[Congressional Record Volume 153, Number 53 (Tuesday, March 27, 2007)]
[Senate]
[Pages S3849-S3979]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 648. Mr. COBURN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
as follows:


[[Page S3850]]


       At the appropriate place, add the following: 
     Notwithstanding any other provision of this Act, none of the 
     funds appropriated or otherwise made available in this Act 
     may be available for reimbursing State and local law 
     enforcement entities for security and related costs, 
     including overtime, associated with the 2008 Presidential 
     Candidate Nominating Conventions, and the total amount made 
     available in this Act in Title II, Chapter 2, under the 
     heading ``State and Local Law Enforcement Assistance'' is 
     reduced by $100,000,000.
                                 ______
                                 
  SA 649. Mr. COBURN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
as follows:

       At the appropriate place, add the following: 
     Notwithstanding any other provision of this Act, Sec. 3608(b) 
     of this Act shall not take effect.
                                 ______
                                 
  SA 650. Mr. McCAIN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       Beginning on page 144, strike line 23 through line 4 on 
     page 145.
                                 ______
                                 
  SA 651. Mr. McCAIN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       Beginning on page 139, strike line 3 through line 17.
                                 ______
                                 
  SA 652. Mr. WARNER (for himself and Mr. Webb) submitted an amendment 
intended to be proposed by him to the bill H.R. 1591, making emergency 
supplemental appropriations for the fiscal year ending September 30, 
2007, and for other purposes; which was ordered to lie on the table; as 
follows:

       At the appropriate place, insert the following:

     SEC. ___. WAIVER FOR CERTAIN STATES, LOCAL EDUCATIONAL 
                   AGENCIES, AND SCHOOLS.

       A State, local educational agency, or school shall be held 
     harmless and not subject to the penalties provision under 
     section 1111(g) of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 6311(g)), the requirements of school or 
     local educational agency improvement, corrective action, 
     restructuring, or other sanctions or penalties under section 
     1116 of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 6313), or any other sanctions or penalties 
     relating to academic assessments under the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.) for 
     the 2006-2007 school year if the following criteria are met:
       (1) The State (in the case of a local educational agency or 
     school, the State within which such local educational agency 
     or school exists) had 1 or more approved academic assessment 
     plans for the 2005-2006 school year.
       (2) The State (in the case of a local educational agency or 
     school, the State within which such local educational agency 
     or school exists) had 1 or more of such plans subsequently 
     held invalid by the Department of Education for the 2006-2007 
     school year.
       (3) The Governor of the State (in the case of a local 
     educational agency or school, the State within which such 
     local educational agency or school exists) certifies, in 
     writing, to the Secretary of Education that--
       (A) the State cannot effectively train its educators on a 
     new or alternative assessment or assessments in place of the 
     assessment or assessments for which the plan or plans were 
     held invalid by the Department of Education, prior to the 
     date the assessment or assessments are to be administered; 
     and
       (B) the administration of any new or alternative assessment 
     or assessments, in place of the assessment or assessments for 
     which the plan or plans were held invalid by the Department 
     of Education, in the 2006-2007 school year is not in the best 
     interest of the public school system and the children such 
     system serves.
       (4) The Governor of the State (in the case of a local 
     educational agency or school, the State within which such 
     local educational agency or school exists) certifies, in 
     writing, to the Secretary of Education that the local 
     educational agency or school failed to make adequate yearly 
     progress (as described in section 1111(b)(2) of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6311(b)(2))) based on academic assessments administered in 
     the 2006-2007 school year or the State would be subject to 
     the penalties provision under section 1111(g) of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6311(g)) or any other sanctions or penalties relating to 
     academic assessments under the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 6301 et seq.) for the 2006-
     2007 school year solely because the State, local educational 
     agency, or school meets each of the criteria described in 
     paragraphs (1) through (3).
                                 ______
                                 
  SA 653. Mr. GREGG submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 50, strike line 7 and all that follows through page 
     52, line 5.
       On page 52, line 8 strike ``1711'' and insert in lieu 
     thereof ``1710''.
       On page 56, line 6 strike ``1712'' and insert in lieu 
     thereof ``1711''.
                                 ______
                                 
  SA 654. Mr. INHOFE submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 22, strike line 17 and all that follows through 
     ``(B) the Secretary'' on line 21 and insert the following:
       (A) the commander of such facility or quarters, as 
     applicable, shall--
       (i) in the case of a facility or quarters recommended for 
     closure or realignment under the 2005 round of defense base 
     closure and realignment, comply with the requirements 
     applicable to such closure or realignment pursuant to the 
     Defense Base Closure and Realignment Act of 1990 (part A of 
     title XXIX of Public Law 101-510; 10 U.S.C. 2687 note) and 
     submit to the Secretary a report comparing the costs and 
     feasibility of--

       (I) accelerating the schedule for closing or realigning the 
     facility or quarters; and
       (II) transferring the operations and personnel from such 
     facility or quarters to an alternate temporary and adequate 
     facility or quarters until such closure or realignment is 
     completed; or

       (ii) in the case of a facility or quarters not recommended 
     for closure or realignment under the 2005 round of defense 
     base closure and realignment, submit to the Secretary a 
     detailed plan to correct the deficiency; and
       (B) the Secretary
                                 ______
                                 
  SA 655. Mrs. HUTCHISON submitted an amendment intended to be proposed 
by her to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       On page 28, between lines 18 and 19, insert the following:
       Sec. 13__. (a)(1) Notwithstanding any other provision of 
     law, the Secretary of Veterans Affairs (referred to in this 
     section as the ``Secretary'') may convey to the State of 
     Texas, without consideration, all right, title, and interest 
     of the United States in and to the parcel of real property 
     comprising the location of the Marlin, Texas, Department of 
     Veterans Affairs Medical Center.
       (2) The property conveyed under paragraph (1) shall be used 
     by the State of Texas for the purposes of a prison.
       (b) In carrying out the conveyance under subsection (a), 
     the Secretary--
       (1) shall not be required to comply with, and shall not be 
     held liable under, any Federal law (including a regulation) 
     relating to the environment or historic preservation; but
       (2) may, at the discretion of the Secretary, conduct 
     environmental cleanup on the parcel to be conveyed, at a cost 
     not to exceed $500,000, using amounts made available for 
     environmental cleanup of sites under the jurisdiction of the 
     Secretary.
                                 ______
                                 
  SA 656. Mr. COBURN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
as follows:

       At the appropriate place, insert the following:
       Sec. ___. (a) Posting of Certain Reports on Internet 
     Websites.--Each report described in subsection (b) shall be 
     posted on the Internet website of the department or agency 
     submitting that report for the public not later than 48 hours 
     after the submission of that report to Congress.
       (b) Covered Reports.--The reports described in this 
     subsection are each report (including any review, evaluation, 
     assessment, or analysis) required by a provision of this Act 
     to be submitted by any department or agency to Congress or 
     any committee of the Senate or the House of Representatives.
       (c) Redaction of Certain Information.--In posting a report 
     on the Internet website of the department or agency under 
     subsection (a), the head of that department or agency may 
     redact any information the release of which to the public 
     would compromise the national security of the United States.
                                 ______
                                 
  SA 657. Mr. COBURN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       In title IV, strike sections 411 and all that follows 
     through the section heading for section 471 and insert the 
     following:

[[Page S3851]]

     SEC. 411. CROP DISASTER ASSISTANCE.

       (a) In General.--Subject to the availability of 
     appropriated funds under section 421, the Secretary shall 
     make emergency financial assistance authorized under this 
     section available to producers on a farm that have incurred 
     qualifying losses described in subsection (c).
       (b) Administration.--
       (1) In general.--Except as provided in paragraph (2), the 
     Secretary shall make assistance available under this section 
     in the same manner as provided under section 815 of the 
     Agriculture, Rural Development, Food and Drug Administration 
     and Related Agencies Appropriations Act, 2001 (Public Law 
     106-387; 114 Stat. 1549A-55), including using the same loss 
     thresholds for quantity and economic losses as were used in 
     administering that section, except that the payment rate 
     shall be 55 percent of the established price, instead of 65 
     percent.
       (2) Noninsured producers.--For producers on a farm that 
     were eligible to acquire crop insurance for the applicable 
     production loss and failed to do so or failed to submit an 
     application for the noninsured assistance program for the 
     loss, the Secretary shall make assistance in accordance with 
     paragraph (1), except that the payment rate shall be 20 
     percent of the established price, instead of 50 percent.
       (c) Qualifying Losses.--Assistance under this section shall 
     be made available to producers on farms, other than producers 
     of sugar beets, that incurred qualifying quantity or quality 
     losses for the applicable crop due to damaging weather or any 
     related condition (including losses due to crop diseases, 
     insects, and delayed harvest), as determined by the 
     Secretary.
       (d) Quality Losses.--
       (1) In general.--In addition to any payment received under 
     subsection (b), subject to the availability of appropriated 
     funds under section 421, the Secretary shall make payments to 
     producers on a farm described in subsection (a) that incurred 
     a quality loss for the applicable crop of a commodity in an 
     amount equal to the product obtained by multiplying--
       (A) the payment quantity determined under paragraph (2);
       (B)(i) in the case of an insurable commodity, the coverage 
     level elected by the insured under the policy or plan of 
     insurance under the Federal Crop Insurance Act (7 U.S.C. 1501 
     et seq.); or
       (ii) in the case of a noninsurable commodity, the 
     applicable coverage level for the payment quantity determined 
     under paragraph (2); by
       (C) 55 percent of the payment rate determined under 
     paragraph (3).
       (2) Payment quantity.--For the purpose of paragraph (1)(A), 
     the payment quantity for quality losses for a crop of a 
     commodity on a farm shall equal the lesser of--
       (A) the actual production of the crop affected by a quality 
     loss of the commodity on the farm; or
       (B)(i) in the case of an insurable commodity, the actual 
     production history for the commodity by the producers on the 
     farm under the Federal Crop Insurance Act (7 U.S.C. 1501 et 
     seq.); or
       (ii) in the case of a noninsurable commodity, the 
     established yield for the crop for the producers on the farm 
     under section 196 of the Federal Agriculture Improvement and 
     Reform Act of 1996 (7 U.S.C. 7333).
       (3) Payment rate.--
       (A) In general.--For the purpose of paragraph (1)(B), the 
     payment rate for quality losses for a crop of a commodity on 
     a farm shall be equal to the difference between (as 
     determined by the applicable State committee of the Farm 
     Service Agency)--
       (i) the per unit market value that the units of the crop 
     affected by the quality loss would have had if the crop had 
     not suffered a quality loss; and
       (ii) the per unit market value of the units of the crop 
     affected by the quality loss.
       (B) Factors.--In determining the payment rate for quality 
     losses for a crop of a commodity on a farm, the applicable 
     State committee of the Farm Service Agency shall take into 
     account--
       (i) the average local market quality discounts that 
     purchasers applied to the commodity during the first 2 months 
     following the normal harvest period for the commodity;
       (ii) the loan rate and repayment rate established for the 
     commodity under the marketing loan program established for 
     the commodity under subtitle B of title I of the Farm 
     Security and Rural Investment Act of 2002 (7 U.S.C. 7931 et 
     seq.);
       (iii) the market value of the commodity if sold into a 
     secondary market; and
       (iv) other factors determined appropriate by the committee.
       (4) Eligibility.--
       (A) In general.--For producers on a farm to be eligible to 
     obtain a payment for a quality loss for a crop under this 
     subsection--
       (i) the amount obtained by multiplying the per unit loss 
     determined under paragraph (1) by the number of units 
     affected by the quality loss shall be reduced by the amount 
     of any indemnification received by the producers on the farm 
     for quality loss adjustment for the commodity under a policy 
     or plan of insurance under the Federal Crop Insurance Act (7 
     U.S.C. 1501 et seq.); and
       (ii) the remainder shall be at least 25 percent of the 
     value that all affected production of the crop would have had 
     if the crop had not suffered a quality loss.
       (B) Ineligibility.--If the amount of a quality loss payment 
     for a commodity for the producers on a farm determined under 
     this paragraph is equal to or less than zero, the producers 
     on the farm shall be ineligible for assistance for the 
     commodity under this subsection.
       (5) Eligible production.--The Secretary shall carry out 
     this subsection in a fair and equitable manner for all 
     eligible production, including the production of fruits and 
     vegetables, other specialty crops, and field crops.
       (e) Election of Crop Year.--If a producer incurred 
     qualifying crop losses in more than 1 of the crop years 
     during the applicable period, the producers on a farm shall 
     elect to receive assistance under this section for losses 
     incurred in only 1 of the crop years.
       (f) Payment Limitation.--
       (1) Limitation.--Assistance provided under this section to 
     the producers on a farm for losses to a crop, together with 
     the amounts specified in paragraph (2) applicable to the same 
     crop, may not exceed 95 percent of what the value of the crop 
     would have been in the absence of the losses, as estimated by 
     the Secretary.
       (2) Other payments.--In applying the limitation in 
     paragraph (1), the Secretary shall include the following:
       (A) Any crop insurance payment made under the Federal Crop 
     Insurance Act (7 U.S.C. 1501 et seq.) or payment under 
     section 196 of the Federal Agricultural Improvement and 
     Reform Act of 1996 (7 U.S.C. 7333) that the producers on the 
     farm receive for losses to the same crop.
       (B) The value of the crop that was not lost (if any), as 
     estimated by the Secretary.
       (g) Timing.--
       (1) In general.--Subject to paragraph (2), the Secretary 
     shall make payments to producers on a farm for a crop under 
     this section not later than 60 days after the date the 
     producers on the farm submit to the Secretary a completed 
     application for the payments.
       (2) Interest.--If the Secretary does not make payments to 
     the producers on a farm by the date described in paragraph 
     (1), the Secretary shall pay to the producers on a farm 
     interest on the payments at a rate equal to the current (as 
     of the sign-up deadline established by the Secretary) market 
     yield on outstanding, marketable obligations of the United 
     States with maturities of 30 years.

     SEC. 412. LIVESTOCK ASSISTANCE.

       (a) Livestock Compensation Program.--
       (1) Use of appropriated funds.--Effective beginning on the 
     date of enactment of this Act, subject to the availability of 
     appropriated funds under section 421, the Secretary shall 
     carry out the 2002 Livestock Compensation Program announced 
     by the Secretary on October 10, 2002 (67 Fed. Reg. 63070), to 
     provide compensation for livestock losses during the 
     applicable period for losses (including losses due to 
     blizzards that began in calendar year 2006 and continued in 
     January 2007) due to a disaster, as determined by the 
     Secretary, except that the payment rate shall be 80 percent 
     of the payment rate established for the 2002 Livestock 
     Compensation Program.
       (2) Eligible applicants.--In carrying out the program 
     described in paragraph (1), the Secretary shall provide 
     assistance to any applicant for livestock losses during the 
     applicable period that--
       (A)(i) conducts a livestock operation that is located in a 
     disaster county, including any applicant conducting a 
     livestock operation with eligible livestock (within the 
     meaning of the livestock assistance program under section 
     101(b) of division B of Public Law 108-324 (118 Stat. 1234)); 
     or
       (ii) produces an animal described in section 10806(a)(1) of 
     the Farm Security and Rural Investment Act of 2002 (21 U.S.C. 
     321d(a)(1));
       (B) demonstrates to the Secretary that the applicant 
     suffered a material loss of pasture or hay production, or 
     experienced substantially increased feed costs, due to 
     damaging weather or a related condition during the calendar 
     year, as determined by the Secretary; and
       (C) meets all other eligibility requirements established by 
     the Secretary for the program.
       (3) Mitigation.--In determining the eligibility for or 
     amount of payments for which a producer is eligible under the 
     livestock compensation program, the Secretary shall not 
     penalize a producer that takes actions (recognizing disaster 
     conditions) that reduce the average number of livestock the 
     producer owned for grazing during the production year for 
     which assistance is being provided.
       (4) Payments for reduction in grazing on federal land.--
       (A) In general.--In carrying out this subsection, the 
     Secretary shall make payments to livestock producers that are 
     in proportion to any reduction during calendar year 2007 in 
     grazing on Federal land in a disaster county leased by the 
     producers a result of actions described in subparagraph (B).
       (B) Federal actions.--Actions referred to in subparagraph 
     (A) are actions taken during calendar year 2007 by the Bureau 
     of Land Management or other Federal agency to restrict or 
     prohibit grazing otherwise allowed under the terms of the 
     lease of the producers in order to expedite the recovery of 
     the Federal land from drought, wildfire, or other natural 
     disaster declared by the Secretary during the applicable 
     period.
       (5) Limitation.--The Secretary shall ensure, to the maximum 
     extent practicable, that producers on a farm do not receive 
     duplicative payments under this subsection and

[[Page S3852]]

     another Federal program with respect to any loss.
       (b) Livestock Indemnity Payments.--
       (1) In general.--Subject to the availability of 
     appropriated funds under section 421, the Secretary shall 
     make livestock indemnity payments to producers on farms that 
     have incurred livestock losses during the applicable period 
     (including losses due to blizzards that began in calendar 
     year 2006 and continued in January 2007) due to a disaster, 
     as determined by the Secretary, including losses due to 
     hurricanes, floods, anthrax, wildfires, and extreme heat.
       (2) Payment rates.--Indemnity payments to a producer on a 
     farm under paragraph (1) shall be made at a rate of not less 
     than 30 percent of the market value of the applicable 
     livestock on the day before the date of death of the 
     livestock, as determined by the Secretary.
       (c) Ewe Lamb Replacement and Retention.--
       (1) In general.--Subject to the availability of 
     appropriated funds under section 421, the Secretary shall use 
     $13,000,000 of the funds made available under that section to 
     make payments to producers located in disaster counties under 
     the Ewe Lamb Replacement and Retention Payment Program under 
     part 784 of title 7, Code of Federal Regulations (or a 
     successor regulation) for each qualifying ewe lamb retained 
     or purchased during the period beginning on January 1, 2006, 
     and ending on December 31, 2006, by the producers.
       (2) Ineligibility for other assistance.--A producer that 
     receives assistance under this subsection shall not be 
     eligible to receive assistance under subsection (a).
       (d) Election of Production Year.--If a producer incurred 
     qualifying production losses in more than one of the 
     production years, the producers on a farm shall elect to 
     receive assistance under this section in only one of the 
     production years.
       (e) Exception.--Notwithstanding any other provision of this 
     section, livestock producers on a farm shall be eligible to 
     receive assistance under subsection (a) or livestock 
     indemnity payments under subsection (b) if the producers on a 
     farm--
       (1) have livestock operations in a county included in the 
     geographic area covered by a major disaster or emergency 
     designated by the President under the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 
     et seq.) due to blizzards, ice storms, or other winter-
     related causes during the period of December 2006 through 
     January 2007; and
       (2) meet all eligibility requirements for the assistance or 
     payments other than the requirements relating to disaster 
     declarations by the Secretary under subsections (a) and 
     (b)(1).

                       Subtitle B--Miscellaneous

     SEC. 421. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--The Secretary shall use to carry out this 
     title funds derived from annual appropriations for the 
     Department of Agriculture, as determined by the Secretary.
       (b) Limitation.--Notwithstanding any other provision of 
     this title, the authority provided by this title and the 
     amendments made by this title shall apply only to the extent 
     that funds are appropriated in advance in an annual 
     appropriations Act for the Department of Agriculture.

                   Subtitle C--Emergency Designation

     SEC. 431. EMERGENCY DESIGNATION.

                                 ______
                                 
  SA 658. Mr. GRASSLEY (for himself and Mr. Baucus) submitted an 
amendment intended to be proposed by him to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       Strike all after the first word and insert the following:

                  V--FAIR MINIMUM WAGE AND TAX RELIEF

                     Subtitle A--Fair Minimum Wage

     SEC. 500. SHORT TITLE.

       This subtitle may be cited as the ``Fair Minimum Wage Act 
     of 2007''.

     SEC. 501. MINIMUM WAGE.

       (a) In General.--Section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to 
     read as follows:
       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $5.85 an hour, beginning on the 60th day after the 
     date of enactment of the Fair Minimum Wage Act of 2007;
       ``(B) $6.55 an hour, beginning 12 months after that 60th 
     day; and
       ``(C) $7.25 an hour, beginning 24 months after that 60th 
     day;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 60 days after the date of enactment of this 
     Act.

     SEC. 502. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH 
                   OF THE NORTHERN MARIANA ISLANDS.

       (a) In General.--Section 6 of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of 
     the Northern Mariana Islands.
       (b) Transition.--Notwithstanding subsection (a), the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--
       (1) $3.55 an hour, beginning on the 60th day after the date 
     of enactment of this Act; and
       (2) increased by $0.50 an hour (or such lesser amount as 
     may be necessary to equal the minimum wage under section 
     6(a)(1) of such Act), beginning 6 months after the date of 
     enactment of this Act and every 6 months thereafter until the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under this subsection is equal to the minimum 
     wage set forth in such section.

               Subtitle B--Small Business Tax Incentives

     SEC. 510. SHORT TITLE; AMENDMENT OF CODE.

       (a) Short Title.--This subtitle may be cited as the ``Small 
     Business and Work Opportunity Act of 2007''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this subtitle 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.

              PART I--SMALL BUSINESS TAX RELIEF PROVISIONS

                     Subpart A--General Provisions

     SEC. 511. EXTENSION OF INCREASED EXPENSING FOR SMALL 
                   BUSINESSES.

       Section 179 (relating to election to expense certain 
     depreciable business assets) is amended by striking ``2010'' 
     each place it appears and inserting ``2011''.

     SEC. 512. EXTENSION AND MODIFICATION OF 15-YEAR STRAIGHT-LINE 
                   COST RECOVERY FOR QUALIFIED LEASEHOLD 
                   IMPROVEMENTS AND QUALIFIED RESTAURANT 
                   IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST 
                   RECOVERY FOR CERTAIN IMPROVEMENTS TO RETAIL 
                   SPACE.

       (a) Extension of Leasehold and Restaurant Improvements.--
       (1) In general.--Clauses (iv) and (v) of section 
     168(e)(3)(E) (relating to 15-year property) are each amended 
     by striking ``January 1, 2008'' and inserting ``January 1, 
     2009''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to property placed in service after December 31, 
     2007.
       (b) Modification of Treatment of Qualified Restaurant 
     Property as 15-Year Property for Purposes of Depreciation 
     Deduction.--
       (1) Treatment to include new construction.--Paragraph (7) 
     of section 168(e) (relating to classification of property) is 
     amended to read as follows:
       ``(7) Qualified restaurant property.--The term `qualified 
     restaurant property' means any section 1250 property which is 
     a building (or its structural components) or an improvement 
     to such building if more than 50 percent of such building's 
     square footage is devoted to preparation of, and seating for 
     on-premises consumption of, prepared meals.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to any property placed in service after the date 
     of the enactment of this Act, the original use of which 
     begins with the taxpayer after such date.
       (c) Recovery Period for Depreciation of Certain 
     Improvements to Retail Space.--
       (1) 15-year recovery period.--Section 168(e)(3)(E) 
     (relating to 15-year property) is amended by striking ``and'' 
     at the end of clause (vii), by striking the period at the end 
     of clause (viii) and inserting ``, and'', and by adding at 
     the end the following new clause:
       ``(ix) any qualified retail improvement property placed in 
     service before January 1, 2009.''.
       (2) Qualified retail improvement property.--Section 168(e) 
     is amended by adding at the end the following new paragraph:
       ``(8) Qualified retail improvement property.--
       ``(A) In general.--The term `qualified retail improvement 
     property' means any improvement to an interior portion of a 
     building which is nonresidential real property if--
       ``(i) such portion is open to the general public and is 
     used in the retail trade or business of selling tangible 
     personal property to the general public, and
       ``(ii) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Improvements made by owner.--In the case of an 
     improvement made by the owner of such improvement, such 
     improvement shall be qualified retail improvement property 
     (if at all) only so long as such improvement is held by such 
     owner. Rules similar to the rules under paragraph (6)(B) 
     shall apply for purposes of the preceding sentence.
       ``(C) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefitting a common area, 
     or
       ``(iv) the internal structural framework of the 
     building.''.
       (3) Requirement to use straight line method.--Section 
     168(b)(3) is amended by adding at the end the following new 
     subparagraph:
       ``(I) Qualified retail improvement property described in 
     subsection (e)(8).''.
       (4) Alternative system.--The table contained in section 
     168(g)(3)(B) is amended by inserting after the item relating 
     to subparagraph (E)(viii) the following new item:

(E)(ix)...........................................................39''.


[[Page S3853]]


       (5) Effective date.--The amendments made by this subsection 
     shall apply to property placed in service after the date of 
     the enactment of this Act.

     SEC. 513. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL 
                   BUSINESS.

       (a) Cash Accounting Permitted.--
       (1) In general.--Section 446 (relating to general rule for 
     methods of accounting) is amended by adding at the end the 
     following new subsection:
       ``(g) Certain Small Business Taxpayers Permitted To Use 
     Cash Accounting Method Without Limitation.--
       ``(1) In general.--An eligible taxpayer shall not be 
     required to use an accrual method of accounting for any 
     taxable year.
       ``(2) Eligible taxpayer.--For purposes of this subsection, 
     a taxpayer is an eligible taxpayer with respect to any 
     taxable year if--
       ``(A) for each of the prior taxable years ending on or 
     after the date of the enactment of this subsection, the 
     taxpayer (or any predecessor) met the gross receipts test in 
     effect under section 448(c) for such taxable year, and
       ``(B) the taxpayer is not subject to section 447 or 448.''.
       (2) Expansion of gross receipts test.--
       (A) In general.--Paragraph (3) of section 448(b) (relating 
     to entities with gross receipts of not more than $5,000,000) 
     is amended to read as follows:
       ``(3) Entities meeting gross receipts test.--Paragraphs (1) 
     and (2) of subsection (a) shall not apply to any corporation 
     or partnership for any taxable year if, for each of the prior 
     taxable years ending on or after the date of the enactment of 
     the Small Business and Work Opportunity Act of 2007, the 
     entity (or any predecessor) met the gross receipts test in 
     effect under subsection (c) for such prior taxable year.''.
       (B) Conforming amendments.--Section 448(c) of such Code is 
     amended--
       (i) by striking ``$5,000,000'' in the heading thereof,
       (ii) by striking ``$5,000,000'' each place it appears in 
     paragraph (1) and inserting ``$10,000,000'', and
       (iii) by adding at the end the following new paragraph:
       ``(4) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2008, the dollar 
     amount contained in paragraph (1) shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2007' for 
     `calendar year 1992' in subparagraph (B) thereof.
       ``If any amount as adjusted under this subparagraph is not 
     a multiple of $100,000, such amount shall be rounded to the 
     nearest multiple of $100,000.''.
       (b) Clarification of Inventory Rules for Small Business.--
       (1) In general.--Section 471 (relating to general rule for 
     inventories) is amended by redesignating subsection (c) as 
     subsection (d) and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Small Business Taxpayers Not Required To Use 
     Inventories.--
       ``(1) In general.--A qualified taxpayer shall not be 
     required to use inventories under this section for a taxable 
     year.
       ``(2) Treatment of taxpayers not using inventories.--If a 
     qualified taxpayer does not use inventories with respect to 
     any property for any taxable year beginning after the date of 
     the enactment of this subsection, such property shall be 
     treated as a material or supply which is not incidental.
       ``(3) Qualified taxpayer.--For purposes of this subsection, 
     the term `qualified taxpayer' means--
       ``(A) any eligible taxpayer (as defined in section 
     446(g)(2)), and
       ``(B) any taxpayer described in section 448(b)(3).''.
       (2) Conforming amendments.--
       (A) Subpart D of part II of subchapter E of chapter 1 is 
     amended by striking section 474.
       (B) The table of sections for subpart D of part II of 
     subchapter E of chapter 1 is amended by striking the item 
     relating to section 474.
       (c) Effective Date and Special Rules.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after the date of the 
     enactment of this Act.
       (2) Change in method of accounting.--In the case of any 
     taxpayer changing the taxpayer's method of accounting for any 
     taxable year under the amendments made by this section--
       (A) such change shall be treated as initiated by the 
     taxpayer;
       (B) such change shall be treated as made with the consent 
     of the Secretary of the Treasury; and
       (C) the net amount of the adjustments required to be taken 
     into account by the taxpayer under section 481 of the 
     Internal Revenue Code of 1986 shall be taken into account 
     over a period (not greater than 4 taxable years) beginning 
     with such taxable year.

     SEC. 514. EXTENSION AND MODIFICATION OF COMBINED WORK 
                   OPPORTUNITY TAX CREDIT AND WELFARE-TO-WORK 
                   CREDIT.

       (a) Extension.--Section 51(c)(4)(B) (relating to 
     termination) is amended by striking ``2007'' and inserting 
     ``2012''.
       (b) Increase in Maximum Age for Designated Community 
     Residents.--
       (1) In general.--Paragraph (5) of section 51(d) is amended 
     to read as follows:
       ``(5) Designated community residents.--
       ``(A) In general.--The term `designated community resident' 
     means any individual who is certified by the designated local 
     agency--
       ``(i) as having attained age 18 but not age 40 on the 
     hiring date, and
       ``(ii) as having his principal place of abode within an 
     empowerment zone, enterprise community, renewal community, or 
     rural renewal county.
       ``(B) Individual must continue to reside in zone, 
     community, or county.--In the case of a designated community 
     resident, the term `qualified wages' shall not include wages 
     paid or incurred for services performed while the 
     individual's principal place of abode is outside an 
     empowerment zone, enterprise community, renewal community, or 
     rural renewal county.
       ``(C) Rural renewal county.--For purposes of this 
     paragraph, the term `rural renewal county' means any county 
     which--
       ``(i) is outside a metropolitan statistical area (defined 
     as such by the Office of Management and Budget), and
       ``(ii) during the 5-year periods 1990 through 1994 and 1995 
     through 1999 had a net population loss.''.
       (2) Conforming amendment.--Subparagraph (D) of section 
     51(d)(1) is amended to read as follows:
       ``(D) a designated community resident,''.
       (c) Clarification of Treatment of Individuals Under 
     Individual Work Plans.--Subparagraph (B) of section 51(d)(6) 
     (relating to vocational rehabilitation referral) is amended 
     by striking ``or'' at the end of clause (i), by striking the 
     period at the end of clause (ii) and inserting ``, or'', and 
     by adding at the end the following new clause:
       ``(iii) an individual work plan developed and implemented 
     by an employment network pursuant to subsection (g) of 
     section 1148 of the Social Security Act with respect to which 
     the requirements of such subsection are met.''.
       (d) Treatment of Disabled Veterans Under the Work 
     Opportunity Tax Credit.--
       (1) Disabled veterans treated as members of targeted 
     group.--
       (A) In general.--Subparagraph (A) of section 51(d)(3) 
     (relating to qualified veteran) is amended by striking 
     ``agency as being a member of a family'' and all that follows 
     and inserting ``agency as--
       ``(i) being a member of a family receiving assistance under 
     a food stamp program under the Food Stamp Act of 1977 for at 
     least a 3-month period ending during the 12-month period 
     ending on the hiring date, or
       ``(ii) entitled to compensation for a service-connected 
     disability incurred after September 10, 2001.''.
       (B) Definitions.--Paragraph (3) of section 51(d) is amended 
     by adding at the end the following new subparagraph:
       ``(C) Other definitions.--For purposes of subparagraph (A), 
     the terms `compensation' and `service-connected' have the 
     meanings given such terms under section 101 of title 38, 
     United States Code.''.
       (2) Increase in amount of wages taken into account for 
     disabled veterans.--Paragraph (3) of section 51(b) is 
     amended--
       (A) by inserting ``($12,000 per year in the case of any 
     individual who is a qualified veteran by reason of subsection 
     (d)(3)(A)(ii))'' before the period at the end, and
       (B) by striking ``ONLY FIRST  $6,000 of'' in the heading 
     and inserting ``LIMITATION ON''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after the date of the enactment of this Act, in taxable years 
     ending after such date.

     SEC. 515. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       (a) Employment Taxes.--Chapter 25 (relating to general 
     provisions relating to employment taxes) is amended by adding 
     at the end the following new section:

     ``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       ``(a) General Rules.--For purposes of the taxes, and other 
     obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer (and no other person shall be 
     treated as the employer) of any work site employee performing 
     services for any customer of such organization, but only with 
     respect to remuneration remitted by such organization to such 
     work site employee, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(b) Successor Employer Status.--For purposes of sections 
     3121(a)(1), 3231(e)(2)(C), and 3306(b)(1)--
       ``(1) a certified professional employer organization 
     entering into a service contract with a customer with respect 
     to a work site employee shall be treated as a successor 
     employer and the customer shall be treated as a predecessor 
     employer during the term of such service contract, and
       ``(2) a customer whose service contract with a certified 
     professional employer organization is terminated with respect 
     to a work site employee shall be treated as a successor 
     employer and the certified professional employer organization 
     shall be treated as a predecessor employer.
       ``(c) Liability of Certified Professional Employer 
     Organization.--Solely for purposes of its liability for the 
     taxes, and other obligations, imposed by this subtitle--

[[Page S3854]]

       ``(1) a certified professional employer organization shall 
     be treated as the employer of any individual (other than a 
     work site employee or a person described in subsection (f)) 
     who is performing services covered by a contract meeting the 
     requirements of section 7705(e)(2), but only with respect to 
     remuneration remitted by such organization to such 
     individual, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(d) Treatment of Credits.--
       ``(1) In general.--For purposes of any credit specified in 
     paragraph (2)--
       ``(A) such credit with respect to a work site employee 
     performing services for the customer applies to the customer, 
     not the certified professional employer organization,
       ``(B) the customer, and not the certified professional 
     employer organization, shall take into account wages and 
     employment taxes--
       ``(i) paid by the certified professional employer 
     organization with respect to the work site employee, and
       ``(ii) for which the certified professional employer 
     organization receives payment from the customer, and
       ``(C) the certified professional employer organization 
     shall furnish the customer with any information necessary for 
     the customer to claim such credit.
       ``(2) Credits specified.--A credit is specified in this 
     paragraph if such credit is allowed under--
       ``(A) section 41 (credit for increasing research activity),
       ``(B) section 45A (Indian employment credit),
       ``(C) section 45B (credit for portion of employer social 
     security taxes paid with respect to employee cash tips),
       ``(D) section 45C (clinical testing expenses for certain 
     drugs for rare diseases or conditions),
       ``(E) section 51 (work opportunity credit),
       ``(F) section 51A (temporary incentives for employing long-
     term family assistance recipients),
       ``(G) section 1396 (empowerment zone employment credit),
       ``(H) 1400(d) (DC Zone employment credit),
       ``(I) Section 1400H (renewal community employment credit), 
     and
       ``(J) any other section as provided by the Secretary.
       ``(e) Special Rule for Related Party.--This section shall 
     not apply in the case of a customer which bears a 
     relationship to a certified professional employer 
     organization described in section 267(b) or 707(b). For 
     purposes of the preceding sentence, such sections shall be 
     applied by substituting `10 percent' for `50 percent'.
       ``(f) Special Rule for Certain Individuals.--For purposes 
     of the taxes imposed under this subtitle, an individual with 
     net earnings from self-employment derived from the customer's 
     trade or business is not a work site employee with respect to 
     remuneration paid by a certified professional employer 
     organization.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Certified Professional Employer Organization Defined.--
     Chapter 79 (relating to definitions) is amended by adding at 
     the end the following new section:

     ``SEC. 7705. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS 
                   DEFINED.

       ``(a) In General.--For purposes of this title, the term 
     `certified professional employer organization' means a person 
     who has been certified by the Secretary for purposes of 
     section 3511 as meeting the requirements of subsection (b).
       ``(b) General Requirements.--A person meets the 
     requirements of this subsection if such person--
       ``(1) demonstrates that such person (and any owner, 
     officer, and such other persons as may be specified in 
     regulations) meets such requirements as the Secretary shall 
     establish with respect to tax status, background, experience, 
     business location, and annual financial audits,
       ``(2) computes its taxable income using an accrual method 
     of accounting unless the Secretary approves another method,
       ``(3) agrees that it will satisfy the bond and independent 
     financial review requirements of subsection (c) on an ongoing 
     basis,
       ``(4) agrees that it will satisfy such reporting 
     obligations as may be imposed by the Secretary,
       ``(5) agrees to verify on such periodic basis as the 
     Secretary may prescribe that it continues to meet the 
     requirements of this subsection, and
       ``(6) agrees to notify the Secretary in writing within such 
     time as the Secretary may prescribe of any change that 
     materially affects whether it continues to meet the 
     requirements of this subsection.
       ``(c) Bond and Independent Financial Review Requirements.--
       ``(1) In general.--An organization meets the requirements 
     of this paragraph if such organization--
       ``(A) meets the bond requirements of paragraph (2), and
       ``(B) meets the independent financial review requirements 
     of paragraph (3).
       ``(2) Bond.--
       ``(A) In general.--A certified professional employer 
     organization meets the requirements of this paragraph if the 
     organization has posted a bond for the payment of taxes under 
     subtitle C (in a form acceptable to the Secretary) in an 
     amount at least equal to the amount specified in subparagraph 
     (B).
       ``(B) Amount of bond.--For the period April 1 of any 
     calendar year through March 31 of the following calendar 
     year, the amount of the bond required is equal to the greater 
     of--
       ``(i) 5 percent of the organization's liability under 
     section 3511 for taxes imposed by subtitle C during the 
     preceding calendar year (but not to exceed $1,000,000), or
       ``(ii) $50,000.
       ``(3) Independent financial review requirements.--A 
     certified professional employer organization meets the 
     requirements of this paragraph if such organization--
       ``(A) has, as of the most recent review date, caused to be 
     prepared and provided to the Secretary (in such manner as the 
     Secretary may prescribe) an opinion of an independent 
     certified public accountant that the certified professional 
     employer organization's financial statements are presented 
     fairly in accordance with generally accepted accounting 
     principles, and
       ``(B) provides, not later than the last day of the second 
     month beginning after the end of each calendar quarter, to 
     the Secretary from an independent certified public accountant 
     an assertion regarding Federal employment tax payments and an 
     examination level attestation on such assertion.

     Such assertion shall state that the organization has withheld 
     and made deposits of all taxes imposed by chapters 21, 22, 
     and 24 of the Internal Revenue Code in accordance with 
     regulations imposed by the Secretary for such calendar 
     quarter and such examination level attestation shall state 
     that such assertion is fairly stated, in all material 
     respects.
       ``(4) Controlled group rules.--For purposes of the 
     requirements of paragraphs (2) and (3), all professional 
     employer organizations that are members of a controlled group 
     within the meaning of sections 414(b) and (c) shall be 
     treated as a single organization.
       ``(5) Failure to file assertion and attestation.--If the 
     certified professional employer organization fails to file 
     the assertion and attestation required by paragraph (3) with 
     respect to any calendar quarter, then the requirements of 
     paragraph (3) with respect to such failure shall be treated 
     as not satisfied for the period beginning on the due date for 
     such attestation.
       ``(6) Review date.--For purposes of paragraph (3)(A), the 
     review date shall be 6 months after the completion of the 
     organization's fiscal year.
       ``(d) Suspension and Revocation Authority.--The Secretary 
     may suspend or revoke a certification of any person under 
     subsection (b) for purposes of section 3511 if the Secretary 
     determines that such person is not satisfying the 
     representations or requirements of subsections (b) or (c), or 
     fails to satisfy applicable accounting, reporting, payment, 
     or deposit requirements.
       ``(e) Work Site Employee.--For purposes of this title--
       ``(1) In general.--The term `work site employee' means, 
     with respect to a certified professional employer 
     organization, an individual who--
       ``(A) performs services for a customer pursuant to a 
     contract which is between such customer and the certified 
     professional employer organization and which meets the 
     requirements of paragraph (2), and
       ``(B) performs services at a work site meeting the 
     requirements of paragraph (3).
       ``(2) Service contract requirements.--A contract meets the 
     requirements of this paragraph with respect to an individual 
     performing services for a customer if such contract is in 
     writing and provides that the certified professional employer 
     organization shall--
       ``(A) assume responsibility for payment of wages to such 
     individual, without regard to the receipt or adequacy of 
     payment from the customer for such services,
       ``(B) assume responsibility for reporting, withholding, and 
     paying any applicable taxes under subtitle C, with respect to 
     such individual's wages, without regard to the receipt or 
     adequacy of payment from the customer for such services,
       ``(C) assume responsibility for any employee benefits which 
     the service contract may require the organization to provide, 
     without regard to the receipt or adequacy of payment from the 
     customer for such services,
       ``(D) assume responsibility for hiring, firing, and 
     recruiting workers in addition to the customer's 
     responsibility for hiring, firing and recruiting workers,
       ``(E) maintain employee records relating to such 
     individual, and
       ``(F) agree to be treated as a certified professional 
     employer organization for purposes of section 3511 with 
     respect to such individual.
       ``(3) Work site coverage requirement.--The requirements of 
     this paragraph are met with respect to an individual if at 
     least 85 percent of the individuals performing services for 
     the customer at the work site where such individual performs 
     services are subject to 1 or more contracts with the 
     certified professional employer organization which meet the 
     requirements of paragraph (2) (but not taking into account 
     those individuals who are excluded employees within the 
     meaning of section 414(q)(5)).

[[Page S3855]]

       ``(f) Determination of Employment Status.--Except to the 
     extent necessary for purposes of section 3511, nothing in 
     this section shall be construed to affect the determination 
     of who is an employee or employer for purposes of this title.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (c) Conforming Amendments.--
       (1) Section 3302 is amended by adding at the end the 
     following new subsection:
       ``(h) Treatment of Certified Professional Employer 
     Organizations.--If a certified professional employer 
     organization (as defined in section 7705), or a customer of 
     such organization, makes a contribution to the State's 
     unemployment fund with respect to a work site employee, such 
     organization shall be eligible for the credits available 
     under this section with respect to such contribution.''.
       (2) Section 3303(a) is amended--
       (A) by striking the period at the end of paragraph (3) and 
     inserting ``; and'' and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) if the taxpayer is a certified professional employer 
     organization (as defined in section 7705) that is treated as 
     the employer under section 3511, such certified professional 
     employer organization is permitted to collect and remit, in 
     accordance with paragraphs (1), (2), and (3), contributions 
     during the taxable year to the State unemployment fund with 
     respect to a work site employee.'', and
       (B) in the last sentence--
       (i) by striking ``paragraphs (1), (2), and (3)'' and 
     inserting ``paragraphs (1), (2), (3), and (4)'', and
       (ii) by striking ``paragraph (1), (2), or (3)'' and 
     inserting ``paragraph (1), (2), (3), or (4)''.
       (3) Section 6053(c) (relating to reporting of tips) is 
     amended by adding at the end the following new paragraph:
       ``(8) Certified professional employer organizations.--For 
     purposes of any report required by this subsection, in the 
     case of a certified professional employer organization that 
     is treated under section 3511 as the employer of a work site 
     employee, the customer with respect to whom a work site 
     employee performs services shall be the employer for purposes 
     of reporting under this section and the certified 
     professional employer organization shall furnish to the 
     customer any information necessary to complete such reporting 
     no later than such time as the Secretary shall prescribe.''.
       (d) Clerical Amendments.--
       (1) The table of sections for chapter 25 is amended by 
     adding at the end the following new item:

``Sec. 3511. Certified professional employer organizations''.

       (2) The table of sections for chapter 79 is amended by 
     inserting after the item relating to section 7704 the 
     following new item:

``Sec. 7705. Certified professional employer organizations defined''.

       (e) Reporting Requirements and Obligations.--The Secretary 
     of the Treasury shall develop such reporting and 
     recordkeeping rules, regulations, and procedures as the 
     Secretary determines necessary or appropriate to ensure 
     compliance with the amendments made by this section with 
     respect to entities applying for certification as certified 
     professional employer organizations or entities that have 
     been so certified. Such rules shall be designed in a manner 
     which streamlines, to the extent possible, the application of 
     requirements of such amendments, the exchange of information 
     between a certified professional employer organization and 
     its customers, and the reporting and recordkeeping 
     obligations of the certified professional employer 
     organization.
       (f) User Fees.--Subsection (b) of section 7528 (relating to 
     Internal Revenue Service user fees) is amended by adding at 
     the end the following new paragraph:
       ``(4) Certified professional employer organizations.--The 
     fee charged under the program in connection with the 
     certification by the Secretary of a professional employer 
     organization under section 7705 shall not exceed $500.''.
       (g) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to wages for services performed on or 
     after January 1 of the first calendar year beginning more 
     than 12 months after the date of the enactment of this Act.
       (2) Certification program.--The Secretary of the Treasury 
     shall establish the certification program described in 
     section 7705(b) of the Internal Revenue Code of 1986, as 
     added by subsection (b), not later than 6 months before the 
     effective date determined under paragraph (1).
       (h) No Inference.--Nothing contained in this section or the 
     amendments made by this section shall be construed to create 
     any inference with respect to the determination of who is an 
     employee or employer--
       (1) for Federal tax purposes (other than the purposes set 
     forth in the amendments made by this section), or
       (2) for purposes of any other provision of law.

     SEC. 516. ACCELERATED DEPRECIATION FOR INVESTMENT IN HIGH 
                   OUT-MIGRATION COUNTIES.

       (a) In General.--Section 168 (relating to accelerated cost 
     recovery system) is amended by adding at the end the 
     following new subsection:
       ``(l) Rural Investment Property.--
       ``(1) In general.--For purposes of subsection (a), the 
     applicable recovery period for qualified rural investment 
     property shall be determined in accordance with the table 
     contained in paragraph (2) in lieu of the table contained in 
     subsection (c).
       ``(2) Applicable recovery period for rural investment 
     property.--For purposes of paragraph (1)--
                                                         The applicable
``  ``In the case of:                               recovery period is:
    3-year property............................................2 years 
    5-year property............................................3 years 
    7-year property............................................4 years 
    10-year property...........................................6 years 
    15-year property...........................................9 years 
    20-year property..........................................12 years 
  Nonresidential real property................................22 years.

       ``(3) Qualified rural investment property defined.--For 
     purposes of this subsection--
       ``(A) In general.--The term `qualified rural investment 
     property' means property which is property described in the 
     table in paragraph (2) and which is--
       ``(i) used by the taxpayer predominantly in the active 
     conduct of a trade or business within a high out-migration 
     county,
       ``(ii) not used or located outside such county on a regular 
     basis,
       ``(iii) not acquired (directly or indirectly) by the 
     taxpayer from a person who is related to the taxpayer (within 
     the meaning of section 465(b)(3)(C)), and
       ``(iv) not property (or any portion thereof) placed in 
     service for purposes of operating any racetrack or other 
     facility used for gambling.
       ``(B) High out-migration county.--The term `high out-
     migration county' means any county which--
       ``(i) is outside a metropolitan statistical area (defined 
     as such by the Office of Management and Budget), and
       ``(ii) during the 5-year periods 1990 through 1994 and 1995 
     through 1999 had a net population loss.
       ``(4) Termination.--This subsection shall not apply to 
     property placed in service after March 31, 2008.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act, the original use of which begins 
     with the taxpayer after such date.

                   Subpart B--Subchapter S Provisions

     SEC. 521. CAPITAL GAIN OF S CORPORATION NOT TREATED AS 
                   PASSIVE INVESTMENT INCOME.

       (a) In General.--Section 1362(d)(3) is amended by striking 
     subparagraphs (B), (C), (D), (E), and (F) and inserting the 
     following new subparagraph:
       ``(B) Passive investment income defined.--
       ``(i) In general.--Except as otherwise provided in this 
     subparagraph, the term `passive investment income' means 
     gross receipts derived from royalties, rents, dividends, 
     interest, and annuities.
       ``(ii) Exception for interest on notes from sales of 
     inventory.--The term `passive investment income' shall not 
     include interest on any obligation acquired in the ordinary 
     course of the corporation's trade or business from its sale 
     of property described in section 1221(a)(1).
       ``(iii) Treatment of certain lending or finance 
     companies.--If the S corporation meets the requirements of 
     section 542(c)(6) for the taxable year, the term `passive 
     investment income' shall not include gross receipts for the 
     taxable year which are derived directly from the active and 
     regular conduct of a lending or finance business (as defined 
     in section 542(d)(1)).
       ``(iv) Treatment of certain dividends.--If an S corporation 
     holds stock in a C corporation meeting the requirements of 
     section 1504(a)(2), the term `passive investment income' 
     shall not include dividends from such C corporation to the 
     extent such dividends are attributable to the earnings and 
     profits of such C corporation derived from the active conduct 
     of a trade or business.
       ``(v) Exception for banks, etc.--In the case of a bank (as 
     defined in section 581) or a depository institution holding 
     company (as defined in section 3(w)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813(w)(1)), the term `passive 
     investment income' shall not include--

       ``(I) interest income earned by such bank or company, or
       ``(II) dividends on assets required to be held by such bank 
     or company, including stock in the Federal Reserve Bank, the 
     Federal Home Loan Bank, or the Federal Agricultural Mortgage 
     Bank or participation certificates issued by a Federal 
     Intermediate Credit Bank.''.

       (b) Conforming Amendment.--Clause (i) of section 
     1042(c)(4)(A) is amended by striking ``section 
     1362(d)(3)(C)'' and inserting ``section 1362(d)(3)(B)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

[[Page S3856]]

     SEC. 522. TREATMENT OF BANK DIRECTOR SHARES.

       (a) In General.--Section 1361 (defining S corporation) is 
     amended by adding at the end the following new subsection:
       ``(f) Restricted Bank Director Stock.--
       ``(1) In general.--Restricted bank director stock shall not 
     be taken into account as outstanding stock of the S 
     corporation in applying this subchapter (other than section 
     1368(f)).
       ``(2) Restricted bank director stock.--For purposes of this 
     subsection, the term `restricted bank director stock' means 
     stock in a bank (as defined in section 581) or a depository 
     institution holding company (as defined in section 3(w)(1) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1)), if 
     such stock--
       ``(A) is required to be held by an individual under 
     applicable Federal or State law in order to permit such 
     individual to serve as a director, and
       ``(B) is subject to an agreement with such bank or company 
     (or a corporation which controls (within the meaning of 
     section 368(c)) such bank or company) pursuant to which the 
     holder is required to sell back such stock (at the same price 
     as the individual acquired such stock) upon ceasing to hold 
     the office of director.
       ``(3) Cross reference.--

``For treatment of certain distributions with respect to restricted 
              bank director stock, see section 1368(f)''.

       (b) Distributions.--Section 1368 (relating to 
     distributions) is amended by adding at the end the following 
     new subsection:
       ``(f) Restricted Bank Director Stock.--If a director 
     receives a distribution (not in part or full payment in 
     exchange for stock) from an S corporation with respect to any 
     restricted bank director stock (as defined in section 
     1361(f)), the amount of such distribution--
       ``(1) shall be includible in gross income of the director, 
     and
       ``(2) shall be deductible by the corporation for the 
     taxable year of such corporation in which or with which ends 
     the taxable year in which such amount in included in the 
     gross income of the director.''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006.
       (2) Special rule for treatment as second class of stock.--
     In the case of any taxable year beginning after December 31, 
     1996, restricted bank director stock (as defined in section 
     1361(f) of the Internal Revenue Code of 1986, as added by 
     this section) shall not be taken into account in determining 
     whether an S corporation has more than 1 class of stock.

     SEC. 523. SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE 
                   RESERVE METHOD OF ACCOUNTING ON BECOMING S 
                   CORPORATION.

       (a) In General.--Section 1361, as amended by this Act, is 
     amended by adding at the end the following new subsection:
       ``(g) Special Rule for Bank Required To Change From the 
     Reserve Method of Accounting on Becoming S Corporation.--In 
     the case of a bank which changes from the reserve method of 
     accounting for bad debts described in section 585 or 593 for 
     its first taxable year for which an election under section 
     1362(a) is in effect, the bank may elect to take into account 
     any adjustments under section 481 by reason of such change 
     for the taxable year immediately preceding such first taxable 
     year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 524. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED 
                   SUBCHAPTER S SUBSIDIARY.

       (a) In General.--Subparagraph (C) of section 1361(b)(3) 
     (relating to treatment of terminations of qualified 
     subchapter S subsidiary status) is amended--
       (1) by striking ``For purposes of this title,'' and 
     inserting the following:
       ``(i) In general.--For purposes of this title,'', and
       (2) by inserting at the end the following new clause:
       ``(ii) Termination by reason of sale of stock.--If the 
     failure to meet the requirements of subparagraph (B) is by 
     reason of the sale of stock of a corporation which is a 
     qualified subchapter S subsidiary, the sale of such stock 
     shall be treated as if--

       ``(I) the sale were a sale of an undivided interest in the 
     assets of such corporation (based on the percentage of the 
     corporation's stock sold), and
       ``(II) the sale were followed by an acquisition by such 
     corporation of all of its assets (and the assumption by such 
     corporation of all of its liabilities) in a transaction to 
     which section 351 applies.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006 .

     SEC. 525. ELIMINATION OF ALL EARNINGS AND PROFITS 
                   ATTRIBUTABLE TO PRE-1983 YEARS FOR CERTAIN 
                   CORPORATIONS.

       In the case of a corporation which is--
       (1) described in section 1311(a)(1) of the Small Business 
     Job Protection Act of 1996, and
       (2) not described in section 1311(a)(2) of such Act,
       the amount of such corporation's accumulated earnings and 
     profits (for the first taxable year beginning after the date 
     of the enactment of this Act) shall be reduced by an amount 
     equal to the portion (if any) of such accumulated earnings 
     and profits which were accumulated in any taxable year 
     beginning before January 1, 1983, for which such corporation 
     was an electing small business corporation under subchapter S 
     of the Internal Revenue Code of 1986.

     SEC. 526. EXPANSION OF QUALIFYING BENEFICIARIES OF AN 
                   ELECTING SMALL BUSINESS TRUST.

       (a) No Look Through for Eligibility Purposes.--Clause (v) 
     of section 1361(c)(2)(B) is amended by adding at the end the 
     following new sentence: ``This clause shall not apply for 
     purposes of subsection (b)(1)(C).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

                      PART II--REVENUE PROVISIONS

     SEC. 531. MODIFICATION OF EFFECTIVE DATE OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) Leases to Foreign Entities.--Section 849(b) of the 
     American Jobs Creation Act of 2004 is amended by adding at 
     the end the following new paragraph:
       ``(5) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2006, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.

     SEC. 532. APPLICATION OF RULES TREATING INVERTED CORPORATIONS 
                   AS DOMESTIC CORPORATIONS TO CERTAIN 
                   TRANSACTIONS OCCURRING AFTER MARCH 20, 2002.

       (a) In General.--Section 7874(b) (relating to inverted 
     corporations treated as domestic corporations) is amended to 
     read as follows:
       ``(b) Inverted Corporations Treated as Domestic 
     Corporations.--
       ``(1) In general.--Notwithstanding section 7701(a)(4), a 
     foreign corporation shall be treated for purposes of this 
     title as a domestic corporation if such corporation would be 
     a surrogate foreign corporation if subsection (a)(2) were 
     applied by substituting `80 percent' for `60 percent'.
       ``(2) Special rule for certain transactions occurring after 
     march 20, 2002.--
       ``(A) In general.--If--
       ``(i) paragraph (1) does not apply to a foreign 
     corporation, but
       ``(ii) paragraph (1) would apply to such corporation if, in 
     addition to the substitution under paragraph (1), subsection 
     (a)(2) were applied by substituting `March 20, 2002' for 
     `March 4, 2003' each place it appears,

     then paragraph (1) shall apply to such corporation but only 
     with respect to taxable years of such corporation beginning 
     after December 31, 2006.
       ``(B) Special rules.--Subject to such rules as the 
     Secretary may prescribe, in the case of a corporation to 
     which paragraph (1) applies by reason of this paragraph--
       ``(i) the corporation shall be treated, as of the close of 
     its last taxable year beginning before January 1, 2007, as 
     having transferred all of its assets, liabilities, and 
     earnings and profits to a domestic corporation in a 
     transaction with respect to which no tax is imposed under 
     this title,
       ``(ii) the bases of the assets transferred in the 
     transaction to the domestic corporation shall be the same as 
     the bases of the assets in the hands of the foreign 
     corporation, subject to any adjustments under this title for 
     built-in losses,
       ``(iii) the basis of the stock of any shareholder in the 
     domestic corporation shall be the same as the basis of the 
     stock of the shareholder in the foreign corporation for which 
     it is treated as exchanged, and
       ``(iv) the transfer of any earnings and profits by reason 
     of clause (i) shall be disregarded in determining any deemed 
     dividend or foreign tax creditable to the domestic 
     corporation with respect to such transfer.
       ``(C) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this paragraph, including regulations to prevent the 
     avoidance of the purposes of this paragraph.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 533. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.

       (a) Disallowance of Deduction.--
       (1) In general.--Section 162(g) (relating to treble damage 
     payments under the antitrust laws) is amended--
       (A) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively,
       (B) by striking ``If'' and inserting:
       ``(1) Treble damages.--If'', and
       (C) by adding at the end the following new paragraph:
       ``(2) Punitive damages.--No deduction shall be allowed 
     under this chapter for any amount paid or incurred for 
     punitive damages in connection with any judgment in, or 
     settlement of, any action. This paragraph shall not apply to 
     punitive damages described in section 104(c).''.
       (2) Conforming amendment.--The heading for section 162(g) 
     is amended by inserting ``Or Punitive Damages'' after 
     ``Laws''.
       (b) Inclusion in Income of Punitive Damages Paid by Insurer 
     or Otherwise.--
       (1) In general.--Part II of subchapter B of chapter 1 
     (relating to items specifically included in gross income) is 
     amended by adding at the end the following new section:

[[Page S3857]]

     ``SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR 
                   OTHERWISE.

       ``Gross income shall include any amount paid to or on 
     behalf of a taxpayer as insurance or otherwise by reason of 
     the taxpayer's liability (or agreement) to pay punitive 
     damages.''.
       (2) Reporting requirements.--Section 6041 (relating to 
     information at source) is amended by adding at the end the 
     following new subsection:
       ``(h) Section To Apply to Punitive Damages Compensation.--
     This section shall apply to payments by a person to or on 
     behalf of another person as insurance or otherwise by reason 
     of the other person's liability (or agreement) to pay 
     punitive damages.''.
       (3) Conforming amendment.--The table of sections for part 
     II of subchapter B of chapter 1 is amended by adding at the 
     end the following new item:

``Sec. 91. Punitive damages compensated by insurance or otherwise''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to damages paid or incurred on or after the date 
     of the enactment of this Act.

     SEC. 534. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, 
                   AND OTHER AMOUNTS.

       (a) In General.--Subsection (f) of section 162 (relating to 
     trade or business expenses) is amended to read as follows:
       ``(f) Fines, Penalties, and Other Amounts.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     deduction otherwise allowable shall be allowed under this 
     chapter for any amount paid or incurred (whether by suit, 
     agreement, or otherwise) to, or at the direction of, a 
     government or entity described in paragraph (4) in relation 
     to--
       ``(A) the violation of any law, or
       ``(B) an investigation or inquiry into the potential 
     violation of any law which is initiated by such government or 
     entity.
       ``(2) Exception for amounts constituting restitution or 
     paid to come into compliance with law.--Paragraph (1) shall 
     not apply to any amount which--
       ``(A) the taxpayer establishes--
       ``(i) constitutes restitution (or remediation of property) 
     for damage or harm caused by, or which may be caused by, the 
     violation of any law or the potential violation of any law, 
     or
       ``(ii) is paid to come into compliance with any law which 
     was violated or involved in the investigation or inquiry, and
       ``(B) in the case of any binding, written settlement 
     agreement which requires the taxpayer to pay or incur an 
     amount in excess of $1,000,000, is identified as an amount 
     described in clause (i) or (ii) of subparagraph (A), as the 
     case may be, in the settlement agreement or in the court 
     order implementing the settlement agreement.

     A taxpayer shall not meet the requirements of subparagraph 
     (A) solely by reason an identification under subparagraph 
     (B). This paragraph shall not apply to any amount paid or 
     incurred as reimbursement to the government or entity for the 
     costs of any investigation or litigation unless such amount 
     is paid or incurred for a cost or fee regularly charged for 
     any routine audit or other customary review performed by the 
     government or entity.
       ``(3) Exception for amounts paid or incurred as the result 
     of certain court orders.--Paragraph (1) shall not apply to 
     any amount paid or incurred by order of a court in a suit in 
     which no government or entity described in paragraph (4) is a 
     party.
       ``(4) Certain nongovernmental regulatory entities.--An 
     entity is described in this paragraph if it is--
       ``(A) a nongovernmental entity which exercises self-
     regulatory powers (including imposing sanctions) in 
     connection with a qualified board or exchange (as defined in 
     section 1256(g)(7)), or
       ``(B) to the extent provided in regulations, a 
     nongovernmental entity which exercises self-regulatory powers 
     (including imposing sanctions) as part of performing an 
     essential governmental function.
       ``(5) Exception for taxes due.--Paragraph (1) shall not 
     apply to any amount paid or incurred as taxes due.''.
       (b) Reporting of Deductible Amounts.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6050V the 
     following new section:

     ``SEC. 6050W. INFORMATION WITH RESPECT TO CERTAIN FINES, 
                   PENALTIES, AND OTHER AMOUNTS.

       ``(a) Requirement of Reporting.--
       ``(1) In general.--The appropriate official of any 
     government or entity which is described in section 162(f)(4) 
     which is involved in a suit or agreement described in 
     paragraph (2) shall make a return in such form as determined 
     by the Secretary setting forth--
       ``(A) the amount required to be paid as a result of the 
     suit or agreement to which paragraph (1) of section 162(f) 
     applies,
       ``(B) any amount required to be paid as a result of the 
     suit or agreement which constitutes restitution or 
     remediation of property, and
       ``(C) any amount required to be paid as a result of the 
     suit or agreement for the purpose of coming into compliance 
     with any law which was violated or involved in the 
     investigation or inquiry.
       ``(2) Suit or agreement described.--
       ``(A) In general.--A suit or agreement is described in this 
     paragraph if--
       ``(i) it is--

       ``(I) a suit with respect to a violation of any law over 
     which the government or entity has authority and with respect 
     to which there has been a court order, or
       ``(II) an agreement which is entered into with respect to a 
     violation of any law over which the government or entity has 
     authority, or with respect to an investigation or inquiry by 
     the government or entity into the potential violation of any 
     law over which such government or entity has authority, and

       ``(ii) the aggregate amount involved in all court orders 
     and agreements with respect to the violation, investigation, 
     or inquiry is $600 or more.
       ``(B) Adjustment of reporting threshold.--The Secretary may 
     adjust the $600 amount in subparagraph (A)(ii) as necessary 
     in order to ensure the efficient administration of the 
     internal revenue laws.
       ``(3) Time of filing.--The return required under this 
     subsection shall be filed not later than--
       ``(A) 30 days after the date on which a court order is 
     issued with respect to the suit or the date the agreement is 
     entered into, as the case may be, or
       ``(B) the date specified by the Secretary.
       ``(b) Statements To Be Furnished to Individuals Involved in 
     the Settlement.--Every person required to make a return under 
     subsection (a) shall furnish to each person who is a party to 
     the suit or agreement a written statement showing--
       ``(1) the name of the government or entity, and
       ``(2) the information supplied to the Secretary under 
     subsection (a)(1).

     The written statement required under the preceding sentence 
     shall be furnished to the person at the same time the 
     government or entity provides the Secretary with the 
     information required under subsection (a).
       ``(c) Appropriate Official Defined.--For purposes of this 
     section, the term `appropriate official' means the officer or 
     employee having control of the suit, investigation, or 
     inquiry or the person appropriately designated for purposes 
     of this section.''.
       (2) Conforming amendment.--The table of sections for 
     subpart B of part III of subchapter A of chapter 61 is 
     amended by inserting after the item relating to section 6050V 
     the following new item:

``Sec. 6050W. Information with respect to certain fines, penalties, and 
              other amounts''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred on or after the date 
     of the enactment of this Act, except that such amendments 
     shall not apply to amounts paid or incurred under any binding 
     order or agreement entered into before such date. Such 
     exception shall not apply to an order or agreement requiring 
     court approval unless the approval was obtained before such 
     date.

     SEC. 535. REVISION OF TAX RULES ON EXPATRIATION OF 
                   INDIVIDUALS.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 is amended by inserting after section 877 the 
     following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market.--Except as provided in subsections 
     (d) and (f), all property of a covered expatriate to whom 
     this section applies shall be treated as sold on the day 
     before the expatriation date for its fair market value.
       ``(2) Recognition of gain or loss.--In the case of any sale 
     under paragraph (1)--
       ``(A) notwithstanding any other provision of this title, 
     any gain arising from such sale shall be taken into account 
     for the taxable year of the sale, and
       ``(B) any loss arising from such sale shall be taken into 
     account for the taxable year of the sale to the extent 
     otherwise provided by this title, except that section 1091 
     shall not apply to any such loss.

     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence.
       ``(3) Exclusion for certain gain.--
       ``(A) In general.--The amount which, but for this 
     paragraph, would be includible in the gross income of any 
     individual by reason of this section shall be reduced (but 
     not below zero) by $600,000. For purposes of this paragraph, 
     allocable expatriation gain taken into account under 
     subsection (f)(2) shall be treated in the same manner as an 
     amount required to be includible in gross income.
       ``(B) Cost-of-living adjustment.--
       ``(i) In general.--In the case of an expatriation date 
     occurring in any calendar year after 2007, the $600,000 
     amount under subparagraph (A) shall be increased by an amount 
     equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, determined by 
     substituting `calendar year 2006' for `calendar year 1992' in 
     subparagraph (B) thereof.

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $1,000, such amount 
     shall be rounded to the next lower multiple of $1,000.
       ``(4) Election to continue to be taxed as united states 
     citizen.--
       ``(A) In general.--If a covered expatriate elects the 
     application of this paragraph--
       ``(i) this section (other than this paragraph and 
     subsection (i)) shall not apply to the expatriate, but

[[Page S3858]]

       ``(ii) in the case of property to which this section would 
     apply but for such election, the expatriate shall be subject 
     to tax under this title in the same manner as if the 
     individual were a United States citizen.
       ``(B) Requirements.--Subparagraph (A) shall not apply to an 
     individual unless the individual--
       ``(i) provides security for payment of tax in such form and 
     manner, and in such amount, as the Secretary may require,
       ``(ii) consents to the waiver of any right of the 
     individual under any treaty of the United States which would 
     preclude assessment or collection of any tax which may be 
     imposed by reason of this paragraph, and
       ``(iii) complies with such other requirements as the 
     Secretary may prescribe.
       ``(C) Election.--An election under subparagraph (A) shall 
     apply to all property to which this section would apply but 
     for the election and, once made, shall be irrevocable. Such 
     election shall also apply to property the basis of which is 
     determined in whole or in part by reference to the property 
     with respect to which the election was made.
       ``(b) Election To Defer Tax.--
       ``(1) In general.--If the taxpayer elects the application 
     of this subsection with respect to any property treated as 
     sold by reason of subsection (a), the payment of the 
     additional tax attributable to such property shall be 
     postponed until the due date of the return for the taxable 
     year in which such property is disposed of (or, in the case 
     of property disposed of in a transaction in which gain is not 
     recognized in whole or in part, until such other date as the 
     Secretary may prescribe).
       ``(2) Determination of tax with respect to property.--For 
     purposes of paragraph (1), the additional tax attributable to 
     any property is an amount which bears the same ratio to the 
     additional tax imposed by this chapter for the taxable year 
     solely by reason of subsection (a) as the gain taken into 
     account under subsection (a) with respect to such property 
     bears to the total gain taken into account under subsection 
     (a) with respect to all property to which subsection (a) 
     applies.
       ``(3) Termination of postponement.--No tax may be postponed 
     under this subsection later than the due date for the return 
     of tax imposed by this chapter for the taxable year which 
     includes the date of death of the expatriate (or, if earlier, 
     the time that the security provided with respect to the 
     property fails to meet the requirements of paragraph (4), 
     unless the taxpayer corrects such failure within the time 
     specified by the Secretary).
       ``(4) Security.--
       ``(A) In general.--No election may be made under paragraph 
     (1) with respect to any property unless adequate security is 
     provided to the Secretary with respect to such property.
       ``(B) Adequate security.--For purposes of subparagraph (A), 
     security with respect to any property shall be treated as 
     adequate security if--
       ``(i) it is a bond in an amount equal to the deferred tax 
     amount under paragraph (2) for the property, or
       ``(ii) the taxpayer otherwise establishes to the 
     satisfaction of the Secretary that the security is adequate.
       ``(5) Waiver of certain rights.--No election may be made 
     under paragraph (1) unless the taxpayer consents to the 
     waiver of any right under any treaty of the United States 
     which would preclude assessment or collection of any tax 
     imposed by reason of this section.
       ``(6) Elections.--An election under paragraph (1) shall 
     only apply to property described in the election and, once 
     made, is irrevocable. An election may be made under paragraph 
     (1) with respect to an interest in a trust with respect to 
     which gain is required to be recognized under subsection 
     (f)(1).
       ``(7) Interest.--For purposes of section 6601--
       ``(A) the last date for the payment of tax shall be 
     determined without regard to the election under this 
     subsection, and
       ``(B) section 6621(a)(2) shall be applied by substituting 
     `5 percentage points' for `3 percentage points' in 
     subparagraph (B) thereof.
       ``(c) Covered Expatriate.--For purposes of this section--
       ``(1) In general.--Except as provided in paragraph (2), the 
     term `covered expatriate' means an expatriate.
       ``(2) Exceptions.--An individual shall not be treated as a 
     covered expatriate if--
       ``(A) the individual--
       ``(i) became at birth a citizen of the United States and a 
     citizen of another country and, as of the expatriation date, 
     continues to be a citizen of, and is taxed as a resident of, 
     such other country, and
       ``(ii) has not been a resident of the United States (as 
     defined in section 7701(b)(1)(A)(ii)) during the 5 taxable 
     years ending with the taxable year during which the 
     expatriation date occurs, or
       ``(B)(i) the individual's relinquishment of United States 
     citizenship occurs before such individual attains age 18\1/
     2\, and
       ``(ii) the individual has been a resident of the United 
     States (as so defined) for not more than 5 taxable years 
     before the date of relinquishment.
       ``(d) Exempt Property; Special Rules for Pension Plans.--
       ``(1) Exempt property.--This section shall not apply to the 
     following:
       ``(A) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the day before the 
     expatriation date, meet the requirements of section 
     897(c)(2).
       ``(B) Specified property.--Any property or interest in 
     property not described in subparagraph (A) which the 
     Secretary specifies in regulations.
       ``(2) Special rules for certain retirement plans.--
       ``(A) In general.--If a covered expatriate holds on the day 
     before the expatriation date any interest in a retirement 
     plan to which this paragraph applies--
       ``(i) such interest shall not be treated as sold for 
     purposes of subsection (a)(1), but
       ``(ii) an amount equal to the present value of the 
     expatriate's nonforfeitable accrued benefit shall be treated 
     as having been received by such individual on such date as a 
     distribution under the plan.
       ``(B) Treatment of subsequent distributions.--In the case 
     of any distribution on or after the expatriation date to or 
     on behalf of the covered expatriate from a plan from which 
     the expatriate was treated as receiving a distribution under 
     subparagraph (A), the amount otherwise includible in gross 
     income by reason of the subsequent distribution shall be 
     reduced by the excess of the amount includible in gross 
     income under subparagraph (A) over any portion of such amount 
     to which this subparagraph previously applied.
       ``(C) Treatment of subsequent distributions by plan.--For 
     purposes of this title, a retirement plan to which this 
     paragraph applies, and any person acting on the plan's 
     behalf, shall treat any subsequent distribution described in 
     subparagraph (B) in the same manner as such distribution 
     would be treated without regard to this paragraph.
       ``(D) Applicable plans.--This paragraph shall apply to--
       ``(i) any qualified retirement plan (as defined in section 
     4974(c)),
       ``(ii) an eligible deferred compensation plan (as defined 
     in section 457(b)) of an eligible employer described in 
     section 457(e)(1)(A), and
       ``(iii) to the extent provided in regulations, any foreign 
     pension plan or similar retirement arrangements or programs.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes 
     citizenship, and
       ``(B) any long-term resident of the United States who--
       ``(i) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(ii) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.
       ``(2) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date of the event described in clause (i) or (ii) 
     of paragraph (1)(B).
       ``(3) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces such individual's 
     United States nationality before a diplomatic or consular 
     officer of the United States pursuant to paragraph (5) of 
     section 349(a) of the Immigration and Nationality Act (8 
     U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.

     Subparagraph (A) or (B) shall not apply to any individual 
     unless the renunciation or voluntary relinquishment is 
     subsequently approved by the issuance to the individual of a 
     certificate of loss of nationality by the United States 
     Department of State.
       ``(4) Long-term resident.--The term `long-term resident' 
     has the meaning given to such term by section 877(e)(2).
       ``(f) Special Rules Applicable to Beneficiaries' Interests 
     in Trust.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     an individual is determined under paragraph (3) to hold an 
     interest in a trust on the day before the expatriation date--
       ``(A) the individual shall not be treated as having sold 
     such interest,
       ``(B) such interest shall be treated as a separate share in 
     the trust, and
       ``(C)(i) such separate share shall be treated as a separate 
     trust consisting of the assets allocable to such share,
       ``(ii) the separate trust shall be treated as having sold 
     its assets on the day before the expatriation date for their 
     fair market value and as having distributed all of its assets 
     to the individual as of such time, and
       ``(iii) the individual shall be treated as having 
     recontributed the assets to the separate trust.

     Subsection (a)(2) shall apply to any income, gain, or loss of 
     the individual arising from a

[[Page S3859]]

     distribution described in subparagraph (C)(ii). In 
     determining the amount of such distribution, proper 
     adjustments shall be made for liabilities of the trust 
     allocable to an individual's share in the trust.
       ``(2) Special rules for interests in qualified trusts.--
       ``(A) In general.--If the trust interest described in 
     paragraph (1) is an interest in a qualified trust--
       ``(i) paragraph (1) and subsection (a) shall not apply, and
       ``(ii) in addition to any other tax imposed by this title, 
     there is hereby imposed on each distribution with respect to 
     such interest a tax in the amount determined under 
     subparagraph (B).
       ``(B) Amount of tax.--The amount of tax under subparagraph 
     (A)(ii) shall be equal to the lesser of--
       ``(i) the highest rate of tax imposed by section 1(e) for 
     the taxable year which includes the day before the 
     expatriation date, multiplied by the amount of the 
     distribution, or
       ``(ii) the balance in the deferred tax account immediately 
     before the distribution determined without regard to any 
     increases under subparagraph (C)(ii) after the 30th day 
     preceding the distribution.
       ``(C) Deferred tax account.--For purposes of subparagraph 
     (B)(ii)--
       ``(i) Opening balance.--The opening balance in a deferred 
     tax account with respect to any trust interest is an amount 
     equal to the tax which would have been imposed on the 
     allocable expatriation gain with respect to the trust 
     interest if such gain had been included in gross income under 
     subsection (a).
       ``(ii) Increase for interest.--The balance in the deferred 
     tax account shall be increased by the amount of interest 
     determined (on the balance in the account at the time the 
     interest accrues), for periods after the 90th day after the 
     expatriation date, by using the rates and method applicable 
     under section 6621 for underpayments of tax for such periods, 
     except that section 6621(a)(2) shall be applied by 
     substituting `5 percentage points' for `3 percentage points' 
     in subparagraph (B) thereof.
       ``(iii) Decrease for taxes previously paid.--The balance in 
     the tax deferred account shall be reduced--

       ``(I) by the amount of taxes imposed by subparagraph (A) on 
     any distribution to the person holding the trust interest, 
     and
       ``(II) in the case of a person holding a nonvested 
     interest, to the extent provided in regulations, by the 
     amount of taxes imposed by subparagraph (A) on distributions 
     from the trust with respect to nonvested interests not held 
     by such person.

       ``(D) Allocable expatriation gain.--For purposes of this 
     paragraph, the allocable expatriation gain with respect to 
     any beneficiary's interest in a trust is the amount of gain 
     which would be allocable to such beneficiary's vested and 
     nonvested interests in the trust if the beneficiary held 
     directly all assets allocable to such interests.
       ``(E) Tax deducted and withheld.--
       ``(i) In general.--The tax imposed by subparagraph (A)(ii) 
     shall be deducted and withheld by the trustees from the 
     distribution to which it relates.
       ``(ii) Exception where failure to waive treaty rights.--If 
     an amount may not be deducted and withheld under clause (i) 
     by reason of the distributee failing to waive any treaty 
     right with respect to such distribution--

       ``(I) the tax imposed by subparagraph (A)(ii) shall be 
     imposed on the trust and each trustee shall be personally 
     liable for the amount of such tax, and
       ``(II) any other beneficiary of the trust shall be entitled 
     to recover from the distributee the amount of such tax 
     imposed on the other beneficiary.

       ``(F) Disposition.--If a trust ceases to be a qualified 
     trust at any time, a covered expatriate disposes of an 
     interest in a qualified trust, or a covered expatriate 
     holding an interest in a qualified trust dies, then, in lieu 
     of the tax imposed by subparagraph (A)(ii), there is hereby 
     imposed a tax equal to the lesser of--
       ``(i) the tax determined under paragraph (1) as if the day 
     before the expatriation date were the date of such cessation, 
     disposition, or death, whichever is applicable, or
       ``(ii) the balance in the tax deferred account immediately 
     before such date.

     Such tax shall be imposed on the trust and each trustee shall 
     be personally liable for the amount of such tax and any other 
     beneficiary of the trust shall be entitled to recover from 
     the covered expatriate or the estate the amount of such tax 
     imposed on the other beneficiary.
       ``(G) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Qualified trust.--The term `qualified trust' means a 
     trust which is described in section 7701(a)(30)(E).
       ``(ii) Vested interest.--The term `vested interest' means 
     any interest which, as of the day before the expatriation 
     date, is vested in the beneficiary.
       ``(iii) Nonvested interest.--The term `nonvested interest' 
     means, with respect to any beneficiary, any interest in a 
     trust which is not a vested interest. Such interest shall be 
     determined by assuming the maximum exercise of discretion in 
     favor of the beneficiary and the occurrence of all 
     contingencies in favor of the beneficiary.
       ``(iv) Adjustments.--The Secretary may provide for such 
     adjustments to the bases of assets in a trust or a deferred 
     tax account, and the timing of such adjustments, in order to 
     ensure that gain is taxed only once.
       ``(v) Coordination with retirement plan rules.--This 
     subsection shall not apply to an interest in a trust which is 
     part of a retirement plan to which subsection (d)(2) applies.
       ``(3) Determination of beneficiaries' interest in trust.--
       ``(A) Determinations under paragraph (1).--For purposes of 
     paragraph (1), a beneficiary's interest in a trust shall be 
     based upon all relevant facts and circumstances, including 
     the terms of the trust instrument and any letter of wishes or 
     similar document, historical patterns of trust distributions, 
     and the existence of and functions performed by a trust 
     protector or any similar adviser.
       ``(B) Other determinations.--For purposes of this section--
       ``(i) Constructive ownership.--If a beneficiary of a trust 
     is a corporation, partnership, trust, or estate, the 
     shareholders, partners, or beneficiaries shall be deemed to 
     be the trust beneficiaries for purposes of this section.
       ``(ii) Taxpayer return position.--A taxpayer shall clearly 
     indicate on its income tax return--

       ``(I) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(II) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.

       ``(g) Termination of Deferrals, Etc.--In the case of any 
     covered expatriate, notwithstanding any other provision of 
     this title--
       ``(1) any period during which recognition of income or gain 
     is deferred shall terminate on the day before the 
     expatriation date, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply on the day before the expatriation date and the 
     unpaid portion of such tax shall be due and payable at the 
     time and in the manner prescribed by the Secretary.
       ``(h) Imposition of Tentative Tax.--
       ``(1) In general.--If an individual is required to include 
     any amount in gross income under subsection (a) for any 
     taxable year, there is hereby imposed, immediately before the 
     expatriation date, a tax in an amount equal to the amount of 
     tax which would be imposed if the taxable year were a short 
     taxable year ending on the expatriation date.
       ``(2) Due date.--The due date for any tax imposed by 
     paragraph (1) shall be the 90th day after the expatriation 
     date.
       ``(3) Treatment of tax.--Any tax paid under paragraph (1) 
     shall be treated as a payment of the tax imposed by this 
     chapter for the taxable year to which subsection (a) applies.
       ``(4) Deferral of tax.--The provisions of subsection (b) 
     shall apply to the tax imposed by this subsection to the 
     extent attributable to gain includible in gross income by 
     reason of this section.
       ``(i) Special Liens for Deferred Tax Amounts.--
       ``(1) Imposition of lien.--
       ``(A) In general.--If a covered expatriate makes an 
     election under subsection (a)(4) or (b) which results in the 
     deferral of any tax imposed by reason of subsection (a), the 
     deferred amount (including any interest, additional amount, 
     addition to tax, assessable penalty, and costs attributable 
     to the deferred amount) shall be a lien in favor of the 
     United States on all property of the expatriate located in 
     the United States (without regard to whether this section 
     applies to the property).
       ``(B) Deferred amount.--For purposes of this subsection, 
     the deferred amount is the amount of the increase in the 
     covered expatriate's income tax which, but for the election 
     under subsection (a)(4) or (b), would have occurred by reason 
     of this section for the taxable year including the 
     expatriation date.
       ``(2) Period of lien.--The lien imposed by this subsection 
     shall arise on the expatriation date and continue until--
       ``(A) the liability for tax by reason of this section is 
     satisfied or has become unenforceable by reason of lapse of 
     time, or
       ``(B) it is established to the satisfaction of the 
     Secretary that no further tax liability may arise by reason 
     of this section.
       ``(3) Certain rules apply.--The rules set forth in 
     paragraphs (1), (3), and (4) of section 6324A(d) shall apply 
     with respect to the lien imposed by this subsection as if it 
     were a lien imposed by section 6324A.
       ``(j) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Inclusion in Income of Gifts and Bequests Received by 
     United States Citizens and Residents From Expatriates.--
     Section 102 (relating to gifts, etc. not included in gross 
     income) is amended by adding at the end the following new 
     subsection:
       ``(d) Gifts and Inheritances From Covered Expatriates.--
       ``(1) Treatment of gifts and inheritances.--
       ``(A) In general.--Subsection (a) shall not exclude from 
     gross income the value of any property acquired by gift, 
     bequest, devise, or inheritance from a covered expatriate 
     after the expatriation date.
       ``(B) Determination of basis.--Notwithstanding sections 
     1015 or 1022, the basis of any property described in 
     subparagraph (A)

[[Page S3860]]

     in the hands of the donee or the person acquiring such 
     property from the decedent shall be equal to the fair market 
     value of the property at the time of the gift, bequest, 
     devise, or inheritance.
       ``(2) Exceptions for transfers otherwise subject to estate 
     or gift tax.--Paragraph (1) shall not apply to any property 
     if either--
       ``(A) the gift, bequest, devise, or inheritance is--
       ``(i) shown on a timely filed return of tax imposed by 
     chapter 12 as a taxable gift by the covered expatriate, or
       ``(ii) included in the gross estate of the covered 
     expatriate for purposes of chapter 11 and shown on a timely 
     filed return of tax imposed by chapter 11 of the estate of 
     the covered expatriate, or
       ``(B) no such return was timely filed but no such return 
     would have been required to be filed even if the covered 
     expatriate were a citizen or long-term resident of the United 
     States.
       ``(3) Definitions.--For purposes of this subsection, any 
     term used in this subsection which is also used in section 
     877A shall have the same meaning as when used in section 
     877A.''.
       (c) Definition of Termination of United States 
     Citizenship.--Section 7701(a) is amended by adding at the end 
     the following new paragraph:
       ``(50) Termination of united states citizenship.--
       ``(A) In general.--An individual shall not cease to be 
     treated as a United States citizen before the date on which 
     the individual's citizenship is treated as relinquished under 
     section 877A(e)(3).
       ``(B) Dual citizens.--Under regulations prescribed by the 
     Secretary, subparagraph (A) shall not apply to an individual 
     who became at birth a citizen of the United States and a 
     citizen of another country.''.
       (d) Ineligibility for Visa or Admission to United States.--
       (1) In general.--Section 212(a)(10)(E) of the Immigration 
     and Nationality Act (8 U.S.C. 1182(a)(10)(E)) is amended to 
     read as follows:
       ``(E) Former citizens not in compliance with expatriation 
     revenue provisions.--Any alien who is a former citizen of the 
     United States who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3) of the Internal 
     Revenue Code of 1986) and who is not in compliance with 
     section 877A of such Code (relating to expatriation) is 
     inadmissible.''.
       (2) Availability of information.--
       (A) In general.--Section 6103(l) (relating to disclosure of 
     returns and return information for purposes other than tax 
     administration) is amended by adding at the end the following 
     new paragraph:
       ``(21) Disclosure to deny visa or admission to certain 
     expatriates.--Upon written request of the Attorney General or 
     the Attorney General's delegate, the Secretary shall disclose 
     whether an individual is in compliance with section 877A (and 
     if not in compliance, any items of noncompliance) to officers 
     and employees of the Federal agency responsible for 
     administering section 212(a)(10)(E) of the Immigration and 
     Nationality Act solely for the purpose of, and to the extent 
     necessary in, administering such section 212(a)(10)(E).''.
       (B) Safeguards.--Section 6103(p)(4) (relating to 
     safeguards) is amended by striking ``or (20)'' each place it 
     appears and inserting ``(20), or (21)''.
       (3) Effective dates.--The amendments made by this 
     subsection shall apply to individuals who relinquish United 
     States citizenship on or after the date of the enactment of 
     this Act.
       (e) Conforming Amendments.--
       (1) Section 877 is amended by adding at the end the 
     following new subsection:
       ``(h) Application.--This section shall not apply to an 
     expatriate (as defined in section 877A(e)) whose expatriation 
     date (as so defined) occurs on or after the date of the 
     enactment of this subsection.''.
       (2) Section 2107 is amended by adding at the end the 
     following new subsection:
       ``(f) Application.--This section shall not apply to any 
     expatriate subject to section 877A.''.
       (3) Section 2501(a)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Application.--This paragraph shall not apply to any 
     expatriate subject to section 877A.''.
       (4) Section 6039G(a) is amended by inserting ``or 877A'' 
     after ``section 877(b)''.
       (5) The second sentence of section 6039G(d) is amended by 
     inserting ``or who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3))'' after ``section 
     877(a))''.
       (f) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 is amended by 
     inserting after the item relating to section 877 the 
     following new item:

``Sec. 877A. Tax responsibilities of expatriation''.

       (g) Effective Date.--
       (1) In general.--Except as provided in this subsection, the 
     amendments made by this section shall apply to expatriates 
     (within the meaning of section 877A(e) of the Internal 
     Revenue Code of 1986, as added by this section) whose 
     expatriation date (as so defined) occurs on or after the date 
     of the enactment of this Act.
       (2) Gifts and bequests.--Section 102(d) of the Internal 
     Revenue Code of 1986 (as added by subsection (b)) shall apply 
     to gifts and bequests received on or after the date of the 
     enactment of this Act, from an individual or the estate of an 
     individual whose expatriation date (as so defined) occurs 
     after such date.
       (3) Due date for tentative tax.--The due date under section 
     877A(h)(2) of the Internal Revenue Code of 1986, as added by 
     this section, shall in no event occur before the 90th day 
     after the date of the enactment of this Act.

     SEC. 536. LIMITATION ON ANNUAL AMOUNTS WHICH MAY BE DEFERRED 
                   UNDER NONQUALIFIED DEFERRED COMPENSATION 
                   ARRANGEMENTS.

       (a) In General.--Section 409A(a) of the Internal Revenue 
     Code of 1986 (relating to inclusion of gross income under 
     nonqualified deferred compensation plans) is amended--
       (1) by striking ``and (4)'' in subclause (I) of paragraph 
     (1)(A)(i) and inserting ``(4), and (5)'', and
       (2) by adding at the end the following new paragraph:
       ``(5) Annual limitation on aggregate deferred amounts.--
       ``(A) Limitation.--The requirements of this paragraph are 
     met if the plan provides that the aggregate amount of 
     compensation which is deferred for any taxable year with 
     respect to a participant under the plan may not exceed the 
     applicable dollar amount for the taxable year.
       ``(B) Inclusion of future earnings.--If an amount is 
     includible under paragraph (1) in the gross income of a 
     participant for any taxable year by reason of any failure to 
     meet the requirements of this paragraph, any income (whether 
     actual or notional) for any subsequent taxable year shall be 
     included in gross income under paragraph (1)(A) in such 
     subsequent taxable year to the extent such income--
       ``(i) is attributable to compensation (or income 
     attributable to such compensation) required to be included in 
     gross income by reason of such failure (including by reason 
     of this subparagraph), and
       ``(ii) is not subject to a substantial risk of forfeiture 
     and has not been previously included in gross income.
       ``(C) Aggregation rule.--For purposes of this paragraph, 
     all nonqualified deferred compensation plans maintained by 
     all employers treated as a single employer under subsection 
     (d)(6) shall be treated as 1 plan.
       ``(D) Applicable dollar amount.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable dollar amount' 
     means, with respect to any participant, the lesser of--

       ``(I) the average annual compensation which was payable 
     during the base period to the participant by the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) and which was includible in 
     the participant's gross income for taxable years in the base 
     period, or
       ``(II) $1,000,000.

       ``(ii) Base period.--

       ``(I) In general.--The term `base period' means, with 
     respect to any computation year, the 5-taxable year period 
     ending with the taxable year preceding the computation year.
       ``(II) Elections made before computation year.--If, before 
     the beginning of the computation year, an election described 
     in paragraph (4)(B) is made by the participant to have 
     compensation for services performed in the computation year 
     deferred under a nonqualified deferred compensation plan, the 
     base period shall be the 5-taxable year period ending with 
     the taxable year preceding the taxable year in which the 
     election is made.
       ``(III) Computation year.--For purposes of this clause, the 
     term `computation year' means any taxable year of the 
     participant for which the limitation under subparagraph (A) 
     is being determined.
       ``(IV) Special rule for employees of less than 5 years.--If 
     a participant did not perform services for the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) during the entire 5-taxable 
     year period referred to in subparagraph (A) or (B), only the 
     portion of such period during which the participant performed 
     such services shall be taken into account.''.

       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006, 
     except that--
       (A) the amendments shall only apply to amounts deferred 
     after December 31, 2006 (and to earnings on such amounts), 
     and
       (B) taxable years beginning on or before December 31, 2006, 
     shall be taken into account in determining the average annual 
     compensation of a participant during any base period for 
     purposes of section 409A(a)(5)(D) of the Internal Revenue 
     Code of 1986 (as added by such amendments).
       (2) Guidance relating to certain existing arrangements.--
     Not later than 60 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall issue guidance 
     providing a limited period during which a nonqualified 
     deferred compensation plan adopted before December 31, 2006, 
     may, without violating the requirements of section 409A(a) of 
     such Code, be amended--
       (A) to provide that a participant may, no later than 
     December 31, 2007, cancel or modify an outstanding deferral 
     election with regard to all or a portion of amounts deferred 
     after December 31, 2006, to the extent necessary for the plan 
     to meet the requirements of section 409A(a)(5) of such Code 
     (as added by the amendments made by this section),

[[Page S3861]]

     but only if amounts subject to the cancellation or 
     modification are, to the extent not previously included in 
     gross income, includible in income of the participant when no 
     longer subject to substantial risk of forfeiture, and
       (B) to conform to the requirements of section 409A(a)(5) of 
     such Code (as added by the amendments made by this section) 
     with regard to amounts deferred after December 31, 2006.

     SEC. 537. INCREASE IN CRIMINAL MONETARY PENALTY LIMITATION 
                   FOR THE UNDERPAYMENT OR OVERPAYMENT OF TAX DUE 
                   TO FRAUD.

       (a) In General.--Section 7206 (relating to fraud and false 
     statements) is amended--
       (1) by striking ``Any person who--'' and inserting ``(a) in 
     general.--'', and
       (2) by adding at the end the following new subsection:
       ``(b) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--If any portion of any 
     underpayment (as defined in section 6664(a)) or overpayment 
     (as defined in section 6401(a)) of tax required to be shown 
     on a return is attributable to fraudulent action described in 
     subsection (a), the applicable dollar amount under subsection 
     (a) shall in no event be less than an amount equal to such 
     portion. A rule similar to the rule under section 6663(b) 
     shall apply for purposes of determining the portion so 
     attributable.''.
       (b) Increase in Penalties.--
       (1) Attempt to evade or defeat tax.--Section 7201 is 
     amended--
       (A) by striking ``$100,000'' and inserting ``$500,000'',
       (B) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (C) by striking ``5 years'' and inserting ``10 years''.
       (2) Willful failure to file return, supply information, or 
     pay tax.--Section 7203 is amended--
       (A) in the first sentence--
       (i) by striking ``Any person'' and inserting the following:
       ``(a) In General.--Any person'', and
       (ii) by striking ``$25,000'' and inserting ``$50,000'',
       (B) in the third sentence, by striking ``section'' and 
     inserting ``subsection'', and
       (C) by adding at the end the following new subsection:
       ``(b) Aggravated Failure To File.--
       ``(1) In general.--In the case of any failure described in 
     paragraph (2), the first sentence of subsection (a) shall be 
     applied by substituting--
       ``(A) `felony' for `misdemeanor',
       ``(B) `$500,000 ($1,000,000' for `$25,000 ($100,000', and
       ``(C) `10 years' for `1 year'.''.
       ``(2) Failure described.--A failure described in this 
     paragraph is a failure to make a return described in 
     subsection (a) for a period of 3 or more consecutive taxable 
     years if the aggregate tax liability for such period is not 
     less than $100,000.''.
       (3) Fraud and false statements.--Section 7206(a) (as 
     redesignated by subsection (a)) is amended--
       (A) by striking ``$100,000'' and inserting ``$500,000'',
       (B) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (C) by striking ``3 years'' and inserting ``5 years''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to actions, and failures to act, occurring after 
     the date of the enactment of this Act.

     SEC. 538. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST 
                   ON UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE 
                   FINANCIAL ARRANGEMENTS.

       (a) Determination of Penalty.--
       (1) In general.--Notwithstanding any other provision of 
     law, in the case of an applicable taxpayer--
       (A) the determination as to whether any interest or 
     applicable penalty is to be imposed with respect to any 
     arrangement described in paragraph (2), or to any 
     underpayment of Federal income tax attributable to items 
     arising in connection with any such arrangement, shall be 
     made without regard to the rules of subsections (b), (c), and 
     (d) of section 6664 of the Internal Revenue Code of 1986, and
       (B) if any such interest or applicable penalty is imposed, 
     the amount of such interest or penalty shall be equal to 
     twice that determined without regard to this section.
       (2) Applicable taxpayer.--For purposes of this subsection--
       (A) In general.--The term ``applicable taxpayer'' means a 
     taxpayer which--
       (i) has underreported its United States income tax 
     liability with respect to any item which directly or 
     indirectly involves--

       (I) any financial arrangement which in any manner relies on 
     the use of offshore payment mechanisms (including credit, 
     debit, or charge cards) issued by banks or other entities in 
     foreign jurisdictions, or
       (II) any offshore financial arrangement (including any 
     arrangement with foreign banks, financial institutions, 
     corporations, partnerships, trusts, or other entities), and

       (ii) has neither signed a closing agreement pursuant to the 
     Voluntary Offshore Compliance Initiative established by the 
     Department of the Treasury under Revenue Procedure 2003-11 
     nor voluntarily disclosed its participation in such 
     arrangement by notifying the Internal Revenue Service of such 
     arrangement prior to the issue being raised by the Internal 
     Revenue Service during an examination.
       (B) Authority to waive.--The Secretary of the Treasury or 
     the Secretary's delegate may waive the application of 
     paragraph (1) to any taxpayer if the Secretary or the 
     Secretary's delegate determines that the use of such offshore 
     payment mechanisms is incidental to the transaction and, in 
     addition, in the case of a trade or business, such use is 
     conducted in the ordinary course of the type of trade or 
     business of the taxpayer.
       (C) Issues raised.--For purposes of subparagraph (A)(ii), 
     an item shall be treated as an issue raised during an 
     examination if the individual examining the return--
       (i) communicates to the taxpayer knowledge about the 
     specific item, or
       (ii) has made a request to the taxpayer for information and 
     the taxpayer could not make a complete response to that 
     request without giving the examiner knowledge of the specific 
     item.
       (b) Applicable Penalty.--For purposes of this section, the 
     term ``applicable penalty'' means any penalty, addition to 
     tax, or fine imposed under chapter 68 of the Internal Revenue 
     Code of 1986.
       (c) Effective Date.--The provisions of this section shall 
     apply to interest, penalties, additions to tax, and fines 
     with respect to any taxable year if, as of the date of the 
     enactment of this Act, the assessment of any tax, penalty, or 
     interest with respect to such taxable year is not prevented 
     by the operation of any law or rule of law.

     SEC. 539. INCREASE IN PENALTY FOR BAD CHECKS AND MONEY 
                   ORDERS.

       (a) In General.--Section 6657 (relating to bad checks) is 
     amended--
       (1) by striking ``$750'' and inserting ``$1,250'', and
       (2) by striking ``$15'' and inserting ``$25''.
       (b) Effective Date.--The amendments made by this section 
     apply to checks or money orders received after the date of 
     the enactment of this Act.

     SEC. 540. TREATMENT OF CONTINGENT PAYMENT CONVERTIBLE DEBT 
                   INSTRUMENTS.

       (a) In General.--Section 1275(d) (relating to regulation 
     authority) is amended--
       (1) by striking ``The Secretary'' and inserting the 
     following:
       ``(1) In general.--The Secretary'', and
       (2) by adding at the end the following new paragraph:
       ``(2) Treatment of contingent payment convertible debt.--
       ``(A) In general.--In the case of a debt instrument which--
       ``(i) is convertible into stock of the issuing corporation, 
     into stock or debt of a related party (within the meaning of 
     section 267(b) or 707(b)(1)), or into cash or other property 
     in an amount equal to the approximate value of such stock or 
     debt, and
       ``(ii) provides for 1 or more contingent payments,

     any regulations which require original issue discount to be 
     determined by reference to the comparable yield of a fixed-
     rate debt instrument shall be applied as if the regulations 
     require that such comparable yield be determined by reference 
     to a fixed-rate debt instrument which is convertible into 
     stock.
       ``(B) Special rule.--For purposes of subparagraph (A), the 
     comparable yield shall be determined without taking into 
     account the yield resulting from the conversion of a debt 
     instrument into stock.''.
       (b) Cross Reference.--Section 163(e)(6) (relating to cross 
     references) is amended by adding at the end the following:
       ``For the treatment of contingent payment convertible debt, 
     see section 1275(d)(2).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to debt instruments issued on or after the date 
     of the enactment of this Act.

     SEC. 541. EXTENSION OF IRS USER FEES.

       Subsection (c) of section 7528 (relating to Internal 
     Revenue Service user fees) is amended by striking ``September 
     30, 2014'' and inserting ``September 30, 2016''.

     SEC. 542. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES 
                   FOR EMPLOYMENT TAX LIABILITIES.

       (a) In General.--Section 6330(f) (relating to jeopardy and 
     State refund collection) is amended--
       (1) by striking ``; or'' at the end of paragraph (1) and 
     inserting a comma,
       (2) by adding ``or'' at the end of paragraph (2), and
       (3) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) the Secretary has served a levy in connection with 
     the collection of taxes under chapter 21, 22, 23, or 24,''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to levies issued on or after the date that is 120 
     days after the date of the enactment of this Act.

     SEC. 543. MODIFICATIONS TO WHISTLEBLOWER REFORMS.

       (a) Modification of Tax Threshold for Awards.--Subparagraph 
     (B) of section 7623(b)(5), as added by the Tax Relief and 
     Health Care Act of 2006, is amended by striking 
     ``$2,000,000'' and inserting ``$20,000''.
       (b) Whistleblower Office.--
       (1) In general.--Section 7623 is amended by adding at the 
     end the following new subsections:
       ``(c) Whistleblower Office.--
       ``(1) In general.--There is established in the Internal 
     Revenue Service an office to be known as the `Whistleblower 
     Office' which--
       ``(A) shall at all times operate at the direction of the 
     Commissioner and coordinate and

[[Page S3862]]

     consult with other divisions in the Internal Revenue Service 
     as directed by the Commissioner,
       ``(B) shall analyze information received from any 
     individual described in subsection (b) and either investigate 
     the matter itself or assign it to the appropriate Internal 
     Revenue Service office,
       ``(C) shall monitor any action taken with respect to such 
     matter,
       ``(D) shall inform such individual that it has accepted the 
     individual's information for further review,
       ``(E) may require such individual and any legal 
     representative of such individual to not disclose any 
     information so provided,
       ``(F) in its sole discretion, may ask for additional 
     assistance from such individual or any legal representative 
     of such individual, and
       ``(G) shall determine the amount to be awarded to such 
     individual under subsection (b).
       ``(2) Funding for office.--There is authorized to be 
     appropriated $10,000,000 for each fiscal year for the 
     Whistleblower Office. These funds shall be used to maintain 
     the Whistleblower Office and also to reimburse other Internal 
     Revenue Service offices for related costs, such as costs of 
     investigation and collection.
       ``(3) Request for assistance.--
       ``(A) In general.--Any assistance requested under paragraph 
     (1)(F) shall be under the direction and control of the 
     Whistleblower Office or the office assigned to investigate 
     the matter under subparagraph (A). No individual or legal 
     representative whose assistance is so requested may by reason 
     of such request represent himself or herself as an employee 
     of the Federal Government.
       ``(B) Funding of assistance.--From the amounts available 
     for expenditure under subsection (b), the Whistleblower 
     Office may, with the agreement of the individual described in 
     subsection (b), reimburse the costs incurred by any legal 
     representative of such individual in providing assistance 
     described in subparagraph (A).
       ``(d) Reports.--The Secretary shall each year conduct a 
     study and report to Congress on the use of this section, 
     including--
       ``(1) an analysis of the use of this section during the 
     preceding year and the results of such use, and
       ``(2) any legislative or administrative recommendations 
     regarding the provisions of this section and its 
     application.''.
       (2) Conforming amendment.--Section 406 of division A of the 
     Tax Relief and Health Care Act of 2006 is amended by striking 
     subsections (b) and (c).
       (3) Report on implementation.--Not later than 6 months 
     after the date of the enactment of this Act, the Secretary of 
     the Treasury shall submit to Congress a report on the 
     establishment and operation of the Whistleblower Office under 
     section 7623(c) of the Internal Revenue Code of 1986.
       (c) Publicity of Award Appeals.--Paragraph (4) of section 
     7623(b), as added by the Tax Relief and Health Care Act of 
     2006, is amended to read as follows:
       ``(4) Appeal of award determination.--
       ``(A) In general.--Any determination regarding an award 
     under paragraph (1), (2), or (3) may, within 30 days of such 
     determination, be appealed to the Tax Court (and the Tax 
     Court shall have jurisdiction with respect to such matter).
       ``(B) Publicity of appeals.--Notwithstanding sections 7458 
     and 7461, the Tax Court may, in order to preserve the 
     anonymity, privacy, or confidentiality of any person under 
     this subsection, provide by rules adopted under section 7453 
     that portions of filings, hearings, testimony, evidence, and 
     reports in connection with proceedings under this subsection 
     may be closed to the public or to inspection by the 
     public.''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to information 
     provided on or after the date of the enactment of this Act.
       (2) Publicity of award appeals.--The amendment made by 
     subsection (c) shall take effect as if included in the 
     amendments made by section 406 of the Tax Relief and Health 
     Care Act of 2006.

     SEC. 544. MODIFICATIONS OF DEFINITION OF EMPLOYEES COVERED BY 
                   DENIAL OF DEDUCTION FOR EXCESSIVE EMPLOYEE 
                   REMUNERATION.

       (a) In General.--Paragraph (3) of section 162(m) is amended 
     to read as follows:
       ``(3) Covered employee.--For purposes of this subsection, 
     the term `covered employee' means, with respect to any 
     taxpayer for any taxable year, an individual who--
       ``(A) was the chief executive officer of the taxpayer, or 
     an individual acting in such a capacity, at any time during 
     the taxable year,
       ``(B) is 1 of the 4 highest compensated officers of the 
     taxpayer for the taxable year (other than the individual 
     described in subparagraph (A)), or
       ``(C) was a covered employee of the taxpayer (or any 
     predecessor) for any preceding taxable year beginning after 
     December 31, 2006.
       ``In the case of an individual who was a covered employee 
     for any taxable year beginning after December 31, 2006, the 
     term `covered employee' shall include a beneficiary of such 
     employee with respect to any remuneration for services 
     performed by such employee as a covered employee (whether or 
     not such services are performed during the taxable year in 
     which the remuneration is paid).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 545. INCREASE IN AGE OF MINOR CHILDREN WHOSE UNEARNED 
                   INCOME IS TAXED AS IF PARENT'S INCOME.

       (a) In General.--Subparagraph (A) of section 1(g)(2) 
     (relating to child to whom subsection applies) is amended to 
     read as follows:
       ``(A) such child--
       ``(i) has not attained age 19 before the close of the 
     taxable year, or
       ``(ii) is a student (as defined in section 152(f)(2))--

       ``(I) who has not attained age 24 before the close of such 
     taxable year, and
       ``(II) whose earned income (as defined in section 
     911(d)(2)) for such taxable year does not exceed one-half of 
     the amount of the individual's support (within the meaning of 
     section 152(c)(1)(D) after the application of section 
     152(f)(5)) for such taxable year, and''.

       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 546. INCREASE IN INFORMATION RETURN PENALTIES.

       (a) Failure to File Correct Information Returns.--
       (1) In general.--Section 6721(a)(1) is amended--
       (A) by striking ``$50'' and inserting ``$250'', and
       (B) by striking ``$250,000'' and inserting ``$3,000,000''.
       (2) Reduction where correction in specified period.--
       (A) Correction within 30 days.--Section 6721(b)(1) is 
     amended--
       (i) by striking ``$15'' and inserting ``$50'',
       (ii) by striking ``$50'' and inserting ``$250'', and
       (iii) by striking ``$75,000'' and inserting ``$500,000''.
       (B) Failures corrected on or before august 1.--Section 
     6721(b)(2) is amended--
       (i) by striking ``$30'' and inserting ``$100'',
       (ii) by striking ``$50'' and inserting ``$250'', and
       (iii) by striking ``$150,000'' and inserting 
     ``$1,500,000''.
       (3) Lower limitation for persons with gross receipts of not 
     more than $5,000,000.--Section 6721(d)(1) is amended--
       (A) in subparagraph (A)--
       (i) by striking ``$100,000'' and inserting ``$1,000,000'', 
     and
       (ii) by striking ``$250,000'' and inserting ``$3,000,000'',
       (B) in subparagraph (B)--
       (i) by striking ``$25,000'' and inserting ``$175,000'', and
       (ii) by striking ``$75,000'' and inserting ``$500,000'', 
     and
       (C) in subparagraph (C)--
       (i) by striking ``$50,000'' and inserting ``$500,000'', and
       (ii) by striking ``$150,000'' and inserting ``$1,500,000''.
       (4) Penalty in case of intentional disregard.--Section 
     6721(e) is amended--
       (A) by striking ``$100'' in paragraph (2) and inserting 
     ``$500'',
       (B) by striking ``$250,000'' in paragraph (3)(A) and 
     inserting ``$3,000,000''.
       (b) Failure to Furnish Correct Payee Statements.--
       (1) In general.--Section 6722(a) is amended--
       (A) by striking ``$50'' and inserting ``$250'', and
       (B) by striking ``$100,000'' and inserting ``$1,000,000''.
       (2) Penalty in case of intentional disregard.--Section 
     6722(c) is amended--
       (A) by striking ``$100'' in paragraph (1) and inserting 
     ``$500'', and
       (B) by striking ``$100,000'' in paragraph (2)(A) and 
     inserting ``$1,000,000''.
       (c) Failure to Comply With Other Information Reporting 
     Requirements.--Section 6723 is amended--
       (1) by striking ``$50'' and inserting ``$250'', and
       (2) by striking ``$100,000'' and inserting ``$1,000,000''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to information returns required to 
     be filed on or after January 1, 2008.

     SEC. 547. E-FILING REQUIREMENT FOR CERTAIN LARGE 
                   ORGANIZATIONS.

       (a) In General.--The first sentence of section 6011(e)(2) 
     is amended to read as follows: ``In prescribing regulations 
     under paragraph (1), the Secretary shall take into account 
     (among other relevant factors) the ability of the taxpayer to 
     comply at reasonable cost with the requirements of such 
     regulations.''.
       (b) Conforming Amendment.--Section 6724 is amended by 
     striking subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending on or after December 31, 
     2008.

     SEC. 548. EXPANSION OF IRS ACCESS TO INFORMATION IN NATIONAL 
                   DIRECTORY OF NEW HIRES FOR TAX ADMINISTRATION 
                   PURPOSES.

       (a) In General.--Paragraph (3) of section 453(j) of the 
     Social Security Act (42 U.S.C. 653(j)) is amended to read as 
     follows:
       ``(3) Administration of federal tax laws.--The Secretary of 
     the Treasury shall have access to the information in the 
     National Directory of New Hires for purposes of administering 
     the Internal Revenue Code of 1986.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

[[Page S3863]]

     SEC. 549. DISCLOSURE OF PRISONER RETURN INFORMATION TO 
                   FEDERAL BUREAU OF PRISONS.

       (a) Disclosure.--
       (1) In general.--Subsection (l) of section 6103 (relating 
     to disclosure of returns and return information for purposes 
     other than tax administration) is amended by adding at the 
     end the following new paragraph:
       ``(21) Disclosure of return information of prisoners to 
     federal bureau of prisons.--
       ``(A) In general.--Under such procedures as the Secretary 
     may prescribe, the Secretary may disclose return information 
     with respect to persons incarcerated in Federal prisons whom 
     the Secretary believes filed or facilitated the filing of 
     false or fraudulent returns to the head of the Federal Bureau 
     of Prisons if the Secretary determines that such disclosure 
     is necessary to permit effective tax administration.
       ``(B) Disclosure by agency to employees.--The head of the 
     Federal Bureau of Prisons may redisclose information received 
     under subparagraph (A)--
       ``(i) only to those officers and employees of the Bureau 
     who are personally and directly engaged in taking 
     administrative actions to address violations of 
     administrative rules and regulations of the prison facility, 
     and
       ``(ii) solely for the purposes described in subparagraph 
     (C).
       ``(C) Restriction on use of disclosed information.--Return 
     information disclosed under this paragraph may be used only 
     for the purposes of--
       ``(i) preventing the filing of false or fraudulent returns; 
     and
       ``(ii) taking administrative actions against individuals 
     who have filed or attempted to file false or fraudulent 
     returns.''.
       (2) Procedures and record keeping related to disclosure.--
     Subsection (p)(4) of section 6103 is amended--
       (A) by striking ``(14), or (17)'' in the matter before 
     subparagraph (A) and inserting ``(14), (17), or (21)'', and
       (B) by striking ``(9), or (16)'' in subparagraph (F)(i) and 
     inserting ``(9), (16), or (21)''.
       (3) Evaluation by treasury inspector general for tax 
     administration.--Paragraph (3) of section 7803(d) is amended 
     by striking ``and'' at the end of subparagraph (A), by 
     striking the period at the end of subparagraph (B) and 
     inserting ``; and'', and by adding at the end the following 
     new subparagraph:
       ``(C) not later than 3 years after the date of the 
     enactment of section 6103(l)(21), submit a written report to 
     Congress on the implementation of such section.''.
       (b) Annual Reports.--
       (1) In general.--The Secretary of the Treasury shall submit 
     to Congress and make publicly available an annual report on 
     the filing of false and fraudulent returns by individuals 
     incarcerated in Federal and State prisons.
       (2) Contents of report.--The report submitted under 
     paragraph (1) shall contain statistics on the number of false 
     or fraudulent returns associated with each Federal and State 
     prison and such other information that the Secretary 
     determines is appropriate.
       (3) Exchange of information.--For the purpose of gathering 
     information necessary for the reports required under 
     paragraph (1), the Secretary of the Treasury shall enter into 
     agreements with the head of the Federal Bureau of Prisons and 
     the heads of State agencies charged with responsibility for 
     administration of State prisons under which the head of the 
     Bureau or Agency provides to the Secretary not less 
     frequently than annually the names and other identifying 
     information of prisoners incarcerated at each facility 
     administered by the Bureau or Agency.
       (c) Effective Date.--The amendments made by this section 
     shall apply to disclosures on or after January 1, 2008.

     SEC. 550. MODIFICATION OF CRIMINAL PENALTIES FOR WILLFUL 
                   FAILURES INVOLVING TAX PAYMENTS AND FILING 
                   REQUIREMENTS.

       (a) Increase in Penalty for Attempt to Evade or Defeat 
     Tax.--Section 7201 (relating to attempt to evade or defeat 
     tax) is amended--
       (1) by striking ``$100,000'' and inserting ``$500,000'',
       (2) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (3) by striking ``5 years'' and inserting ``10 years''.
       (b) Modification of Penalties for Willful Failure to File 
     Return, Supply Information, or Pay Tax.--
       (1) In general.--Section 7203 (relating to willful failure 
     to file return, supply information, or pay tax) is amended--
       (A) in the first sentence--
       (i) by striking ``Any person'' and inserting the following:
       ``(a) In General.--Any person'', and
       (ii) by striking ``$25,000'' and inserting ``$50,000'',
       (B) in the third sentence, by striking ``section'' and 
     inserting ``subsection'', and
       (C) by adding at the end the following new subsection:
       ``(b) Aggravated Failure to File.--
       ``(1) In general.--In the case of any failure described in 
     paragraph (2), the first sentence of subsection (a) shall be 
     applied by substituting--
       ``(A) `felony' for `misdemeanor',
       ``(B) `$250,000 ($500,000' for `$50,000 ($100,000', and
       ``(C) `5 years' for `1 year'.
       ``(2) Failure described.--A failure described in this 
     paragraph is--
       ``(A) a failure to make a return described in subsection 
     (a) for any 3 taxable years occurring during any period of 5 
     consecutive taxable years if the aggregate tax liability for 
     such period is not less than $50,000, or
       ``(B) a failure to make a return if the tax liability 
     giving rise to the requirement to make such return is 
     attributable to an activity which is a felony under any State 
     or Federal law.''.
       (2) Penalty may be applied in addition to other 
     penalties.--Section 7204 (relating to fraudulent statement or 
     failure to make statement to employees) is amended by 
     striking ``the penalty provided in section 6674'' and 
     inserting ``the penalties provided in sections 6674 and 
     7203(b)''.
       (c) Fraud and False Statements.--Section 7206 (relating to 
     fraud and false statements) is amended--
       (1) by striking ``$100,000'' and inserting ``$500,000'',
       (2) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (3) by striking ``3 years'' and inserting ``5 years''.
       (d) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--Section 7206 (relating to 
     fraud and false statements), as amended by subsection (a)(3), 
     is amended--
       (1) by striking ``Any person who--'' and inserting ``(a) In 
     General.--Any person who--'', and
       (2) by adding at the end the following new subsection:
       ``(b) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--If any portion of any 
     underpayment (as defined in section 6664(a)) or overpayment 
     (as defined in section 6401(a)) of tax required to be shown 
     on a return is attributable to fraudulent action described in 
     subsection (a), the applicable dollar amount under subsection 
     (a) shall in no event be less than an amount equal to such 
     portion. A rule similar to the rule under section 6663(b) 
     shall apply for purposes of determining the portion so 
     attributable.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to actions, and failures to act, occurring after 
     the date of the enactment of this Act.

     SEC. 551. UNDERSTATEMENT OF TAXPAYER LIABILITY BY RETURN 
                   PREPARERS.

       (a) Application of Return Preparer Penalties to All Tax 
     Returns.--
       (1) Definition of tax return preparer.--Paragraph (36) of 
     section 7701(a) (relating to income tax preparer) is 
     amended--
       (A) by striking ``income'' each place it appears in the 
     heading and the text, and
       (B) in subparagraph (A), by striking ``subtitle A'' each 
     place it appears and inserting ``this title''.
       (2) Conforming amendments.--
       (A)(i) Section 6060 is amended by striking ``INCOME TAX 
     RETURN PREPARERS'' in the heading and inserting ``TAX RETURN 
     PREPARERS''.
       (ii) Section 6060(a) is amended--
       (I) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (II) by striking ``each income tax return preparer'' and 
     inserting ``each tax return preparer'', and
       (III) by striking ``another income tax return preparer'' 
     and inserting ``another tax return preparer''.
       (iii) The item relating to section 6060 in the table of 
     sections for subpart F of part III of subchapter A of chapter 
     61 is amended by striking ``income tax return preparers'' and 
     inserting ``tax return preparers''.
       (iv) Subpart F of part III of subchapter A of chapter 61 is 
     amended by striking ``Income Tax Return Preparers'' in the 
     heading and inserting ``Tax Return Preparers''.
       (v) The item relating to subpart F in the table of subparts 
     for part III of subchapter A of chapter 61 is amended by 
     striking ``income tax return preparers'' and inserting ``tax 
     return preparers''.
       (B) Section 6103(k)(5) is amended--
       (i) by striking ``income tax return preparer'' each place 
     it appears and inserting ``tax return preparer'', and
       (ii) by striking ``income tax return preparers'' each place 
     it appears and inserting ``tax return preparers''.
       (C)(i) Section 6107 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARER'' in the 
     heading and inserting ``TAX RETURN PREPARER'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears in subsections (a) and (b) and inserting ``a 
     tax return preparer'',
       (III) by striking ``Income Tax Return Preparer'' in the 
     heading for subsection (b) and inserting ``Tax Return 
     Preparer'', and
       (IV) in subsection (c), by striking ``income tax return 
     preparers'' and inserting ``tax return preparers''.
       (ii) The item relating to section 6107 in the table of 
     sections for subchapter B of chapter 61 is amended by 
     striking ``Income tax return preparer'' and inserting ``Tax 
     return preparer''.
       (D) Section 6109(a)(4) is amended--
       (i) by striking ``an income tax return preparer'' and 
     inserting ``a tax return preparer'', and
       (ii) by striking ``income return preparer'' in the heading 
     and inserting ``tax return preparer''.
       (E) Section 6503(k)(4) is amended by striking ``Income tax 
     return preparers'' and inserting ``Tax return preparers''.
       (F)(i) Section 6694 is amended--

[[Page S3864]]

       (I) by striking ``INCOME TAX RETURN PREPARER'' in the 
     heading and inserting ``TAX RETURN PREPARER'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (III) in subsection (c)(2), by striking ``the income tax 
     return preparer'' and inserting ``the tax return preparer'',
       (IV) in subsection (e), by striking ``subtitle A'' and 
     inserting ``this title'', and
       (V) in subsection (f), by striking ``income tax return 
     preparer'' and inserting ``tax return preparer''.
       (ii) The item relating to section 6694 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by striking ``income tax return preparer'' and inserting 
     ``tax return preparer''.
       (G)(i) Section 6695 is amended--
       (I) by striking ``INCOME'' in the heading, and
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``A TAX RETURN PREPARER''.
       (ii) Section 6695(f) is amended--
       (I) by striking ``subtitle A'' and inserting ``this 
     title'', and
       (II) by striking ``the income tax return preparer'' and 
     inserting ``the tax return preparer''.
       (iii) The item relating to section 6695 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by striking ``income''.
       (H) Section 6696(e) is amended by striking ``subtitle A'' 
     each place it appears and inserting ``this title''.
       (I)(i) Section 7407 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARERS'' in the 
     heading and inserting ``TAX RETURN PREPARERS'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (III) by striking ``income tax preparer'' both places it 
     appears in subsection (a) and inserting ``tax return 
     preparer'', and
       (IV) by striking ``income tax return'' in subsection (a) 
     and inserting ``tax return''.
       (ii) The item relating to section 7407 in the table of 
     sections for subchapter A of chapter 76 is amended by 
     striking ``income tax return preparers'' and inserting ``tax 
     return preparers''.
       (J)(i) Section 7427 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARERS'' in the 
     heading and inserting ``TAX RETURN PREPARERS'', and
       (II) by striking ``an income tax return preparer'' and 
     inserting ``a tax return preparer''.
       (ii) The item relating to section 7427 in the table of 
     sections for subchapter B of chapter 76 is amended to read as 
     follows:

``Sec. 7427. Tax return preparers.''.
       (b) Modification of Penalty for Understatement of 
     Taxpayer's Liability by Tax Return Preparer.--Subsections (a) 
     and (b) of section 6694 are amended to read as follows:
       ``(a) Understatement Due to Unreasonable Positions.--
       ``(1) In general.--Any tax return preparer who prepares any 
     return or claim for refund with respect to which any part of 
     an understatement of liability is due to a position described 
     in paragraph (2) shall pay a penalty with respect to each 
     such return or claim in an amount equal to the greater of--
       ``(A) $1,000, or
       ``(B) 50 percent of the income derived (or to be derived) 
     by the tax return preparer with respect to the return or 
     claim.
       ``(2) Unreasonable position.--A position is described in 
     this paragraph if--
       ``(A) the tax return preparer knew (or reasonably should 
     have known) of the position,
       ``(B) there was not a reasonable belief that the position 
     would more likely than not be sustained on its merits, and
       ``(C)(i) the position was not disclosed as provided in 
     section 6662(d)(2)(B)(ii), or
       ``(ii) there was no reasonable basis for the position.
       ``(3) Reasonable cause exception.--No penalty shall be 
     imposed under this subsection if it is shown that there is 
     reasonable cause for the understatement and the tax return 
     preparer acted in good faith.
       ``(b) Understatement Due to Willful or Reckless Conduct.--
       ``(1) In general.--Any tax return preparer who prepares any 
     return or claim for refund with respect to which any part of 
     an understatement of liability is due to a conduct described 
     in paragraph (2) shall pay a penalty with respect to each 
     such return or claim in an amount equal to the greater of--
       ``(A) $5,000, or
       ``(B) 50 percent of the income derived (or to be derived) 
     by the tax return preparer with respect to the return or 
     claim.
       ``(2) Willful or reckless conduct.--Conduct described in 
     this paragraph is conduct by the tax return preparer which 
     is--
       ``(A) a willful attempt in any manner to understate the 
     liability for tax on the return or claim, or
       ``(B) a reckless or intentional disregard of rules or 
     regulations.
       ``(3) Reduction in penalty.--The amount of any penalty 
     payable by any person by reason of this subsection for any 
     return or claim for refund shall be reduced by the amount of 
     the penalty paid by such person by reason of subsection 
     (a).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns prepared after the date of the 
     enactment of this Act.

     SEC. 552. PENALTY FOR FILING ERRONEOUS REFUND CLAIMS.

       (a) In General.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6675 the following new section:

     ``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

       ``(a) Civil Penalty.--If a claim for refund or credit with 
     respect to income tax (other than a claim for a refund or 
     credit relating to the earned income credit under section 32) 
     is made for an excessive amount, unless it is shown that the 
     claim for such excessive amount has a reasonable basis, the 
     person making such claim shall be liable for a penalty in an 
     amount equal to 20 percent of the excessive amount.
       ``(b) Excessive Amount.--For purposes of this section, the 
     term `excessive amount' means in the case of any person the 
     amount by which the amount of the claim for refund or credit 
     for any taxable year exceeds the amount of such claim 
     allowable under this title for such taxable year.
       ``(c) Coordination With Other Penalties.--This section 
     shall not apply to any portion of the excessive amount of a 
     claim for refund or credit on which a penalty is imposed 
     under part II of subchapter A of chapter 68.''.
       (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 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any claim--
       (1) filed or submitted after the date of the enactment of 
     this Act, or
       (2) filed or submitted prior to such date but not withdrawn 
     before the date which is 30 days after such date of 
     enactment.

     SEC. 553. SUSPENSION OF CERTAIN PENALTIES AND INTEREST.

       (a) In General.--Paragraphs (1)(A) and (3)(A) of section 
     6404(g) are each amended by striking ``18-month period'' and 
     inserting ``24-month period''.
       (b) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to notices 
     provided by the Secretary of the Treasury, or his delegate 
     after the date which is 6 months after the date of the 
     enactment of this Act.
       (2) Exception for certain taxpayers.--The amendments made 
     by this section shall not apply to any taxpayer with respect 
     to whom a suspension of any interest, penalty, addition to 
     tax, or other amount is in effect on the date which is 6 
     months after the date of the enactment of this Act.

     SEC. 554. ADDITIONAL REASONS FOR SECRETARY TO TERMINATE 
                   INSTALLMENT AGREEMENTS.

       (a) In General.--Section 6159(b)(4) (relating to failure to 
     pay an installment or any other tax liability when due or to 
     provide requested financial information) is amended by 
     striking ``or'' at the end of subparagraph (B), by 
     redesignating subparagraph (C) as subparagraph (E), and by 
     inserting after subparagraph (B) the following new 
     subparagraphs:
       ``(C) to make a Federal tax deposit under section 6302 at 
     the time such deposit is required to be made,
       ``(D) to file a return of tax imposed under this title by 
     its due date (including extensions), or''.
       (b) Conforming Amendment.--The heading for paragraph (4) of 
     section 6159(b) is amended by striking ``Failure to pay an 
     installment or any other tax liability when due or to provide 
     requested financial information'' and inserting ``Failure to 
     make payments or deposits or file returns when due or to 
     provide requested financial information''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to failures occurring on or after the date of the 
     enactment of this Act.

     SEC. 555. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS-IN-
                   COMPROMISE.

       (a) In General.--Section 7122(b) (relating to record) is 
     amended by striking ``Whenever a compromise'' and all that 
     follows through ``his delegate, with his reasons therefor'' 
     and inserting ``If the Secretary determines that an opinion 
     of the General Counsel for the Department of the Treasury, or 
     the Counsel's delegate, is required with respect to a 
     compromise, there shall be placed on file in the office of 
     the Secretary such opinion, with the reasons therefor''.
       (b) Conforming Amendments.--Section 7122(b) is amended by 
     striking the second and third sentences.
       (c) Effective Date.--The amendments made by this section 
     shall apply to offers-in-compromise submitted or pending on 
     or after the date of the enactment of this Act.

     SEC. 556. AUTHORIZATION FOR FINANCIAL MANAGEMENT SERVICE 
                   RETENTION OF TRANSACTION FEES FROM LEVIED 
                   AMOUNTS.

       (a) In General.--Subsection (h) of section 6331 (relating 
     to continuing levy on certain payments) is amended by adding 
     at the end the following new paragraph:
       ``(4) Imposition of financial management services 
     transaction fees.--If the Secretary approves a levy under 
     this subsection, the Secretary may impose on the taxpayer a 
     transaction fee sufficient to cover the full cost of 
     implementing the levy under this subsection. Such fee--
       ``(A) shall be treated as an expense under section 6341,

[[Page S3865]]

       ``(B) may be collected through a levy under this 
     subsection, and
       ``(C) shall be in addition to the amount of tax liability 
     with respect to which such levy was approved.''.
       (b) Retention of Fees by Financial Management Service.--The 
     Financial Management Service may retain the amount of any 
     transaction fee imposed under section 6331(h)(4) of the 
     Internal Revenue Code of 1986. Any amount retained by the 
     Financial Management Service under that section shall be 
     deposited into the account of the Department of the Treasury 
     under section 3711(g)(7) of title 31, United States Code.
       (c) Effective Date.--The amendment made by this section 
     shall apply to amounts levied after the date of the enactment 
     of this Act.

     SEC. 557. AUTHORITY FOR UNDERCOVER OPERATIONS.

       Paragraph (6) of section 7608(c) (relating to application 
     of section) is amended by striking ``2007'' both places it 
     appears and inserting ``2008''.

     SEC. 558. INCREASE IN PENALTY EXCISE TAXES ON THE POLITICAL 
                   AND EXCESS LOBBYING ACTIVITIES OF SECTION 
                   501(C)(3) ORGANIZATIONS.

       (a) Taxes on Disqualifying Lobbying Expenditures of Certain 
     Organizations.--
       (1) In general.--Section 4912(a) (relating to tax on 
     organization) is amended by striking ``5 percent'' and 
     inserting ``10 percent''.
       (2) Tax on management.--Section 4912(b) is amended by 
     striking ``5 percent'' and inserting ``10 percent''.
       (b) Taxes on Political Expenditures of Section 501(c)(3) 
     Organizations.--
       (1) In general.--Section 4955(a) (relating to initial 
     taxes) is amended--
       (A) in paragraph (1), by striking ``10 percent'' and 
     inserting ``20 percent'', and
       (B) in paragraph (2), by striking ``2\1/2\ percent'' and 
     inserting ``5 percent''.
       (2) Increased limitation for managers.--Section 4955(c)(2) 
     is amended--
       (A) by striking ``$5,000'' and inserting ``$10,000'', and
       (B) by striking ``$10,000'' and inserting ``$20,000''.
       (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. 559. INCREASED PENALTY FOR FAILURE TO FILE FOR EXEMPT 
                   ORGANIZATIONS.

       (a) In General.--Subparagraph (A) of section 6652(c)(1) 
     (relating to annual returns under section 6033(a)(1) or 
     6012(a)(6)) is amended by adding at the end the following new 
     sentence: ``In the case of an organization having gross 
     receipts exceeding $25,000,000 for any year, with respect to 
     the return so required, the first sentence of this 
     subparagraph shall be applied by substituting `$250' for 
     `$20' and, in lieu of applying the second sentence of this 
     subparagraph, the maximum penalty under this subparagraph 
     shall not exceed $125,000.''.
       (b) Conforming Amendment.--The third sentence of section 
     6652(c)(1)(A) is amended by inserting ``but not exceeding 
     $25,000,000'' after ``$1,000,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed on or after 
     January 1, 2008.

     SEC. 560. PENALTIES FOR FAILURE TO FILE CERTAIN RETURNS 
                   ELECTRONICALLY.

       (a) In General.--Part I of subchapter A of chapter 68 
     (relating to additions to the tax, additional amounts, and 
     assessable penalties) is amended by inserting after section 
     6652 the following new section:

     ``SEC. 6652A. FAILURE TO FILE CERTAIN RETURNS ELECTRONICALLY.

       ``(a) In General.--If a person fails to file a return 
     described in section 6651 or 6652(c)(1) in electronic form as 
     required under section 6011(e)--
       ``(1) such failure shall be treated as a failure to file 
     such return (even if filed in a form other than electronic 
     form), and
       ``(2) the penalty imposed under section 6651 or 6652(c), 
     whichever is appropriate, shall be equal to the greater of--
       ``(A) the amount of the penalty under such section, 
     determined without regard to this section, or
       ``(B) the amount determined under subsection (b).
       ``(b) Amount of Penalty.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the penalty determined under this subsection is equal to 
     $40 for each day during which a failure described under 
     subsection (a) continues. The maximum penalty under this 
     paragraph on failures with respect to any 1 return shall not 
     exceed the lesser of $20,000 or 10 percent of the gross 
     receipts of the taxpayer for the year.
       ``(2) Increased penalties for taxpayers with gross receipts 
     between $1,000,000 and $100,000,000.--
       ``(A) Taxpayers with gross receipts between $1,000,000 and 
     $25,000,000.--In the case of a taxpayer having gross receipts 
     exceeding $1,000,000 but not exceeding $25,000,000 for any 
     year--
       ``(i) the first sentence of paragraph (1) shall be applied 
     by substituting `$200' for `$40', and
       ``(ii) in lieu of applying the second sentence of paragraph 
     (1), the maximum penalty under paragraph (1) shall not exceed 
     $100,000.
       ``(B) Taxpayers with gross receipts over $25,000,000.--
     Except as provided in paragraph (3), in the case of a 
     taxpayer having gross receipts exceeding $25,000,000 for any 
     year--
       ``(i) the first sentence of paragraph (1) shall be applied 
     by substituting `$500' for `$40', and
       ``(ii) in lieu of applying the second sentence of paragraph 
     (1), the maximum penalty under paragraph (1) shall not exceed 
     $250,000.
       ``(3) Increased penalties for certain taxpayers with gross 
     receipts exceeding $100,000,000.--In the case of a return 
     described in section 6651--
       ``(A) Taxpayers with gross receipts between $100,000,000 
     and $250,000,000.--In the case of a taxpayer having gross 
     receipts exceeding $100,000,000 but not exceeding 
     $250,000,000 for any year--
       ``(i) the amount of the penalty determined under this 
     subsection shall equal the sum of--

       ``(I) $50,000, plus
       ``(II) $1,000 for each day during which such failure 
     continues (twice such amount for each day such failure 
     continues after the first such 60 days), and

       ``(ii) the maximum amount under clause (i)(II) on failures 
     with respect to any 1 return shall not exceed $200,000.
       ``(B) Taxpayers with gross receipts over $250,000,000.--In 
     the case of a taxpayer having gross receipts exceeding 
     $250,000,000 for any year--
       ``(i) the amount of the penalty determined under this 
     subsection shall equal the sum of--

       ``(I) $250,000, plus
       ``(II) $2,500 for each day during which such failure 
     continues (twice such amount for each day such failure 
     continues after the first such 60 days), and

       ``(ii) the maximum amount under clause (i)(II) on failures 
     with respect to any 1 return shall not exceed $250,000.
       ``(C) Exception for certain returns.--Subparagraphs (A) and 
     (B) shall not apply to any return of tax imposed under 
     section 512.''.
       (b) Clerical Amendment.--The table of sections for part I 
     of subchapter A of chapter 68 is amended by inserting after 
     the item relating to section 6652 the following new item:

``Sec. 6652A. Failure to file certain returns electronically.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed on or after 
     January 1, 2008.

                      PART III--GENERAL PROVISIONS

     SEC. 561. ENHANCED COMPLIANCE ASSISTANCE FOR SMALL 
                   BUSINESSES.

       (a) In General.--Section 212 of the Small Business 
     Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 601 
     note) is amended by striking subsection (a) and inserting the 
     following:
       ``(a) Compliance Guide.--
       ``(1) In general.--For each rule or group of related rules 
     for which an agency is required to prepare a final regulatory 
     flexibility analysis under section 605(b) of title 5, United 
     States Code, the agency shall publish 1 or more guides to 
     assist small entities in complying with the rule and shall 
     entitle such publications `small entity compliance guides'.
       ``(2) Publication of guides.--The publication of each guide 
     under this subsection shall include--
       ``(A) the posting of the guide in an easily identified 
     location on the website of the agency; and
       ``(B) distribution of the guide to known industry contacts, 
     such as small entities, associations, or industry leaders 
     affected by the rule.
       ``(3) Publication date.--An agency shall publish each guide 
     (including the posting and distribution of the guide as 
     described under paragraph (2))--
       ``(A) on the same date as the date of publication of the 
     final rule (or as soon as possible after that date); and
       ``(B) not later than the date on which the requirements of 
     that rule become effective.
       ``(4) Compliance actions.--
       ``(A) In general.--Each guide shall explain the actions a 
     small entity is required to take to comply with a rule.
       ``(B) Explanation.--The explanation under subparagraph 
     (A)--
       ``(i) shall include a description of actions needed to meet 
     the requirements of a rule, to enable a small entity to know 
     when such requirements are met; and
       ``(ii) if determined appropriate by the agency, may include 
     a description of possible procedures, such as conducting 
     tests, that may assist a small entity in meeting such 
     requirements, except that, compliance with any procedures 
     described pursuant to this section does not establish 
     compliance with the rule, or establish a presumption or 
     inference of such compliance.
       ``(C) Procedures.--Procedures described under subparagraph 
     (B)(ii)--
       ``(i) shall be suggestions to assist small entities; and
       ``(ii) shall not be additional requirements, or diminish 
     requirements, relating to the rule.
       ``(5) Agency preparation of guides.--The agency shall, in 
     its sole discretion, taking into account the subject matter 
     of the rule and the language of relevant statutes, ensure 
     that the guide is written using sufficiently plain language 
     likely to be understood by affected small entities. Agencies 
     may prepare separate guides covering groups or classes of 
     similarly affected small entities and may cooperate with 
     associations of small entities to develop and distribute such 
     guides. An agency may prepare guides and apply this section 
     with respect to a rule or a group of related rules.

[[Page S3866]]

       ``(6) Reporting.--Not later than 1 year after the date of 
     enactment of the Fair Minimum Wage Act of 2007, and annually 
     thereafter, the head of each agency shall submit a report to 
     the Committee on Small Business and Entrepreneurship of the 
     Senate, the Committee on Small Business of the House of 
     Representatives, and any other committee of relevant 
     jurisdiction describing the status of the agency's compliance 
     with paragraphs (1) through (5).''.
       (b) Technical and Conforming Amendment.--Section 211(3) of 
     the Small Business Regulatory Enforcement Fairness Act of 
     1996 (5 U.S.C. 601 note) is amended by inserting ``and 
     entitled'' after ``designated''.

     SEC. 562. SMALL BUSINESS CHILD CARE GRANT PROGRAM.

       (a) Establishment.--The Secretary of Health and Human 
     Services (referred to in this section as the ``Secretary'') 
     shall establish a program to award grants to States, on a 
     competitive basis, to assist States in providing funds to 
     encourage the establishment and operation of employer-
     operated child care programs.
       (b) Application.--To be eligible to receive a grant under 
     this section, a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require, 
     including an assurance that the funds required under 
     subsection (e) will be provided.
       (c) Amount and Period of Grant.--The Secretary shall 
     determine the amount of a grant to a State under this section 
     based on the population of the State as compared to the 
     population of all States receiving grants under this section. 
     The Secretary shall make the grant for a period of 3 years.
       (d) Use of Funds.--
       (1) In general.--A State shall use amounts provided under a 
     grant awarded under this section to provide assistance to 
     small businesses (or consortia formed in accordance with 
     paragraph (3)) located in the State to enable the small 
     businesses (or consortia) to establish and operate child care 
     programs. Such assistance may include--
       (A) technical assistance in the establishment of a child 
     care program;
       (B) assistance for the startup costs related to a child 
     care program;
       (C) assistance for the training of child care providers;
       (D) scholarships for low-income wage earners;
       (E) the provision of services to care for sick children or 
     to provide care to school-aged children;
       (F) the entering into of contracts with local resource and 
     referral organizations or local health departments;
       (G) assistance for care for children with disabilities;
       (H) payment of expenses for renovation or operation of a 
     child care facility; or
       (I) assistance for any other activity determined 
     appropriate by the State.
       (2) Application.--In order for a small business or 
     consortium to be eligible to receive assistance from a State 
     under this section, the small business involved shall prepare 
     and submit to the State an application at such time, in such 
     manner, and containing such information as the State may 
     require.
       (3) Preference.--
       (A) In general.--In providing assistance under this 
     section, a State shall give priority to an applicant that 
     desires to form a consortium to provide child care in a 
     geographic area within the State where such care is not 
     generally available or accessible.
       (B) Consortium.--For purposes of subparagraph (A), a 
     consortium shall be made up of 2 or more entities that shall 
     include small businesses and that may include large 
     businesses, nonprofit agencies or organizations, local 
     governments, or other appropriate entities.
       (4) Limitations.--With respect to grant funds received 
     under this section, a State may not provide in excess of 
     $500,000 in assistance from such funds to any single 
     applicant.
       (e) Matching Requirement.--To be eligible to receive a 
     grant under this section, a State shall provide assurances to 
     the Secretary that, with respect to the costs to be incurred 
     by a covered entity receiving assistance in carrying out 
     activities under this section, the covered entity will make 
     available (directly or through donations from public or 
     private entities) non-Federal contributions to such costs in 
     an amount equal to--
       (1) for the first fiscal year in which the covered entity 
     receives such assistance, not less than 50 percent of such 
     costs ($1 for each $1 of assistance provided to the covered 
     entity under the grant);
       (2) for the second fiscal year in which the covered entity 
     receives such assistance, not less than 66\2/3\ percent of 
     such costs ($2 for each $1 of assistance provided to the 
     covered entity under the grant); and
       (3) for the third fiscal year in which the covered entity 
     receives such assistance, not less than 75 percent of such 
     costs ($3 for each $1 of assistance provided to the covered 
     entity under the grant).
       (f) Requirements of Providers.--To be eligible to receive 
     assistance under a grant awarded under this section, a child 
     care provider--
       (1) who receives assistance from a State shall comply with 
     all applicable State and local licensing and regulatory 
     requirements and all applicable health and safety standards 
     in effect in the State; and
       (2) who receives assistance from an Indian tribe or tribal 
     organization shall comply with all applicable regulatory 
     standards.
       (g) State-Level Activities.--A State may not retain more 
     than 3 percent of the amount described in subsection (c) for 
     State administration and other State-level activities.
       (h) Administration.--
       (1) State responsibility.--A State shall have 
     responsibility for administering a grant awarded for the 
     State under this section and for monitoring covered entities 
     that receive assistance under such grant.
       (2) Audits.--A State shall require each covered entity 
     receiving assistance under the grant awarded under this 
     section to conduct an annual audit with respect to the 
     activities of the covered entity. Such audits shall be 
     submitted to the State.
       (3) Misuse of funds.--
       (A) Repayment.--If the State determines, through an audit 
     or otherwise, that a covered entity receiving assistance 
     under a grant awarded under this section has misused the 
     assistance, the State shall notify the Secretary of the 
     misuse. The Secretary, upon such a notification, may seek 
     from such a covered entity the repayment of an amount equal 
     to the amount of any such misused assistance plus interest.
       (B) Appeals process.--The Secretary shall by regulation 
     provide for an appeals process with respect to repayments 
     under this paragraph.
       (i) Reporting Requirements.--
       (1) 2-year study.--
       (A) In general.--Not later than 2 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine--
       (i) the capacity of covered entities to meet the child care 
     needs of communities within States;
       (ii) the kinds of consortia that are being formed with 
     respect to child care at the local level to carry out 
     programs funded under this section; and
       (iii) who is using the programs funded under this section 
     and the income levels of such individuals.
       (B) Report.--Not later than 28 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on the results of the study 
     conducted in accordance with subparagraph (A).
       (2) 4-year study.--
       (A) In general.--Not later than 4 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine the number 
     of child care facilities that are funded through covered 
     entities that received assistance through a grant awarded 
     under this section and that remain in operation, and the 
     extent to which such facilities are meeting the child care 
     needs of the individuals served by such facilities.
       (B) Report.--Not later than 52 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on the results of the study 
     conducted in accordance with subparagraph (A).
       (j) Definitions.--In this section:
       (1) Covered entity.--The term ``covered entity'' means a 
     small business or a consortium formed in accordance with 
     subsection (d)(3).
       (2) Indian community.--The term ``Indian community'' means 
     a community served by an Indian tribe or tribal organization.
       (3) Indian tribe; tribal organization.--The terms ``Indian 
     tribe'' and ``tribal organization'' have the meanings given 
     the terms in section 658P of the Child Care and Development 
     Block Grant Act of 1990 (42 U.S.C. 9858n).
       (4) Small business.--The term ``small business'' means an 
     employer who employed an average of at least 2 but not more 
     than 50 employees on the business days during the preceding 
     calendar year.
       (5) State.--The term ``State'' has the meaning given the 
     term in section 658P of the Child Care and Development Block 
     Grant Act of 1990 (42 U.S.C. 9858n).
       (k) Application to Indian Tribes and Tribal 
     Organizations.--In this section:
       (1) In general.--Except as provided in subsection (f)(1), 
     and in paragraphs (2) and (3), the term ``State'' includes an 
     Indian tribe or tribal organization.
       (2) Geographic references.--The term ``State'' includes an 
     Indian community in subsections (c) (the second and third 
     place the term appears), (d)(1) (the second place the term 
     appears), (d)(3)(A) (the second place the term appears), and 
     (i)(1)(A)(i).
       (3) State-level activities.--The term ``State-level 
     activities'' includes activities at the tribal level.
       (l) Authorization of Appropriations.--
       (1) In general.--There is authorized to be appropriated to 
     carry out this section, $50,000,000 for the period of fiscal 
     years 2008 through 2012.
       (2) Studies and administration.--With respect to the total 
     amount appropriated for such period in accordance with this 
     subsection, not more than $2,500,000 of that amount may be 
     used for expenditures related to conducting studies required 
     under, and the administration of, this section.
       (m) Termination of Program.--The program established under 
     subsection (a) shall terminate on September 30, 2012.

[[Page S3867]]

     SEC. 563. STUDY OF UNIVERSAL USE OF ADVANCE PAYMENT OF EARNED 
                   INCOME CREDIT.

       Not later than 180 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall report to 
     Congress on a study of the benefits, costs, risks, and 
     barriers to workers and to businesses (with a special 
     emphasis on small businesses) if the advance earned income 
     tax credit program (under section 3507 of the Internal 
     Revenue Code of 1986) included all recipients of the earned 
     income tax credit (under section 32 of such Code) and what 
     steps would be necessary to implement such inclusion.

     SEC. 564. SENSE OF THE SENATE CONCERNING PERSONAL SAVINGS.

       (a) Findings.--The Senate finds that--
       (1) the personal saving rate in the United States is at its 
     lowest point since the Great Depression, with the rate having 
     fallen into negative territory;
       (2) the United States ranks at the bottom of the Group of 
     Twenty (G-20) nations in terms of net national saving rate;
       (3) approximately half of all the working people of the 
     United States work for an employer that does not offer any 
     kind of retirement plan;
       (4) existing savings policies enacted by Congress provide 
     limited incentives to save for low- and moderate-income 
     families; and
       (5) the Social Security program was enacted to serve as the 
     safest component of a retirement system that also includes 
     employer-sponsored retirement plans and personal savings.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) Congress should enact policies that promote savings 
     vehicles for retirement that are simple, easily accessible 
     and provide adequate financial security for all the people of 
     the United States;
       (2) it is important to begin retirement saving as early as 
     possible to take full advantage of the power of compound 
     interest; and
       (3) regularly contributing money to a financially-sound 
     investment account is one important method for helping to 
     achieve one's retirement goals.

     SEC. 565. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

       (a) In General.--Section 29 of the Small Business Act (15 
     U.S.C. 656) is amended by adding at the end the following:
       ``(m) Continued Funding for Centers.--
       ``(1) In general.--A nonprofit organization described in 
     paragraph (2) shall be eligible to receive, subject to 
     paragraph (3), a 3-year grant under this subsection.
       ``(2) Applicability.--A nonprofit organization described in 
     this paragraph is a nonprofit organization that has received 
     funding under subsection (b) or (l).
       ``(3) Application and approval criteria.--
       ``(A) Criteria.--Subject to subparagraph (B), the 
     Administrator shall develop and publish criteria for the 
     consideration and approval of applications by nonprofit 
     organizations under this subsection.
       ``(B) Contents.--Except as otherwise provided in this 
     subsection, the conditions for participation in the grant 
     program under this subsection shall be the same as the 
     conditions for participation in the program under subsection 
     (l), as in effect on the date of enactment of this Act.
       ``(C) Notification.--Not later than 60 days after the date 
     of the deadline to submit applications for each fiscal year, 
     the Administrator shall approve or deny any application under 
     this subsection and notify the applicant for each such 
     application.
       ``(4) Award of grants.--
       ``(A) In general.--Subject to the availability of 
     appropriations, the Administrator shall make a grant for the 
     Federal share of the cost of activities described in the 
     application to each applicant approved under this subsection.
       ``(B) Amount.--A grant under this subsection shall be for 
     not more than $150,000, for each year of that grant.
       ``(C) Federal share.--The Federal share under this 
     subsection shall be not more than 50 percent.
       ``(D) Priority.--In allocating funds made available for 
     grants under this section, the Administrator shall give 
     applications under this subsection or subsection (l) priority 
     over first-time applications under subsection (b).
       ``(5) Renewal.--
       ``(A) In general.--The Administrator may renew a grant 
     under this subsection for additional 3-year periods, if the 
     nonprofit organization submits an application for such 
     renewal at such time, in such manner, and accompanied by such 
     information as the Administrator may establish.
       ``(B) Unlimited renewals.--There shall be no limitation on 
     the number of times a grant may be renewed under subparagraph 
     (A).
       ``(n) Privacy Requirements.--
       ``(1) In general.--A women's business center may not 
     disclose the name, address, or telephone number of any 
     individual or small business concern receiving assistance 
     under this section without the consent of such individual or 
     small business concern, unless--
       ``(A) the Administrator is ordered to make such a 
     disclosure by a court in any civil or criminal enforcement 
     action initiated by a Federal or State agency; or
       ``(B) the Administrator considers such a disclosure to be 
     necessary for the purpose of conducting a financial audit of 
     a women's business center, but a disclosure under this 
     subparagraph shall be limited to the information necessary 
     for such audit.
       ``(2) Administration use of information.--This subsection 
     shall not--
       ``(A) restrict Administration access to program activity 
     data; or
       ``(B) prevent the Administration from using client 
     information (other than the information described in 
     subparagraph (A)) to conduct client surveys.
       ``(3) Regulations.--The Administrator shall issue 
     regulations to establish standards for requiring disclosures 
     during a financial audit under paragraph (1)(B).''.
       (b) Repeal.--Section 29(l) of the Small Business Act (15 
     U.S.C. 656(l)) is repealed effective October 1 of the first 
     full fiscal year after the date of enactment of this Act.
       (c) Transitional Rule.--Notwithstanding any other provision 
     of law, a grant or cooperative agreement that was awarded 
     under subsection (l) of section 29 of the Small Business Act 
     (15 U.S.C. 656), on or before the day before the date 
     described in subsection (b) of this section, shall remain in 
     full force and effect under the terms, and for the duration, 
     of such grant or agreement.

     SEC. 566. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND 
                   SUPPLIES MANUFACTURED OUTSIDE THE UNITED 
                   STATES.

       Section 2 of the Buy American Act (41 U.S.C. 10a) is 
     amended--
       (1) by striking ``Notwithstanding'' and inserting the 
     following:
       ``(a) In General.--Notwithstanding''; and
       (2) by adding at the end the following:
       ``(b) Reports.--
       ``(1) In general.--Not later than 180 days after the end of 
     each of fiscal years 2007 through 2011, the head of each 
     Federal agency shall submit to the Committee on Homeland 
     Security and Governmental Affairs of the Senate and the 
     Committee on Oversight and Government Reform of the House of 
     Representatives a report on the amount of the acquisitions 
     made by the agency in that fiscal year of articles, 
     materials, or supplies purchased from entities that 
     manufacture the articles, materials, or supplies outside of 
     the United States.
       ``(2) Contents of report.--The report required by paragraph 
     (1) shall separately include, for the fiscal year covered by 
     such report--
       ``(A) the dollar value of any articles, materials, or 
     supplies that were manufactured outside the United States;
       ``(B) an itemized list of all waivers granted with respect 
     to such articles, materials, or supplies under this Act, and 
     a citation to the treaty, international agreement, or other 
     law under which each waiver was granted;
       ``(C) if any articles, materials, or supplies were acquired 
     from entities that manufacture articles, materials, or 
     supplies outside the United States, the specific exception 
     under this section that was used to purchase such articles, 
     materials, or supplies; and
       ``(D) a summary of--
       ``(i) the total procurement funds expended on articles, 
     materials, and supplies manufactured inside the United 
     States; and
       ``(ii) the total procurement funds expended on articles, 
     materials, and supplies manufactured outside the United 
     States.
       ``(3) Public availability.--The head of each Federal agency 
     submitting a report under paragraph (1) shall make the report 
     publicly available to the maximum extent practicable.
       ``(4) Exception for intelligence community.--This 
     subsection shall not apply to acquisitions made by an agency, 
     or component thereof, that is an element of the intelligence 
     community as specified in, or designated under, section 3(4) 
     of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.

     SEC. 567. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME 
                   TAX INCREASE ON SOCIAL SECURITY BENEFITS.

       It is the sense of the Senate that Congress should repeal 
     the 1993 tax increase on Social Security benefits and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     repeal and avoid forcing taxpayers to pay substantially more 
     interest to foreign creditors.

     SEC. 568. SENSE OF THE SENATE REGARDING PERMANENT TAX 
                   INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE 
                   AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.

       It is the sense of the Senate that Congress should make 
     permanent the tax incentives to make education more 
     affordable and more accessible for American families and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     incentives and avoid forcing taxpayers to pay substantially 
     more interest to foreign creditors.

     SEC. 569. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

       Section 274A(e) of the Immigration and Nationality Act (8 
     U.S.C. 1324a(e)) is amended by adding at the end the 
     following new paragraph:
       ``(10) Prohibition on award of government contracts, 
     grants, and agreements.--
       ``(A) Employers with no contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subparagraph 
     (C), if an employer who does not hold a Federal contract, 
     grant, or cooperative agreement is determined to have 
     violated this section, the employer shall be debarred from 
     the receipt of a Federal contract, grant, or cooperative 
     agreement for a period of 7 years.
       ``(ii) Placement on excluded list.--The Secretary of 
     Homeland Security or the Attorney General shall advise the 
     Administrator of General Services of the debarment

[[Page S3868]]

     of an employer under clause (i) and the Administrator of 
     General Services shall list the employer on the List of 
     Parties Excluded from Federal Procurement and Nonprocurement 
     Programs for a period of 7 years.
       ``(iii) Waiver.--

       ``(I) Authority.--The Administrator of General Services, in 
     consultation with the Secretary of Homeland Security and the 
     Attorney General, may waive operation of clause (i) or may 
     limit the duration or scope of a debarment under clause (i) 
     if such waiver or limitation is necessary to national defense 
     or in the interest of national security.
       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternative action under this clause 
     shall not be judicially reviewed.

       ``(B) Employers with contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subclause 
     (C), an employer who holds a Federal contract, grant, or 
     cooperative agreement and is determined to have violated this 
     section shall be debarred from the receipt of new Federal 
     contracts, grants, or cooperative agreements for a period of 
     10 years.
       ``(ii) Notice to agencies.--Prior to debarring the employer 
     under clause (i), the Secretary of Homeland Security, in 
     cooperation with the Administrator of General Services, shall 
     advise any agency or department holding a contract, grant, or 
     cooperative agreement with the employer of the Government's 
     intention to debar the employer from the receipt of new 
     Federal contracts, grants, or cooperative agreements for a 
     period of 10 years.
       ``(iii) Waiver.--

       ``(I) Authority.--After consideration of the views of any 
     agency or department that holds a contract, grant, or 
     cooperative agreement with the employer, the Administrator of 
     General Services, in consultation with the Secretary of 
     Homeland Security and the Attorney General, may waive 
     operation of clause (i) or may limit the duration or scope of 
     the debarment under clause (i) if such waiver or limitation 
     is necessary to the national defense or in the interest of 
     national security.
       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternate action under this clause 
     shall not be judicially reviewed.

       ``(C) Exemption from penalty for employers participating in 
     the basic pilot program.--In the case of imposition on an 
     employer of a debarment from the receipt of a Federal 
     contract, grant, or cooperative agreement under subparagraph 
     (A) or (B), that penalty shall be waived if the employer 
     establishes that the employer was voluntarily participating 
     in the basic pilot program under section 403(a) of the 
     Illegal Immigration Reform and Immigrant Responsibility Act 
     of 1996 (8 U.S.C. 1324a note) at the time of the violations 
     of this section that resulted in the debarment.''.
                                 ______
                                 
  SA 659. Mr. DORGAN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of subtitle F of title IV, add the following:

     SEC. 4__. APPLICABILITY OF COUNTRY OF ORIGIN LABELING 
                   REQUIREMENTS.

       Section 285 of the Agricultural Marketing Act of 1946 (7 
     U.S.C. 1638d) is amended by striking ``September 30, 2008'' 
     and inserting ``September 30, 2007''.
                                 ______
                                 
  SA 660. Mrs. BOXER submitted an amendment intended to be proposed by 
her to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. MAN-PORTABLE AIR DEFENSE SYSTEMS.

       (a) In General.--Notwithstanding any other provision of 
     law, the Secretary of State may authorize the use of counter-
     MANPADS equipment to protect the civil reserve air fleet if 
     the Secretary determines that--
       (1) such use is in the national security or foreign policy 
     interests of the United States; and
       (2) sufficient safeguards are in place to ensure that the 
     technology relating to such use is not diverted or 
     compromised.
       (b) Definition of MANPADS.--In this section, the term 
     ``MANPADS'' means--
       (1) a surface-to-air missile system designed to be man-
     portable and carried and fired by a single individual; and
       (2) any other surface-to-air missile system designed to be 
     operated and fired by more than one individual acting as a 
     crew and portable by several individuals.
       (c) Regulations.--The Secretary of State shall, in 
     consultation with the Secretary of Commerce, promulgate 
     regulations to carry out the section.
                                 ______
                                 
  SA 661. Mr. KOHL (for himself, Ms. Snowe, Mr. Feingold, and Ms. 
Landrieu) submitted an amendment intended to be proposed by him to the 
bill H.R. 1591, making emergency supplemental appropriations for the 
fiscal year ending September 30, 2007, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the end of chapter 10 of title III, add the following:
       Sec. 4004. With respect to any funds made available under 
     this or any other Act for the operation, capital improvement, 
     or management of public housing as authorized under sections 
     9(d) and 9(e) of the United States Housing Act of 1937 (42 
     U.S.C. 1437g(d) and (e)), the Secretary of Housing and Urban 
     Development shall not impose any requirement or guideline 
     relating to asset management that restricts or limits in any 
     way the use of capital funds for central office costs 
     pursuant to section 9(g)(1) or 9(g)(2) of such Act (42 U.S.C. 
     1437g(g)(1),(2)).
                                 ______
                                 
  SA 662. Mr. DOMENICI submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       On page 37, between lines 10 and 11, insert the following:

                       International Commissions

 international boundary and water commission, united states and mexico

       For an additional amount for the ``International Boundary 
     and Water Commission, United States and Mexico'', 
     $21,700,000, to remain available until expended: Provided, 
     That of the funds appropriated under this heading, not less 
     than $11,700,000 shall be made available for sediment removal 
     and construction associated with the Rio Grande Canalization 
     project in Dona Ana County, New Mexico: Provided further,  
     That of the funds appropriated under this heading, not less 
     than $10,000,000 shall be made available for sediment removal 
     associated with the Rio Grande Flood Control System 
     Rehabilitation project in El Paso County, Texas.
                                 ______
                                 
  SA 663. Ms. STABENOW (for herself and Mr. Levin) submitted an 
amendment intended to be proposed by her to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       On page 60, strike lines 21 and 22 and insert the 
     following: ``the 2005 season, $18,590,000, to remain 
     available until expended, of which $15,590,000 shall be for 
     emergency repairs to breakwaters and dredging of commerical 
     and shallow draft harbors in the Detroit District.''
                                 ______
                                 
  SA 664. Mr. OBAMA (for himself, Mrs. McCaskill, Ms. Mikulski, Mr. 
Harkin, Mr. Kerry, Ms. Cantwell, Mr. Biden, Mr. Bingaman, Mr. Casey, 
Mr. Durbin, Mr. Baucus, Ms. Landrieu, and Mr. Leahy) submitted an 
amendment intended to be proposed by him to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; as follows:

       At the end of chapter 3 of title I, add the following:

     SEC. 1316. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM FOR 
                   ADDITIONAL MENTAL HEALTH AND RELATED PERSONNEL.

       The amount appropriated or otherwise made available by this 
     chapter under the heading ``Defense Health Program'' is 
     hereby increased by $58,000,000, with the amount of the 
     increase to be available for additional caseworkers at 
     military medical treatment facilities and other military 
     facilities housing patients to participate in, enhance, and 
     assist the Physical Disability Evaluation System (PDES) 
     process, and for additional mental health and mental crisis 
     counselors at military medical treatment facilities and other 
     military facilities housing patients for services for members 
     of the Armed Forces and their families.

     SEC. 1317. ADDITIONAL AMOUNTS FOR OPERATION AND MAINTENANCE 
                   FOR THE MILITARY DEPARTMENTS FOR IMPROVED 
                   PHYSICAL DISABILITY EVALUATIONS OF MEMBERS OF 
                   THE ARMED FORCES.

       (a) Additional Amount for Operation and Maintenance, 
     Army.--The amount appropriated or otherwise made available by 
     this chapter under the heading ``Operation and Maintenance, 
     Army'' is hereby increased by $10,000,000, with the amount of 
     the increase to be available in accordance with subsection 
     (d).
       (b) Additional Amounts for Operation and Maintenance for 
     Department of the

[[Page S3869]]

     Navy.--The aggregate amount appropriated or otherwise made 
     available by this chapter under the headings ``Operation and 
     Maintenance, Navy'' and ``Operation and Maintenance, Marine 
     Corps'' is hereby increased by $10,000,000, with the amount 
     of the increase to be available in accordance with subsection 
     (d).
       (c) Additional Amount for Operation and Maintenance, Air 
     Force.--The amount appropriated or otherwise made available 
     by this _chapter under the heading ``Operation and 
     Maintenance, Air Force'' is hereby increased by $10,000,000, 
     with the amount of the increase to be available in accordance 
     with subsection (d).
       (d) Internet Access to Physical Disability Evaluations of 
     Members of the Armed Forces.--
       (1) In general.--Each Secretary of a military department 
     shall, utilizing amounts appropriated by the applicable 
     subsection of this section, develop and implement an Internet 
     website to permit members of the Armed Forces who are subject 
     to the Physical Disability Evaluation system of such military 
     department to participate in such system through the 
     Internet.
       (2) Elements.--Each Internet website under paragraph (1) 
     shall include the following:
       (A) The availability of any forms required for the 
     utilization of the physical disability evaluation system 
     concerned by members of the Armed Forces who are subject to 
     such system.
       (B) Secure mechanisms for the submission of forms described 
     in subparagraph (A) by members of the Armed Forces described 
     in that subparagraph, and for the tracking by such members of 
     the acceptance and review of any forms so submitted.
       (C) Secure mechanisms for advising members of the Armed 
     Forces described in subparagraph (A) of any additional 
     information, forms, or other items that are required for the 
     acceptance and review of any forms so submitted.
       (D) The continuous availability of assistance for members 
     of the Armed Forces described in subparagraph (A), including 
     assistance through the caseworkers assigned to such members, 
     in submitting and tracking forms, including assistance in 
     obtaining information, forms, or other items described by 
     subparagraph (C).

     SEC. 1318. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM FOR 
                   WOMEN'S MENTAL HEALTH SERVICES.

       The amount appropriated or otherwise made available by this 
     chapter under the heading ``Defense Health Program'' is 
     hereby increased by $15,000,000, with the amount of the 
     increase to be available for the development and 
     implementation of a women's mental health treatment program 
     for women members of the Armed Forces to help screen and 
     treat women members of the Armed Forces, including services 
     and treatment for women who have experienced post-traumatic 
     stress disorder and services and treatment for women who have 
     experienced sexual assault or abuse, which services shall 
     include the hiring and training of sexual abuse crisis 
     counselors for members of the Armed Forces who have 
     experienced sexual abuse or assault.

     SEC. 1319. STUDY ON MENTAL HEALTH AND READJUSTMENT NEEDS OF 
                   MEMBERS AND FORMER MEMBERS OF THE ARMED FORCES 
                   WHO DEPLOYED IN OPERATION IRAQI FREEDOM AND 
                   OPERATION ENDURING FREEDOM AND THEIR FAMILIES.

       (a) In General.--Using amounts appropriated or otherwise 
     made available by this chapter under the heading ``Defense 
     Health Program'', the Secretary of Defense shall, in 
     consultation with the Secretary of Veterans Affairs, enter 
     into an agreement with the National Academy of Sciences for a 
     study on the mental health and readjustment needs of members 
     and former members of the Armed Forces who deployed in 
     Operation Iraqi Freedom or Operation Enduring Freedom and 
     their families as a result of such deployment.
       (b) Phases.--The study required under subsection (a) shall 
     consist of two phases:
       (1) A preliminary phase, to be completed not later than 180 
     days after the date of the enactment of this Act, to 
     determine the parameters of the final phase of the study 
     under paragraph (2).
       (2) A second phase, to be completed not later than two 
     years after the date of the enactment of this Act, to carry 
     out a comprehensive assessment, in accordance with the 
     parameters identified under paragraph (1), of the mental 
     health and readjustment needs of members and former members 
     of the Armed Forces who deployed in Operation Iraqi Freedom 
     or Operation Enduring Freedom and their families as a result 
     of such deployment.
       (c) Reports.--The Secretary of Defense shall submit to 
     Congress, and make available to the public, a comprehensive 
     report on each phase of the study required under subsection 
     (a) not later than 30 days after the date of the completion 
     of such phase of the study.
                                 ______
                                 
  SA 665. Mr. REED submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 62, line 18, insert before the period at the end 
     the following: ``: Provided further, That the Secretary of 
     the Army, acting through the Chief of Engineers, shall use 
     not more than $3,250,000 of the amounts made available under 
     this heading to rehabilitate the flood damage reduction 
     project, Woonsocket, Rhode Island to federal levee standards.
                                 ______
                                 
  SA 666. Mrs. CLINTON submitted an amendment intended to be proposed 
by her to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of chapter 5 of title I, add the following:

     SEC. 1503. LINKING OF AWARD FEES UNDER DEPARTMENT OF HOMELAND 
                   SECURITY CONTRACTS TO SUCCESSFUL ACQUISITION 
                   OUTCOMES.

       The Secretary of Homeland Security shall require that all 
     contracts of the Department of Homeland Security that provide 
     award fees link such fees to successful acquisition outcomes 
     (which outcomes shall be specified in terms of cost, 
     schedule, and performance).
                                 ______
                                 
  SA 667. Mrs. CLINTON (for herself and Mr. Feingold) submitted an 
amendment intended to be proposed by her to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. REPORT ON SUPPORTING THE RESTORATION OF DEMOCRATIC 
                   RULE IN ZIMBABWE.

       (a) In General.--Not later than 90 days after the date of 
     the enactment of this Act, the Secretary of State shall 
     submit to Congress a report detailing a comprehensive plan 
     for supporting and assisting the people of Zimbabwe in their 
     efforts to restore democratic rule.
       (b) Consultation.--The Secretary of State shall develop the 
     plan described in subsection (a) in consultation with--
       (1) the United Nations;
       (2) the African Union;
       (3) the Southern African Development Community;
       (4) other multilateral organizations; and
       (5) interested States.
                                 ______
                                 
  SA 668. Mrs. CLINTON submitted an amendment intended to be proposed 
by her to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of chapter 3 of title I, add the following:

     SEC. 1316. LINKING OF AWARD FEES UNDER DEPARTMENT OF DEFENSE 
                   CONTRACTS TO SUCCESSFUL ACQUISITION OUTCOMES.

       The Secretary of Defense shall require that all contracts 
     of the Department of Defense that provide award fees link 
     such fees to successful acquisition outcomes (which outcomes 
     shall be specified in terms of cost, schedule, and 
     performance).
                                 ______
                                 
  SA 669. Mr. LIEBERMAN (for himself, Mrs. Boxer, Mr. Kennedy, Mrs. 
Clinton, Ms. Cantwell, Mr. Akaka, Mr. Biden, Ms. Landrieu, and Mr. 
Menendez) submitted an amendment intended to be proposed by him to the 
bill H.R. 1591, making emergency supplemental appropriations for the 
fiscal year ending September 30, 2007, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the end of chapter 3 of title I, add the following:

     SEC. 1316. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM FOR 
                   ENHANCED ACTIVITIES OF THE DEFENSE AND VETERANS 
                   BRAIN INJURY CENTER.

       The amount appropriated or otherwise made available by this 
     chapter under the heading ``Defense Health Program'' is 
     hereby increased by $17,000,000, with the amount of the 
     increase to be available for the Defense and Veterans Brain 
     Injury Center (DVBIC) for activities as follows:
       (1) To provide care to members of the Armed Forces with 
     traumatic brain injury at sites of the Defense and Veterans 
     Brain Injury Center.
       (2) To develop best practices on diagnosis and short-term 
     and long-term medical care for traumatic brain injury and 
     disseminate such practices to medical treatment facilities 
     and centers of the Department of Defense and the Department 
     of Veterans Affairs.
       (3) To conduct outreach and education to families of 
     members of the Armed Forces and veterans who are affected by 
     traumatic brain injury.
       (4) To investigate promising preventive interventions and 
     early interventions (including behavioral and pharmacological 
     treatments) to mitigate the impact of traumatic brain injury.
                                 ______
                                 
  SA 670. Mr. LUGAR submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30,

[[Page S3870]]

2007, and for other purposes; which was ordered to lie on the table; as 
follows:

       On page 56, after line 18, insert the following:


                         CIVILIAN RESERVE CORPS

       Sec. 1713. Of the funds appropriated by this chapter under 
     the heading ``Economic Support Fund'' and available for Iraq 
     and Afghanistan, up to $50,000,000 may be made available to 
     establish and maintain a civilian reserve corps. Funds made 
     available under this section shall be subject to the regular 
     notification procedures of the Committees on Appropriations.
                                 ______
                                 
  SA 671. Mr. DOMENICI submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       Strike section 413.
                                 ______
                                 
  SA 672. Mr. CRAIG submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       Beginning on page 89, line 8, strike ``available until 
     expended,'' and all that follows through ``that within 30 
     days'' on page 90, line 15, and insert ``available until 
     expended.

                         medical administration

       For an additional amount for ``Medical Administration'', 
     $250,000,000, to remain available until expended.

                           medical facilities

       For an additional amount for ``Medical Facilities'', 
     $595,000,000, to remain avialable until expended, of which 
     $45,000,000 shall be used for facility and equipment upgrades 
     at the Department of Veterans Affairs polytrauma 
     rehabilitation centers and the polytrauma network sites: 
     Provided, That within 30 days
                                 ______
                                 
  SA 673. Mr. HAGEL (for himself, Mr. Harkin, Mr. Grassley, and Mr. 
Durbin) submitted an amendment intended to be proposed by him to the 
bill H.R. 1591, making emergency supplemental appropriations for the 
fiscal year ending September 30, 2007, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the end of chapter 9 of title II, add the following:

     SEC. 2904. PAYMENT OF DEATH GRATUITY WITH RESPECT TO MEMBERS 
                   OF THE ARMED FORCES WITHOUT A SURVIVING SPOUSE 
                   WHO ARE SURVIVED BY A MINOR CHILD.

       Section 1477 of title 10, United States Code, is amended--
       (1) in subsection (a), by inserting ``, subject to 
     subsection (d),'' after ``shall be paid'';
       (2) by redesignating subsection (d) as subsection (e); and
       (3) by inserting after subsection (c) the following new 
     subsection (d):
       ``(d)(1) In the case of a person covered by section 1475 or 
     1476 of this title who has no surviving spouse, but who has 
     one or more surviving children (as prescribed by subsection 
     (b)) under the age of 18 years who, after the death of the 
     person, will be in the custody of a parent (as prescribed by 
     subsection (c)) or brother or sister (as prescribed by 
     subsection (a)) of the person, the death gratuity shall be 
     paid to such parent, brother, or sister as designated by the 
     person, whether in the full amount payable under section 1478 
     of this title or in such portion of such amount as the person 
     shall specify.
       ``(2) If the amount of the death gratuity specified for 
     payment under paragraph (1) is less than the full amount of 
     the death gratuity payable under section 1478 of this title, 
     the balance of the amount of the death gratuity shall be paid 
     to or for the living survivors of the person concerned in 
     accordance with paragraphs (2) through (5) of subsection (a).
       ``(3) An individual designated for the payment of death 
     gratuity under paragraph (1) shall be treated as an eligible 
     survivor for purposes of subsection (e).''.
                                 ______
                                 
  SA 674. Mr. COCHRAN (for himself and Mr. Lott) submitted an amendment 
intended to be proposed by him to the bill H.R. 1591, making emergency 
supplemental appropriations for the fiscal year ending September 30, 
2007, and for other purposes; which was ordered to lie on the table; as 
follows:

       On page 28, beginning on line 14, strike ``the Commander, 
     Multi-National Forces-Iraq shall submit'' and insert ``the 
     Commander, Multi-National Forces-Iraq and the United States 
     Ambassador to Iraq shall jointly submit''.
                                 ______
                                 
  SA 675. Mr. THOMAS submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:
       Sec. __. (a) Notwithstanding any other provision of this 
     Act, the following amounts provided in this Act are rescinded 
     and shall be null and void:
       (1) $24,000,000 for funding sugar beets.
       (2) $3,000,000 for funding for sugar cane.
       (3) $20,000,000 for insect infestation damage 
     reimbursements in Nevada, Idaho, and Utah.
       (4) $2,100,000,000 for crop production losses.
       (5) $1,500,000,000 for livestock production losses.
       (6) $100,000,000 for Dairy Production losses.
       (7) $13,000,000 for Ewe Lamb Replacement and Retention 
     program.
       (8) $32,000,000 for Livestock Indemnity program.
       (9) $40,000,000 for the Tree Assistance program.
       (10) $100,000,000 million for Small Agricultural Dependent 
     Businesses.
       (11) $6,000,000 for North Dakota flooded crop land.
       (12) $35,000,000 for emergency conservation program.
       (13) $50,000,000 for the emergency watershed program.
       (14) $115,000,000 for the conservation security program.
       (15) $18,000,000 for drought assistance in upper Great 
     Plains/South West.
       (16) Provisions that extend the availability by a year 
     $3,500,000 in funding for guided tours of the Capitol. Also a 
     provision allows transfer of funds from holiday ornament 
     sales in the Senate gift shop.
       (17) $165,900,000 for fisheries disaster relief, funded 
     through NOAA.
       (18) $12,000,000 for forest service money (requested by the 
     President in the non-emergency fiscal year 2008 budget).
       (19) $425,000,000 for education grants for rural areas-
     (Secure Rural Schools program).
       (20) $640,000,000 for LIHEAP.
       (21) $25,000,000 for asbestos abatement at the Capitol 
     Power Plant.
       (22) $388,900,000 for funding for backlog of old Department 
     of Transportation projects.
       (23) $22,800,000 for geothermal research and development.
       (24) $500,000,000 for wildland fire management.
       (25) $13,000,000 for mine safety technology research.
       (26) $31,000,000 for 1 month extension of Milk Income Loss 
     Contract program (MILC).
       (27) $50,000,000 for fisheries disaster mitigation fund.
       (28) Subsections (a) and (b) of section 1315 (Iraq 
     withdraw).
       (29) Any provision relating to Hurricane Katrina, Hurricane 
     Rita, Hurricane Wilma, or Hurricane Dennis emergency 
     assistance.
       (30) $100,000,000 for the 2008 Presidential Candidate 
     Nominating Conventions.
       (b) Notwithstanding any other provision of this Act, any 
     provision relating to the Federal minimum wage and any 
     related changes to the Internal Revenue Code of 1986, shall 
     be null and void.
                                 ______
                                 
  SA 676. Mr. FEINGOLD (for himself, Mrs. Boxer, and Mr. Leahy) 
submitted an amendment intended to be proposed by him to the bill H.R. 
1591, making emergency supplemental appropriations for the fiscal year 
ending September 30, 2007, and for other purposes; which was ordered to 
lie on the table; as follows:

       At the end of chapter 3 of title I, add the following:

     SEC. 1316. PROHIBITION ON USE OF FUNDS TO MAINTAIN THE UNITED 
                   STATES ARMED FORCES IN IRAQ.

       (a) Prohibition.--Commencing 120 days after the date of the 
     enactment of this Act, no funds appropriated or otherwise 
     made available by this Act may be obligated or expended to 
     continue the deployment of members of the United States Armed 
     Forces to Iraq.
       (b) Exceptions.--The prohibition under subsection (a) shall 
     not apply to the use of funds as follows:
       (1) To conduct targeted counterterrorism operations in 
     Iraq.
       (2) To provide security for United States infrastructure 
     and personnel.
       (3) To train Iraqi security forces.
       (4) To provide for the safe redeployment from Iraq of 
     members of the United States Armed Forces who are not needed 
     to perform any of the tasks described in paragraphs (1) 
     through (3).
                                 ______
                                 
  SA 677. Mr. LEAHY submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 40, line 1, strike ``$5,000,000'' and insert in 
     lieu thereof ``$10,000,000''.
                                 ______
                                 
  SA 678. Mr. LEAHY submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 44, line 16, strike ``$323,000,000'' and insert in 
     lieu thereof ``$328,000,000''.
       On page 44, line 24, strike ``$45,000,000'' and insert in 
     lieu thereof ``$50,000,000''.
       On page 42, line 20, strike ``$210,000,000'' and insert in 
     lieu thereof ``$205,000,000''.

[[Page S3871]]

                                 ______
                                 
  SA 679. Ms. COLLINS (for herself and Mr. Lieberman) submitted an 
amendment intended to be proposed by her to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of title III, add the following new section:

                       procurement of small arms

       Sec. 4104. (a) None of the funds appropriated or otherwise 
     made available by this Act may be obligated or expended for 
     the procurement of small arms, including pistols, rifles, and 
     machine guns of .50 caliber or below, for assistance to the 
     military or security forces of Iraq or Afghanistan unless 
     such arms are procured through a contract awarded on or after 
     January 1, 2007, using competitive procedures that require 
     full and open competition and that are open to all qualified 
     manufacturers in the United States.
       (b) The restriction under subsection (a) applies to 
     contracts to procure small arms and associated equipment, 
     including magazines and cleaning kits.
                                 ______
                                 
  SA 680. Mr. KENNEDY (for himself, Mr. Enzi, Mr. Baucus, and Mr. 
Grassley) submitted an amendment intended to be proposed by him to the 
bill H.R. 1591, making emergency supplemental appropriations for the 
fiscal year ending September 30, 2007, and for other purposes; as 
follows:

       At the end add the following:

               TITLE V--FAIR MINIMUM WAGE AND TAX RELIEF

                     Subtitle A--Fair Minimum Wage

     SEC. 500. SHORT TITLE.

       This subtitle may be cited as the ``Fair Minimum Wage Act 
     of 2007''.

     SEC. 501. MINIMUM WAGE.

       (a) In General.--Section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to 
     read as follows:
       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $5.85 an hour, beginning on the 60th day after the 
     date of enactment of the Fair Minimum Wage Act of 2007;
       ``(B) $6.55 an hour, beginning 12 months after that 60th 
     day; and
       ``(C) $7.25 an hour, beginning 24 months after that 60th 
     day;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 60 days after the date of enactment of this 
     Act.

     SEC. 502. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH 
                   OF THE NORTHERN MARIANA ISLANDS.

       (a) In General.--Section 6 of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of 
     the Northern Mariana Islands.
       (b) Transition.--Notwithstanding subsection (a), the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--
       (1) $3.55 an hour, beginning on the 60th day after the date 
     of enactment of this Act; and
       (2) increased by $0.50 an hour (or such lesser amount as 
     may be necessary to equal the minimum wage under section 
     6(a)(1) of such Act), beginning 6 months after the date of 
     enactment of this Act and every 6 months thereafter until the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under this subsection is equal to the minimum 
     wage set forth in such section.

               Subtitle B--Small Business Tax Incentives

     SEC. 510. SHORT TITLE; AMENDMENT OF CODE.

       (a) Short Title.--This subtitle may be cited as the ``Small 
     Business and Work Opportunity Act of 2007''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this subtitle 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.

              PART I--SMALL BUSINESS TAX RELIEF PROVISIONS

                     Subpart A--General Provisions

     SEC. 511. EXTENSION OF INCREASED EXPENSING FOR SMALL 
                   BUSINESSES.

       Section 179 (relating to election to expense certain 
     depreciable business assets) is amended by striking ``2010'' 
     each place it appears and inserting ``2011''.

     SEC. 512. EXTENSION AND MODIFICATION OF 15-YEAR STRAIGHT-LINE 
                   COST RECOVERY FOR QUALIFIED LEASEHOLD 
                   IMPROVEMENTS AND QUALIFIED RESTAURANT 
                   IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST 
                   RECOVERY FOR CERTAIN IMPROVEMENTS TO RETAIL 
                   SPACE.

       (a) Extension of Leasehold and Restaurant Improvements.--
       (1) In general.--Clauses (iv) and (v) of section 
     168(e)(3)(E) (relating to 15-year property) are each amended 
     by striking ``January 1, 2008'' and inserting ``April 1, 
     2008''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to property placed in service after December 31, 
     2007.
       (b) Modification of Treatment of Qualified Restaurant 
     Property as 15-Year Property for Purposes of Depreciation 
     Deduction.--
       (1) Treatment to include new construction.--Paragraph (7) 
     of section 168(e) (relating to classification of property) is 
     amended to read as follows:
       ``(7) Qualified restaurant property.--The term `qualified 
     restaurant property' means any section 1250 property which is 
     a building (or its structural components) or an improvement 
     to such building if more than 50 percent of such building's 
     square footage is devoted to preparation of, and seating for 
     on-premises consumption of, prepared meals.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to any property placed in service after the date 
     of the enactment of this Act, the original use of which 
     begins with the taxpayer after such date.
       (c) Recovery Period for Depreciation of Certain 
     Improvements to Retail Space.--
       (1) 15-year recovery period.--Section 168(e)(3)(E) 
     (relating to 15-year property) is amended by striking ``and'' 
     at the end of clause (vii), by striking the period at the end 
     of clause (viii) and inserting ``, and'', and by adding at 
     the end the following new clause:
       ``(ix) any qualified retail improvement property placed in 
     service before April 1, 2008.''.
       (2) Qualified retail improvement property.--Section 168(e) 
     is amended by adding at the end the following new paragraph:
       ``(8) Qualified retail improvement property.--
       ``(A) In general.--The term `qualified retail improvement 
     property' means any improvement to an interior portion of a 
     building which is nonresidential real property if--
       ``(i) such portion is open to the general public and is 
     used in the retail trade or business of selling tangible 
     personal property to the general public, and
       ``(ii) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Improvements made by owner.--In the case of an 
     improvement made by the owner of such improvement, such 
     improvement shall be qualified retail improvement property 
     (if at all) only so long as such improvement is held by such 
     owner. Rules similar to the rules under paragraph (6)(B) 
     shall apply for purposes of the preceding sentence.
       ``(C) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefitting a common area, 
     or
       ``(iv) the internal structural framework of the 
     building.''.
       (3) Requirement to use straight line method.--Section 
     168(b)(3) is amended by adding at the end the following new 
     subparagraph:
       ``(I) Qualified retail improvement property described in 
     subsection (e)(8).''.
       (4) Alternative system.--The table contained in section 
     168(g)(3)(B) is amended by inserting after the item relating 
     to subparagraph (E)(viii) the following new item:

(E)(ix)...........................................................39''.

       (5) Effective date.--The amendments made by this subsection 
     shall apply to property placed in service after the date of 
     the enactment of this Act.

     SEC. 513. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL 
                   BUSINESS.

       (a) Cash Accounting Permitted.--
       (1) In general.--Section 446 (relating to general rule for 
     methods of accounting) is amended by adding at the end the 
     following new subsection:
       ``(g) Certain Small Business Taxpayers Permitted To Use 
     Cash Accounting Method Without Limitation.--
       ``(1) In general.--An eligible taxpayer shall not be 
     required to use an accrual method of accounting for any 
     taxable year.
       ``(2) Eligible taxpayer.--For purposes of this subsection, 
     a taxpayer is an eligible taxpayer with respect to any 
     taxable year if--
       ``(A) for each of the prior taxable years ending on or 
     after the date of the enactment of this subsection, the 
     taxpayer (or any predecessor) met the gross receipts test in 
     effect under section 448(c) for such taxable year, and
       ``(B) the taxpayer is not subject to section 447 or 448.''.
       (2) Expansion of gross receipts test.--
       (A) In general.--Paragraph (3) of section 448(b) (relating 
     to entities with gross receipts of not more than $5,000,000) 
     is amended to read as follows:
       ``(3) Entities meeting gross receipts test.--Paragraphs (1) 
     and (2) of subsection (a) shall not apply to any corporation 
     or partnership for any taxable year if, for each of the prior 
     taxable years ending on or after the date of the enactment of 
     the Small Business and Work Opportunity Act of 2007, the 
     entity (or any predecessor) met the gross receipts test in 
     effect under subsection (c) for such prior taxable year.''.
       (B) Conforming amendments.--Section 448(c) of such Code is 
     amended--
       (i) by striking ``$5,000,000'' in the heading thereof,
       (ii) by striking ``$5,000,000'' each place it appears in 
     paragraph (1) and inserting ``$10,000,000'', and
       (iii) by adding at the end the following new paragraph:

[[Page S3872]]

       ``(4) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2008, the dollar 
     amount contained in paragraph (1) shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2007' for 
     `calendar year 1992' in subparagraph (B) thereof.
       ``If any amount as adjusted under this subparagraph is not 
     a multiple of $100,000, such amount shall be rounded to the 
     nearest multiple of $100,000.''.
       (b) Clarification of Inventory Rules for Small Business.--
       (1) In general.--Section 471 (relating to general rule for 
     inventories) is amended by redesignating subsection (c) as 
     subsection (d) and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Small Business Taxpayers Not Required To Use 
     Inventories.--
       ``(1) In general.--A qualified taxpayer shall not be 
     required to use inventories under this section for a taxable 
     year.
       ``(2) Treatment of taxpayers not using inventories.--If a 
     qualified taxpayer does not use inventories with respect to 
     any property for any taxable year beginning after the date of 
     the enactment of this subsection, such property shall be 
     treated as a material or supply which is not incidental.
       ``(3) Qualified taxpayer.--For purposes of this subsection, 
     the term `qualified taxpayer' means--
       ``(A) any eligible taxpayer (as defined in section 
     446(g)(2)), and
       ``(B) any taxpayer described in section 448(b)(3).''.
       (2) Conforming amendments.--
       (A) Subpart D of part II of subchapter E of chapter 1 is 
     amended by striking section 474.
       (B) The table of sections for subpart D of part II of 
     subchapter E of chapter 1 is amended by striking the item 
     relating to section 474.
       (c) Effective Date and Special Rules.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after the date of the 
     enactment of this Act.
       (2) Change in method of accounting.--In the case of any 
     taxpayer changing the taxpayer's method of accounting for any 
     taxable year under the amendments made by this section--
       (A) such change shall be treated as initiated by the 
     taxpayer;
       (B) such change shall be treated as made with the consent 
     of the Secretary of the Treasury; and
       (C) the net amount of the adjustments required to be taken 
     into account by the taxpayer under section 481 of the 
     Internal Revenue Code of 1986 shall be taken into account 
     over a period (not greater than 4 taxable years) beginning 
     with such taxable year.

     SEC. 514. EXTENSION AND MODIFICATION OF COMBINED WORK 
                   OPPORTUNITY TAX CREDIT AND WELFARE-TO-WORK 
                   CREDIT.

       (a) Extension.--Section 51(c)(4)(B) (relating to 
     termination) is amended by striking ``2007'' and inserting 
     ``2012''.
       (b) Increase in Maximum Age for Designated Community 
     Residents.--
       (1) In general.--Paragraph (5) of section 51(d) is amended 
     to read as follows:
       ``(5) Designated community residents.--
       ``(A) In general.--The term `designated community resident' 
     means any individual who is certified by the designated local 
     agency--
       ``(i) as having attained age 18 but not age 40 on the 
     hiring date, and
       ``(ii) as having his principal place of abode within an 
     empowerment zone, enterprise community, or renewal community.
       ``(B) Individual must continue to reside in zone or 
     community.--In the case of a designated community resident, 
     the term `qualified wages' shall not include wages paid or 
     incurred for services performed while the individual's 
     principal place of abode is outside an empowerment zone, 
     enterprise community, or renewal community.''.
       (2) Conforming amendment.--Subparagraph (D) of section 
     51(d)(1) is amended to read as follows:
       ``(D) a designated community resident,''.
       (c) Clarification of Treatment of Individuals Under 
     Individual Work Plans.--Subparagraph (B) of section 51(d)(6) 
     (relating to vocational rehabilitation referral) is amended 
     by striking ``or'' at the end of clause (i), by striking the 
     period at the end of clause (ii) and inserting ``, or'', and 
     by adding at the end the following new clause:
       ``(iii) an individual work plan developed and implemented 
     by an employment network pursuant to subsection (g) of 
     section 1148 of the Social Security Act with respect to which 
     the requirements of such subsection are met.''.
       (d) Treatment of Disabled Veterans Under the Work 
     Opportunity Tax Credit.--
       (1) Disabled veterans treated as members of targeted 
     group.--
       (A) In general.--Subparagraph (A) of section 51(d)(3) 
     (relating to qualified veteran) is amended by striking 
     ``agency as being a member of a family'' and all that follows 
     and inserting ``agency as--
       ``(i) being a member of a family receiving assistance under 
     a food stamp program under the Food Stamp Act of 1977 for at 
     least a 3-month period ending during the 12-month period 
     ending on the hiring date, or
       ``(ii) entitled to compensation for a service-connected 
     disability incurred after September 10, 2001.''.
       (B) Definitions.--Paragraph (3) of section 51(d) is amended 
     by adding at the end the following new subparagraph:
       ``(C) Other definitions.--For purposes of subparagraph (A), 
     the terms `compensation' and `service-connected' have the 
     meanings given such terms under section 101 of title 38, 
     United States Code.''.
       (2) Increase in amount of wages taken into account for 
     disabled veterans.--Paragraph (3) of section 51(b) is 
     amended--
       (A) by inserting ``($12,000 per year in the case of any 
     individual who is a qualified veteran by reason of subsection 
     (d)(3)(A)(ii))'' before the period at the end, and
       (B) by striking ``only first  $6,000 of'' in the heading 
     and inserting ``limitation on''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after the date of the enactment of this Act, in taxable years 
     ending after such date.

     SEC. 515. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       (a) Employment Taxes.--Chapter 25 (relating to general 
     provisions relating to employment taxes) is amended by adding 
     at the end the following new section:

     ``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       ``(a) General Rules.--For purposes of the taxes, and other 
     obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer (and no other person shall be 
     treated as the employer) of any work site employee performing 
     services for any customer of such organization, but only with 
     respect to remuneration remitted by such organization to such 
     work site employee, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(b) Successor Employer Status.--For purposes of sections 
     3121(a)(1), 3231(e)(2)(C), and 3306(b)(1)--
       ``(1) a certified professional employer organization 
     entering into a service contract with a customer with respect 
     to a work site employee shall be treated as a successor 
     employer and the customer shall be treated as a predecessor 
     employer during the term of such service contract, and
       ``(2) a customer whose service contract with a certified 
     professional employer organization is terminated with respect 
     to a work site employee shall be treated as a successor 
     employer and the certified professional employer organization 
     shall be treated as a predecessor employer.
       ``(c) Liability of Certified Professional Employer 
     Organization.--Solely for purposes of its liability for the 
     taxes, and other obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer of any individual (other than a 
     work site employee or a person described in subsection (f)) 
     who is performing services covered by a contract meeting the 
     requirements of section 7705(e)(2), but only with respect to 
     remuneration remitted by such organization to such 
     individual, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(d) Treatment of Credits.--
       ``(1) In general.--For purposes of any credit specified in 
     paragraph (2)--
       ``(A) such credit with respect to a work site employee 
     performing services for the customer applies to the customer, 
     not the certified professional employer organization,
       ``(B) the customer, and not the certified professional 
     employer organization, shall take into account wages and 
     employment taxes--
       ``(i) paid by the certified professional employer 
     organization with respect to the work site employee, and
       ``(ii) for which the certified professional employer 
     organization receives payment from the customer, and
       ``(C) the certified professional employer organization 
     shall furnish the customer with any information necessary for 
     the customer to claim such credit.
       ``(2) Credits specified.--A credit is specified in this 
     paragraph if such credit is allowed under--
       ``(A) section 41 (credit for increasing research activity),
       ``(B) section 45A (Indian employment credit),
       ``(C) section 45B (credit for portion of employer social 
     security taxes paid with respect to employee cash tips),
       ``(D) section 45C (clinical testing expenses for certain 
     drugs for rare diseases or conditions),
       ``(E) section 51 (work opportunity credit),
       ``(F) section 51A (temporary incentives for employing long-
     term family assistance recipients),
       ``(G) section 1396 (empowerment zone employment credit),
       ``(H) 1400(d) (DC Zone employment credit),
       ``(I) Section 1400H (renewal community employment credit), 
     and
       ``(J) any other section as provided by the Secretary.
       ``(e) Special Rule for Related Party.--This section shall 
     not apply in the case of a

[[Page S3873]]

     customer which bears a relationship to a certified 
     professional employer organization described in section 
     267(b) or 707(b). For purposes of the preceding sentence, 
     such sections shall be applied by substituting `10 percent' 
     for `50 percent'.
       ``(f) Special Rule for Certain Individuals.--For purposes 
     of the taxes imposed under this subtitle, an individual with 
     net earnings from self-employment derived from the customer's 
     trade or business is not a work site employee with respect to 
     remuneration paid by a certified professional employer 
     organization.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Certified Professional Employer Organization Defined.--
     Chapter 79 (relating to definitions) is amended by adding at 
     the end the following new section:

     ``SEC. 7705. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS 
                   DEFINED.

       ``(a) In General.--For purposes of this title, the term 
     `certified professional employer organization' means a person 
     who has been certified by the Secretary for purposes of 
     section 3511 as meeting the requirements of subsection (b).
       ``(b) General Requirements.--A person meets the 
     requirements of this subsection if such person--
       ``(1) demonstrates that such person (and any owner, 
     officer, and such other persons as may be specified in 
     regulations) meets such requirements as the Secretary shall 
     establish with respect to tax status, background, experience, 
     business location, and annual financial audits,
       ``(2) computes its taxable income using an accrual method 
     of accounting unless the Secretary approves another method,
       ``(3) agrees that it will satisfy the bond and independent 
     financial review requirements of subsection (c) on an ongoing 
     basis,
       ``(4) agrees that it will satisfy such reporting 
     obligations as may be imposed by the Secretary,
       ``(5) agrees to verify on such periodic basis as the 
     Secretary may prescribe that it continues to meet the 
     requirements of this subsection, and
       ``(6) agrees to notify the Secretary in writing within such 
     time as the Secretary may prescribe of any change that 
     materially affects whether it continues to meet the 
     requirements of this subsection.
       ``(c) Bond and Independent Financial Review Requirements.--
       ``(1) In general.--An organization meets the requirements 
     of this paragraph if such organization--
       ``(A) meets the bond requirements of paragraph (2), and
       ``(B) meets the independent financial review requirements 
     of paragraph (3).
       ``(2) Bond.--
       ``(A) In general.--A certified professional employer 
     organization meets the requirements of this paragraph if the 
     organization has posted a bond for the payment of taxes under 
     subtitle C (in a form acceptable to the Secretary) in an 
     amount at least equal to the amount specified in subparagraph 
     (B).
       ``(B) Amount of bond.--For the period April 1 of any 
     calendar year through March 31 of the following calendar 
     year, the amount of the bond required is equal to the greater 
     of--
       ``(i) 5 percent of the organization's liability under 
     section 3511 for taxes imposed by subtitle C during the 
     preceding calendar year (but not to exceed $1,000,000), or
       ``(ii) $50,000.
       ``(3) Independent financial review requirements.--A 
     certified professional employer organization meets the 
     requirements of this paragraph if such organization--
       ``(A) has, as of the most recent review date, caused to be 
     prepared and provided to the Secretary (in such manner as the 
     Secretary may prescribe) an opinion of an independent 
     certified public accountant that the certified professional 
     employer organization's financial statements are presented 
     fairly in accordance with generally accepted accounting 
     principles, and
       ``(B) provides, not later than the last day of the second 
     month beginning after the end of each calendar quarter, to 
     the Secretary from an independent certified public accountant 
     an assertion regarding Federal employment tax payments and an 
     examination level attestation on such assertion.
     Such assertion shall state that the organization has withheld 
     and made deposits of all taxes imposed by chapters 21, 22, 
     and 24 of the Internal Revenue Code in accordance with 
     regulations imposed by the Secretary for such calendar 
     quarter and such examination level attestation shall state 
     that such assertion is fairly stated, in all material 
     respects.
       ``(4) Controlled group rules.--For purposes of the 
     requirements of paragraphs (2) and (3), all professional 
     employer organizations that are members of a controlled group 
     within the meaning of sections 414(b) and (c) shall be 
     treated as a single organization.
       ``(5) Failure to file assertion and attestation.--If the 
     certified professional employer organization fails to file 
     the assertion and attestation required by paragraph (3) with 
     respect to any calendar quarter, then the requirements of 
     paragraph (3) with respect to such failure shall be treated 
     as not satisfied for the period beginning on the due date for 
     such attestation.
       ``(6) Review date.--For purposes of paragraph (3)(A), the 
     review date shall be 6 months after the completion of the 
     organization's fiscal year.
       ``(d) Suspension and Revocation Authority.--The Secretary 
     may suspend or revoke a certification of any person under 
     subsection (b) for purposes of section 3511 if the Secretary 
     determines that such person is not satisfying the 
     representations or requirements of subsections (b) or (c), or 
     fails to satisfy applicable accounting, reporting, payment, 
     or deposit requirements.
       ``(e) Work Site Employee.--For purposes of this title--
       ``(1) In general.--The term `work site employee' means, 
     with respect to a certified professional employer 
     organization, an individual who--
       ``(A) performs services for a customer pursuant to a 
     contract which is between such customer and the certified 
     professional employer organization and which meets the 
     requirements of paragraph (2), and
       ``(B) performs services at a work site meeting the 
     requirements of paragraph (3).
       ``(2) Service contract requirements.--A contract meets the 
     requirements of this paragraph with respect to an individual 
     performing services for a customer if such contract is in 
     writing and provides that the certified professional employer 
     organization shall--
       ``(A) assume responsibility for payment of wages to such 
     individual, without regard to the receipt or adequacy of 
     payment from the customer for such services,
       ``(B) assume responsibility for reporting, withholding, and 
     paying any applicable taxes under subtitle C, with respect to 
     such individual's wages, without regard to the receipt or 
     adequacy of payment from the customer for such services,
       ``(C) assume responsibility for any employee benefits which 
     the service contract may require the organization to provide, 
     without regard to the receipt or adequacy of payment from the 
     customer for such services,
       ``(D) assume responsibility for hiring, firing, and 
     recruiting workers in addition to the customer's 
     responsibility for hiring, firing and recruiting workers,
       ``(E) maintain employee records relating to such 
     individual, and
       ``(F) agree to be treated as a certified professional 
     employer organization for purposes of section 3511 with 
     respect to such individual.
       ``(3) Work site coverage requirement.--The requirements of 
     this paragraph are met with respect to an individual if at 
     least 85 percent of the individuals performing services for 
     the customer at the work site where such individual performs 
     services are subject to 1 or more contracts with the 
     certified professional employer organization which meet the 
     requirements of paragraph (2) (but not taking into account 
     those individuals who are excluded employees within the 
     meaning of section 414(q)(5)).
       ``(f) Determination of Employment Status.--Except to the 
     extent necessary for purposes of section 3511, nothing in 
     this section shall be construed to affect the determination 
     of who is an employee or employer for purposes of this title.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (c) Conforming Amendments.--
       (1) Section 3302 is amended by adding at the end the 
     following new subsection:
       ``(h) Treatment of Certified Professional Employer 
     Organizations.--If a certified professional employer 
     organization (as defined in section 7705), or a customer of 
     such organization, makes a contribution to the State's 
     unemployment fund with respect to a work site employee, such 
     organization shall be eligible for the credits available 
     under this section with respect to such contribution.''.
       (2) Section 3303(a) is amended--
       (A) by striking the period at the end of paragraph (3) and 
     inserting ``; and'' and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) if the taxpayer is a certified professional employer 
     organization (as defined in section 7705) that is treated as 
     the employer under section 3511, such certified professional 
     employer organization is permitted to collect and remit, in 
     accordance with paragraphs (1), (2), and (3), contributions 
     during the taxable year to the State unemployment fund with 
     respect to a work site employee.'', and
       (B) in the last sentence--
       (i) by striking ``paragraphs (1), (2), and (3)'' and 
     inserting ``paragraphs (1), (2), (3), and (4)'', and
       (ii) by striking ``paragraph (1), (2), or (3)'' and 
     inserting ``paragraph (1), (2), (3), or (4)''.
       (3) Section 6053(c) (relating to reporting of tips) is 
     amended by adding at the end the following new paragraph:
       ``(8) Certified professional employer organizations.--For 
     purposes of any report required by this subsection, in the 
     case of a certified professional employer organization that 
     is treated under section 3511 as the employer of a work site 
     employee, the customer with respect to whom a work site 
     employee performs services shall be the employer for purposes 
     of reporting under this section and the certified 
     professional employer organization shall furnish to the 
     customer any information necessary to complete such reporting 
     no later than such time as the Secretary shall prescribe.''.
       (d) Clerical Amendments.--
       (1) The table of sections for chapter 25 is amended by 
     adding at the end the following new item:


[[Page S3874]]


``Sec. 3511. Certified professional employer organizations''.

       (2) The table of sections for chapter 79 is amended by 
     inserting after the item relating to section 7704 the 
     following new item:

``Sec. 7705. Certified professional employer organizations defined''.

       (e) Reporting Requirements and Obligations.--The Secretary 
     of the Treasury shall develop such reporting and 
     recordkeeping rules, regulations, and procedures as the 
     Secretary determines necessary or appropriate to ensure 
     compliance with the amendments made by this section with 
     respect to entities applying for certification as certified 
     professional employer organizations or entities that have 
     been so certified. Such rules shall be designed in a manner 
     which streamlines, to the extent possible, the application of 
     requirements of such amendments, the exchange of information 
     between a certified professional employer organization and 
     its customers, and the reporting and recordkeeping 
     obligations of the certified professional employer 
     organization.
       (f) User Fees.--Subsection (b) of section 7528 (relating to 
     Internal Revenue Service user fees) is amended by adding at 
     the end the following new paragraph:
       ``(4) Certified professional employer organizations.--The 
     fee charged under the program in connection with the 
     certification by the Secretary of a professional employer 
     organization under section 7705 shall not exceed $500.''.
       (g) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to wages for services performed on or 
     after January 1 of the first calendar year beginning more 
     than 12 months after the date of the enactment of this Act.
       (2) Certification program.--The Secretary of the Treasury 
     shall establish the certification program described in 
     section 7705(b) of the Internal Revenue Code of 1986, as 
     added by subsection (b), not later than 6 months before the 
     effective date determined under paragraph (1).
       (h) No Inference.--Nothing contained in this section or the 
     amendments made by this section shall be construed to create 
     any inference with respect to the determination of who is an 
     employee or employer--
       (1) for Federal tax purposes (other than the purposes set 
     forth in the amendments made by this section), or
       (2) for purposes of any other provision of law.

                   Subpart B--Subchapter S Provisions

     SEC. 521. CAPITAL GAIN OF S CORPORATION NOT TREATED AS 
                   PASSIVE INVESTMENT INCOME.

       (a) In General.--Section 1362(d)(3) is amended by striking 
     subparagraphs (B), (C), (D), (E), and (F) and inserting the 
     following new subparagraph:
       ``(B) Passive investment income defined.--
       ``(i) In general.--Except as otherwise provided in this 
     subparagraph, the term `passive investment income' means 
     gross receipts derived from royalties, rents, dividends, 
     interest, and annuities.
       ``(ii) Exception for interest on notes from sales of 
     inventory.--The term `passive investment income' shall not 
     include interest on any obligation acquired in the ordinary 
     course of the corporation's trade or business from its sale 
     of property described in section 1221(a)(1).
       ``(iii) Treatment of certain lending or finance 
     companies.--If the S corporation meets the requirements of 
     section 542(c)(6) for the taxable year, the term `passive 
     investment income' shall not include gross receipts for the 
     taxable year which are derived directly from the active and 
     regular conduct of a lending or finance business (as defined 
     in section 542(d)(1)).
       ``(iv) Treatment of certain dividends.--If an S corporation 
     holds stock in a C corporation meeting the requirements of 
     section 1504(a)(2), the term `passive investment income' 
     shall not include dividends from such C corporation to the 
     extent such dividends are attributable to the earnings and 
     profits of such C corporation derived from the active conduct 
     of a trade or business.
       ``(v) Exception for banks, etc.--In the case of a bank (as 
     defined in section 581) or a depository institution holding 
     company (as defined in section 3(w)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813(w)(1)), the term `passive 
     investment income' shall not include--

       ``(I) interest income earned by such bank or company, or
       ``(II) dividends on assets required to be held by such bank 
     or company, including stock in the Federal Reserve Bank, the 
     Federal Home Loan Bank, or the Federal Agricultural Mortgage 
     Bank or participation certificates issued by a Federal 
     Intermediate Credit Bank.''.

       (b) Conforming Amendment.--Clause (i) of section 
     1042(c)(4)(A) is amended by striking ``section 
     1362(d)(3)(C)'' and inserting ``section 1362(d)(3)(B)''.
       (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. 522. TREATMENT OF BANK DIRECTOR SHARES.

       (a) In General.--Section 1361 (defining S corporation) is 
     amended by adding at the end the following new subsection:
       ``(f) Restricted Bank Director Stock.--
       ``(1) In general.--Restricted bank director stock shall not 
     be taken into account as outstanding stock of the S 
     corporation in applying this subchapter (other than section 
     1368(f)).
       ``(2) Restricted bank director stock.--For purposes of this 
     subsection, the term `restricted bank director stock' means 
     stock in a bank (as defined in section 581) or a depository 
     institution holding company (as defined in section 3(w)(1) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1)), if 
     such stock--
       ``(A) is required to be held by an individual under 
     applicable Federal or State law in order to permit such 
     individual to serve as a director, and
       ``(B) is subject to an agreement with such bank or company 
     (or a corporation which controls (within the meaning of 
     section 368(c)) such bank or company) pursuant to which the 
     holder is required to sell back such stock (at the same price 
     as the individual acquired such stock) upon ceasing to hold 
     the office of director.
       ``(3) Cross reference.--

``For treatment of certain distributions with respect to restricted 
              bank director stock, see section 1368(f)''.
       (b) Distributions.--Section 1368 (relating to 
     distributions) is amended by adding at the end the following 
     new subsection:
       ``(f) Restricted Bank Director Stock.--If a director 
     receives a distribution (not in part or full payment in 
     exchange for stock) from an S corporation with respect to any 
     restricted bank director stock (as defined in section 
     1361(f)), the amount of such distribution--
       ``(1) shall be includible in gross income of the director, 
     and
       ``(2) shall be deductible by the corporation for the 
     taxable year of such corporation in which or with which ends 
     the taxable year in which such amount in included in the 
     gross income of the director.''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006.
       (2) Special rule for treatment as second class of stock.--
     In the case of any taxable year beginning after December 31, 
     1996, restricted bank director stock (as defined in section 
     1361(f) of the Internal Revenue Code of 1986, as added by 
     this section) shall not be taken into account in determining 
     whether an S corporation has more than 1 class of stock.

     SEC. 523. SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE 
                   RESERVE METHOD OF ACCOUNTING ON BECOMING S 
                   CORPORATION.

       (a) In General.--Section 1361, as amended by this Act, is 
     amended by adding at the end the following new subsection:
       ``(g) Special Rule for Bank Required To Change From the 
     Reserve Method of Accounting on Becoming S Corporation.--In 
     the case of a bank which changes from the reserve method of 
     accounting for bad debts described in section 585 or 593 for 
     its first taxable year for which an election under section 
     1362(a) is in effect, the bank may elect to take into account 
     any adjustments under section 481 by reason of such change 
     for the taxable year immediately preceding such first taxable 
     year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 524. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED 
                   SUBCHAPTER S SUBSIDIARY.

       (a) In General.--Subparagraph (C) of section 1361(b)(3) 
     (relating to treatment of terminations of qualified 
     subchapter S subsidiary status) is amended--
       (1) by striking ``For purposes of this title,'' and 
     inserting the following:
       ``(i) In general.--For purposes of this title,'', and
       (2) by inserting at the end the following new clause:
       ``(ii) Termination by reason of sale of stock.--If the 
     failure to meet the requirements of subparagraph (B) is by 
     reason of the sale of stock of a corporation which is a 
     qualified subchapter S subsidiary, the sale of such stock 
     shall be treated as if--

       ``(I) the sale were a sale of an undivided interest in the 
     assets of such corporation (based on the percentage of the 
     corporation's stock sold), and
       ``(II) the sale were followed by an acquisition by such 
     corporation of all of its assets (and the assumption by such 
     corporation of all of its liabilities) in a transaction to 
     which section 351 applies.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006 .

     SEC. 525. ELIMINATION OF ALL EARNINGS AND PROFITS 
                   ATTRIBUTABLE TO PRE-1983 YEARS FOR CERTAIN 
                   CORPORATIONS.

       In the case of a corporation which is--
       (1) described in section 1311(a)(1) of the Small Business 
     Job Protection Act of 1996, and
       (2) not described in section 1311(a)(2) of such Act,
       the amount of such corporation's accumulated earnings and 
     profits (for the first taxable year beginning after the date 
     of the enactment of this Act) shall be reduced by an amount 
     equal to the portion (if any) of such accumulated earnings 
     and profits which were accumulated in any taxable year 
     beginning

[[Page S3875]]

     before January 1, 1983, for which such corporation was an 
     electing small business corporation under subchapter S of the 
     Internal Revenue Code of 1986.

     SEC. 526. EXPANSION OF QUALIFYING BENEFICIARIES OF AN 
                   ELECTING SMALL BUSINESS TRUST.

       (a) No Look Through for Eligibility Purposes.--Clause (v) 
     of section 1361(c)(2)(B) is amended by adding at the end the 
     following new sentence: ``This clause shall not apply for 
     purposes of subsection (b)(1)(C).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

                      PART II--REVENUE PROVISIONS

     SEC. 531. MODIFICATION OF EFFECTIVE DATE OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) Leases to Foreign Entities.--Section 849(b) of the 
     American Jobs Creation Act of 2004 is amended by adding at 
     the end the following new paragraph:
       ``(5) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2006, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.

     SEC. 532. APPLICATION OF RULES TREATING INVERTED CORPORATIONS 
                   AS DOMESTIC CORPORATIONS TO CERTAIN 
                   TRANSACTIONS OCCURRING AFTER MARCH 20, 2002.

       (a) In General.--Section 7874(b) (relating to inverted 
     corporations treated as domestic corporations) is amended to 
     read as follows:
       ``(b) Inverted Corporations Treated as Domestic 
     Corporations.--
       ``(1) In general.--Notwithstanding section 7701(a)(4), a 
     foreign corporation shall be treated for purposes of this 
     title as a domestic corporation if such corporation would be 
     a surrogate foreign corporation if subsection (a)(2) were 
     applied by substituting `80 percent' for `60 percent'.
       ``(2) Special rule for certain transactions occurring after 
     march 20, 2002.--
       ``(A) In general.--If--
       ``(i) paragraph (1) does not apply to a foreign 
     corporation, but
       ``(ii) paragraph (1) would apply to such corporation if, in 
     addition to the substitution under paragraph (1), subsection 
     (a)(2) were applied by substituting `March 20, 2002' for 
     `March 4, 2003' each place it appears,
     then paragraph (1) shall apply to such corporation but only 
     with respect to taxable years of such corporation beginning 
     after December 31, 2006.
       ``(B) Special rules.--Subject to such rules as the 
     Secretary may prescribe, in the case of a corporation to 
     which paragraph (1) applies by reason of this paragraph--
       ``(i) the corporation shall be treated, as of the close of 
     its last taxable year beginning before January 1, 2007, as 
     having transferred all of its assets, liabilities, and 
     earnings and profits to a domestic corporation in a 
     transaction with respect to which no tax is imposed under 
     this title,
       ``(ii) the bases of the assets transferred in the 
     transaction to the domestic corporation shall be the same as 
     the bases of the assets in the hands of the foreign 
     corporation, subject to any adjustments under this title for 
     built-in losses,
       ``(iii) the basis of the stock of any shareholder in the 
     domestic corporation shall be the same as the basis of the 
     stock of the shareholder in the foreign corporation for which 
     it is treated as exchanged, and
       ``(iv) the transfer of any earnings and profits by reason 
     of clause (i) shall be disregarded in determining any deemed 
     dividend or foreign tax creditable to the domestic 
     corporation with respect to such transfer.
       ``(C) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this paragraph, including regulations to prevent the 
     avoidance of the purposes of this paragraph.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 533. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.

       (a) Disallowance of Deduction.--
       (1) In general.--Section 162(g) (relating to treble damage 
     payments under the antitrust laws) is amended--
       (A) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively,
       (B) by striking ``If'' and inserting:
       ``(1) Treble damages.--If'', and
       (C) by adding at the end the following new paragraph:
       ``(2) Punitive damages.--No deduction shall be allowed 
     under this chapter for any amount paid or incurred for 
     punitive damages in connection with any judgment in, or 
     settlement of, any action. This paragraph shall not apply to 
     punitive damages described in section 104(c).''.
       (2) Conforming amendment.--The heading for section 162(g) 
     is amended by inserting ``Or Punitive Damages'' after 
     ``Laws''.
       (b) Inclusion in Income of Punitive Damages Paid by Insurer 
     or Otherwise.--
       (1) In general.--Part II of subchapter B of chapter 1 
     (relating to items specifically included in gross income) is 
     amended by adding at the end the following new section:

     ``SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR 
                   OTHERWISE.

       ``Gross income shall include any amount paid to or on 
     behalf of a taxpayer as insurance or otherwise by reason of 
     the taxpayer's liability (or agreement) to pay punitive 
     damages.''.
       (2) Reporting requirements.--Section 6041 (relating to 
     information at source) is amended by adding at the end the 
     following new subsection:
       ``(h) Section To Apply to Punitive Damages Compensation.--
     This section shall apply to payments by a person to or on 
     behalf of another person as insurance or otherwise by reason 
     of the other person's liability (or agreement) to pay 
     punitive damages.''.
       (3) Conforming amendment.--The table of sections for part 
     II of subchapter B of chapter 1 is amended by adding at the 
     end the following new item:

``Sec. 91. Punitive damages compensated by insurance or otherwise''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to damages paid or incurred on or after the date 
     of the enactment of this Act.

     SEC. 534. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, 
                   AND OTHER AMOUNTS.

       (a) In General.--Subsection (f) of section 162 (relating to 
     trade or business expenses) is amended to read as follows:
       ``(f) Fines, Penalties, and Other Amounts.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     deduction otherwise allowable shall be allowed under this 
     chapter for any amount paid or incurred (whether by suit, 
     agreement, or otherwise) to, or at the direction of, a 
     government or entity described in paragraph (4) in relation 
     to the violation of any law or the investigation or inquiry 
     by such government or entity into the potential violation of 
     any law.
       ``(2) Exception for amounts constituting restitution or 
     paid to come into compliance with law.--Paragraph (1) shall 
     not apply to any amount which--
       ``(A) the taxpayer establishes--
       ``(i) constitutes restitution (including remediation of 
     property) for damage or harm caused by or which may be caused 
     by the violation of any law or the potential violation of any 
     law, or
       ``(ii) is paid to come into compliance with any law which 
     was violated or involved in the investigation or inquiry, and
       ``(B) is identified as restitution or as an amount paid to 
     come into compliance with the law, as the case may be, in the 
     court order or settlement agreement.
     A taxpayer shall not meet the requirements of subparagraph 
     (A) solely by reason an identification under subparagraph 
     (B). This paragraph shall not apply to any amount paid or 
     incurred as reimbursement to the government or entity for the 
     costs of any investigation or litigation.
       ``(3) Exception for amounts paid or incurred as the result 
     of certain court orders.--Paragraph (1) shall not apply to 
     any amount paid or incurred by order of a court in a suit in 
     which no government or entity described in paragraph (4) is a 
     party.
       ``(4) Certain nongovernmental regulatory entities.--An 
     entity is described in this paragraph if it is--
       ``(A) a nongovernmental entity which exercises self-
     regulatory powers (including imposing sanctions) in 
     connection with a qualified board or exchange (as defined in 
     section 1256(g)(7)), or
       ``(B) to the extent provided in regulations, a 
     nongovernmental entity which exercises self-regulatory powers 
     (including imposing sanctions) as part of performing an 
     essential governmental function.
       ``(5) Exception for taxes due.--Paragraph (1) shall not 
     apply to any amount paid or incurred as taxes due.''.
       (b) Reporting of Deductible Amounts.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6050V the 
     following new section:

     ``SEC. 6050W. INFORMATION WITH RESPECT TO CERTAIN FINES, 
                   PENALTIES, AND OTHER AMOUNTS.

       ``(a) Requirement of Reporting.--
       ``(1) In general.--The appropriate official of any 
     government or entity which is described in section 162(f)(4) 
     which is involved in a suit or agreement described in 
     paragraph (2) shall make a return in such form as determined 
     by the Secretary setting forth--
       ``(A) the amount required to be paid as a result of the 
     suit or agreement to which paragraph (1) of section 162(f) 
     applies,
       ``(B) any amount required to be paid as a result of the 
     suit or agreement which constitutes restitution or 
     remediation of property, and
       ``(C) any amount required to be paid as a result of the 
     suit or agreement for the purpose of coming into compliance 
     with any law which was violated or involved in the 
     investigation or inquiry.
       ``(2) Suit or agreement described.--
       ``(A) In general.--A suit or agreement is described in this 
     paragraph if--
       ``(i) it is--

       ``(I) a suit with respect to a violation of any law over 
     which the government or entity has authority and with respect 
     to which there has been a court order, or
       ``(II) an agreement which is entered into with respect to a 
     violation of any law over which the government or entity has 
     authority, or with respect to an investigation or inquiry by 
     the government or entity into the potential violation of any 
     law over which such government or entity has authority, and

[[Page S3876]]

       ``(ii) the aggregate amount involved in all court orders 
     and agreements with respect to the violation, investigation, 
     or inquiry is $600 or more.
       ``(B) Adjustment of reporting threshold.--The Secretary may 
     adjust the $600 amount in subparagraph (A)(ii) as necessary 
     in order to ensure the efficient administration of the 
     internal revenue laws.
       ``(3) Time of filing.--The return required under this 
     subsection shall be filed not later than--
       ``(A) 30 days after the date on which a court order is 
     issued with respect to the suit or the date the agreement is 
     entered into, as the case may be, or
       ``(B) the date specified Secretary.
       ``(b) Statements To Be Furnished to Individuals Involved in 
     the Settlement.--Every person required to make a return under 
     subsection (a) shall furnish to each person who is a party to 
     the suit or agreement a written statement showing--
       ``(1) the name of the government or entity, and
       ``(2) the information supplied to the Secretary under 
     subsection (a)(1).
     The written statement required under the preceding sentence 
     shall be furnished to the person at the same time the 
     government or entity provides the Secretary with the 
     information required under subsection (a).
       ``(c) Appropriate Official Defined.--For purposes of this 
     section, the term `appropriate official' means the officer or 
     employee having control of the suit, investigation, or 
     inquiry or the person appropriately designated for purposes 
     of this section.''.
       (2) Conforming amendment.--The table of sections for 
     subpart B of part III of subchapter A of chapter 61 is 
     amended by inserting after the item relating to section 6050V 
     the following new item:

``Sec. 6050W. Information with respect to certain fines, penalties, and 
              other amounts''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred on or after the date 
     of the enactment of this Act, except that such amendments 
     shall not apply to amounts paid or incurred under any binding 
     order or agreement entered into before such date. Such 
     exception shall not apply to an order or agreement requiring 
     court approval unless the approval was obtained before such 
     date.

     SEC. 535. REVISION OF TAX RULES ON EXPATRIATION OF 
                   INDIVIDUALS.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 is amended by inserting after section 877 the 
     following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market.--Except as provided in subsections 
     (d) and (f), all property of a covered expatriate to whom 
     this section applies shall be treated as sold on the day 
     before the expatriation date for its fair market value.
       ``(2) Recognition of gain or loss.--In the case of any sale 
     under paragraph (1)--
       ``(A) notwithstanding any other provision of this title, 
     any gain arising from such sale shall be taken into account 
     for the taxable year of the sale, and
       ``(B) any loss arising from such sale shall be taken into 
     account for the taxable year of the sale to the extent 
     otherwise provided by this title, except that section 1091 
     shall not apply to any such loss.
     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence.
       ``(3) Exclusion for certain gain.--
       ``(A) In general.--The amount which, but for this 
     paragraph, would be includible in the gross income of any 
     individual by reason of this section shall be reduced (but 
     not below zero) by $600,000. For purposes of this paragraph, 
     allocable expatriation gain taken into account under 
     subsection (f)(2) shall be treated in the same manner as an 
     amount required to be includible in gross income.
       ``(B) Cost-of-living adjustment.--
       ``(i) In general.--In the case of an expatriation date 
     occurring in any calendar year after 2007, the $600,000 
     amount under subparagraph (A) shall be increased by an amount 
     equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, determined by 
     substituting `calendar year 2006' for `calendar year 1992' in 
     subparagraph (B) thereof.

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $1,000, such amount 
     shall be rounded to the next lower multiple of $1,000.
       ``(4) Election to continue to be taxed as united states 
     citizen.--
       ``(A) In general.--If a covered expatriate elects the 
     application of this paragraph--
       ``(i) this section (other than this paragraph and 
     subsection (i)) shall not apply to the expatriate, but
       ``(ii) in the case of property to which this section would 
     apply but for such election, the expatriate shall be subject 
     to tax under this title in the same manner as if the 
     individual were a United States citizen.
       ``(B) Requirements.--Subparagraph (A) shall not apply to an 
     individual unless the individual--
       ``(i) provides security for payment of tax in such form and 
     manner, and in such amount, as the Secretary may require,
       ``(ii) consents to the waiver of any right of the 
     individual under any treaty of the United States which would 
     preclude assessment or collection of any tax which may be 
     imposed by reason of this paragraph, and
       ``(iii) complies with such other requirements as the 
     Secretary may prescribe.
       ``(C) Election.--An election under subparagraph (A) shall 
     apply to all property to which this section would apply but 
     for the election and, once made, shall be irrevocable. Such 
     election shall also apply to property the basis of which is 
     determined in whole or in part by reference to the property 
     with respect to which the election was made.
       ``(b) Election To Defer Tax.--
       ``(1) In general.--If the taxpayer elects the application 
     of this subsection with respect to any property treated as 
     sold by reason of subsection (a), the payment of the 
     additional tax attributable to such property shall be 
     postponed until the due date of the return for the taxable 
     year in which such property is disposed of (or, in the case 
     of property disposed of in a transaction in which gain is not 
     recognized in whole or in part, until such other date as the 
     Secretary may prescribe).
       ``(2) Determination of tax with respect to property.--For 
     purposes of paragraph (1), the additional tax attributable to 
     any property is an amount which bears the same ratio to the 
     additional tax imposed by this chapter for the taxable year 
     solely by reason of subsection (a) as the gain taken into 
     account under subsection (a) with respect to such property 
     bears to the total gain taken into account under subsection 
     (a) with respect to all property to which subsection (a) 
     applies.
       ``(3) Termination of postponement.--No tax may be postponed 
     under this subsection later than the due date for the return 
     of tax imposed by this chapter for the taxable year which 
     includes the date of death of the expatriate (or, if earlier, 
     the time that the security provided with respect to the 
     property fails to meet the requirements of paragraph (4), 
     unless the taxpayer corrects such failure within the time 
     specified by the Secretary).
       ``(4) Security.--
       ``(A) In general.--No election may be made under paragraph 
     (1) with respect to any property unless adequate security is 
     provided to the Secretary with respect to such property.
       ``(B) Adequate security.--For purposes of subparagraph (A), 
     security with respect to any property shall be treated as 
     adequate security if--
       ``(i) it is a bond in an amount equal to the deferred tax 
     amount under paragraph (2) for the property, or
       ``(ii) the taxpayer otherwise establishes to the 
     satisfaction of the Secretary that the security is adequate.
       ``(5) Waiver of certain rights.--No election may be made 
     under paragraph (1) unless the taxpayer consents to the 
     waiver of any right under any treaty of the United States 
     which would preclude assessment or collection of any tax 
     imposed by reason of this section.
       ``(6) Elections.--An election under paragraph (1) shall 
     only apply to property described in the election and, once 
     made, is irrevocable. An election may be made under paragraph 
     (1) with respect to an interest in a trust with respect to 
     which gain is required to be recognized under subsection 
     (f)(1).
       ``(7) Interest.--For purposes of section 6601--
       ``(A) the last date for the payment of tax shall be 
     determined without regard to the election under this 
     subsection, and
       ``(B) section 6621(a)(2) shall be applied by substituting 
     `5 percentage points' for `3 percentage points' in 
     subparagraph (B) thereof.
       ``(c) Covered Expatriate.--For purposes of this section--
       ``(1) In general.--Except as provided in paragraph (2), the 
     term `covered expatriate' means an expatriate.
       ``(2) Exceptions.--An individual shall not be treated as a 
     covered expatriate if--
       ``(A) the individual--
       ``(i) became at birth a citizen of the United States and a 
     citizen of another country and, as of the expatriation date, 
     continues to be a citizen of, and is taxed as a resident of, 
     such other country, and
       ``(ii) has not been a resident of the United States (as 
     defined in section 7701(b)(1)(A)(ii)) during the 5 taxable 
     years ending with the taxable year during which the 
     expatriation date occurs, or
       ``(B)(i) the individual's relinquishment of United States 
     citizenship occurs before such individual attains age 18\1/
     2\, and
       ``(ii) the individual has been a resident of the United 
     States (as so defined) for not more than 5 taxable years 
     before the date of relinquishment.
       ``(d) Exempt Property; Special Rules for Pension Plans.--
       ``(1) Exempt property.--This section shall not apply to the 
     following:
       ``(A) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the day before the 
     expatriation date, meet the requirements of section 
     897(c)(2).
       ``(B) Specified property.--Any property or interest in 
     property not described in subparagraph (A) which the 
     Secretary specifies in regulations.
       ``(2) Special rules for certain retirement plans.--
       ``(A) In general.--If a covered expatriate holds on the day 
     before the expatriation date

[[Page S3877]]

     any interest in a retirement plan to which this paragraph 
     applies--
       ``(i) such interest shall not be treated as sold for 
     purposes of subsection (a)(1), but
       ``(ii) an amount equal to the present value of the 
     expatriate's nonforfeitable accrued benefit shall be treated 
     as having been received by such individual on such date as a 
     distribution under the plan.
       ``(B) Treatment of subsequent distributions.--In the case 
     of any distribution on or after the expatriation date to or 
     on behalf of the covered expatriate from a plan from which 
     the expatriate was treated as receiving a distribution under 
     subparagraph (A), the amount otherwise includible in gross 
     income by reason of the subsequent distribution shall be 
     reduced by the excess of the amount includible in gross 
     income under subparagraph (A) over any portion of such amount 
     to which this subparagraph previously applied.
       ``(C) Treatment of subsequent distributions by plan.--For 
     purposes of this title, a retirement plan to which this 
     paragraph applies, and any person acting on the plan's 
     behalf, shall treat any subsequent distribution described in 
     subparagraph (B) in the same manner as such distribution 
     would be treated without regard to this paragraph.
       ``(D) Applicable plans.--This paragraph shall apply to--
       ``(i) any qualified retirement plan (as defined in section 
     4974(c)),
       ``(ii) an eligible deferred compensation plan (as defined 
     in section 457(b)) of an eligible employer described in 
     section 457(e)(1)(A), and
       ``(iii) to the extent provided in regulations, any foreign 
     pension plan or similar retirement arrangements or programs.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes 
     citizenship, and
       ``(B) any long-term resident of the United States who--
       ``(i) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(ii) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.
       ``(2) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date of the event described in clause (i) or (ii) 
     of paragraph (1)(B).
       ``(3) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces such individual's 
     United States nationality before a diplomatic or consular 
     officer of the United States pursuant to paragraph (5) of 
     section 349(a) of the Immigration and Nationality Act (8 
     U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.
     Subparagraph (A) or (B) shall not apply to any individual 
     unless the renunciation or voluntary relinquishment is 
     subsequently approved by the issuance to the individual of a 
     certificate of loss of nationality by the United States 
     Department of State.
       ``(4) Long-term resident.--The term `long-term resident' 
     has the meaning given to such term by section 877(e)(2).
       ``(f) Special Rules Applicable to Beneficiaries' Interests 
     in Trust.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     an individual is determined under paragraph (3) to hold an 
     interest in a trust on the day before the expatriation date--
       ``(A) the individual shall not be treated as having sold 
     such interest,
       ``(B) such interest shall be treated as a separate share in 
     the trust, and
       ``(C)(i) such separate share shall be treated as a separate 
     trust consisting of the assets allocable to such share,
       ``(ii) the separate trust shall be treated as having sold 
     its assets on the day before the expatriation date for their 
     fair market value and as having distributed all of its assets 
     to the individual as of such time, and
       ``(iii) the individual shall be treated as having 
     recontributed the assets to the separate trust.
     Subsection (a)(2) shall apply to any income, gain, or loss of 
     the individual arising from a distribution described in 
     subparagraph (C)(ii). In determining the amount of such 
     distribution, proper adjustments shall be made for 
     liabilities of the trust allocable to an individual's share 
     in the trust.
       ``(2) Special rules for interests in qualified trusts.--
       ``(A) In general.--If the trust interest described in 
     paragraph (1) is an interest in a qualified trust--
       ``(i) paragraph (1) and subsection (a) shall not apply, and
       ``(ii) in addition to any other tax imposed by this title, 
     there is hereby imposed on each distribution with respect to 
     such interest a tax in the amount determined under 
     subparagraph (B).
       ``(B) Amount of tax.--The amount of tax under subparagraph 
     (A)(ii) shall be equal to the lesser of--
       ``(i) the highest rate of tax imposed by section 1(e) for 
     the taxable year which includes the day before the 
     expatriation date, multiplied by the amount of the 
     distribution, or
       ``(ii) the balance in the deferred tax account immediately 
     before the distribution determined without regard to any 
     increases under subparagraph (C)(ii) after the 30th day 
     preceding the distribution.
       ``(C) Deferred tax account.--For purposes of subparagraph 
     (B)(ii)--
       ``(i) Opening balance.--The opening balance in a deferred 
     tax account with respect to any trust interest is an amount 
     equal to the tax which would have been imposed on the 
     allocable expatriation gain with respect to the trust 
     interest if such gain had been included in gross income under 
     subsection (a).
       ``(ii) Increase for interest.--The balance in the deferred 
     tax account shall be increased by the amount of interest 
     determined (on the balance in the account at the time the 
     interest accrues), for periods after the 90th day after the 
     expatriation date, by using the rates and method applicable 
     under section 6621 for underpayments of tax for such periods, 
     except that section 6621(a)(2) shall be applied by 
     substituting `5 percentage points' for `3 percentage points' 
     in subparagraph (B) thereof.
       ``(iii) Decrease for taxes previously paid.--The balance in 
     the tax deferred account shall be reduced--

       ``(I) by the amount of taxes imposed by subparagraph (A) on 
     any distribution to the person holding the trust interest, 
     and
       ``(II) in the case of a person holding a nonvested 
     interest, to the extent provided in regulations, by the 
     amount of taxes imposed by subparagraph (A) on distributions 
     from the trust with respect to nonvested interests not held 
     by such person.

       ``(D) Allocable expatriation gain.--For purposes of this 
     paragraph, the allocable expatriation gain with respect to 
     any beneficiary's interest in a trust is the amount of gain 
     which would be allocable to such beneficiary's vested and 
     nonvested interests in the trust if the beneficiary held 
     directly all assets allocable to such interests.
       ``(E) Tax deducted and withheld.--
       ``(i) In general.--The tax imposed by subparagraph (A)(ii) 
     shall be deducted and withheld by the trustees from the 
     distribution to which it relates.
       ``(ii) Exception where failure to waive treaty rights.--If 
     an amount may not be deducted and withheld under clause (i) 
     by reason of the distributee failing to waive any treaty 
     right with respect to such distribution--

       ``(I) the tax imposed by subparagraph (A)(ii) shall be 
     imposed on the trust and each trustee shall be personally 
     liable for the amount of such tax, and
       ``(II) any other beneficiary of the trust shall be entitled 
     to recover from the distributee the amount of such tax 
     imposed on the other beneficiary.

       ``(F) Disposition.--If a trust ceases to be a qualified 
     trust at any time, a covered expatriate disposes of an 
     interest in a qualified trust, or a covered expatriate 
     holding an interest in a qualified trust dies, then, in lieu 
     of the tax imposed by subparagraph (A)(ii), there is hereby 
     imposed a tax equal to the lesser of--
       ``(i) the tax determined under paragraph (1) as if the day 
     before the expatriation date were the date of such cessation, 
     disposition, or death, whichever is applicable, or
       ``(ii) the balance in the tax deferred account immediately 
     before such date.
     Such tax shall be imposed on the trust and each trustee shall 
     be personally liable for the amount of such tax and any other 
     beneficiary of the trust shall be entitled to recover from 
     the covered expatriate or the estate the amount of such tax 
     imposed on the other beneficiary.
       ``(G) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Qualified trust.--The term `qualified trust' means a 
     trust which is described in section 7701(a)(30)(E).
       ``(ii) Vested interest.--The term `vested interest' means 
     any interest which, as of the day before the expatriation 
     date, is vested in the beneficiary.
       ``(iii) Nonvested interest.--The term `nonvested interest' 
     means, with respect to any beneficiary, any interest in a 
     trust which is not a vested interest. Such interest shall be 
     determined by assuming the maximum exercise of discretion in 
     favor of the beneficiary and the occurrence of all 
     contingencies in favor of the beneficiary.
       ``(iv) Adjustments.--The Secretary may provide for such 
     adjustments to the bases of assets in a trust or a deferred 
     tax account, and the timing of such adjustments, in order to 
     ensure that gain is taxed only once.
       ``(v) Coordination with retirement plan rules.--This 
     subsection shall not apply to an interest in a trust which is 
     part of a retirement plan to which subsection (d)(2) applies.

[[Page S3878]]

       ``(3) Determination of beneficiaries' interest in trust.--
       ``(A) Determinations under paragraph (1).--For purposes of 
     paragraph (1), a beneficiary's interest in a trust shall be 
     based upon all relevant facts and circumstances, including 
     the terms of the trust instrument and any letter of wishes or 
     similar document, historical patterns of trust distributions, 
     and the existence of and functions performed by a trust 
     protector or any similar adviser.
       ``(B) Other determinations.--For purposes of this section--
       ``(i) Constructive ownership.--If a beneficiary of a trust 
     is a corporation, partnership, trust, or estate, the 
     shareholders, partners, or beneficiaries shall be deemed to 
     be the trust beneficiaries for purposes of this section.
       ``(ii) Taxpayer return position.--A taxpayer shall clearly 
     indicate on its income tax return--

       ``(I) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(II) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.

       ``(g) Termination of Deferrals, Etc.--In the case of any 
     covered expatriate, notwithstanding any other provision of 
     this title--
       ``(1) any period during which recognition of income or gain 
     is deferred shall terminate on the day before the 
     expatriation date, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply on the day before the expatriation date and the 
     unpaid portion of such tax shall be due and payable at the 
     time and in the manner prescribed by the Secretary.
       ``(h) Imposition of Tentative Tax.--
       ``(1) In general.--If an individual is required to include 
     any amount in gross income under subsection (a) for any 
     taxable year, there is hereby imposed, immediately before the 
     expatriation date, a tax in an amount equal to the amount of 
     tax which would be imposed if the taxable year were a short 
     taxable year ending on the expatriation date.
       ``(2) Due date.--The due date for any tax imposed by 
     paragraph (1) shall be the 90th day after the expatriation 
     date.
       ``(3) Treatment of tax.--Any tax paid under paragraph (1) 
     shall be treated as a payment of the tax imposed by this 
     chapter for the taxable year to which subsection (a) applies.
       ``(4) Deferral of tax.--The provisions of subsection (b) 
     shall apply to the tax imposed by this subsection to the 
     extent attributable to gain includible in gross income by 
     reason of this section.
       ``(i) Special Liens for Deferred Tax Amounts.--
       ``(1) Imposition of lien.--
       ``(A) In general.--If a covered expatriate makes an 
     election under subsection (a)(4) or (b) which results in the 
     deferral of any tax imposed by reason of subsection (a), the 
     deferred amount (including any interest, additional amount, 
     addition to tax, assessable penalty, and costs attributable 
     to the deferred amount) shall be a lien in favor of the 
     United States on all property of the expatriate located in 
     the United States (without regard to whether this section 
     applies to the property).
       ``(B) Deferred amount.--For purposes of this subsection, 
     the deferred amount is the amount of the increase in the 
     covered expatriate's income tax which, but for the election 
     under subsection (a)(4) or (b), would have occurred by reason 
     of this section for the taxable year including the 
     expatriation date.
       ``(2) Period of lien.--The lien imposed by this subsection 
     shall arise on the expatriation date and continue until--
       ``(A) the liability for tax by reason of this section is 
     satisfied or has become unenforceable by reason of lapse of 
     time, or
       ``(B) it is established to the satisfaction of the 
     Secretary that no further tax liability may arise by reason 
     of this section.
       ``(3) Certain rules apply.--The rules set forth in 
     paragraphs (1), (3), and (4) of section 6324A(d) shall apply 
     with respect to the lien imposed by this subsection as if it 
     were a lien imposed by section 6324A.
       ``(j) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Inclusion in Income of Gifts and Bequests Received by 
     United States Citizens and Residents From Expatriates.--
     Section 102 (relating to gifts, etc. not included in gross 
     income) is amended by adding at the end the following new 
     subsection:
       ``(d) Gifts and Inheritances From Covered Expatriates.--
       ``(1) Treatment of gifts and inheritances.--
       ``(A) In general.--Subsection (a) shall not exclude from 
     gross income the value of any property acquired by gift, 
     bequest, devise, or inheritance from a covered expatriate 
     after the expatriation date.
       ``(B) Determination of basis.--Notwithstanding sections 
     1015 or 1022, the basis of any property described in 
     subparagraph (A) in the hands of the donee or the person 
     acquiring such property from the decedent shall be equal to 
     the fair market value of the property at the time of the 
     gift, bequest, devise, or inheritance.
       ``(2) Exceptions for transfers otherwise subject to estate 
     or gift tax.--Paragraph (1) shall not apply to any property 
     if either--
       ``(A) the gift, bequest, devise, or inheritance is--
       ``(i) shown on a timely filed return of tax imposed by 
     chapter 12 as a taxable gift by the covered expatriate, or
       ``(ii) included in the gross estate of the covered 
     expatriate for purposes of chapter 11 and shown on a timely 
     filed return of tax imposed by chapter 11 of the estate of 
     the covered expatriate, or
       ``(B) no such return was timely filed but no such return 
     would have been required to be filed even if the covered 
     expatriate were a citizen or long-term resident of the United 
     States.
       ``(3) Definitions.--For purposes of this subsection, any 
     term used in this subsection which is also used in section 
     877A shall have the same meaning as when used in section 
     877A.''.
       (c) Definition of Termination of United States 
     Citizenship.--Section 7701(a) is amended by adding at the end 
     the following new paragraph:
       ``(50) Termination of united states citizenship.--
       ``(A) In general.--An individual shall not cease to be 
     treated as a United States citizen before the date on which 
     the individual's citizenship is treated as relinquished under 
     section 877A(e)(3).
       ``(B) Dual citizens.--Under regulations prescribed by the 
     Secretary, subparagraph (A) shall not apply to an individual 
     who became at birth a citizen of the United States and a 
     citizen of another country.''.
       (d) Ineligibility for Visa or Admission to United States.--
       (1) In general.--Section 212(a)(10)(E) of the Immigration 
     and Nationality Act (8 U.S.C. 1182(a)(10)(E)) is amended to 
     read as follows:
       ``(E) Former citizens not in compliance with expatriation 
     revenue provisions.--Any alien who is a former citizen of the 
     United States who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3) of the Internal 
     Revenue Code of 1986) and who is not in compliance with 
     section 877A of such Code (relating to expatriation) is 
     inadmissible.''.
       (2) Availability of information.--
       (A) In general.--Section 6103(l) (relating to disclosure of 
     returns and return information for purposes other than tax 
     administration) is amended by adding at the end the following 
     new paragraph:
       ``(21) Disclosure to deny visa or admission to certain 
     expatriates.--Upon written request of the Attorney General or 
     the Attorney General's delegate, the Secretary shall disclose 
     whether an individual is in compliance with section 877A (and 
     if not in compliance, any items of noncompliance) to officers 
     and employees of the Federal agency responsible for 
     administering section 212(a)(10)(E) of the Immigration and 
     Nationality Act solely for the purpose of, and to the extent 
     necessary in, administering such section 212(a)(10)(E).''.
       (B) Safeguards.--Section 6103(p)(4) (relating to 
     safeguards) is amended by striking ``or (20)'' each place it 
     appears and inserting ``(20), or (21)''.
       (3) Effective dates.--The amendments made by this 
     subsection shall apply to individuals who relinquish United 
     States citizenship on or after the date of the enactment of 
     this Act.
       (e) Conforming Amendments.--
       (1) Section 877 is amended by adding at the end the 
     following new subsection:
       ``(h) Application.--This section shall not apply to an 
     expatriate (as defined in section 877A(e)) whose expatriation 
     date (as so defined) occurs on or after the date of the 
     enactment of this subsection.''.
       (2) Section 2107 is amended by adding at the end the 
     following new subsection:
       ``(f) Application.--This section shall not apply to any 
     expatriate subject to section 877A.''.
       (3) Section 2501(a)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Application.--This paragraph shall not apply to any 
     expatriate subject to section 877A.''.
       (4) Section 6039G(a) is amended by inserting ``or 877A'' 
     after ``section 877(b)''.
       (5) The second sentence of section 6039G(d) is amended by 
     inserting ``or who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3))'' after ``section 
     877(a))''.
       (f) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 is amended by 
     inserting after the item relating to section 877 the 
     following new item:

``Sec. 877A. Tax responsibilities of expatriation''.
       (g) Effective Date.--
       (1) In general.--Except as provided in this subsection, the 
     amendments made by this section shall apply to expatriates 
     (within the meaning of section 877A(e) of the Internal 
     Revenue Code of 1986, as added by this section) whose 
     expatriation date (as so defined) occurs on or after the date 
     of the enactment of this Act.
       (2) Gifts and bequests.--Section 102(d) of the Internal 
     Revenue Code of 1986 (as added by subsection (b)) shall apply 
     to gifts and bequests received on or after the date of the 
     enactment of this Act, from an individual or the estate of an 
     individual whose expatriation date (as so defined) occurs 
     after such date.
       (3) Due date for tentative tax.--The due date under section 
     877A(h)(2) of the Internal

[[Page S3879]]

     Revenue Code of 1986, as added by this section, shall in no 
     event occur before the 90th day after the date of the 
     enactment of this Act.

     SEC. 536. LIMITATION ON ANNUAL AMOUNTS WHICH MAY BE DEFERRED 
                   UNDER NONQUALIFIED DEFERRED COMPENSATION 
                   ARRANGEMENTS.

       (a) In General.--Section 409A(a) of the Internal Revenue 
     Code of 1986 (relating to inclusion of gross income under 
     nonqualified deferred compensation plans) is amended--
       (1) by striking ``and (4)'' in subclause (I) of paragraph 
     (1)(A)(i) and inserting ``(4), and (5)'', and
       (2) by adding at the end the following new paragraph:
       ``(5) Annual limitation on aggregate deferred amounts.--
       ``(A) Limitation.--The requirements of this paragraph are 
     met if the plan provides that the aggregate amount of 
     compensation which is deferred for any taxable year with 
     respect to a participant under the plan may not exceed the 
     applicable dollar amount for the taxable year.
       ``(B) Inclusion of future earnings.--If an amount is 
     includible under paragraph (1) in the gross income of a 
     participant for any taxable year by reason of any failure to 
     meet the requirements of this paragraph, any income (whether 
     actual or notional) for any subsequent taxable year shall be 
     included in gross income under paragraph (1)(A) in such 
     subsequent taxable year to the extent such income--
       ``(i) is attributable to compensation (or income 
     attributable to such compensation) required to be included in 
     gross income by reason of such failure (including by reason 
     of this subparagraph), and
       ``(ii) is not subject to a substantial risk of forfeiture 
     and has not been previously included in gross income.
       ``(C) Aggregation rule.--For purposes of this paragraph, 
     all nonqualified deferred compensation plans maintained by 
     all employers treated as a single employer under subsection 
     (d)(6) shall be treated as 1 plan.
       ``(D) Applicable dollar amount.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable dollar amount' 
     means, with respect to any participant, the lesser of--

       ``(I) the average annual compensation which was payable 
     during the base period to the participant by the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) and which was includible in 
     the participant's gross income for taxable years in the base 
     period, or
       ``(II) $1,000,000.

       ``(ii) Base period.--

       ``(I) In general.--The term `base period' means, with 
     respect to any computation year, the 5-taxable year period 
     ending with the taxable year preceding the computation year.
       ``(II) Elections made before computation year.--If, before 
     the beginning of the computation year, an election described 
     in paragraph (4)(B) is made by the participant to have 
     compensation for services performed in the computation year 
     deferred under a nonqualified deferred compensation plan, the 
     base period shall be the 5-taxable year period ending with 
     the taxable year preceding the taxable year in which the 
     election is made.
       ``(III) Computation year.--For purposes of this clause, the 
     term `computation year' means any taxable year of the 
     participant for which the limitation under subparagraph (A) 
     is being determined.
       ``(IV) Special rule for employees of less than 5 years.--If 
     a participant did not perform services for the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) during the entire 5-taxable 
     year period referred to in subparagraph (A) or (B), only the 
     portion of such period during which the participant performed 
     such services shall be taken into account.''.

       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006, 
     except that--
       (A) the amendments shall only apply to amounts deferred 
     after December 31, 2006 (and to earnings on such amounts), 
     and
       (B) taxable years beginning on or before December 31, 2006, 
     shall be taken into account in determining the average annual 
     compensation of a participant during any base period for 
     purposes of section 409A(a)(5)(D) of the Internal Revenue 
     Code of 1986 (as added by such amendments).
       (2) Guidance relating to certain existing arrangements.--
     Not later than 60 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall issue guidance 
     providing a limited period during which a nonqualified 
     deferred compensation plan adopted before December 31, 2006, 
     may, without violating the requirements of section 409A(a) of 
     such Code, be amended--
       (A) to provide that a participant may, no later than 
     December 31, 2007, cancel or modify an outstanding deferral 
     election with regard to all or a portion of amounts deferred 
     after December 31, 2006, to the extent necessary for the plan 
     to meet the requirements of section 409A(a)(5) of such Code 
     (as added by the amendments made by this section), but only 
     if amounts subject to the cancellation or modification are, 
     to the extent not previously included in gross income, 
     includible in income of the participant when no longer 
     subject to substantial risk of forfeiture, and
       (B) to conform to the requirements of section 409A(a)(5) of 
     such Code (as added by the amendments made by this section) 
     with regard to amounts deferred after December 31, 2006.

     SEC. 537. INCREASE IN CRIMINAL MONETARY PENALTY LIMITATION 
                   FOR THE UNDERPAYMENT OR OVERPAYMENT OF TAX DUE 
                   TO FRAUD.

       (a) In General.--Section 7206 (relating to fraud and false 
     statements) is amended--
       (1) by striking ``Any person who--'' and inserting ``(a) In 
     General.--'', and
       (2) by adding at the end the following new subsection:
       ``(b) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--If any portion of any 
     underpayment (as defined in section 6664(a)) or overpayment 
     (as defined in section 6401(a)) of tax required to be shown 
     on a return is attributable to fraudulent action described in 
     subsection (a), the applicable dollar amount under subsection 
     (a) shall in no event be less than an amount equal to such 
     portion. A rule similar to the rule under section 6663(b) 
     shall apply for purposes of determining the portion so 
     attributable.''.
       (b) Increase in Penalties.--
       (1) Attempt to evade or defeat tax.--Section 7201 is 
     amended--
       (A) by striking ``$100,000'' and inserting ``$500,000'',
       (B) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (C) by striking ``5 years'' and inserting ``10 years''.
       (2) Willful failure to file return, supply information, or 
     pay tax.--Section 7203 is amended--
       (A) in the first sentence--
       (i) by striking ``Any person'' and inserting the following:
       ``(a) In General.--Any person'', and
       (ii) by striking ``$25,000'' and inserting ``$50,000'',
       (B) in the third sentence, by striking ``section'' and 
     inserting ``subsection'', and
       (C) by adding at the end the following new subsection:
       ``(b) Aggravated Failure To File.--
       ``(1) In general.--In the case of any failure described in 
     paragraph (2), the first sentence of subsection (a) shall be 
     applied by substituting--
       ``(A) `felony' for `misdemeanor',
       ``(B) `$500,000 ($1,000,000' for `$25,000 ($100,000', and
       ``(C) `10 years' for `1 year'.''.
       ``(2) Failure described.--A failure described in this 
     paragraph is a failure to make a return described in 
     subsection (a) for a period of 3 or more consecutive taxable 
     years if the aggregate tax liability for such period is not 
     less than $100,000.''.
       (3) Fraud and false statements.--Section 7206(a) (as 
     redesignated by subsection (a)) is amended--
       (A) by striking ``$100,000'' and inserting ``$500,000'',
       (B) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (C) by striking ``3 years'' and inserting ``5 years''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to actions, and failures to act, occurring after 
     the date of the enactment of this Act.

     SEC. 538. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST 
                   ON UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE 
                   FINANCIAL ARRANGEMENTS.

       (a) Determination of Penalty.--
       (1) In general.--Notwithstanding any other provision of 
     law, in the case of an applicable taxpayer--
       (A) the determination as to whether any interest or 
     applicable penalty is to be imposed with respect to any 
     arrangement described in paragraph (2), or to any 
     underpayment of Federal income tax attributable to items 
     arising in connection with any such arrangement, shall be 
     made without regard to the rules of subsections (b), (c), and 
     (d) of section 6664 of the Internal Revenue Code of 1986, and
       (B) if any such interest or applicable penalty is imposed, 
     the amount of such interest or penalty shall be equal to 
     twice that determined without regard to this section.
       (2) Applicable taxpayer.--For purposes of this subsection--
       (A) In general.--The term ``applicable taxpayer'' means a 
     taxpayer which--
       (i) has underreported its United States income tax 
     liability with respect to any item which directly or 
     indirectly involves--

       (I) any financial arrangement which in any manner relies on 
     the use of offshore payment mechanisms (including credit, 
     debit, or charge cards) issued by banks or other entities in 
     foreign jurisdictions, or
       (II) any offshore financial arrangement (including any 
     arrangement with foreign banks, financial institutions, 
     corporations, partnerships, trusts, or other entities), and

       (ii) has neither signed a closing agreement pursuant to the 
     Voluntary Offshore Compliance Initiative established by the 
     Department of the Treasury under Revenue Procedure 2003-11 
     nor voluntarily disclosed its participation in such 
     arrangement by notifying the Internal Revenue Service of such 
     arrangement prior to the issue being raised by the Internal 
     Revenue Service during an examination.
       (B) Authority to waive.--The Secretary of the Treasury or 
     the Secretary's delegate may waive the application of 
     paragraph (1) to any taxpayer if the Secretary or the 
     Secretary's delegate determines that the use of

[[Page S3880]]

     such offshore payment mechanisms is incidental to the 
     transaction and, in addition, in the case of a trade or 
     business, such use is conducted in the ordinary course of the 
     type of trade or business of the taxpayer.
       (C) Issues raised.--For purposes of subparagraph (A)(ii), 
     an item shall be treated as an issue raised during an 
     examination if the individual examining the return--
       (i) communicates to the taxpayer knowledge about the 
     specific item, or
       (ii) has made a request to the taxpayer for information and 
     the taxpayer could not make a complete response to that 
     request without giving the examiner knowledge of the specific 
     item.
       (b) Applicable Penalty.--For purposes of this section, the 
     term ``applicable penalty'' means any penalty, addition to 
     tax, or fine imposed under chapter 68 of the Internal Revenue 
     Code of 1986.
       (c) Effective Date.--The provisions of this section shall 
     apply to interest, penalties, additions to tax, and fines 
     with respect to any taxable year if, as of the date of the 
     enactment of this Act, the assessment of any tax, penalty, or 
     interest with respect to such taxable year is not prevented 
     by the operation of any law or rule of law.

     SEC. 539. INCREASE IN PENALTY FOR BAD CHECKS AND MONEY 
                   ORDERS.

       (a) In General.--Section 6657 (relating to bad checks) is 
     amended--
       (1) by striking ``$750'' and inserting ``$1,250'', and
       (2) by striking ``$15'' and inserting ``$25''.
       (b) Effective Date.--The amendments made by this section 
     apply to checks or money orders received after the date of 
     the enactment of this Act.

     SEC. 540. TREATMENT OF CONTINGENT PAYMENT CONVERTIBLE DEBT 
                   INSTRUMENTS.

       (a) In General.--Section 1275(d) (relating to regulation 
     authority) is amended--
       (1) by striking ``The Secretary'' and inserting the 
     following:
       ``(1) In general.--The Secretary'', and
       (2) by adding at the end the following new paragraph:
       ``(2) Treatment of contingent payment convertible debt.--
       ``(A) In general.--In the case of a debt instrument which--
       ``(i) is convertible into stock of the issuing corporation, 
     into stock or debt of a related party (within the meaning of 
     section 267(b) or 707(b)(1)), or into cash or other property 
     in an amount equal to the approximate value of such stock or 
     debt, and
       ``(ii) provides for 1 or more contingent payments,
     any regulations which require original issue discount to be 
     determined by reference to the comparable yield of a fixed-
     rate debt instrument shall be applied as if the regulations 
     require that such comparable yield be determined by reference 
     to a fixed-rate debt instrument which is convertible into 
     stock.
       ``(B) Special rule.--For purposes of subparagraph (A), the 
     comparable yield shall be determined without taking into 
     account the yield resulting from the conversion of a debt 
     instrument into stock.''.
       (b) Cross Reference.--Section 163(e)(6) (relating to cross 
     references) is amended by adding at the end the following:
       ``For the treatment of contingent payment convertible debt, 
     see section 1275(d)(2).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to debt instruments issued on or after the date 
     of the enactment of this Act.

     SEC. 541. EXTENSION OF IRS USER FEES.

       Subsection (c) of section 7528 (relating to Internal 
     Revenue Service user fees) is amended by striking ``September 
     30, 2014'' and inserting ``September 30, 2016''.

     SEC. 542. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES 
                   FOR EMPLOYMENT TAX LIABILITIES.

       (a) In General.--Section 6330(f) (relating to jeopardy and 
     State refund collection) is amended--
       (1) by striking ``; or'' at the end of paragraph (1) and 
     inserting a comma,
       (2) by adding ``or'' at the end of paragraph (2), and
       (3) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) the Secretary has served a levy in connection with 
     the collection of taxes under chapter 21, 22, 23, or 24,''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to levies issued on or after the date that is 120 
     days after the date of the enactment of this Act.

     SEC. 543. MODIFICATIONS TO WHISTLEBLOWER REFORMS.

       (a) Modification of Tax Threshold for Awards.--Subparagraph 
     (B) of section 7623(b)(5), as added by the Tax Relief and 
     Health Care Act of 2006, is amended by striking 
     ``$2,000,000'' and inserting ``$20,000''.
       (b) Whistleblower Office.--
       (1) In general.--Section 7623 is amended by adding at the 
     end the following new subsections:
       ``(c) Whistleblower Office.--
       ``(1) In general.--There is established in the Internal 
     Revenue Service an office to be known as the `Whistleblower 
     Office' which--
       ``(A) shall at all times operate at the direction of the 
     Commissioner and coordinate and consult with other divisions 
     in the Internal Revenue Service as directed by the 
     Commissioner,
       ``(B) shall analyze information received from any 
     individual described in subsection (b) and either investigate 
     the matter itself or assign it to the appropriate Internal 
     Revenue Service office,
       ``(C) shall monitor any action taken with respect to such 
     matter,
       ``(D) shall inform such individual that it has accepted the 
     individual's information for further review,
       ``(E) may require such individual and any legal 
     representative of such individual to not disclose any 
     information so provided,
       ``(F) in its sole discretion, may ask for additional 
     assistance from such individual or any legal representative 
     of such individual, and
       ``(G) shall determine the amount to be awarded to such 
     individual under subsection (b).
       ``(2) Funding for office.--There is authorized to be 
     appropriated $10,000,000 for each fiscal year for the 
     Whistleblower Office. These funds shall be used to maintain 
     the Whistleblower Office and also to reimburse other Internal 
     Revenue Service offices for related costs, such as costs of 
     investigation and collection.
       ``(3) Request for assistance.--
       ``(A) In general.--Any assistance requested under paragraph 
     (1)(F) shall be under the direction and control of the 
     Whistleblower Office or the office assigned to investigate 
     the matter under subparagraph (A). No individual or legal 
     representative whose assistance is so requested may by reason 
     of such request represent himself or herself as an employee 
     of the Federal Government.
       ``(B) Funding of assistance.--From the amounts available 
     for expenditure under subsection (b), the Whistleblower 
     Office may, with the agreement of the individual described in 
     subsection (b), reimburse the costs incurred by any legal 
     representative of such individual in providing assistance 
     described in subparagraph (A).
       ``(d) Reports.--The Secretary shall each year conduct a 
     study and report to Congress on the use of this section, 
     including--
       ``(1) an analysis of the use of this section during the 
     preceding year and the results of such use, and
       ``(2) any legislative or administrative recommendations 
     regarding the provisions of this section and its 
     application.''.
       (2) Conforming amendment.--Section 406 of division A of the 
     Tax Relief and Health Care Act of 2006 is amended by striking 
     subsections (b) and (c).
       (3) Report on implementation.--Not later than 6 months 
     after the date of the enactment of this Act, the Secretary of 
     the Treasury shall submit to Congress a report on the 
     establishment and operation of the Whistleblower Office under 
     section 7623(c) of the Internal Revenue Code of 1986.
       (c) Publicity of Award Appeals.--Paragraph (4) of section 
     7623(b), as added by the Tax Relief and Health Care Act of 
     2006, is amended to read as follows:
       ``(4) Appeal of award determination.--
       ``(A) In general.--Any determination regarding an award 
     under paragraph (1), (2), or (3) may, within 30 days of such 
     determination, be appealed to the Tax Court (and the Tax 
     Court shall have jurisdiction with respect to such matter).
       ``(B) Publicity of appeals.--Notwithstanding sections 7458 
     and 7461, the Tax Court may, in order to preserve the 
     anonymity, privacy, or confidentiality of any person under 
     this subsection, provide by rules adopted under section 7453 
     that portions of filings, hearings, testimony, evidence, and 
     reports in connection with proceedings under this subsection 
     may be closed to the public or to inspection by the 
     public.''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to information 
     provided on or after the date of the enactment of this Act.
       (2) Publicity of award appeals.--The amendment made by 
     subsection (c) shall take effect as if included in the 
     amendments made by section 406 of the Tax Relief and Health 
     Care Act of 2006.

     SEC. 544. MODIFICATIONS OF DEFINITION OF EMPLOYEES COVERED BY 
                   DENIAL OF DEDUCTION FOR EXCESSIVE EMPLOYEE 
                   REMUNERATION.

       (a) In General.--Paragraph (3) of section 162(m) is amended 
     to read as follows:
       ``(3) Covered employee.--For purposes of this subsection, 
     the term `covered employee' means, with respect to any 
     taxpayer for any taxable year, an individual who--
       ``(A) was the chief executive officer of the taxpayer, or 
     an individual acting in such a capacity, at any time during 
     the taxable year,
       ``(B) is 1 of the 4 highest compensated officers of the 
     taxpayer for the taxable year (other than the individual 
     described in subparagraph (A)), or
       ``(C) was a covered employee of the taxpayer (or any 
     predecessor) for any preceding taxable year beginning after 
     December 31, 2006.
       ``In the case of an individual who was a covered employee 
     for any taxable year beginning after December 31, 2006, the 
     term `covered employee' shall include a beneficiary of such 
     employee with respect to any remuneration for services 
     performed by such employee as a covered employee (whether or 
     not such services are performed during the taxable year in 
     which the remuneration is paid).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

[[Page S3881]]

                      PART III--GENERAL PROVISIONS

     SEC. 551. ENHANCED COMPLIANCE ASSISTANCE FOR SMALL 
                   BUSINESSES.

       (a) In General.--Section 212 of the Small Business 
     Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 601 
     note) is amended by striking subsection (a) and inserting the 
     following:
       ``(a) Compliance Guide.--
       ``(1) In general.--For each rule or group of related rules 
     for which an agency is required to prepare a final regulatory 
     flexibility analysis under section 605(b) of title 5, United 
     States Code, the agency shall publish 1 or more guides to 
     assist small entities in complying with the rule and shall 
     entitle such publications `small entity compliance guides'.
       ``(2) Publication of guides.--The publication of each guide 
     under this subsection shall include--
       ``(A) the posting of the guide in an easily identified 
     location on the website of the agency; and
       ``(B) distribution of the guide to known industry contacts, 
     such as small entities, associations, or industry leaders 
     affected by the rule.
       ``(3) Publication date.--An agency shall publish each guide 
     (including the posting and distribution of the guide as 
     described under paragraph (2))--
       ``(A) on the same date as the date of publication of the 
     final rule (or as soon as possible after that date); and
       ``(B) not later than the date on which the requirements of 
     that rule become effective.
       ``(4) Compliance actions.--
       ``(A) In general.--Each guide shall explain the actions a 
     small entity is required to take to comply with a rule.
       ``(B) Explanation.--The explanation under subparagraph 
     (A)--
       ``(i) shall include a description of actions needed to meet 
     the requirements of a rule, to enable a small entity to know 
     when such requirements are met; and
       ``(ii) if determined appropriate by the agency, may include 
     a description of possible procedures, such as conducting 
     tests, that may assist a small entity in meeting such 
     requirements, except that, compliance with any procedures 
     described pursuant to this section does not establish 
     compliance with the rule, or establish a presumption or 
     inference of such compliance.
       ``(C) Procedures.--Procedures described under subparagraph 
     (B)(ii)--
       ``(i) shall be suggestions to assist small entities; and
       ``(ii) shall not be additional requirements, or diminish 
     requirements, relating to the rule.
       ``(5) Agency preparation of guides.--The agency shall, in 
     its sole discretion, taking into account the subject matter 
     of the rule and the language of relevant statutes, ensure 
     that the guide is written using sufficiently plain language 
     likely to be understood by affected small entities. Agencies 
     may prepare separate guides covering groups or classes of 
     similarly affected small entities and may cooperate with 
     associations of small entities to develop and distribute such 
     guides. An agency may prepare guides and apply this section 
     with respect to a rule or a group of related rules.
       ``(6) Reporting.--Not later than 1 year after the date of 
     enactment of the Fair Minimum Wage Act of 2007, and annually 
     thereafter, the head of each agency shall submit a report to 
     the Committee on Small Business and Entrepreneurship of the 
     Senate, the Committee on Small Business of the House of 
     Representatives, and any other committee of relevant 
     jurisdiction describing the status of the agency's compliance 
     with paragraphs (1) through (5).''.
       (b) Technical and Conforming Amendment.--Section 211(3) of 
     the Small Business Regulatory Enforcement Fairness Act of 
     1996 (5 U.S.C. 601 note) is amended by inserting ``and 
     entitled'' after ``designated''.

     SEC. 552. SMALL BUSINESS CHILD CARE GRANT PROGRAM.

       (a) Establishment.--The Secretary of Health and Human 
     Services (referred to in this section as the ``Secretary'') 
     shall establish a program to award grants to States, on a 
     competitive basis, to assist States in providing funds to 
     encourage the establishment and operation of employer-
     operated child care programs.
       (b) Application.--To be eligible to receive a grant under 
     this section, a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require, 
     including an assurance that the funds required under 
     subsection (e) will be provided.
       (c) Amount and Period of Grant.--The Secretary shall 
     determine the amount of a grant to a State under this section 
     based on the population of the State as compared to the 
     population of all States receiving grants under this section. 
     The Secretary shall make the grant for a period of 3 years.
       (d) Use of Funds.--
       (1) In general.--A State shall use amounts provided under a 
     grant awarded under this section to provide assistance to 
     small businesses (or consortia formed in accordance with 
     paragraph (3)) located in the State to enable the small 
     businesses (or consortia) to establish and operate child care 
     programs. Such assistance may include--
       (A) technical assistance in the establishment of a child 
     care program;
       (B) assistance for the startup costs related to a child 
     care program;
       (C) assistance for the training of child care providers;
       (D) scholarships for low-income wage earners;
       (E) the provision of services to care for sick children or 
     to provide care to school-aged children;
       (F) the entering into of contracts with local resource and 
     referral organizations or local health departments;
       (G) assistance for care for children with disabilities;
       (H) payment of expenses for renovation or operation of a 
     child care facility; or
       (I) assistance for any other activity determined 
     appropriate by the State.
       (2) Application.--In order for a small business or 
     consortium to be eligible to receive assistance from a State 
     under this section, the small business involved shall prepare 
     and submit to the State an application at such time, in such 
     manner, and containing such information as the State may 
     require.
       (3) Preference.--
       (A) In general.--In providing assistance under this 
     section, a State shall give priority to an applicant that 
     desires to form a consortium to provide child care in a 
     geographic area within the State where such care is not 
     generally available or accessible.
       (B) Consortium.--For purposes of subparagraph (A), a 
     consortium shall be made up of 2 or more entities that shall 
     include small businesses and that may include large 
     businesses, nonprofit agencies or organizations, local 
     governments, or other appropriate entities.
       (4) Limitations.--With respect to grant funds received 
     under this section, a State may not provide in excess of 
     $500,000 in assistance from such funds to any single 
     applicant.
       (e) Matching Requirement.--To be eligible to receive a 
     grant under this section, a State shall provide assurances to 
     the Secretary that, with respect to the costs to be incurred 
     by a covered entity receiving assistance in carrying out 
     activities under this section, the covered entity will make 
     available (directly or through donations from public or 
     private entities) non-Federal contributions to such costs in 
     an amount equal to--
       (1) for the first fiscal year in which the covered entity 
     receives such assistance, not less than 50 percent of such 
     costs ($1 for each $1 of assistance provided to the covered 
     entity under the grant);
       (2) for the second fiscal year in which the covered entity 
     receives such assistance, not less than 66\2/3\ percent of 
     such costs ($2 for each $1 of assistance provided to the 
     covered entity under the grant); and
       (3) for the third fiscal year in which the covered entity 
     receives such assistance, not less than 75 percent of such 
     costs ($3 for each $1 of assistance provided to the covered 
     entity under the grant).
       (f) Requirements of Providers.--To be eligible to receive 
     assistance under a grant awarded under this section, a child 
     care provider--
       (1) who receives assistance from a State shall comply with 
     all applicable State and local licensing and regulatory 
     requirements and all applicable health and safety standards 
     in effect in the State; and
       (2) who receives assistance from an Indian tribe or tribal 
     organization shall comply with all applicable regulatory 
     standards.
       (g) State-Level Activities.--A State may not retain more 
     than 3 percent of the amount described in subsection (c) for 
     State administration and other State-level activities.
       (h) Administration.--
       (1) State responsibility.--A State shall have 
     responsibility for administering a grant awarded for the 
     State under this section and for monitoring covered entities 
     that receive assistance under such grant.
       (2) Audits.--A State shall require each covered entity 
     receiving assistance under the grant awarded under this 
     section to conduct an annual audit with respect to the 
     activities of the covered entity. Such audits shall be 
     submitted to the State.
       (3) Misuse of funds.--
       (A) Repayment.--If the State determines, through an audit 
     or otherwise, that a covered entity receiving assistance 
     under a grant awarded under this section has misused the 
     assistance, the State shall notify the Secretary of the 
     misuse. The Secretary, upon such a notification, may seek 
     from such a covered entity the repayment of an amount equal 
     to the amount of any such misused assistance plus interest.
       (B) Appeals process.--The Secretary shall by regulation 
     provide for an appeals process with respect to repayments 
     under this paragraph.
       (i) Reporting Requirements.--
       (1) 2-year study.--
       (A) In general.--Not later than 2 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine--
       (i) the capacity of covered entities to meet the child care 
     needs of communities within States;
       (ii) the kinds of consortia that are being formed with 
     respect to child care at the local level to carry out 
     programs funded under this section; and
       (iii) who is using the programs funded under this section 
     and the income levels of such individuals.
       (B) Report.--Not later than 28 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on

[[Page S3882]]

     the results of the study conducted in accordance with 
     subparagraph (A).
       (2) 4-year study.--
       (A) In general.--Not later than 4 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine the number 
     of child care facilities that are funded through covered 
     entities that received assistance through a grant awarded 
     under this section and that remain in operation, and the 
     extent to which such facilities are meeting the child care 
     needs of the individuals served by such facilities.
       (B) Report.--Not later than 52 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on the results of the study 
     conducted in accordance with subparagraph (A).
       (j) Definitions.--In this section:
       (1) Covered entity.--The term ``covered entity'' means a 
     small business or a consortium formed in accordance with 
     subsection (d)(3).
       (2) Indian community.--The term ``Indian community'' means 
     a community served by an Indian tribe or tribal organization.
       (3) Indian tribe; tribal organization.--The terms ``Indian 
     tribe'' and ``tribal organization'' have the meanings given 
     the terms in section 658P of the Child Care and Development 
     Block Grant Act of 1990 (42 U.S.C. 9858n).
       (4) Small business.--The term ``small business'' means an 
     employer who employed an average of at least 2 but not more 
     than 50 employees on the business days during the preceding 
     calendar year.
       (5) State.--The term ``State'' has the meaning given the 
     term in section 658P of the Child Care and Development Block 
     Grant Act of 1990 (42 U.S.C. 9858n).
       (k) Application to Indian Tribes and Tribal 
     Organizations.--In this section:
       (1) In general.--Except as provided in subsection (f)(1), 
     and in paragraphs (2) and (3), the term ``State'' includes an 
     Indian tribe or tribal organization.
       (2) Geographic references.--The term ``State'' includes an 
     Indian community in subsections (c) (the second and third 
     place the term appears), (d)(1) (the second place the term 
     appears), (d)(3)(A) (the second place the term appears), and 
     (i)(1)(A)(i).
       (3) State-level activities.--The term ``State-level 
     activities'' includes activities at the tribal level.
       (l) Authorization of Appropriations.--
       (1) In general.--There is authorized to be appropriated to 
     carry out this section, $50,000,000 for the period of fiscal 
     years 2008 through 2012.
       (2) Studies and administration.--With respect to the total 
     amount appropriated for such period in accordance with this 
     subsection, not more than $2,500,000 of that amount may be 
     used for expenditures related to conducting studies required 
     under, and the administration of, this section.
       (m) Termination of Program.--The program established under 
     subsection (a) shall terminate on September 30, 2012.

     SEC. 553. STUDY OF UNIVERSAL USE OF ADVANCE PAYMENT OF EARNED 
                   INCOME CREDIT.

       Not later than 180 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall report to 
     Congress on a study of the benefits, costs, risks, and 
     barriers to workers and to businesses (with a special 
     emphasis on small businesses) if the advance earned income 
     tax credit program (under section 3507 of the Internal 
     Revenue Code of 1986) included all recipients of the earned 
     income tax credit (under section 32 of such Code) and what 
     steps would be necessary to implement such inclusion.

     SEC. 554. SENSE OF THE SENATE CONCERNING PERSONAL SAVINGS.

       (a) Findings.--The Senate finds that--
       (1) the personal saving rate in the United States is at its 
     lowest point since the Great Depression, with the rate having 
     fallen into negative territory;
       (2) the United States ranks at the bottom of the Group of 
     Twenty (G-20) nations in terms of net national saving rate;
       (3) approximately half of all the working people of the 
     United States work for an employer that does not offer any 
     kind of retirement plan;
       (4) existing savings policies enacted by Congress provide 
     limited incentives to save for low- and moderate-income 
     families; and
       (5) the Social Security program was enacted to serve as the 
     safest component of a retirement system that also includes 
     employer-sponsored retirement plans and personal savings.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) Congress should enact policies that promote savings 
     vehicles for retirement that are simple, easily accessible 
     and provide adequate financial security for all the people of 
     the United States;
       (2) it is important to begin retirement saving as early as 
     possible to take full advantage of the power of compound 
     interest; and
       (3) regularly contributing money to a financially-sound 
     investment account is one important method for helping to 
     achieve one's retirement goals.

     SEC. 555. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

       (a) In General.--Section 29 of the Small Business Act (15 
     U.S.C. 656) is amended by adding at the end the following:
       ``(m) Continued Funding for Centers.--
       ``(1) In general.--A nonprofit organization described in 
     paragraph (2) shall be eligible to receive, subject to 
     paragraph (3), a 3-year grant under this subsection.
       ``(2) Applicability.--A nonprofit organization described in 
     this paragraph is a nonprofit organization that has received 
     funding under subsection (b) or (l).
       ``(3) Application and approval criteria.--
       ``(A) Criteria.--Subject to subparagraph (B), the 
     Administrator shall develop and publish criteria for the 
     consideration and approval of applications by nonprofit 
     organizations under this subsection.
       ``(B) Contents.--Except as otherwise provided in this 
     subsection, the conditions for participation in the grant 
     program under this subsection shall be the same as the 
     conditions for participation in the program under subsection 
     (l), as in effect on the date of enactment of this Act.
       ``(C) Notification.--Not later than 60 days after the date 
     of the deadline to submit applications for each fiscal year, 
     the Administrator shall approve or deny any application under 
     this subsection and notify the applicant for each such 
     application.
       ``(4) Award of grants.--
       ``(A) In general.--Subject to the availability of 
     appropriations, the Administrator shall make a grant for the 
     Federal share of the cost of activities described in the 
     application to each applicant approved under this subsection.
       ``(B) Amount.--A grant under this subsection shall be for 
     not more than $150,000, for each year of that grant.
       ``(C) Federal share.--The Federal share under this 
     subsection shall be not more than 50 percent.
       ``(D) Priority.--In allocating funds made available for 
     grants under this section, the Administrator shall give 
     applications under this subsection or subsection (l) priority 
     over first-time applications under subsection (b).
       ``(5) Renewal.--
       ``(A) In general.--The Administrator may renew a grant 
     under this subsection for additional 3-year periods, if the 
     nonprofit organization submits an application for such 
     renewal at such time, in such manner, and accompanied by such 
     information as the Administrator may establish.
       ``(B) Unlimited renewals.--There shall be no limitation on 
     the number of times a grant may be renewed under subparagraph 
     (A).
       ``(n) Privacy Requirements.--
       ``(1) In general.--A women's business center may not 
     disclose the name, address, or telephone number of any 
     individual or small business concern receiving assistance 
     under this section without the consent of such individual or 
     small business concern, unless--
       ``(A) the Administrator is ordered to make such a 
     disclosure by a court in any civil or criminal enforcement 
     action initiated by a Federal or State agency; or
       ``(B) the Administrator considers such a disclosure to be 
     necessary for the purpose of conducting a financial audit of 
     a women's business center, but a disclosure under this 
     subparagraph shall be limited to the information necessary 
     for such audit.
       ``(2) Administration use of information.--This subsection 
     shall not--
       ``(A) restrict Administration access to program activity 
     data; or
       ``(B) prevent the Administration from using client 
     information (other than the information described in 
     subparagraph (A)) to conduct client surveys.
       ``(3) Regulations.--The Administrator shall issue 
     regulations to establish standards for requiring disclosures 
     during a financial audit under paragraph (1)(B).''.
       (b) Repeal.--Section 29(l) of the Small Business Act (15 
     U.S.C. 656(l)) is repealed effective October 1 of the first 
     full fiscal year after the date of enactment of this Act.
       (c) Transitional Rule.--Notwithstanding any other provision 
     of law, a grant or cooperative agreement that was awarded 
     under subsection (l) of section 29 of the Small Business Act 
     (15 U.S.C. 656), on or before the day before the date 
     described in subsection (b) of this section, shall remain in 
     full force and effect under the terms, and for the duration, 
     of such grant or agreement.

     SEC. 556. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND 
                   SUPPLIES MANUFACTURED OUTSIDE THE UNITED 
                   STATES.

       Section 2 of the Buy American Act (41 U.S.C. 10a) is 
     amended--
       (1) by striking ``Notwithstanding'' and inserting the 
     following:
       ``(a) In General.--Notwithstanding''; and
       (2) by adding at the end the following:
       ``(b) Reports.--
       ``(1) In general.--Not later than 180 days after the end of 
     each of fiscal years 2007 through 2011, the head of each 
     Federal agency shall submit to the Committee on Homeland 
     Security and Governmental Affairs of the Senate and the 
     Committee on Oversight and Government Reform of the House of 
     Representatives a report on the amount of the acquisitions 
     made by the agency in that fiscal year of articles, 
     materials, or supplies purchased from entities that 
     manufacture the articles, materials, or supplies outside of 
     the United States.
       ``(2) Contents of report.--The report required by paragraph 
     (1) shall separately include, for the fiscal year covered by 
     such report--
       ``(A) the dollar value of any articles, materials, or 
     supplies that were manufactured outside the United States;
       ``(B) an itemized list of all waivers granted with respect 
     to such articles, materials, or supplies under this Act, and 
     a citation to the treaty, international agreement, or other 
     law under which each waiver was granted;

[[Page S3883]]

       ``(C) if any articles, materials, or supplies were acquired 
     from entities that manufacture articles, materials, or 
     supplies outside the United States, the specific exception 
     under this section that was used to purchase such articles, 
     materials, or supplies; and
       ``(D) a summary of--
       ``(i) the total procurement funds expended on articles, 
     materials, and supplies manufactured inside the United 
     States; and
       ``(ii) the total procurement funds expended on articles, 
     materials, and supplies manufactured outside the United 
     States.
       ``(3) Public availability.--The head of each Federal agency 
     submitting a report under paragraph (1) shall make the report 
     publicly available to the maximum extent practicable.
       ``(4) Exception for intelligence community.--This 
     subsection shall not apply to acquisitions made by an agency, 
     or component thereof, that is an element of the intelligence 
     community as specified in, or designated under, section 3(4) 
     of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.

     SEC. 557. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME 
                   TAX INCREASE ON SOCIAL SECURITY BENEFITS.

       It is the sense of the Senate that Congress should repeal 
     the 1993 tax increase on Social Security benefits and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     repeal and avoid forcing taxpayers to pay substantially more 
     interest to foreign creditors.

     SEC. 558. SENSE OF THE SENATE REGARDING PERMANENT TAX 
                   INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE 
                   AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.

       It is the sense of the Senate that Congress should make 
     permanent the tax incentives to make education more 
     affordable and more accessible for American families and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     incentives and avoid forcing taxpayers to pay substantially 
     more interest to foreign creditors.

     SEC. 559. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

       Section 274A(e) of the Immigration and Nationality Act (8 
     U.S.C. 1324a(e)) is amended by adding at the end the 
     following new paragraph:
       ``(10) Prohibition on award of government contracts, 
     grants, and agreements.--
       ``(A) Employers with no contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subparagraph 
     (C), if an employer who does not hold a Federal contract, 
     grant, or cooperative agreement is determined to have 
     violated this section, the employer shall be debarred from 
     the receipt of a Federal contract, grant, or cooperative 
     agreement for a period of 7 years.
       ``(ii) Placement on excluded list.--The Secretary of 
     Homeland Security or the Attorney General shall advise the 
     Administrator of General Services of the debarment of an 
     employer under clause (i) and the Administrator of General 
     Services shall list the employer on the List of Parties 
     Excluded from Federal Procurement and Nonprocurement Programs 
     for a period of 7 years.
       ``(iii) Waiver.--

       ``(I) Authority.--The Administrator of General Services, in 
     consultation with the Secretary of Homeland Security and the 
     Attorney General, may waive operation of clause (i) or may 
     limit the duration or scope of a debarment under clause (i) 
     if such waiver or limitation is necessary to national defense 
     or in the interest of national security.
       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternative action under this clause 
     shall not be judicially reviewed.

       ``(B) Employers with contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subclause 
     (C), an employer who holds a Federal contract, grant, or 
     cooperative agreement and is determined to have violated this 
     section shall be debarred from the receipt of new Federal 
     contracts, grants, or cooperative agreements for a period of 
     10 years.
       ``(ii) Notice to agencies.--Prior to debarring the employer 
     under clause (i), the Secretary of Homeland Security, in 
     cooperation with the Administrator of General Services, shall 
     advise any agency or department holding a contract, grant, or 
     cooperative agreement with the employer of the Government's 
     intention to debar the employer from the receipt of new 
     Federal contracts, grants, or cooperative agreements for a 
     period of 10 years.
       ``(iii) Waiver.--

       ``(I) Authority.--After consideration of the views of any 
     agency or department that holds a contract, grant, or 
     cooperative agreement with the employer, the Administrator of 
     General Services, in consultation with the Secretary of 
     Homeland Security and the Attorney General, may waive 
     operation of clause (i) or may limit the duration or scope of 
     the debarment under clause (i) if such waiver or limitation 
     is necessary to the national defense or in the interest of 
     national security.
       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternate action under this clause 
     shall not be judicially reviewed.

       ``(C) Exemption from penalty for employers participating in 
     the basic pilot program.--In the case of imposition on an 
     employer of a debarment from the receipt of a Federal 
     contract, grant, or cooperative agreement under subparagraph 
     (A) or (B), that penalty shall be waived if the employer 
     establishes that the employer was voluntarily participating 
     in the basic pilot program under section 403(a) of the 
     Illegal Immigration Reform and Immigrant Responsibility Act 
     of 1996 (8 U.S.C. 1324a note) at the time of the violations 
     of this section that resulted in the debarment.''.
                                 ______
                                 
  SA 681. Mr. LEAHY submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of chapter 3 of title I, add the following:

     SEC. 1316. AMOUNTS FOR PROCUREMENT OF DEPLOYABLE, TWO-WAY, 
                   SPEECH-TO-SPEECH LANGUAGE TRANSLATION DEVICES 
                   FOR USE IN IRAQ AND AFGHANISTAN.

       Of the amount appropriated or otherwise made available by 
     this chapter under the heading ``Other Procurement, Army'', 
     the amount ($12,800,000) otherwise available for the Sequoyah 
     Foreign Language Translation System shall be available 
     instead for the procurement of deployable, two-way, speech-
     to-speech language translation devices for use in Iraq and 
     Afghanistan.
                                 ______
                                 
  SA 682. Mr. LEAHY (for himself, Mr. Bond, Ms. Landrieu, Mr. Dodd, Mr. 
Bingaman, Ms. Mikulski, Ms. Cantwell, Mr. Baucus, Mr. Brown, Mr. Kerry, 
Mr. Durbin, Mr. Rockefeller, Mr. Domenici, and Mr. Biden) submitted an 
amendment intended to be proposed by him to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of chapter 3 of title I, add the following:

     SEC. 1316. ADDITIONAL AMOUNT FOR NATIONAL GUARD AND RESERVE 
                   EQUIPMENT FOR EQUIPMENT FOR THE ARMY NATIONAL 
                   GUARD.

       The amount appropriated by this chapter under the heading 
     ``National Guard and Reserve Equipment'' is hereby increased 
     by $1,000,000,000, with the amount of the increase to be 
     available for equipment for the Army National Guard: 
     Provided, That the amount provided under this heading is 
     designated as an emergency requirement pursuant to section 
     402 of H. Con. Res. 376 (109th Congress) as made applicable 
     to the House of Representatives pursuant to H. Res. 818 
     (109th Congress), and as an emergency requirement pursuant to 
     section 402 of S. Con. Res. 83 (109th Congress) as made 
     applicable to the Senate by section 7035 of Public Law 109-
     234.
                                 ______
                                 
  SA 683. Mr. DORGAN (for himself, Mr. Conrad, Mr. Johnson, and Mr. 
Thune) submitted an amendment intended to be proposed by him to the 
bill H.R. 1591, making emergency supplemental appropriations for the 
fiscal year ending September 30, 2007, and for other purposes; which 
was ordered to lie on the table; as follows:

       At the end of chapter 8 of title III, add the following:

     SEC. 38__. AWARD OF MEDAL OF HONOR TO WOODROW W. KEEBLE FOR 
                   VALOR DURING KOREAN WAR.

       (a) Waiver of Time Limitations.--Notwithstanding any 
     applicable time limitation under section 3744 of title 10, 
     United States Code, or any other time limitation with respect 
     to the award of certain medals to individuals who served in 
     the Armed Forces, the President may award to Woodrow W. 
     Keeble the Medal of Honor under section 3741 of that title 
     for the acts of valor described in subsection (b).
       (b) Acts of Valor.--The acts of valor referred to in 
     subsection (a) are the acts of Woodrow W. Keeble, then-acting 
     platoon leader, carried out on October 20, 1951, during the 
     Korean War.
                                 ______
                                 
  SA 684. Mr. OBAMA (for himself, Mrs. McCaskill, Ms. Mikulski, Mr. 
Harkin, Mr. Kerry, Ms. Cantwell, Mr. Biden, and Mr. Bingaman) submitted 
an amendment intended to be proposed by him to the bill H.R. 1591, 
making emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:


[[Page S3884]]


       At the end of chapter 3 of title I, add the following:

     SEC. 1316. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM FOR 
                   ADDITIONAL MENTAL HEALTH AND RELATED PERSONNEL.

       The amount appropriated or otherwise made available by this 
     chapter under the heading ``Defense Health Program'' is 
     hereby increased by $58,000,000, with the amount of the 
     increase to be available for additional caseworkers at 
     military medical treatment facilities and other military 
     facilities housing patients to participate in, enhance, and 
     assist the Physical Disability Evaluation System (PDES) 
     process, and for additional mental health and mental crisis 
     counselors at military medical treatment facilities and other 
     military facilities housing patients for services for members 
     of the Armed Forces and their families.

     SEC. 1317. ADDITIONAL AMOUNTS FOR OPERATION AND MAINTENANCE 
                   FOR THE MILITARY DEPARTMENTS FOR IMPROVED 
                   PHYSICAL DISABILITY EVALUATIONS OF MEMBERS OF 
                   THE ARMED FORCES.

       (a) Additional Amount for Operation and Maintenance, 
     Army.--The amount appropriated or otherwise made available by 
     this chapter under the heading ``Operation and Maintenance, 
     Army'' is hereby increased by $10,000,000, with the amount of 
     the increase to be available in accordance with subsection 
     (d).
       (b) Additional Amounts for Operation and Maintenance for 
     Department of the Navy.--The aggregate amount appropriated or 
     otherwise made available by this chapter under the headings 
     ``Operation and Maintenance, Navy'' and ``Operation and 
     Maintenance, Marine Corps'' is hereby increased by 
     $10,000,000, with the amount of the increase to be available 
     in accordance with subsection (d).
       (c) Additional Amount for Operation and Maintenance, Air 
     Force.--The amount appropriated or otherwise made available 
     by this _chapter under the heading ``Operation and 
     Maintenance, Air Force'' is hereby increased by $10,000,000, 
     with the amount of the increase to be available in accordance 
     with subsection (d).
       (d) Internet Access to Physical Disability Evaluations of 
     Members of the Armed Forces.--
       (1) In general.--Each Secretary of a military department 
     shall, utilizing amounts appropriated by the applicable 
     subsection of this section, develop and implement an Internet 
     website to permit members of the Armed Forces who are subject 
     to the Physical Disability Evaluation system of such military 
     department to participate in such system through the 
     Internet.
       (2) Elements.--Each Internet website under paragraph (1) 
     shall include the following:
       (A) The availability of any forms required for the 
     utilization of the physical disability evaluation system 
     concerned by members of the Armed Forces who are subject to 
     such system.
       (B) Secure mechanisms for the submission of forms described 
     in subparagraph (A) by members of the Armed Forces described 
     in that subparagraph, and for the tracking by such members of 
     the acceptance and review of any forms so submitted.
       (C) Secure mechanisms for advising members of the Armed 
     Forces described in subparagraph (A) of any additional 
     information, forms, or other items that are required for the 
     acceptance and review of any forms so submitted.
       (D) The continuous availability of assistance for members 
     of the Armed Forces described in subparagraph (A), including 
     assistance through the caseworkers assigned to such members, 
     in submitting and tracking forms, including assistance in 
     obtaining information, forms, or other items described by 
     subparagraph (C).

     SEC. 1318. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM FOR 
                   WOMEN'S MENTAL HEALTH SERVICES.

       The amount appropriated or otherwise made available by this 
     chapter under the heading ``Defense Health Program'' is 
     hereby increased by $15,000,000, with the amount of the 
     increase to be available for the development and 
     implementation of a women's mental health treatment program 
     for women members of the Armed Forces to help screen and 
     treat women members of the Armed Forces, including services 
     and treatment for women who have experienced post-traumatic 
     stress disorder and services and treatment for women who have 
     experienced sexual assault or abuse, which services shall 
     include the hiring and training of sexual abuse crisis 
     counselors for members of the Armed Forces who have 
     experienced sexual abuse or assault.

     SEC. 1319. OFFSET.

       The amount appropriated or otherwise made available by this 
     chapter under the heading ``Iraq Freedom Fund'' is hereby 
     reduced by $103,000,000.

     SEC. 1320. STUDY ON MENTAL HEALTH AND READJUSTMENT NEEDS OF 
                   MEMBERS AND FORMER MEMBERS OF THE ARMED FORCES 
                   WHO DEPLOYED IN OPERATION IRAQI FREEDOM AND 
                   OPERATION ENDURING FREEDOM AND THEIR FAMILIES.

       (a) In General.--Using amounts appropriated or otherwise 
     made available by this chapter under the heading ``Defense 
     Health Program'', the Secretary of Defense shall, in 
     consultation with the Secretary of Veterans Affairs, enter 
     into an agreement with the National Academy of Sciences for a 
     study on the mental health and readjustment needs of members 
     and former members of the Armed Forces who deployed in 
     Operation Iraqi Freedom or Operation Enduring Freedom and 
     their families as a result of such deployment.
       (b) Phases.--The study required under subsection (a) shall 
     consist of two phases:
       (1) A preliminary phase, to be completed not later than 180 
     days after the date of the enactment of this Act, to 
     determine the parameters of the final phase of the study 
     under paragraph (2).
       (2) A second phase, to be completed not later than two 
     years after the date of the enactment of this Act, to carry 
     out a comprehensive assessment, in accordance with the 
     parameters identified under paragraph (1), of the mental 
     health and readjustment needs of members and former members 
     of the Armed Forces who deployed in Operation Iraqi Freedom 
     or Operation Enduring Freedom and their families as a result 
     of such deployment.
       (c) Reports.--The Secretary of Defense shall submit to 
     Congress, and make available to the public, a comprehensive 
     report on each phase of the study required under subsection 
     (a) not later than 30 days after the date of the completion 
     of such phase of the study.
                                 ______
                                 
  SA 685. Mr. KENNEDY submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. PROHIBITION ON MODIFICATIONS TO CONSULTING AND 
                   EDUCATIONAL SERVICES OF THE ARMED FORCES 
                   INSTITUTE OF PATHOLOGY.

       No funds appropriated or otherwise made available by this 
     Act or any other Act may be obligated or expended to plan 
     for, prepare for, or implement any action to reduce, 
     eliminate, or substantially modify the consulting services or 
     educational services provided by the Armed Forces Institute 
     of Pathology.
                                 ______
                                 
  SA 686. Mr. KENNEDY submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. PROHIBITION ON MODIFICATIONS TO CONSULTING AND 
                   EDUCATIONAL SERVICES OF THE ARMED FORCES 
                   INSTITUTE OF PATHOLOGY.

       No funds appropriated or otherwise made available by this 
     Act or any other Act may be obligated or expended to plan 
     for, prepare for, or implement any action to reduce, 
     eliminate, or substantially modify the consulting services or 
     educational services provided by the Armed Forces Institute 
     of Pathology.
                                 ______
                                 
  SA 687. Mr. KERRY submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 70, between lines 5 and 6, insert the following:

     SEC. 2403. RESERVIST PROGRAMS.

       (a) Definitions.--In this section--
       (1) the term ``activated'' means receiving an order placing 
     a Reservist on active duty;
       (2) the term ``active duty'' has the meaning given that 
     term in section 101 of title 10, United States Code;
       (3) the terms ``Administration'' and ``Administrator'' mean 
     the Small Business Administration and the Administrator 
     thereof, respectively;
       (4) the term ``Reservist'' means a member of a reserve 
     component of the Armed Forces, as described in section 10101 
     of title 10, United States Code;
       (5) the term ``Service Corps of Retired Executives'' means 
     the Service Corps of Retired Executives authorized by section 
     8(b)(1) of the Small Business Act (15 U.S.C. 637(b)(1));
       (6) the term ``small business concern'' has the meaning 
     given that term in section 3 of the Small Business Act (15 
     U.S.C. 632);
       (7) the term ``small business development center'' means a 
     small business development center described in section 21 of 
     the Small Business Act (15 U.S.C. 648); and
       (8) the term ``women's business center'' means a women's 
     business center described in section 29 of the Small Business 
     Act (15 U.S.C. 656).
       (b) Application Period.--Section 7(b)(3)(C) of the Small 
     Business Act (15 U.S.C. 636(b)(3)(C)) is amended by striking 
     ``90 days'' and inserting ``1 year''.
       (c) Preapproval Process.--
       (1) Definition.--In this subsection, the term ``eligible 
     Reservist'' means a Reservist who--
       (A) has not been ordered to active duty;
       (B) expects to be ordered to active duty during a period of 
     military conflict; and

[[Page S3885]]

       (C) can reasonably demonstrate that the small business 
     concern for which that Reservist is a key employee will 
     suffer economic injury in the absence of that Reservist.
       (2) Establishment.--Not later than 6 months after the date 
     of enactment of this Act, the Administrator shall establish a 
     preapproval process, under which the Administrator--
       (A) may approve a loan to a small business concern under 
     section 7(b)(3) of the Small Business Act (15 U.S.C. 
     636(b)(3)) before an eligible Reservist employed by that 
     small business concern is activated; and
       (B) shall distribute funds for any loan approved under 
     subparagraph (A) if that eligible Reservist is activated.
       (d) Outreach and Technical Assistance Program.--
       (1) In general.--Not later than 6 months after the date of 
     enactment of this Act, the Administrator, in consultation 
     with the Secretary of Veterans Affairs and the Secretary of 
     Defense, shall develop a comprehensive outreach and technical 
     assistance program (in this subsection referred to as the 
     ``program'') to--
       (A) market the loans available under section 7(b)(3) of the 
     Small Business Act (15 U.S.C. 636(b)(3)) to Reservists, and 
     family members of Reservists, that are on active duty and 
     that are not on active duty; and
       (B) provide technical assistance to a small business 
     concern applying for a loan under that section.
       (2) Components.--The program shall--
       (A) incorporate appropriate websites maintained by the 
     Administration, the Department of Veterans Affairs, and the 
     Department of Defense; and
       (B) require that information on the program is made 
     available to small business concerns directly through--
       (i) the district offices and resource partners of the 
     Administration, including small business development centers, 
     women's business centers, and the Service Corps of Retired 
     Executives; and
       (ii) other Federal agencies, including the Department of 
     Veterans Affairs and the Department of Defense.
       (3) Report.--
       (A) In general.--Not later than 6 months after the date of 
     enactment of this Act, and every 6 months thereafter until 
     the date that is 30 months after such date of enactment, the 
     Administrator shall submit to Congress a report on the status 
     of the program.
       (B) Contents.--Each report submitted under subparagraph (A) 
     shall include--
       (i) for the 6-month period ending on the date of that 
     report--

       (I) the number of loans approved under section 7(b)(3) of 
     the Small Business Act (15 U.S.C. 636(b)(3));
       (II) the number of loans disbursed under that section; and
       (III) the total amount disbursed under that section; and

       (ii) recommendations, if any, to make the program more 
     effective in serving small business concerns that employ 
     Reservists.
                                 ______
                                 
  SA 688. Mr. LEVIN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 96, after line 19, add the following:
       Sec. 3___. Section 20501 of the Continuing Appropriations 
     Resolution, 2007 (division B of Public Law 109-289, as 
     amended by Public Law 110-5; 121 Stat. 26) is amended by 
     striking ``Superfund', $1,251,574,000.'' and inserting 
     ``Superfund', $1,251,574,000: Provided, That $19,000,000 of 
     the amount provided for Environmental Protection Agency, 
     Science and Technology shall be for the Climate Protection 
     Program.''.
                                 ______
                                 
  SA 689. Mr. LUGAR submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 56, after line 18, insert the following:


                         CIVILIAN RESERVE CORPS

       Sec. 1713. Of the funds appropriated by this Act under the 
     headings ``diplomatic and consular programs'' and ``Economic 
     Support Fund'' (except for the Community Action Program), up 
     to $50,000,000 may be made available to support and maintain 
     a civilian reserve corps. Funds made available under this 
     section shall be subject to the regular notification 
     procedures of the Committees on Appropriations.
                                 ______
                                 
  SA 690. Mr. COCHRAN (for Mr. Lugar) proposed an amendment to the bill 
H.R. 1591, making emergency supplemental appropriations for the fiscal 
year ending September 30, 2007, and for other purposes; as follows:

       On page 56, after line 18, insert the following:


                         CIVILIAN RESERVE CORPS

       Sec. 1713. Of the funds appropriated by this Act under the 
     headings ``diplomatic and consular programs'' and ``Economic 
     Support Fund'' (except for the Community Action Program), up 
     to $50,000,000 may be made available to support and maintain 
     a civilian reserve corps. Funds made available under this 
     section shall be subject to the regular notification 
     procedures of the Committees on Appropriations.
                                 ______
                                 
  SA 691. Mr. WEBB (for himself and Mr. Byrd) submitted an amendment 
intended to be proposed by him to the bill H.R. 1591, making emergency 
supplemental appropriations for the fiscal year ending September 30, 
2007, and for other purposes; which was ordered to lie on the table; as 
follows:

       At the appropriate place, insert the following:

     SEC. __. PROHIBITION ON USE OF FUNDS FOR MILITARY OPERATIONS 
                   IN IRAN.

       (a) Prohibition.--No funds appropriated or otherwise made 
     available by this Act may be obligated or expended for 
     military operations or activities within or above the 
     territory of Iran, or within the territorial waters of Iran, 
     except pursuant to a specific authorization of Congress 
     enacted in a statute enacted after the date of the enactment 
     of this Act.
       (b) Exceptions.--The prohibition in subsection (a) shall 
     not apply with respect to military operations or activities 
     as follows:
       (1) Military operations or activities to directly repel or 
     thwart an attack or imminent attack on United States forces 
     or interests from within the territory of Iran.
       (2) Military operations or activities in hot pursuit of 
     forces engaged outside the territory of Iran who thereafter 
     enter into Iran.
       (3) Intelligence collection activities of which Congress 
     has been appropriately notified under applicable law.
       (c) Report.--Not later than 24 hours after determining to 
     utilize funds referred to in subsection (a) for purposes of a 
     military operation described in subsection (b), the President 
     shall submit to the appropriate committees of Congress a 
     report on the determination, including a justification for 
     the determination.
                                 ______
                                 
  SA 692. Mr. WEBB proposed an amendment to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; as follows:

       At the appropriate place, insert the following:

     SEC. __. PROHIBITION ON USE OF FUNDS FOR MILITARY OPERATIONS 
                   IN IRAN.

       (a) Prohibition.--Notwithstanding any other provision of 
     law, no funds appropriated or otherwise made available by 
     this Act may be obligated or expended for military operations 
     or activities within or above the territory of Iran, or 
     within the territorial waters of Iran, except pursuant to a 
     specific authorization of Congress enacted in a statute 
     enacted after the date of the enactment of this Act.
       (b) Exceptions.--The prohibition in subsection (a) shall 
     not apply with respect to military operations or activities 
     as follows:
       (1) Military operations or activities to directly repel an 
     attack launched from within the territory of Iran.
       (2) Military operations or activities to directly thwart an 
     imminent attack to be launched from within the territory of 
     Iran.
       (3) Military operations or activities in hot pursuit of 
     forces engaged outside the territory of Iran who thereafter 
     enter into Iran.
       (4) Intelligence collection activities of which Congress 
     has been appropriately notified under applicable law.
       (c) Report.--Not later than 24 hours after determining to 
     utilize funds referred to in subsection (a) for purposes of a 
     military operation described in subsection (b), the President 
     shall submit to the appropriate committees of Congress a 
     report on the determination, including a justification for 
     the determination.
                                 ______
                                 
  SA 693. Mr. DODD submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of chapter 10 of title III, add the following:
       Sec. 4004. For an additional amount to carry out housing 
     counseling, $25,000,000, to remain available until expended, 
     shall be made available to the Secretary of Housing and Urban 
     Development, Provided, That the amount provided under this 
     section is designated as an emergency requirement pursuant to 
     section 402 of H. Con. Res. 95 (109th Congress).
                                 ______
                                 
  SA 694. Mr. WARNER submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 94, between lines 10 and 11, insert the following:
       Sec. 2904. (a) It is the sense of Congress that the 
     realignment of functions from Walter Reed Army Medical 
     Center, as prescribed under the 2005 round of defense base 
     closure and realignment, should be accelerated to minimize 
     the uncertainty faced by the dedicated professionals serving 
     at the Center,

[[Page S3886]]

     and to ensure the quickest possible completion of facilities 
     and the immediate transfer of functions from the Center.
       (b) Of the funds appropriated by this chapter for military 
     construction under the heading ``Department of Defense Base 
     Closure Account, 2005'', $123,000,000 shall be deposited into 
     the Department of Defense Base Closure Account 2005 
     established under section 2906A(a)(1) of the Defense Base 
     Closure and Realignment Act of 1990 (part A of title XXIX of 
     Public Law 101-510; 10 U.S.C. 2687 note) and made available 
     for the acceleration of construction activities related to 
     the closure of Walter Reed Army Medical Center.
                                 ______
                                 
  SA 695. Mr. WARNER submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 94, between lines 10 and 11, insert the following:
       Sec. 2904. (a) Congress makes the following findings:
       (1) Congress authorized the 2005 Defense Base Closure and 
     Realignment (BRAC) process in the National Defense 
     Authorization Act for Fiscal Year 2002 (Public Law 107-107) 
     as the only fair and objective way for the Department of 
     Defense to reduce excess military base infrastructure and to 
     obtain savings from these reductions.
       (2) In order to ensure a fair and objective process, the 
     President was required to present to Congress a list of bases 
     to be closed or realigned, as determined by the BRAC 
     Commission, in a totality without any changes or alterations.
       (3) The President submitted to Congress the decisions of 
     the BRAC Commission under the 2005 round of defense base 
     closure and realignment on September 15, 2005, two and a half 
     years after the commencement of Operation Iraqi Freedom.
       (4) As part of the BRAC process, the Secretary of Defense 
     was required by law to assess the probable threats to 
     national security and, as part of such assessment, determine 
     the potential, prudent, surge requirements to meet those 
     threats.
       (5) The Department of Defense and the BRAC Commission were 
     required by law to determine whether each decision accounted 
     for the ability to accommodate contingency, mobilization, 
     surge, and future total force requirements at both existing 
     and potential receiving locations to support operations and 
     training.
       (6) Congress took no action to disapprove the decisions of 
     the Commission, thus allowing the totality of the 2005 round 
     of defense base closure and realignment to become law on 
     November 20, 2005.
       (7) Contained within the totality of the 2005 BRAC 
     decisions was the realignment of the Walter Reed Army Medical 
     Center in Washington, D.C., which would result in the closure 
     of the main post and the relocation of--
       (A) all tertiary (sub-specialty and complex care) medical 
     services, Legal Medicine, and a Pathology Program Management 
     Office to National Naval Medical Center, Bethesda, Maryland;
       (B) all non-tertiary (primary and specialty) patient care 
     functions to a new community hospital at Fort Belvoir, 
     Virginia;
       (C) the Armed Forces Medical Examiner, DNA Registry, and 
     Accident Investigation to Dover Air Force Base, Delaware; and
       (D) the Combat Casualty Care Research sub-function and the 
     enlisted histology technician training to Fort Sam Houston, 
     Texas.
       (8) The decision to close Walter Reed Army Medical Center 
     is estimated to save the Department of Defense over 
     $170,000,000 annually after 2011.
       (9) The cost to maintain and renovate current facilities at 
     Walter Reed Army Medical Center and in the national capitol 
     region was estimated by the Department of the Army to exceed 
     $13,000,000,000 over the next 13 years.
       (10) A delay in the closure or realignment of a military 
     installation would cause further disruption and uncertainty 
     for the workforce supporting the installation and the local 
     community surrounding the installation until the action is 
     complete.
       (11) The Defense Base Closure and Realignment Act of 1990 
     (part A of title XXIX of Public Law 101-510; 10 U.S.C. 2687 
     note) requires the Secretary of Defense to complete all such 
     closures and realignments no later than September 15, 2011, 
     in order minimize to the negative impact on military 
     operations and local communities by establishing clear, 
     specific goals for the realignment and closure activities.
       (12) The inadequate conditions and processes recently 
     identified at Walter Reed Army Medical Center are, in part, 
     due to antiquated facilities spread over a 113-acre campus, 
     which was not initially designed for processes necessitated 
     by current military operations.
       (13) The BRAC decision will allow the Department of Defense 
     to transform legacy medical facilities into a premier, 
     modern, state-of-the-art joint operational medical facility 
     that will combine the best military practitioners, medical 
     practices, and medical research efforts from both the 
     Department of the Army and the Department of the Navy under 
     one roof working side-by-side for wounded servicemembers.
       (14) The acceleration of the construction at the receiving 
     locations from the closure of Walter Reed Army Medical Center 
     will allow for a quicker transition of functions and patient 
     services to newer, more modern facilities, significantly 
     improving the capability to care for our Nation's wounded 
     service members.
       (15) Any action by Congress to delay or reverse the BRAC 
     decision to close Walter Reed Army Medical Center will result 
     in an unprecedented disruption to the BRAC process and 
     introduce a level of uncertainty in every other BRAC 
     decision, which could paralyze the efforts of the military 
     and local communities to faithfully carry out the decisions 
     made under the 2005 round of defense base closure and 
     realignment.
       (b) It is the sense of Congress that the realignment of 
     functions from Walter Reed Army Medical Center, as prescribed 
     under the 2005 round of defense base closure and realignment, 
     should be accelerated to minimize the uncertainty faced by 
     the dedicated professionals serving at the Center, and to 
     ensure the quickest possible completion of facilities and the 
     immediate transfer of functions from the Center.
       (c) There are authorized to be appropriated $123,000,000 
     for an additional amount to be deposited into the Department 
     of Defense Base Closure Account 2005 established under 
     section 2906A(a)(1) of the Defense Base Closure and 
     Realignment Act of 1990 (part A of title XXIX of Public Law 
     101-510; 10 U.S.C. 2687 note) for the purpose of accelerating 
     construction activities related to the closure of Walter Reed 
     Army Medical Center. Any funds so appropriated shall remain 
     available until expended.
                                 ______
                                 
  SA 696. Mr. WARNER submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 94, between lines 10 and 11, insert the following:
       Sec. 2904. (a) Congress makes the following findings:
       (1) Congress authorized the 2005 Defense Base Closure and 
     Realignment (BRAC) process in the National Defense 
     Authorization Act for Fiscal Year 2002 (Public Law 107-107) 
     as the only fair and objective way for the Department of 
     Defense to reduce excess military base infrastructure and to 
     obtain savings from these reductions.
       (2) In order to ensure a fair and objective process, the 
     President was required to present to Congress a list of bases 
     to be closed or realigned, as determined by the BRAC 
     Commission, in a totality without any changes or alterations.
       (3) The President submitted to Congress the decisions of 
     the BRAC Commission under the 2005 round of defense base 
     closure and realignment on September 15, 2005, two and a half 
     years after the commencement of Operation Iraqi Freedom.
       (4) As part of the BRAC process, the Secretary of Defense 
     was required by law to assess the probable threats to 
     national security and, as part of such assessment, determine 
     the potential, prudent, surge requirements to meet those 
     threats.
       (5) The Department of Defense and the BRAC Commission were 
     required by law to determine whether each decision accounted 
     for the ability to accommodate contingency, mobilization, 
     surge, and future total force requirements at both existing 
     and potential receiving locations to support operations and 
     training.
       (6) Congress took no action to disapprove the decisions of 
     the Commission, thus allowing the totality of the 2005 round 
     of defense base closure and realignment to become law on 
     November 20, 2005.
       (7) Contained within the totality of the 2005 BRAC 
     decisions was the realignment of the Walter Reed Army Medical 
     Center in Washington, D.C., which would result in the closure 
     of the main post and the relocation of--
       (A) all tertiary (sub-specialty and complex care) medical 
     services, Legal Medicine, and a Pathology Program Management 
     Office to National Naval Medical Center, Bethesda, Maryland;
       (B) all non-tertiary (primary and specialty) patient care 
     functions to a new community hospital at Fort Belvoir, 
     Virginia;
       (C) the Armed Forces Medical Examiner, DNA Registry, and 
     Accident Investigation to Dover Air Force Base, Delaware; and
       (D) the Combat Casualty Care Research sub-function and the 
     enlisted histology technician training to Fort Sam Houston, 
     Texas.
       (8) The decision to close Walter Reed Army Medical Center 
     is estimated to save the Department of Defense over 
     $170,000,000 annually after 2011.
       (9) The cost to maintain and renovate current facilities at 
     Walter Reed Army Medical Center and in the national capitol 
     region was estimated by the Department of the Army to exceed 
     $13,000,000,000 over the next 13 years.
       (10) A delay in the closure or realignment of a military 
     installation would cause further disruption and uncertainty 
     for the workforce supporting the installation and the local 
     community surrounding the installation until the action is 
     complete.
       (11) The Defense Base Closure and Realignment Act of 1990 
     (part A of title XXIX of Public Law 101-510; 10 U.S.C. 2687 
     note) requires the Secretary of Defense to complete all such 
     closures and realignments no later

[[Page S3887]]

     than September 15, 2011, in order minimize to the negative 
     impact on military operations and local communities by 
     establishing clear, specific goals for the realignment and 
     closure activities.
       (12) The inadequate conditions and processes recently 
     identified at Walter Reed Army Medical Center are, in part, 
     due to antiquated facilities spread over a 113-acre campus, 
     which was not initially designed for processes necessitated 
     by current military operations.
       (13) The BRAC decision will allow the Department of Defense 
     to transform legacy medical facilities into a premier, 
     modern, state-of-the-art joint operational medical facility 
     that will combine the best military practitioners, medical 
     practices, and medical research efforts from both the 
     Department of the Army and the Department of the Navy under 
     one roof working side-by-side for wounded servicemembers.
       (14) The acceleration of the construction at the receiving 
     locations from the closure of Walter Reed Army Medical Center 
     will allow for a quicker transition of functions and patient 
     services to newer, more modern facilities, significantly 
     improving the capability to care for our Nation's wounded 
     service members.
       (15) Any action by Congress to delay or reverse the BRAC 
     decision to close Walter Reed Army Medical Center will result 
     in an unprecedented disruption to the BRAC process and 
     introduce a level of uncertainty in every other BRAC 
     decision, which could paralyze the efforts of the military 
     and local communities to faithfully carry out the decisions 
     made under the 2005 round of defense base closure and 
     realignment.
       (b) It is the sense of Congress that the realignment of 
     functions from Walter Reed Army Medical Center, as prescribed 
     under the 2005 round of defense base closure and realignment, 
     should be accelerated to minimize the uncertainty faced by 
     the dedicated professionals serving at the Center, and to 
     ensure the quickest possible completion of facilities and the 
     immediate transfer of functions from the Center.
       (c) Of the funds appropriated by this chapter for military 
     construction under the heading ``Department of Defense Base 
     Closure Account, 2005'', $123,000,000 shall be deposited into 
     the Department of Defense Base Closure Account 2005 
     established under section 2906A(a)(1) of the Defense Base 
     Closure and Realignment Act of 1990 (part A of title XXIX of 
     Public Law 101-510; 10 U.S.C. 2687 note) and made available 
     for the acceleration of construction activities related to 
     the closure of Walter Reed Army Medical Center.
                                 ______
                                 
  SA 697. Mr. WARNER (for himself, Mr. Byrd, Ms. Collins, Mr. Nelson of 
Nebraska, Ms. Snowe, Mr. Salazar, Ms. Murkowski, and Mr. Smith) 
submitted an amendment intended to be proposed by him to the bill H.R. 
1591, making emergency supplemental appropriations for the fiscal year 
ending September 30, 2007, and for other purposes; which was ordered to 
lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. INDEPENDENT ASSESSMENT OF CAPABILITIES OF THE IRAQI 
                   SECURITY FORCES.

       (a) Findings.--Congress makes the following findings:
       (1) The responsibility for Iraq's internal security and 
     halting sectarian violence must rest primarily with the 
     Government of Iraq, relying on the Iraqi Security Forces 
     (ISF).
       (2) In quarterly reports to Congress, and in testimony 
     before a number of congressional committees, the Department 
     of Defense reported progress towards training and equipping 
     Iraqi Security Forces; however, the subsequent performance of 
     the Iraqi Security Forces has been uneven and occasionally 
     appeared inconsistent with those reports.
       (3) On November 15, 2005, President Bush said, ``The plan 
     [is] that we will train Iraqi troops to be able to take the 
     fight to the enemy. And as I have consistently said, as the 
     Iraqis stand up, we will stand down''.
       (4) In testimony to Congress, on November 15, 2006, U.S. 
     Central Command Commander General John Abizaid said, ``I 
     believe that more American forces prevent the Iraqis from 
     doing more, from taking more responsibility for their own 
     future''.
       (5) On January 10, 2007, the President announced a new 
     strategy, which consists of three basic elements: diplomatic, 
     economic, and military; the central component of the military 
     element being an augmentation of the present level of the 
     U.S. military forces with more than 20,000 additional U.S. 
     military troops to Iraq to ``work alongside Iraqi units and 
     be embedded in their formations. Our troops will have a well-
     defined mission: to help Iraqis clear and secure 
     neighborhoods, to help them protect the local population, and 
     to help ensure that the Iraqi forces left behind are capable 
     of providing the security that Baghdad needs''.
       (6) The President said on January 10, 2007, that ``I've 
     made it clear to the Prime Minister and Iraq's other leaders 
     that America's commitment is not open-ended'' so as to dispel 
     the contrary impression that exists.
       (7) The latest National Intelligence Estimate (NIE) on 
     Iraq, entitled ``Prospects for Iraq's Stability: A 
     Challenging Road Ahead,'' released in January 2007, found: 
     ``If strengthened Iraqi Security Forces (ISF), more loyal to 
     the government and supported by Coalition forces, are able to 
     reduce levels of violence and establish more effective 
     security for Iraq's population, Iraqi leaders could have an 
     opportunity to begin the process of political compromise 
     necessary for longer term stability, political progress, and 
     economic recovery''.
       (8) The NIE also stated that ``[d]espite real improvements, 
     the Iraqi Security Forces (ISF)--particularly the Iraqi 
     police--will be hard pressed in the next 12-18 months to 
     execute significantly increased security responsibilities''.
       (9) The current and prospective readiness of the ISF is 
     critical to (A) the long term stability of Iraq, (B) the 
     force protection of U.S. forces conducting combined 
     operations with the ISF; and (C) the scale of U.S. forces 
     deployed to Iraq.
       (b) Independent Assessment of Capabilities of Iraqi 
     Security Forces.--
       (1) In general.--There is hereby authorized to be 
     appropriated for the Department of Defense, $750,000, that 
     the Department, in turn, will commission an independent, 
     private-sector entity, which operates as a 501(c)(3) with 
     recognized credentials and expertise in military affairs, to 
     prepare an independent report assessing the following:
       (A) The readiness of the Iraqi Security Forces (ISF) to 
     assume responsibility for maintaining the territorial 
     integrity of Iraq, denying international terrorists a safe 
     haven, and bringing greater security to Iraq's 18 provinces 
     in the next 12-18 months, and bringing an end to sectarian 
     violence to achieve national reconciliation.
       (B) The training; equipping; command, control and 
     intelligence capabilities; and logistics capacity of the ISF.
       (C) The likelihood that, given the ISF's record of 
     preparedness to date, following years of training and 
     equipping by US forces, the continued support of US troops 
     will contribute to the readiness of the ISF to fulfill the 
     missions outlined in subparagraph (A).
       (2) Report.--Not later than 120 days after passage of this 
     Act, the designated private sector entity shall provide an 
     unclassified report, with a classified annex, containing its 
     findings, to the House and Senate Committees on Armed 
     Services, Appropriations, Foreign Relations, and 
     Intelligence.
                                 ______
                                 
  SA 698. Mr. WARNER submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

     SEC. 1. SENSE OF THE SENATE CONCERNING IRAQ.

       Whereas on the fourth anniversary of Operation Iraqi 
     Freedom, the regime of a brutal dictator has been replaced by 
     a democratically elected government in the Arab world;
       Whereas, the United Nations Security Council Resolution 
     1723, approved November 28, 2006, ``determin[ed] that the 
     situation in Iraq continues to constitute a threat to 
     international peace and security;''
       Whereas, over 137,000 American military personnel are 
     currently serving in Iraq, like thousands of others since 
     March 2003, with the bravery and professionalism consistent 
     with the finest traditions of the United States armed forces, 
     and are deserving of the support of all Americans, which they 
     have strongly;
       Whereas many American service personnel have lost their 
     lives, and many more have been wounded, in Iraq, and the 
     American people will always honor their sacrifices and honor 
     their families;
       Whereas the U.S. Army and Marine Corps, including their 
     Reserve and National Guard organizations, together with 
     components of the other branches of the military, are under 
     enormous strain from multiple, extended deployments to Iraq 
     and Afghanistan, and these deployments, and those that will 
     follow, will have lasting impacts on the future recruiting, 
     retention and readiness of our nation's all volunteer force;
       Whereas Iraq is experiencing a deteriorating problem of 
     sectarian and intra-sectarian violence based upon political 
     distrust and cultural differences between some Sunni and Shia 
     Muslims, concentrated primarily in Baghdad;
       Whereas Iraqis must reach political settlements in order to 
     achieve reconciliation, and the failure of the Iraqis to 
     reach such settlements to support a truly unified government 
     greatly contributes to the increasing violence in Iraq;
       Whereas the responsibility for Iraq's internal security and 
     halting sectarian violence must rest primarily with the 
     Government of Iraq, relying on the Iraqi Security Forces 
     (ISF);
       Whereas the President said on January 10, 2007, that ``I've 
     made it clear to the Prime Minister and Iraq's other leaders 
     that America's commitment is not open-ended'' so as to dispel 
     the contrary impression that exists;
       Whereas it is essential that the Government of Iraq set out 
     measurable and achievable benchmarks and President Bush said, 
     on January 10, 2007, that ``America will change our approach 
     to help the Iraqi government as it works to meet these 
     benchmarks;''
       Whereas according to Secretary of State Rice, Iraq's Policy 
     Committee on National Security agreed upon a set of 
     political, security, and economic benchmarks and an 
     associated timeline in September 2006 that were (a) 
     reaffirmed by Iraq's Presidency Council on October 6, 2007; 
     (b) referenced by the Iraq Study Group; and (c) posted on the 
     President of Iraq's website;
       Whereas the Secretary of State indicated on January 30, 
     2007 that ``we expect the Prime Minister will follow through 
     on his pledges to the President that he would take difficult 
     decisions.''
       Whereas the Secretary of State, the Secretary of Defense, 
     and the Chairman of the Joint Chiefs of Staff have testified 
     about, and, or, provided unclassified material to members of 
     Congress on Iraqi commitments and goals.
       Whereas Congress acknowledges that the Baghdad Security 
     Plan is in it's initial months and while there are signs of 
     progress, there are also signs of difficulty and uncertainty. 
     Now therefore be it
       Resolved that

[[Page S3888]]

       (1) The United States strategy in Iraq, hereafter, should 
     be conditioned on the Iraqi government meeting benchmarks, as 
     told to members of Congress by the President, the Secretary 
     of State, the Secretary of Defense, and the Chairman of the 
     Joint Chiefs of Staff, and reflected in the Iraqi 
     Government's commitments to the United States, and to the 
     international community, including:
       (a) forming a Constitutional Review Committee and 
     completing the Constitutional review;
       (b) enacting and implementing legislation on de-
     Bathification;
       (c) enacting and implementing legislation to ensure the 
     equitable distribution of hydrocarbon resources to the people 
     of Iraq without regard to the sect or ethnicity of 
     recipients, and ensuring that the energy resources of Iraq 
     benefit Sunni Arabs, Shia Arabs, Kurds, and other Iraqi 
     citizens in an equitable manner;
       (d) enacting and implementing legislation on procedures to 
     form semi-autonomous regions;
       (e) enacting and implementing legislation establishing an 
     Independent High Electoral Commission; provincial elections 
     law; provincial council authorities; and a date for 
     provincial elections;
       (f) enacting and implementing legislation addressing 
     amnesty;
       (g) enacting and implementing legislation establishing a 
     strong militia disbarment program to ensure that such 
     security forces are accountable only to the central 
     government and loyal to the constitution of Iraq;
       (h) establishing supporting political media, economic, and 
     services committees in support of the Baghdad Security Plan;
       (i) providing three trained and ready Iraqi brigades to 
     support Baghdad operations;
       (j) providing Iraqi commanders with all authorities to 
     execute this plan and to make tactical and operational 
     decisions, in consultation with U.S. commanders, without 
     political intervention;
       (k) ensuring that the Iraqi Security Forces are providing 
     even handed enforcement of the law against all who break it;
       (l) ensuring that, the Baghdad security plan is not 
     providing a safe haven for any outlaws, regardless of their 
     sectarian or political affiliation; as Prime Minister Maliki 
     stated to President Bush.
       (m) establishing all of the planned joint security stations 
     in neighborhoods across Baghdad;
       (n) increasing the number of Iraqi security forces units 
     capable of operating independently;
       (o) allocating and spending $10 billion in Iraqi revenues 
     for reconstruction projects, including delivery of essential 
     services, on an equitable basis;
       (2) The Iraqi government achieving, or demonstrating 
     satisfactory progress towards achieving these benchmarks 
     should be viewed as the condition for continued United States 
     military and economic involvement in Iraq;
       Sec. 2. Reporting Requirements.
       A. Report Required on Benchmarks
       (1) The Commander, Multi-National Forces-Iraq, in 
     coordination with the United States Ambassador to Iraq, shall 
     submit a report (hereafter known as ``the report''), to the 
     Commander of U.S. Central Command not later than July 15, 
     2007, and every 60 days thereafter. The report shall detail 
     the status of each of the specific benchmarks established in 
     Section 1, and conclude whether satisfactory progress has 
     been made toward meeting the overall benchmarks as defined in 
     Section 1, in a timely manner.
       (2) Upon receipt of the report, the Commander of U.S. 
     Central Command shall prepare an assessment of the report. 
     The report and the assessment shall be submitted to the 
     Secretary of Defense not later than July 20, 2007, and every 
     60 days thereafter.
       (3) Upon receipt of the report and assessment, the 
     Secretary of Defense shall, in consultation with the 
     Secretary of State, prepare their independent assessment of 
     and submit the report and all assessments to the Committees 
     on Armed Services; Appropriations; Foreign Relations or 
     International Relations; and Intelligence of the Senate and 
     House of Representatives, not later than August 1, 2007, and 
     every 60 days thereafter.
       (4) If the report or any of the assessments fail to 
     indicate satisfactory progress in any benchmark, the 
     President shall submit, within 30 days thereafter, a report 
     to Congress on those benchmarks that failed to achieve 
     satisfactory progress. The Presidents' report shall provide 
     an explanation of why satisfactory progress was not achieved 
     and describe revisions to the January 10, 2007 strategy, that 
     reflect how satisfactory progress will be attained.
       (5) The reporting requirement detailed in Section 1227 of 
     the National Defense Authorization Act for Fiscal Year 2007 
     is terminated after a reporting period ending May 31, 2007.
       B. Reports on Readiness of the Armed Forces.
       (1) Commencing 60 days after the enactment of this Act, the 
     Secretaries of the military services, in coordination with 
     the Chiefs of the Services, shall report to the Committees on 
     Armed Services and Appropriations of the Senate and the House 
     of Representatives, not later than 30 days before the date of 
     embarkation, the deployment of any unit of the Armed Forces 
     of the United States, to include the Reserve Forces and 
     National Guard (hereafter known as ``the unit''), outside the 
     United States and its territories, that is not deemed fully 
     mission capable of performing reasonably assigned mission-
     essential tasks to prescribed standards, under anticipated 
     conditions in the theater of operations, of the supported 
     combatant commander.
       (2) Subsequently, the supported combatant commander, in 
     coordination with the Commander of Joint Forces Command, 
     shall assess the risk of the deployment of the unit as 
     significant, high, medium, or low, and specify corrective 
     actions to reduce that level of risk from significant, high, 
     or medium to low to the Secretary of Defense, not later than 
     20 days before the embarkation of the unit.
       (3) Thereafter, the Secretary of Defense, in coordination 
     with Chairman of the Joint Chiefs of Staff, shall forward the 
     aforementioned risk assessment to the Committees on Armed 
     Services and Appropriations of the Senate and the House of 
     Representatives, not later than 10 days before the date of 
     embarkation of the unit, with a statement that the risk 
     associated with the deployment of ``the unit'' has been 
     mitigated to satisfaction, or that the deployment of ``the 
     unit'' has been canceled, delayed, or determined to be of 
     such significant importance that deployment of ``the unit'' 
     is essential and the level of risk of that deployment is 
     vital to national security.

                                 ______
                                 
  SA 699. Mr. GRASSLEY submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       Strike section 2704 and insert the following:
       Sec. 2704. (a) Elimination of Remainder of SCHIP Funding 
     Shortfalls for Fiscal Year 2007.--
       (1) In general.--Section 2104(h) of the Social Security Act 
     (42 U.S.C. 1397dd(h)), as added by section 201(a) of the 
     National Institutes of Health Reform Act of 2006, is 
     amended--
       (A) by redesignating paragraphs (4) through (7) as 
     paragraphs (5) through (8), respectively;
       (B) by inserting after paragraph (3), the following:
       ``(4) Additional amounts to eliminate remainder of fiscal 
     year 2007 funding shortfalls.--
       ``(A) Allotment authority.--From the amounts made available 
     under subparagraph (D) for additional allotments under this 
     paragraph, subject to subparagraph (C), the Secretary shall 
     allot to each remaining shortfall State described in 
     subparagraph (B) such amount as the Secretary determines will 
     eliminate the estimated shortfall described in such 
     subparagraph for the State for fiscal year 2007.
       ``(B) Remaining shortfall state described.--For purposes of 
     subparagraph (A), a remaining shortfall State is a State with 
     a State child health plan approved under this title for which 
     the Secretary estimates, on the basis of the most recent data 
     available to the Secretary as of March 31, 2007, that the 
     projected Federal expenditures under such plan for the State 
     for fiscal year 2007 will exceed the sum of--
       ``(i) the amount of the State's allotments for each of 
     fiscal years 2005 and 2006 that will not be expended by the 
     end of fiscal year 2006;
       ``(ii) the amount of the State's allotment for fiscal year 
     2007; and
       ``(iii) the amounts, if any, that are to be redistributed 
     to the State during fiscal year 2007 in accordance with 
     paragraphs (1) and (2).
       ``(C) Proration rule.--If the amount available under 
     subparagraph (D) is less than the total amount of the 
     estimated shortfalls determined by the Secretary under 
     subparagraph (A), the amount of the allotment for each 
     remaining shortfall State determined under such subparagraph 
     shall be reduced proportionally.
       ``(D) Appropriation; allotment authority.--For the purpose 
     of providing additional allotments to remaining shortfall 
     States under this paragraph there is appropriated, out of any 
     funds in the Treasury not otherwise appropriated, such sums 
     as are necessary for fiscal year 2007, not to exceed 
     $750,000,000. Amounts appropriated pursuant to the preceding 
     sentence are designated as an emergency requirement pursuant 
     to section 402 of H. Con. Res. 95 (109th Congress).''.
       (2) Conforming amendments.--Such section is further 
     amended--
       (A) in paragraph (1)(B), by striking ``paragraph (4)(B)'' 
     and inserting ``paragraph (5)(B)'';
       (B) in paragraph (2)--
       (i) in the paragraph heading, by striking ``remainder of 
     reduction'' and inserting ``part'';
       (ii) in subparagraph (A), by striking ``paragraph (5)(B)'' 
     and inserting ``paragraph (6)(B)''; and
       (iii) in subparagraph (B), by striking ``paragraph (4)(B)'' 
     and inserting ``paragraph (5)(B)'';
       (C) in paragraph (5) (as redesignated by paragraph 
     (1)(A))--
       (i) in subparagraph (A), by inserting ``or allotted'' after 
     ``redistributed''; and
       (ii) in subparagraph (B)--

       (I) by inserting ``or allotted'' after ``redistributed'';
       (II) by striking ``To the'' and inserting the following:

       ``(i) In general.--Subject to clause (ii), to the''; and

[[Page S3889]]

       (III) by adding at the end the following new clause:

       ``(ii) Exception for remaining shortfall states with lowest 
     third ranking of uninsured children.--Only with respect to 
     the amounts allotted under paragraph(4) to a remaining 
     shortfall State described in subparagraph (B) of such 
     paragraph, clause (i) shall not apply to any such State that, 
     on the basis of the most recent American Community Survey of 
     the Bureau of the Census (or, until such data is available, 
     on the basis of the 3 most recent Annual Social and Economic 
     Supplements of the Current Population Survey of the Bureau of 
     the Census), ranks in the lowest \1/3\ of States in terms of 
     the State's percentage of low-income children without health 
     insurance.'';
       (D) in subparagraph (6)(A) (as so redesignated), by 
     striking ``and (3)'' and inserting ``(3), and (4)''; and
       (E) in paragraph (7) (as so redesignated)--
       (i) in the first sentence_

       (I) by inserting ``or allotted'' after ``redistributed''; 
     and
       (II) by inserting ``or allotments'' after 
     ``redistributions''; and

       (ii) in the second sentence, by striking ``and (3), in 
     accordance with paragraph (5)'' and inserting ``(3), and (4) 
     in accordance with paragraph (6)''.
       (b) Improving Access to Dental Services and Mental Health 
     Services for Children.--Title V of the Social Security Act 
     (42 U.S.C. 701 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 511. SEPARATE PROGRAM TO IMPROVE ACCESS TO DENTAL 
                   SERVICES AND MENTAL HEALTH SERVICES.

       ``(a) Authority To Award Allotments.--For the purpose 
     described in subsection (b)(1), the Secretary shall allot to 
     each State which has transmitted an application under 
     subsection (c) that has been approved by the Secretary an 
     amount equal to the product of--
       ``(1) the amount appropriated in subsection (h) for the 
     period of fiscal years 2007 through 2012; and
       ``(2) the proportion that the number of low-income children 
     for that State bears to the total of such numbers of children 
     for all the States with approved applications under this 
     section for such period.
       ``(b) Purpose; Priority for Use of Funds.--
       ``(1) Purpose.--The purpose of an allotment under 
     subsection (a) to a State is to enable the State to carry out 
     activities that are designed to improve access to dental 
     services and mental health services for targeted low-income 
     children and other children with low income or limited 
     availability of health services.
       ``(2) Priority for use of funds.--In carrying out 
     activities with funds from an allotment made under this 
     section, a State shall give priority to activities that are 
     designed to improve access to dental services and mental 
     health services for targeted low-income children.
       ``(c) Application.--A State that desires to receive an 
     allotment under this section shall submit, not later than 
     June 1, 2007, an application to the Secretary in such form 
     and manner, and containing such information, as the Secretary 
     may require. Such application shall include--
       ``(1) a detailed description of the activities proposed to 
     be conducted with funds from the allotment;
       ``(2) quality and outcomes performance measures to evaluate 
     the effectiveness of such activities; and
       ``(3) an assurance that the State shall--
       ``(A) conduct an assessment of the effectiveness of such 
     activities against such performance measures; and
       ``(B) cooperate with the collection and reporting of data 
     and other information determined as a result of conducting 
     such assessments to the Secretary, in such form and manner as 
     the Secretary shall require.
       ``(d) Report.--Not later than March 31, 2008, the Secretary 
     shall submit a report to Congress on the activities conducted 
     with funds allotted under this section.
       ``(e) Supplement, Not Supplant.--Funds awarded under this 
     section shall be used to supplement, not supplant, non-
     Federal funds that are otherwise available for activities 
     conducted with funds from an allotment made under this 
     section.
       ``(f) Application of Other Provisions.--
       ``(1) In general.--Sections 503, 507, and 508 shall apply 
     to allotments under subsection (a) to the same extent and in 
     the same manner as such sections apply to allotments under 
     section 502(c).
       ``(2) Reports.--Section 506 shall apply to allotments under 
     subsection (a) to the extent determined by the Secretary to 
     be appropriate.
       ``(g) Definitions.--In this section:
       ``(1) Targeted low-income children.--The term `targeted 
     low-income children' means, with respect to a State, children 
     enrolled in the State child health plan under title XXI.
       ``(2) Low-income children.--The term `low-income children' 
     has the meaning given the term `low-income child' under 
     section 2110(c)(4).
       ``(h) Appropriation.--There is appropriated, out of any 
     money in the Treasury not otherwise appropriated, 
     $250,000,000 for the period of fiscal years 2007 through 2012 
     for the purpose of making allotments under this section.''.
       (c) Funding Provisions.--
       (1) Repeal of the limited continuous enrollment provision 
     for certain beneficiaries under the medicare advantage 
     program.--
       (A) In general.--Subparagraph (E) of section 1851(e)(2) of 
     the Social Security Act (42 U.S.C. 1395w-21(e)(2)), as added 
     by section 206(a) of division B of the Tax Relief and Health 
     Care Act of 2006 (Public Law 109-432), is repealed.
       (B) Conforming amendment.--Section 1860D-1(b)(1)(B)(iii) of 
     the Social Security Act (42 U.S.C. 1395w-101(b)(1)(B)(iii)), 
     as amended by 206(b) of division B of the Tax Relief and 
     Health Care Act of 2006 (Public Law 109-432), is amended by 
     striking ``subparagraphs (B), (C), and (E)'' and inserting 
     ``subparagraphs (B) and (C)''.
       (C) Effective date.--The amendments made by this paragraph 
     shall take effect on the day after the date of enactment of 
     this Act.
       (2) Requirement for use of tamper-resistant prescription 
     pads under the medicaid program.--
       (A) In general.--Section 1903(i) of the Social Security Act 
     (42 U.S.C. 1396b(i)) is amended--
       (i) by striking ``or'' at the end of paragraph (21);
       (ii) by striking the period at the end of paragraph (22) 
     and inserting ``; or''; and
       (iii) by inserting after paragraph (22) the following new 
     paragraph:
       ``(23) with respect to amounts expended for medical 
     assistance for covered outpatient drugs (as defined in 
     section 1927(k)(2)) for which the prescription was executed 
     in written (and non-electronic) form unless the prescription 
     was executed on a tamper-resistant pad.''.
       (B) Effective date.--The amendments made by subparagraph 
     (A) shall apply to prescriptions executed after September 30, 
     2007.
       (3) Extension of ssi asset verification demonstration to 
     medicaid.--
       (A) In general.--Subject to subparagraph (B), the Secretary 
     of Health and Human Services shall collaborate with the 
     Commissioner of Social Security to provide for the use, for 
     purposes of verifying financial eligibility for medical 
     assistance under State plans under title XIX of the Social 
     Security Act (42 U.S.C. 1396 et seq.), of the system 
     administered by the Commissioner (under section 
     1631(e)(1)(B)(ii) of such Act (42 U.S.C. 1383(e)(1)(B)(ii)) 
     under which the Commissioner may obtain information held by 
     financial institutions in order to verify eligibility for 
     benefits under title XVI of such Act (42 U.S.C. 1381 et 
     seq.).
       (B) Limitation.--For purposes of this paragraph, use of the 
     system described in subparagraph (A), and the information 
     obtained through such system, shall be limited to 
     determinations of eligibility for medical assistance in 
     States in which such system is being used by the Commissioner 
     to verify eligibility for benefits under such title XVI.
       (C) Sharing by commissioner of information obtained from 
     financial institutions.--Notwithstanding the Right to 
     Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.) or any 
     other provision of law, information obtained by the 
     Commissioner from financial institutions under the system 
     described in subparagraph (A) may, for purposes of carrying 
     out this paragraph, be shared with the agencies of States 
     specified in subparagraph (B) which are administering the 
     plans of such States under title XIX of the Social Security 
     Act.
       (d) General Effective Date; Applicability.--Except as 
     otherwise provided, the amendments made by this section take 
     effect on the date of enactment of this Act and apply without 
     fiscal year limitation.

                                 ______
                                 
  SA 700. Mr. GRASSLEY submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       Beginning on page 85, between lines 7 and 8, insert the 
     following:

     Nothing in the preceding sentence shall be construed as 
     prohibiting the Secretary of Health and Human Services during 
     the period described in such sentence from promulgating or 
     implementing a rule designed to prevent fraud and protect the 
     integrity of the Medicaid program or the State Children's 
     Health Insurance Program, reduce inappropriate spending under 
     such programs, or protect hospitals and other providers of 
     items and services under such programs by permitting such 
     hospitals and providers to retain all allowable Federal, 
     State, and local payments for items or services provided to 
     recipients of medical assistance under the Medicaid program 
     or child health assistance under the State Children's Health 
     Insurance Program.
                                 ______
                                 
  SA 701. Mr. GRASSLEY submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       Beginning on page 85, between lines 7 and 8, insert the 
     following:

     Nothing in the preceding sentence shall be construed as 
     prohibiting the Secretary of Health and Human Services during 
     the period described in such sentence from promulgating or 
     implementing a rule designed to prevent fraud and protect the 
     integrity of the Medicaid program or the State Children's 
     Health Insurance Program or reduce inappropriate spending 
     under such programs.

[[Page S3890]]

                                 ______
                                 
  SA 702. Mr. DeMINT submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       Strike subtitle C of title IV.
                                 ______
                                 
  SA 703. Mr. DeMINT submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 135, strike lines 5 through 14.
                                 ______
                                 
  SA 704. Mr. DeMINT submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of chapter 1 of title III, insert the following:

     SEC. 3104. SPINACH.

       No funds made available under this Act shall be used to 
     make payments to growers and first handlers, as defined by 
     the Secretary of Health and Human Services, of fresh spinach 
     that were unable to market spinach crops as a result of the 
     Food and Drug Administration Public Health Advisory issued on 
     September 14, 2006.
                                 ______
                                 
  SA 705. Mr. HAGEL (for himself, Mr. Webb, and Mr. Salazar) submitted 
an amendment intended to be proposed by him to the bill H.R. 1591, 
making emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

         CHAPTER 8--ADDITIONAL POLICY AND REQUIREMENTS ON IRAQ

     SEC. 1803. LIMITATION ON AVAILABILITY OF FUNDS FOR DEPLOYMENT 
                   OF UNITS UNLESS FULLY MISSION CAPABLE.

       (a) Limitation.--Commencing 120 days after the date of the 
     enactment of this Act, no funds appropriated or otherwise 
     made available by this Act or any other Act may be obligated 
     or expended for the deployment of a unit or member of the 
     Armed Forces unless the Chief of Staff of the Armed Force 
     concerned certifies to the congressional defense committees, 
     not later than 15 days before the date of such deployment, 
     that the unit or member, as the case may be, is fully mission 
     capable.
       (b) Fully Mission Capable.--For purposes of this section, a 
     unit or member of the Armed Forces shall be rated as being 
     fully mission capable only if--
       (1) the unit or member is capable of performing assigned 
     mission-essential tasks to prescribed standards under 
     anticipated conditions in the theater of operations of 
     deployment in accordance with guidelines set forth in the 
     Department of Defense readiness reporting system; and
       (2) the unit or member is capable of performing such other 
     assigned mission tasks, including mission tasks outside the 
     theater of operations of deployment, that could reasonably be 
     expected to arise during the period of deployment.
       (c) Applicability to Voluntary Deployments.--The limitation 
     in subsection (a) shall apply with respect to the deployment 
     of any member of the Armed Forces who voluntarily consents to 
     deployment.
       (d) Waiver Authority.--
       (1) In general.--The President may waive the applicability 
     of the limitation in subsection (a) to the deployment of a 
     unit or member of the Armed Forces if the President certifies 
     to the congressional defense committees, not later than 15 
     days before the date of such deployment, that--
       (A) any equipment required for the unit or member to be 
     deployed as fully mission capable that is not available at 
     the time of deployment will be supplied upon arrival in the 
     theater of operations to which the unit or member is 
     deployed; and
       (B) the unit or member has met, prior to deployment, all 
     other requirements to be rated as fully mission capable.
       (2) Case-by-case basis.--Any waiver under paragraph (1) 
     shall be made on a case-by-case basis.
       (e) Additional Waiver Authority.--The President may waive 
     the applicability of the limitation in subsection (a) in the 
     event of a requirement for the use of military force in time 
     of national emergency.

     SEC. 1804. LIMITATION ON EXTENDING LENGTH OF DEPLOYMENTS FOR 
                   OPERATION IRAQI FREEDOM.

       (a) Limitation.--Commencing 120 days after the date of the 
     enactment of this Act, no funds appropriated or otherwise 
     made available by this Act or any other Act may be obligated 
     or expended to deploy, continue the deployment, or execute 
     any order that has the effect of extending the deployment of 
     a unit or member of the Armed Forces for Operation Iraqi 
     Freedom as follows:
       (1) In the case of a unit or member of the Army (including 
     a unit or member of the Army National Guard or the Army 
     Reserve), if the deployment or continuation or extension of 
     deployment would result in the deployment of the unit or 
     member for more than 365 consecutive days.
       (2) In the case of a unit or member of the Marine Corps 
     (including a unit or member of the Marine Corps Reserve), if 
     the deployment or continuation or extension of deployment 
     would result in the deployment of the unit or member for more 
     than 210 consecutive days.
       (b) Exception.--The limitation in subsection (a) shall not 
     apply to designated key command headquarters personnel or 
     other members of the Armed Forces who are required to 
     maintain continuity of mission and situational awareness 
     between rotating forces.
       (c) Deployment Defined.--For purposes of this section, the 
     term ``deployment'' has the meaning given that term in 
     section 991(b) of title 10, United States Code.

     SEC. 1805. MINIMUM PERIOD BETWEEN DEPLOYMENTS FOR OPERATION 
                   IRAQI FREEDOM.

       (a) Minimum Period for Certain Members of the Army and 
     Marine Corps.--
       (1) In general.--Commencing 120 days after the date of the 
     enactment of this Act, no funds appropriated or otherwise 
     made available by this Act or any other Act may be obligated 
     or expended to deploy for Operation Iraqi Freedom a unit or 
     member of the Armed Forces specified in paragraph (2) unless 
     the period between the deployment of the unit or member for 
     Operation Iraqi Freedom covered by this subsection and the 
     previous deployment of the unit or member is equal to or 
     longer than the period of such previous deployment of the 
     unit or member.
       (2) Covered units and members.--The units and members of 
     the Armed Forces specified in this paragraph are as follows:
       (A) Units and members of the regular Army.
       (B) Units and members of the regular Marine Corps.
       (b) Minimum Period for Members of Army Reserve, Marine 
     Corps Reserve, and Army National Guard.--Commencing 120 days 
     after the date of the enactment of this Act, no funds 
     appropriated or otherwise made available by this Act or any 
     other Act may be obligated or expended to deploy for 
     Operation Iraqi Freedom a unit or member of the Army Reserve, 
     Marine Corps Reserve, or Army National Guard if the unit or 
     member has been deployed at any time within the five years 
     preceding the date of the deployment covered by this 
     subsection.
       (c) Deployment Defined.--For purposes of this section, the 
     term ``deployment'' has the meaning given that term in 
     section 991(b) of title 10, United States Code.

     SEC. 1806. ADDITIONAL AMOUNT FOR NATIONAL GUARD PERSONNEL, 
                   ARMY.

       The amount appropriated by chapter 3 of this title under 
     the heading ``National Guard Personnel, Army'' is hereby 
     increased by $597,100,000.

     SEC. 1807. ADDITIONAL AMOUNT FOR OPERATION AND MAINTENANCE, 
                   ARMY NATIONAL GUARD.

       The amount appropriated by chapter 3 of this title under 
     the heading ``Operation and Maintenance, Army National 
     Guard'' is hereby increased by $460,700,000.

     SEC. 1808. ADDITIONAL AMOUNT FOR NATIONAL GUARD AND RESERVE 
                   EQUIPMENT.

       The amount appropriated by chapter 3 of this title under 
     the heading ``National Guard and Reserve Equipment'' is 
     hereby increased by $364,900,000, with the amount of such 
     increase to be available for National Guard equipment needs.

     SEC. 1809. ADDITIONAL AMOUNT FOR PROCUREMENT, MARINE CORPS.

       The amount appropriated by chapter 3 of this title under 
     the heading ``Procurement, Marine Corps'' is hereby increased 
     by $1,700,000,000, with the amount of such increase to be 
     available for additional Mine Resistant Ambush Protection 
     vehicles.

     SEC. 1810. REPORTS ON UNITED STATES EFFORTS FOR IRAQ.

       (a) Reports Required.--Not later than 60 days after the 
     date of the enactment of this Act, and every 60 days 
     thereafter, the President shall submit to the appropriate 
     committees of Congress a report that sets forth a 
     comprehensive description and assessment of current United 
     States diplomatic, political, and economic efforts with 
     respect to Iraq.
       (b) Elements.--
       (1) In general.--Each report under subsection (a) shall set 
     forth, current as of the date of such report, a comprehensive 
     description and assessment of United States diplomatic, 
     political, and economic efforts with respect to Iraq, 
     including efforts as follows:
       (A) To achieve broad-based national political 
     reconciliation in Iraq that includes all of Iraq's 
     communities.
       (B) To engage all nations in the Middle East, including 
     Iraq's immediate neighbors, the international community, and 
     international institutions in developing a regional, 
     internationally-sponsored reconciliation and reconstruction 
     process for Iraq.
       (C) To utilize United States political, economic, and 
     military assistance to facilitate the reconstruction of Iraq.
       (D) To secure the delivery of pledged economic and other 
     assistance for Iraq from the international community, and to 
     secure additional pledges of assistance for Iraq, including 
     specific information regarding the status of assistance 
     pledges for Iraq from the international community.
       (E) To ensure that the Government of Iraq is increasing and 
     improving the delivery of basic services to the people of 
     Iraq.
       (2) Information on status of pledged assistance.--The 
     description of pledged economic and other assistance for Iraq 
     under

[[Page S3891]]

     paragraph (1)(D) shall include information on the current 
     status of delivery of assistance for Iraq under pledges of 
     assistance from the international community.
       (c) Form of Report.--Each report under this section shall 
     be submitted in unclassified form, but may include a 
     classified annex.
       (d) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (1) the Committees on Armed Services, Foreign Relations, 
     and Appropriations of the Senate; and
       (2) the Committees on Armed Services, Foreign Affairs, and 
     Appropriations of the House of Representatives.

     SEC. 1811. EMERGENCY DESIGNATION.

       Amounts provided in this chapter are designated as 
     emergency requirements pursuant to section 403 of H.Con.Res. 
     95 (109th Congress), the concurrent resolution on the budget 
     for fiscal year 2006.
                                 ______
                                 
  SA 706. Mr. BURR submitted an amendment intended to be proposed to 
amendment SA 641 proposed by Mr. Byrd to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       On page 112, line 14, insert before the period the 
     following: ``; in addition to the amounts transferred, an 
     additional $111,000,000 is appropriated to the Public Health 
     and Social Services Emergency Fund to carry out section 319L 
     of the Public Health Service Act (the Biomedical Advanced 
     Research and Development Authority), which shall be 
     designated as an emergency requirement pursuant to section 
     402 of S. Con. Res. 83 (109th Congress), the concurrent 
     resolution on the budget for fiscal year 2007, as made 
     applicable in the Senate by section 7035 of Public Law 109-
     234, to remain available until expended, and to be offset 
     through striking the amount appropriated in chapter I of 
     title III (Department of Agriculture) for the Farm Service 
     Agency, reducing the amount appropriated under section 412 by 
     $12,000,000, and striking the amount appropriated under 
     section 416''.
                                 ______
                                 
  SA 707. Mr. HAGEL (for himself, Mr. Webb, and Mr. Salazar) submitted 
an amendment intended to be proposed by him to the bill H.R. 1591, 
making emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of title I, add the following:

         CHAPTER 8--ADDITIONAL POLICY AND REQUIREMENTS ON IRAQ

     SEC. 1801. SENSE OF CONGRESS.

       It is the sense of Congress that--
       (1) the primary objective of United States strategy in Iraq 
     should be to achieve a political solution and national 
     reconciliation in Iraq through increased, concerted regional 
     and international diplomacy;
       (2) the United States should engage all nations in the 
     Middle East, including Iraq's immediate neighbors, in 
     developing a regional, internationally sponsored peace and 
     reconciliation process for Iraq;
       (3) the regional security conferences on Iraq that are 
     being organized by Prime Minister of Iraq Nuri al-Maliki 
     represent important first steps to achieve a more robust 
     diplomatic initiative that should be given the full and 
     direct support by the President; and
       (4) the President and the Government of Iraq should build 
     on the momentum of the Baghdad conference and the upcoming 
     ministerial meeting by convening a diplomatic conference with 
     the purpose of bringing stability to the region, reinforcing 
     national reconciliation efforts, achieving the withdrawal of 
     the United States Armed Forces from Iraq, and promoting a 
     comprehensive regional diplomatic solution.

     SEC. 1802. FINDINGS REGARDING THE UNITED STATES ARMED FORCES.

       Congress makes the following findings:
       (1) The United States Armed Forces, and the members of the 
     Armed Forces and their families, are under enormous strain 
     from multiple, extended deployments to Iraq and Afghanistan.
       (2) The readiness of nondeployed Army and Marine Corps 
     units has declined significantly due to a lack of equipment 
     and insufficient time to train, thereby jeopardizing their 
     capability to respond quickly and effectively to other crises 
     or contingencies in the world.
       (3) The Navy and Air Force are sustaining high operating 
     tempos in support of military operations in Iraq and 
     Afghanistan, as well as conducting other global missions.
       (4) Each of the Armed Forces has important requirements to 
     modernize and recapitalize aging legacy platforms and systems 
     if our Nation is to possess the military capability needed to 
     defend against a growing array of dynamic and challenging 
     threats to our national security.
       (5) The current deployment tempo of the United States Armed 
     Forces will have lasting impacts on the future recruitment, 
     retention, and readiness of the All-Volunteer Force.

     SEC. 1803. LIMITATION ON AVAILABILITY OF FUNDS FOR DEPLOYMENT 
                   OF UNITS UNLESS FULLY MISSION CAPABLE.

       (a) Limitation.--Commencing 120 days after the date of the 
     enactment of this Act, no funds appropriated or otherwise 
     made available by this Act or any other Act may be obligated 
     or expended for the deployment of a unit or member of the 
     Armed Forces unless the Chief of Staff of the Armed Force 
     concerned certifies to the congressional defense committees, 
     not later than 15 days before the date of such deployment, 
     that the unit or member, as the case may be, is fully mission 
     capable.
       (b) Fully Mission Capable.--For purposes of this section, a 
     unit or member of the Armed Forces shall be rated as being 
     fully mission capable only if--
       (1) the unit or member is capable of performing assigned 
     mission-essential tasks to prescribed standards under 
     anticipated conditions in the theater of operations of 
     deployment in accordance with guidelines set forth in the 
     Department of Defense readiness reporting system; and
       (2) the unit or member is capable of performing such other 
     assigned mission tasks, including mission tasks outside the 
     theater of operations of deployment, that could reasonably be 
     expected to arise during the period of deployment.
       (c) Applicability to Voluntary Deployments.--The limitation 
     in subsection (a) shall apply with respect to the deployment 
     of any member of the Armed Forces who voluntarily consents to 
     deployment.
       (d) Waiver Authority.--
       (1) In general.--The President may waive the applicability 
     of the limitation in subsection (a) to the deployment of a 
     unit or member of the Armed Forces if the President certifies 
     to the congressional defense committees, not later than 15 
     days before the date of such deployment, that--
       (A) any equipment required for the unit or member to be 
     deployed as fully mission capable that is not available at 
     the time of deployment will be supplied upon arrival in the 
     theater of operations to which the unit or member is 
     deployed; and
       (B) the unit or member has met, prior to deployment, all 
     other requirements to be rated as fully mission capable.
       (2) Case-by-case basis.--Any waiver under paragraph (1) 
     shall be made on a case-by-case basis.
       (e) Additional Waiver Authority.--The President may waive 
     the applicability of the limitation in subsection (a) in the 
     event of a requirement for the use of military force in time 
     of national emergency.

     SEC. 1804. LIMITATION ON EXTENDING LENGTH OF DEPLOYMENTS FOR 
                   OPERATION IRAQI FREEDOM.

       (a) Limitation.--Commencing 120 days after the date of the 
     enactment of this Act, no funds appropriated or otherwise 
     made available by this Act or any other Act may be obligated 
     or expended to deploy, continue the deployment, or execute 
     any order that has the effect of extending the deployment of 
     a unit or member of the Armed Forces for Operation Iraqi 
     Freedom as follows:
       (1) In the case of a unit or member of the Army (including 
     a unit or member of the Army National Guard or the Army 
     Reserve), if the deployment or continuation or extension of 
     deployment would result in the deployment of the unit or 
     member for more than 365 consecutive days.
       (2) In the case of a unit or member of the Marine Corps 
     (including a unit or member of the Marine Corps Reserve), if 
     the deployment or continuation or extension of deployment 
     would result in the deployment of the unit or member for more 
     than 210 consecutive days.
       (b) Exception.--The limitation in subsection (a) shall not 
     apply to designated key command headquarters personnel or 
     other members of the Armed Forces who are required to 
     maintain continuity of mission and situational awareness 
     between rotating forces.
       (c) Deployment Defined.--For purposes of this section, the 
     term ``deployment'' has the meaning given that term in 
     section 991(b) of title 10, United States Code.

     SEC. 1805. MINIMUM PERIOD BETWEEN DEPLOYMENTS FOR OPERATION 
                   IRAQI FREEDOM.

       (a) Minimum Period for Certain Members of the Army and 
     Marine Corps.--
       (1) In general.--Commencing 120 days after the date of the 
     enactment of this Act, no funds appropriated or otherwise 
     made available by this Act or any other Act may be obligated 
     or expended to deploy for Operation Iraqi Freedom a unit or 
     member of the Armed Forces specified in paragraph (2) unless 
     the period between the deployment of the unit or member for 
     Operation Iraqi Freedom covered by this subsection and the 
     previous deployment of the unit or member is equal to or 
     longer than the period of such previous deployment of the 
     unit or member.
       (2) Covered units and members.--The units and members of 
     the Armed Forces specified in this paragraph are as follows:
       (A) Units and members of the regular Army.
       (B) Units and members of the regular Marine Corps.
       (b) Minimum Period for Members of Army Reserve, Marine 
     Corps Reserve, and Army National Guard.--Commencing 120 days 
     after the date of the enactment of this Act, no funds 
     appropriated or otherwise made available by this Act or any 
     other Act may be obligated or expended to deploy for 
     Operation Iraqi Freedom a unit or member of the Army Reserve, 
     Marine Corps Reserve, or Army National Guard if the unit or 
     member has been deployed at any time within the five years 
     preceding the date of the deployment covered by this 
     subsection.

[[Page S3892]]

       (c) Deployment Defined.--For purposes of this section, the 
     term ``deployment'' has the meaning given that term in 
     section 991(b) of title 10, United States Code.

     SEC. 1806. ADDITIONAL AMOUNT FOR NATIONAL GUARD PERSONNEL, 
                   ARMY.

       The amount appropriated by chapter 3 of this title under 
     the heading ``National Guard Personnel, Army'' is hereby 
     increased by $597,100,000.

     SEC. 1807. ADDITIONAL AMOUNT FOR OPERATION AND MAINTENANCE, 
                   ARMY NATIONAL GUARD.

       The amount appropriated by chapter 3 of this title under 
     the heading ``Operation and Maintenance, Army National 
     Guard'' is hereby increased by $460,700,000.

     SEC. 1808. ADDITIONAL AMOUNT FOR NATIONAL GUARD AND RESERVE 
                   EQUIPMENT.

       The amount appropriated by chapter 3 of this title under 
     the heading ``National Guard and Reserve Equipment'' is 
     hereby increased by $364,900,000, with the amount of such 
     increase to be available for National Guard equipment needs.

     SEC. 1809. ADDITIONAL AMOUNT FOR PROCUREMENT, MARINE CORPS.

       The amount appropriated by chapter 3 of this title under 
     the heading ``Procurement, Marine Corps'' is hereby increased 
     by $1,700,000,000, with the amount of such increase to be 
     available for additional Mine Resistant Ambush Protection 
     vehicles.

     SEC. 1810. REPORTS ON UNITED STATES EFFORTS FOR IRAQ.

       (a) Reports Required.--Not later than 60 days after the 
     date of the enactment of this Act, and every 60 days 
     thereafter, the President shall submit to the appropriate 
     committees of Congress a report that sets forth a 
     comprehensive description and assessment of current United 
     States diplomatic, political, and economic efforts with 
     respect to Iraq.
       (b) Elements.--
       (1) In general.--Each report under subsection (a) shall set 
     forth, current as of the date of such report, a comprehensive 
     description and assessment of United States diplomatic, 
     political, and economic efforts with respect to Iraq, 
     including efforts as follows:
       (A) To achieve broad-based national political 
     reconciliation in Iraq that includes all of Iraq's 
     communities.
       (B) To engage all nations in the Middle East, including 
     Iraq's immediate neighbors, the international community, and 
     international institutions in developing a regional, 
     internationally-sponsored reconciliation and reconstruction 
     process for Iraq.
       (C) To utilize United States political, economic, and 
     military assistance to facilitate the reconstruction of Iraq.
       (D) To secure the delivery of pledged economic and other 
     assistance for Iraq from the international community, and to 
     secure additional pledges of assistance for Iraq, including 
     specific information regarding the status of assistance 
     pledges for Iraq from the international community.
       (E) To ensure that the Government of Iraq is increasing and 
     improving the delivery of basic services to the people of 
     Iraq.
       (2) Information on status of pledged assistance.--The 
     description of pledged economic and other assistance for Iraq 
     under paragraph (1)(D) shall include information on the 
     current status of delivery of assistance for Iraq under 
     pledges of assistance from the international community.
       (c) Form of Report.--Each report under this section shall 
     be submitted in unclassified form, but may include a 
     classified annex.
       (d) Appropriate Committees of Congress Defined.--In this 
     section, the term ``appropriate committees of Congress'' 
     means--
       (1) the Committees on Armed Services, Foreign Relations, 
     and Appropriations of the Senate; and
       (2) the Committees on Armed Services, Foreign Affairs, and 
     Appropriations of the House of Representatives.

     SEC. 1811. EMERGENCY DESIGNATION.

       Amounts provided in this chapter are designated as 
     emergency requirements pursuant to section 403 of H. Con. 
     Res. 95 (109th Congress), the concurrent resolution on the 
     budget for fiscal year 2006.
                                 ______
                                 
  SA 708. Mr. KYL submitted an amendment intended to be proposed by him 
to the bill H.R. 1591, making emergency supplemental appropriations for 
the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At page 53, strike line 12 and all that follows through 
     page 56, line 4 and insert the following:
       ``(b) Automatic Relief for the Hmong and Other Groups That 
     Do Not Pose a Threat to the United States.--For purposes of 
     section 212(a)(3)(B) of the Immigration and Nationality Act 
     (INA) (8 U.S.C. Sec. 1181(a)(3)(B)), the Hmong, the 
     Montagnards, the Karen National Union/Karen National 
     Liberation Army (KNU/KNLA), the Chin National Front/Chin 
     National Army (CNF/CNA), the Chin National League for 
     Democracy (CNLD), the Kayan New Land Party (KNLP), the Arakan 
     Liberation Party (ALP), the Mustangs, the Alzados, and the 
     Karenni National Progressive Party shall not be considered to 
     be a terrorist organization on the basis of any act or event 
     occurring before the date of the enactment of this section. 
     Nothing in this subsection may be construed to alter or limit 
     the authority of the Secretary of State and Secretary of 
     Homeland Security to exercise their discretionary authority 
     pursuant to section 212(d)(3)(B)(i) of the INA (8 U.S.C. 
     1182(d)(3)(B)(i).''.
       (c) Technical Correction.--Section 212(a)(3)(B)(ii) of the 
     INA (8 U.S.C. 1182(a)(3)(B)(vi)) is amended by striking 
     ``Subclause (VII)'' and replacing it with ``Subclause (IX)''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this section, 
     and these amendments and section 212(a)(3)(B)(ii) of the INA 
     (8 U.S.C. 1182(a)(3)(B)(ii), as amended by this section, 
     shall apply to--
       (1) removal proceedings instituted before, on, or after the 
     date of the enactment of this section; and
       (2) acts and conditions constituting a ground for 
     inadmissibility, excludability, deportation, or removal 
     occurring or existing before, on, or after such date.
                                 ______
                                 
  SA 709. Mr. WYDEN (for himself, Mr. Reid, Mr. Baucus, Mr. Bingaman, 
Mr. Smith, Ms. Cantwell, Mr. Domenici, Mrs. Boxer, Mr. Craig, Mrs. 
Murray, Mr. Crapo, Mr. Tester, and Mr. Stevens, Mr. Bennett Ms. 
Murkowski, Mr. Salazar, and Mrs. Feinstein) proposed an amendment to 
the bill H.R. 1591, making emergency supplemental appropriations for 
the fiscal year ending September 30, 2007, and for other purposes; as 
follows:

       Beginning on page 75, strike line 25 and all that follows 
     through page 76, line 15, and insert the following:

     SEC. 2601. SECURE RURAL SCHOOLS AND COMMUNITY SELF-
                   DETERMINATION PROGRAM.

       (a) Reauthorization of the Secure Rural Schools and 
     Community Self-Determination Act of 2000.--The Secure Rural 
     Schools and Community Self-Determination Act of 2000 (16 
     U.S.C. 500 note; Public Law 106-393) is amended by striking 
     sections 1 through 403 and inserting the following:

     ``SECTION 1. SHORT TITLE.

       ``This Act may be cited as the `Secure Rural Schools and 
     Community Self-Determination Act of 2000'.

     ``SEC. 2. PURPOSES.

       ``The purposes of this Act are--
       ``(1) to stabilize and transition payments to counties to 
     provide funding for schools and roads that supplements other 
     available funds;
       ``(2) to make additional investments in, and create 
     additional employment opportunities through, projects that--
       ``(A)(i) improve the maintenance of existing 
     infrastructure;
       ``(ii) implement stewardship objectives that enhance forest 
     ecosystems; and
       ``(iii) restore and improve land health and water quality;
       ``(B) enjoy broad-based support; and
       ``(C) have objectives that may include--
       ``(i) road, trail, and infrastructure maintenance or 
     obliteration;
       ``(ii) soil productivity improvement;
       ``(iii) improvements in forest ecosystem health;
       ``(iv) watershed restoration and maintenance;
       ``(v) the restoration, maintenance, and improvement of 
     wildlife and fish habitat;
       ``(vi) the control of noxious and exotic weeds; and
       ``(vii) the reestablishment of native species; and
       ``(3) to improve cooperative relationships among--
       ``(A) the people that use and care for Federal land; and
       ``(B) the agencies that manage the Federal land.

     ``SEC. 3. DEFINITIONS.

       ``In this Act:
       ``(1) Adjusted share.--The term `adjusted share' means the 
     number equal to the quotient obtained by dividing--
       ``(A) the number equal to the quotient obtained by 
     dividing--
       ``(i) the base share for the eligible county; by
       ``(ii) the income adjustment for the eligible county; by
       ``(B) the number equal to the sum of the quotients obtained 
     under subparagraph (A) and paragraph (8)(A) for all eligible 
     counties.
       ``(2) Base share.--The term `base share' means the number 
     equal to the average of--
       ``(A) the quotient obtained by dividing--
       ``(i) the number of acres of Federal land described in 
     paragraph (7)(A) in each eligible county; by
       ``(ii) the total number acres of Federal land in all 
     eligible counties in all eligible States; and
       ``(B) the quotient obtained by dividing--
       ``(i) the amount equal to the average of the 3 highest 25-
     percent payments and safety net payments made to each 
     eligible State for each eligible county during the 
     eligibility period; by
       ``(ii) the amount equal to the sum of the averages 
     calculated under clause (i) and paragraph (9)(B)(i) for all 
     eligible counties in all eligible States during the 
     eligibility period.
       ``(3) County payment.--The term `county payment' means the 
     payment for an eligible county calculated under section 
     101(b).
       ``(4) Eligible county.--The term `eligible county' means 
     any county that--
       ``(A) contains Federal land (as defined in paragraph (7)); 
     and

[[Page S3893]]

       ``(B) elects to receive a share of the State payment or the 
     county payment under section 102(b).
       ``(5) Eligibility period.--The term `eligibility period' 
     means fiscal year 1986 through fiscal year 1999.
       ``(6) Eligible state.--The term `eligible State' means a 
     State or territory of the United States that received a 25-
     percent payment for 1 or more fiscal years of the eligibility 
     period.
       ``(7) Federal land.--The term `Federal land' means--
       ``(A) land within the National Forest System, as defined in 
     section 11(a) of the Forest and Rangeland Renewable Resources 
     Planning Act of 1974 (16 U.S.C. 1609(a)) exclusive of the 
     National Grasslands and land utilization projects designated 
     as National Grasslands administered pursuant to the Act of 
     July 22, 1937 (7 U.S.C. 1010-1012); and
       ``(B) such portions of the revested Oregon and California 
     Railroad and reconveyed Coos Bay Wagon Road grant land as are 
     or may hereafter come under the jurisdiction of the 
     Department of the Interior, which have heretofore or may 
     hereafter be classified as timberlands, and power-site land 
     valuable for timber, that shall be managed, except as 
     provided in the former section 3 of the Act of August 28, 
     1937 (50 Stat. 875; 43 U.S.C. 1181c), for permanent forest 
     production.
       ``(8) 50-Percent adjusted share.--The term `50-percent 
     adjusted share' means the number equal to the quotient 
     obtained by dividing--
       ``(A) the number equal to the quotient obtained by 
     dividing--
       ``(i) the 50-percent base share for the eligible county; by
       ``(ii) the income adjustment for the eligible county; by
       ``(B) the number equal to the sum of the quotients obtained 
     under subparagraph (A) and paragraph (1)(A) for all eligible 
     counties.
       ``(9) 50-Percent base share.--The term `50-percent base 
     share' means the number equal to the average of--
       ``(A) the quotient obtained by dividing--
       ``(i) the number of acres of Federal land described in 
     paragraph (7)(B) in each eligible county; by
       ``(ii) the total number acres of Federal land in all 
     eligible counties in all eligible States; and
       ``(B) the quotient obtained by dividing--
       ``(i) the amount equal to the average of the 3 highest 50-
     percent payments made to each eligible county during the 
     eligibility period; by
       ``(ii) the amount equal to the sum of the averages 
     calculated under clause (i) and paragraph (2)(B)(i) for all 
     eligible counties in all eligible States during the 
     eligibility period.
       ``(10) 50-percent payment.--The term `50-percent payment' 
     means the payment that is the sum of the 50-percent share 
     otherwise paid to a county pursuant to title II of the Act of 
     August 28, 1937 (chapter 876; 50 Stat. 875; 43 U.S.C. 1181f), 
     and the payment made to a county pursuant to the Act of May 
     24, 1939 (chapter 144; 53 Stat. 753; 43 U.S.C. 1181f-1 et 
     seq.).
       ``(11) Full funding amount.--The term `full funding amount' 
     means--
       ``(A) $526,079,656 for fiscal year 2007;
       ``(B) $520,000,000 for fiscal year 2008; and
       ``(C) for fiscal year 2009 and each fiscal year thereafter, 
     the amount that is equal to 90 percent of the full funding 
     amount for the preceding fiscal year.
       ``(12) Income adjustment.--The term `income adjustment' 
     means the square of the quotient obtained by dividing--
       ``(A) the per capita personal income for each eligible 
     county; by
       ``(B) the median per capita personal income of all eligible 
     counties.
       ``(13) Per capita personal income.--The term `per capita 
     personal income' means the most recent per capita personal 
     income data, as determined by the Bureau of Economic 
     Analysis.
       ``(14) Safety net payments.--The term `safety net payments' 
     means the special payment amounts paid to States and counties 
     required by section 13982 or 13983 of the Omnibus Budget 
     Reconciliation Act of 1993 (Public Law 103-66; 16 U.S.C. 500 
     note; 43 U.S.C. 1181f note).
       ``(15) Secretary concerned.--The term `Secretary concerned' 
     means--
       ``(A) the Secretary of Agriculture or the designee of the 
     Secretary of Agriculture with respect to the Federal land 
     described in paragraph (7)(A); and
       ``(B) the Secretary of the Interior or the designee of the 
     Secretary of the Interior with respect to the Federal land 
     described in paragraph (7)(B).
       ``(16) State payment.--The term `State payment' means the 
     payment for an eligible State calculated under section 
     101(a).
       ``(17) 25-Percent payment.--The term `25-percent payment' 
     means the payment to States required by the sixth paragraph 
     under the heading of `forest service' in the Act of May 23, 
     1908 (35 Stat. 260; 16 U.S.C. 500), and section 13 of the Act 
     of March 1, 1911 (36 Stat. 963; 16 U.S.C. 500).

 ``TITLE I--SECURE PAYMENTS FOR STATES AND COUNTIES CONTAINING FEDERAL 
                                  LAND

     ``SEC. 101. SECURE PAYMENTS FOR STATES CONTAINING FEDERAL 
                   LAND.

       ``(a) State Payment.--For each of fiscal years 2007 through 
     2011, the Secretary of Agriculture shall calculate for each 
     eligible State an amount equal to the sum of the products 
     obtained by multiplying--
       ``(1) the adjusted share for each eligible county within 
     the eligible State; by
       ``(2) the full funding amount for the fiscal year.
       ``(b) County Payment.--For each of fiscal years 2007 
     through 2011, the Secretary of the Interior shall calculate 
     for each eligible county that received a 50-percent payment 
     during the eligibility period an amount equal to the product 
     obtained by multiplying--
       ``(1) the 50-percent adjusted share for the eligible 
     county; by
       ``(2) the full funding amount for the fiscal year.

     ``SEC. 102. PAYMENTS TO STATES AND COUNTIES.

       ``(a) Payment Amounts.--Except as provided in section 103, 
     the Secretary of the Treasury shall pay to--
       ``(1) a State an amount equal to the sum of the amounts 
     elected under subsection (b) by each county within the State 
     for--
       ``(A) if the county is eligible for the 25-percent payment, 
     the share of the 25-percent payment; or
       ``(B) the share of the State payment of the eligible 
     county; and
       ``(2) a county an amount equal to the amount elected under 
     subsection (b) by each county for--
       ``(A) if the county is eligible for the 50-percent payment, 
     the 50-percent payment; or
       ``(B) the county payment for the eligible county.
       ``(b) Election to Receive Payment Amount.--
       ``(1) Election; submission of results.--
       ``(A) In general.--The election to receive a share of the 
     State payment, the county payment, a share of the State 
     payment and the county payment, a share of the 25-percent 
     payment, the 50-percent payment, or a share of the 25-percent 
     payment and the 50-percent payment, as applicable, shall be 
     made at the discretion of each affected county by August 1, 
     2007, and August 1 of each second fiscal year thereafter, in 
     accordance with paragraph (2), and transmitted to the 
     Secretary concerned by the Governor of each eligible State.
       ``(B) Failure to transmit.--If an election for an affected 
     county is not transmitted to the Secretary concerned by the 
     date specified under subparagraph (A), the affected county 
     shall be considered to have elected to receive a share of the 
     State payment, the county payment, or a share of the State 
     payment and the county payment, as applicable.
       ``(2) Duration of election.--
       ``(A) In general.--A county election to receive a share of 
     the 25-percent payment or 50-percent payment, as applicable 
     shall be effective for 2 fiscal years.
       ``(B) Full funding amount.--If a county elects to receive a 
     share of the State payment or the county payment, the 
     election shall be effective for all subsequent fiscal years 
     through fiscal year 2011.
       ``(3) Source of payment amounts.--The payment to an 
     eligible State or eligible county under this section for a 
     fiscal year shall be derived from--
       ``(A) any revenues, fees, penalties, or miscellaneous 
     receipts, exclusive of deposits to any relevant trust fund, 
     special account, or permanent operating funds, received by 
     the Federal Government from activities by the Bureau of Land 
     Management or the Forest Service on the applicable Federal 
     land; and
       ``(B) to the extent of any shortfall, out of any amounts in 
     the Treasury of the United States not otherwise appropriated.
       ``(c) Distribution and Expenditure of Payments.--
       ``(1) Distribution method.--A State that receives a payment 
     under subsection (a) for Federal land described in section 
     3(7)(A) shall distribute the appropriate payment amount among 
     the appropriate counties in the State in accordance with--
       ``(A) the Act of May 23, 1908 (16 U.S.C. 500); and
       ``(B) section 13 of the Act of March 1, 1911 (36 Stat. 963; 
     16 U.S.C. 500).
       ``(2) Expenditure purposes.--Subject to subsection (d), 
     payments received by a State under subsection (a) and 
     distributed to counties in accordance with paragraph (1) 
     shall be expended as required by the laws referred to in 
     paragraph (1).
       ``(d) Expenditure Rules for Eligible Counties.--
       ``(1) Allocations.--
       ``(A) Use of portion in same manner as 25-percent payment 
     or 50-percent payment, as applicable.--Except as provided in 
     paragraph (3)(B), if an eligible county elects to receive its 
     share of the State payment or the county payment, not less 
     than 80 percent, but not more than 85 percent, of the funds 
     shall be expended in the same manner in which the 25-percent 
     payments or 50-percent payment, as applicable, are required 
     to be expended.
       ``(B) Election as to use of balance.--Except as provided in 
     subparagraph (C), an eligible county shall elect to do 1 or 
     more of the following with the balance of any funds not 
     expended pursuant to subparagraph (A):
       ``(i) Reserve any portion of the balance for projects in 
     accordance with title II.
       ``(ii) Reserve not more than 7 percent of the total share 
     for the eligible county of the State payment or the county 
     payment for projects in accordance with title III.
       ``(iii) Return the portion of the balance not reserved 
     under clauses (i) and (ii) to the Treasury of the United 
     States.
       ``(C) Counties with modest distributions.--In the case of 
     each eligible county to which more than $100,000, but less 
     than

[[Page S3894]]

     $350,000, is distributed for any fiscal year pursuant to 
     either or both of paragraphs (1)(B) and (2)(B) of subsection 
     (a), the eligible county, with respect to the balance of any 
     funds not expended pursuant to subparagraph (A) for that 
     fiscal year, shall--
       ``(i) reserve any portion of the balance for--

       ``(I) carrying out projects under title II;
       ``(II) carrying out projects under title III; or
       ``(III) a combination of the purposes described in 
     subclauses (I) and (II); or

       ``(ii) return the portion of the balance not reserved under 
     clause (i) to the Treasury of the United States.
       ``(2) Distribution of funds.--
       ``(A) In general.--Funds reserved by an eligible county 
     under subparagraph (B)(i) or (C)(i)(I) of paragraph (1) shall 
     be deposited in a special account in the Treasury of the 
     United States.
       ``(B) Availability.--Amounts deposited under subparagraph 
     (A) shall--
       ``(i) be available for expenditure by the Secretary 
     concerned, without further appropriation; and
       ``(ii) remain available until expended in accordance with 
     title II.
       ``(3) Election.--
       ``(A) Notification.--
       ``(i) In general.--An eligible county shall notify the 
     Secretary concerned of an election by the eligible county 
     under this subsection not later than September 30 of each 
     fiscal year.
       ``(ii) Failure to elect.--Except as provided in 
     subparagraph (B), if the eligible county fails to make an 
     election by the date specified in clause (i), the eligible 
     county shall--

       ``(I) be considered to have elected to expend 85 percent of 
     the funds in accordance with paragraph (1)(A); and
       ``(II) return the balance to the Treasury of the United 
     States.

       ``(B) Counties with minor distributions.--In the case of 
     each eligible county to which less than $100,000 is 
     distributed for any fiscal year pursuant to either or both of 
     paragraphs (1)(B) and (2)(B) of subsection (a), the eligible 
     county may elect to expend all the funds in the same manner 
     in which the 25-percent payments or 50-percent payments, as 
     applicable, are required to be expended.
       ``(e) Time for Payment.--The payments required under this 
     section for a fiscal year shall be made as soon as 
     practicable after the end of that fiscal year.

     ``SEC. 103. TRANSITION PAYMENTS TO THE STATES OF CALIFORNIA, 
                   OREGON, AND WASHINGTON.

       ``(a) Definitions.--In this section:
       ``(1) Adjusted amount.--The term `adjusted amount' means, 
     with respect to a covered State--
       ``(A) for fiscal year 2007--
       ``(i) the sum of the amounts paid in fiscal year 2006 under 
     section 102(a)(2) (as in effect on September 29, 2006) for 
     the eligible counties in the covered State that have elected 
     under section 102(b) to receive a share of the State payment 
     for fiscal year 2007; and
       ``(ii) the sum of the amounts paid in fiscal year 2006 
     under section 103(a)(2) (as in effect on September 29, 2006) 
     for the eligible counties in the State of Oregon that have 
     elected under section 102(b) to receive the county payment 
     for fiscal year 2007;
       ``(B) for fiscal year 2008, 90 percent of--
       ``(i) the sum of the amounts paid in fiscal year 2006 under 
     section 102(a)(2) (as in effect on September 29, 2006) for 
     the eligible counties in the covered State that have elected 
     under section 102(b) to receive a share of the State payment 
     for fiscal year 2008; and
       ``(ii) the sum of the amounts paid in fiscal year 2006 
     under section 103(a)(2) (as in effect on September 29, 2006) 
     for the eligible counties in the State of Oregon that have 
     elected under section 102(b) to receive the county payment 
     for fiscal year 2008;
       ``(C) for fiscal year 2009, 81 percent of--
       ``(i) the sum of the amounts paid in fiscal year 2006 under 
     section 102(a)(2) (as in effect on September 29, 2006) for 
     the eligible counties in the covered State that have elected 
     under section 102(b) to receive a share of the State payment 
     for fiscal year 2009; and
       ``(ii) the sum of the amounts paid in fiscal year 2006 
     under section 103(a)(2) (as in effect on September 29, 2006) 
     for the eligible counties in the State of Oregon that have 
     elected under section 102(b) to receive the county payment 
     for fiscal year 2009; and
       ``(D) for fiscal year 2010, 73 percent of--
       ``(i) the sum of the amounts paid in fiscal year 2006 under 
     section 102(a)(2) (as in effect on September 29, 2006) for 
     the eligible counties in the covered State that have elected 
     under section 102(b) to receive a share of the State payment 
     for fiscal year 2010; and
       ``(ii) the sum of the amounts paid in fiscal year 2006 
     under section 103(a)(2) (as in effect on September 29, 2006) 
     for the eligible counties in the State of Oregon that have 
     elected under section 102(b) to receive the county payment 
     for fiscal year 2010.
       ``(2) Covered state.--The term `covered State' means each 
     of the States of California, Oregon, and Washington.
       ``(b) Transition Payments.--For each of fiscal years 2007 
     through 2010, in lieu of the payment amounts that otherwise 
     would have been made under paragraphs (1)(B) and (2)(B) of 
     section 102(a), the Secretary of the Treasury shall pay the 
     adjusted amount to each covered State and the eligible 
     counties within the covered State, as applicable, from funds 
     in the Treasury of the United States not otherwise 
     appropriated.
       ``(c) Distribution of Adjusted Amount in Oregon and 
     Washington.--It is the intent of Congress that the method of 
     distributing the payments under subsection (b) among the 
     counties in the States of Oregon and Washington for each of 
     fiscal years 2007 through 2010 be in the same proportion that 
     the payments were distributed to the eligible counties in 
     fiscal year 2006.
       ``(d) Distribution of Payments in California.--The 
     following payments shall be distributed among the eligible 
     counties in the State of California in the same proportion 
     that payments under section 102(a)(2) (as in effect on 
     September 29, 2006) were distributed to the eligible counties 
     in fiscal year 2006:
       ``(1) Payments to the State of California under subsection 
     (b).
       ``(2) The shares of the eligible counties of the State 
     payment for California under section 102 for fiscal year 
     2011.
       ``(e) Treatment of Payments.--For purposes of this Act, any 
     payment made under subsection (b) shall be considered to be a 
     payment made under section 102(a).

              ``TITLE II--SPECIAL PROJECTS ON FEDERAL LAND

     ``SEC. 201. DEFINITIONS.

       ``In this title:
       ``(1) Participating county.--The term `participating 
     county' means an eligible county that elects under section 
     102(d) to expend a portion of the Federal funds received 
     under section 102 in accordance with this title.
       ``(2) Project funds.--The term `project funds' means all 
     funds an eligible county elects under section 102(d) to 
     reserve for expenditure in accordance with this title.
       ``(3) Resource advisory committee.--The term `resource 
     advisory committee' means--
       ``(A) an advisory committee established by the Secretary 
     concerned under section 205; or
       ``(B) an advisory committee determined by the Secretary 
     concerned to meet the requirements of section 205.
       ``(4) Resource management plan.--The term `resource 
     management plan' means--
       ``(A) a land use plan prepared by the Bureau of Land 
     Management for units of the Federal land described in section 
     3(7)(B) pursuant to section 202 of the Federal Land Policy 
     and Management Act of 1976 (43 U.S.C. 1712); or
       ``(B) a land and resource management plan prepared by the 
     Forest Service for units of the National Forest System 
     pursuant to section 6 of the Forest and Rangeland Renewable 
     Resources Planning Act of 1974l (16 U.S.C. 1604).

     ``SEC. 202. GENERAL LIMITATION ON USE OF PROJECT FUNDS.

       ``(a) Limitation.--Project funds shall be expended solely 
     on projects that meet the requirements of this title.
       ``(b) Authorized Uses.--Project funds may be used by the 
     Secretary concerned for the purpose of entering into and 
     implementing cooperative agreements with willing Federal 
     agencies, State and local governments, private and nonprofit 
     entities, and landowners for protection, restoration, and 
     enhancement of fish and wildlife habitat, and other resource 
     objectives consistent with the purposes of this Act on 
     Federal land and on non-Federal land where projects would 
     benefit the resources on Federal land.

     ``SEC. 203. SUBMISSION OF PROJECT PROPOSALS.

       ``(a) Submission of Project Proposals to Secretary 
     Concerned.--
       ``(1) Projects funded using project funds.--Not later than 
     September 30 for fiscal year 2007, and each September 30 
     thereafter for each succeeding fiscal year through fiscal 
     year 2011, each resource advisory committee shall submit to 
     the Secretary concerned a description of any projects that 
     the resource advisory committee proposes the Secretary 
     undertake using any project funds reserved by eligible 
     counties in the area in which the resource advisory committee 
     has geographic jurisdiction.
       ``(2) Projects funded using other funds.--A resource 
     advisory committee may submit to the Secretary concerned a 
     description of any projects that the committee proposes the 
     Secretary undertake using funds from State or local 
     governments, or from the private sector, other than project 
     funds and funds appropriated and otherwise available to do 
     similar work.
       ``(3) Joint projects.--Participating counties or other 
     persons may propose to pool project funds or other funds, 
     described in paragraph (2), and jointly propose a project or 
     group of projects to a resource advisory committee 
     established under section 205.
       ``(b) Required Description of Projects.--In submitting 
     proposed projects to the Secretary concerned under subsection 
     (a), a resource advisory committee shall include in the 
     description of each proposed project the following 
     information:
       ``(1) The purpose of the project and a description of how 
     the project will meet the purposes of this title.
       ``(2) The anticipated duration of the project.
       ``(3) The anticipated cost of the project.
       ``(4) The proposed source of funding for the project, 
     whether project funds or other funds.
       ``(5)(A) Expected outcomes, including how the project will 
     meet or exceed desired ecological conditions, maintenance 
     objectives, or stewardship objectives.
       ``(B) An estimate of the amount of any timber, forage, and 
     other commodities and other economic activity, including jobs 
     generated, if any, anticipated as part of the project.

[[Page S3895]]

       ``(6) A detailed monitoring plan, including funding needs 
     and sources, that--
       ``(A) tracks and identifies the positive or negative 
     impacts of the project, implementation, and provides for 
     validation monitoring; and
       ``(B) includes an assessment of the following:
       ``(i) Whether or not the project met or exceeded desired 
     ecological conditions; created local employment or training 
     opportunities, including summer youth jobs programs such as 
     the Youth Conservation Corps where appropriate.
       ``(ii) Whether the project improved the use of, or added 
     value to, any products removed from land consistent with the 
     purposes of this title.
       ``(7) An assessment that the project is to be in the public 
     interest.
       ``(c) Authorized Projects.--Projects proposed under 
     subsection (a) shall be consistent with section 2.

     ``SEC. 204. EVALUATION AND APPROVAL OF PROJECTS BY SECRETARY 
                   CONCERNED.

       ``(a) Conditions for Approval of Proposed Project.--The 
     Secretary concerned may make a decision to approve a project 
     submitted by a resource advisory committee under section 203 
     only if the proposed project satisfies each of the following 
     conditions:
       ``(1) The project complies with all applicable Federal laws 
     (including regulations).
       ``(2) The project is consistent with the applicable 
     resource management plan and with any watershed or subsequent 
     plan developed pursuant to the resource management plan and 
     approved by the Secretary concerned.
       ``(3) The project has been approved by the resource 
     advisory committee in accordance with section 205, including 
     the procedures issued under subsection (e) of that section.
       ``(4) A project description has been submitted by the 
     resource advisory committee to the Secretary concerned in 
     accordance with section 203.
       ``(5) The project will improve the maintenance of existing 
     infrastructure, implement stewardship objectives that enhance 
     forest ecosystems, and restore and improve land health and 
     water quality.
       ``(b) Environmental Reviews.--
       ``(1) Request for payment by county.--The Secretary 
     concerned may request the resource advisory committee 
     submitting a proposed project to agree to the use of project 
     funds to pay for any environmental review, consultation, or 
     compliance with applicable environmental laws required in 
     connection with the project.
       ``(2) Conduct of environmental review.--If a payment is 
     requested under paragraph (1) and the resource advisory 
     committee agrees to the expenditure of funds for this 
     purpose, the Secretary concerned shall conduct environmental 
     review, consultation, or other compliance responsibilities in 
     accordance with Federal laws (including regulations).
       ``(3) Effect of refusal to pay.--
       ``(A) In general.--If a resource advisory committee does 
     not agree to the expenditure of funds under paragraph (1), 
     the project shall be deemed withdrawn from further 
     consideration by the Secretary concerned pursuant to this 
     title.
       ``(B) Effect of withdrawal.--A withdrawal under 
     subparagraph (A) shall be deemed to be a rejection of the 
     project for purposes of section 207(c).
       ``(c) Decisions of Secretary Concerned.--
       ``(1) Rejection of projects.--
       ``(A) In general.--A decision by the Secretary concerned to 
     reject a proposed project shall be at the sole discretion of 
     the Secretary concerned.
       ``(B) No administrative appeal or judicial review.--
     Notwithstanding any other provision of law, a decision by the 
     Secretary concerned to reject a proposed project shall not be 
     subject to administrative appeal or judicial review.
       ``(C) Notice of rejection.--Not later than 30 days after 
     the date on which the Secretary concerned makes the rejection 
     decision, the Secretary concerned shall notify in writing the 
     resource advisory committee that submitted the proposed 
     project of the rejection and the reasons for rejection.
       ``(2) Notice of project approval.--The Secretary concerned 
     shall publish in the Federal Register notice of each project 
     approved under subsection (a) if the notice would be required 
     had the project originated with the Secretary.
       ``(d) Source and Conduct of Project.--Once the Secretary 
     concerned accepts a project for review under section 203, the 
     acceptance shall be deemed a Federal action for all purposes.
       ``(e) Implementation of Approved Projects.--
       ``(1) Cooperation.--Notwithstanding chapter 63 of title 31, 
     United States Code, using project funds the Secretary 
     concerned may enter into contracts, grants, and cooperative 
     agreements with States and local governments, private and 
     nonprofit entities, and landowners and other persons to 
     assist the Secretary in carrying out an approved project.
       ``(2) Best value contracting.--
       ``(A) In general.--For any project involving a contract 
     authorized by paragraph (1) the Secretary concerned may elect 
     a source for performance of the contract on a best value 
     basis.
       ``(B) Factors.--The Secretary concerned shall determine 
     best value based on such factors as--
       ``(i) the technical demands and complexity of the work to 
     be done;
       ``(ii)(I) the ecological objectives of the project; and
       ``(II) the sensitivity of the resources being treated;
       ``(iii) the past experience by the contractor with the type 
     of work being done, using the type of equipment proposed for 
     the project, and meeting or exceeding desired ecological 
     conditions; and
       ``(iv) the commitment of the contractor to hiring highly 
     qualified workers and local residents.
       ``(3) Merchantable timber contracting pilot program.--
       ``(A) Establishment.--The Secretary concerned shall 
     establish a pilot program to implement a certain percentage 
     of approved projects involving the sale of merchantable 
     timber using separate contracts for--
       ``(i) the harvesting or collection of merchantable timber; 
     and
       ``(ii) the sale of the timber.
       ``(B) Annual percentages.--Under the pilot program, the 
     Secretary concerned shall ensure that, on a nationwide basis, 
     not less than the following percentage of all approved 
     projects involving the sale of merchantable timber are 
     implemented using separate contracts:
       ``(i) For fiscal year 2007, 25 percent.
       ``(ii) For fiscal year 2008, 35 percent.
       ``(iii) For fiscal year 2009, 45 percent.
       ``(iv) For each of fiscal years 2010 and 2011, 50 percent.
       ``(C) Inclusion in pilot program.--The decision whether to 
     use separate contracts to implement a project involving the 
     sale of merchantable timber shall be made by the Secretary 
     concerned after the approval of the project under this title.
       ``(D) Assistance.--
       ``(i) In general.--The Secretary concerned may use funds 
     from any appropriated account available to the Secretary for 
     the Federal land to assist in the administration of projects 
     conducted under the pilot program.
       ``(ii) Maximum amount of assistance.--The total amount 
     obligated under this subparagraph may not exceed $1,000,000 
     for any fiscal year during which the pilot program is in 
     effect.
       ``(E) Review and report.--
       ``(i) Initial report.--Not later than September 30, 2009, 
     the Comptroller General shall submit to the Committees on 
     Agriculture, Nutrition, and Forestry and Energy and Natural 
     Resources of the Senate and the Committees on Agriculture and 
     Natural Resources of the House of Representatives a report 
     assessing the pilot program.
       ``(ii) Annual report.--The Secretary concerned shall submit 
     to the Committees on Agriculture, Nutrition, and Forestry and 
     Energy and Natural Resources of the Senate and the Committees 
     on Agriculture and Natural Resources of the House of 
     Representatives an annual report describing the results of 
     the pilot program.
       ``(f) Requirements for Project Funds.--The Secretary shall 
     ensure that at least 50 percent of all project funds be used 
     for projects that are primarily dedicated--
       ``(1) to road maintenance, decommissioning, or 
     obliteration; or
       ``(2) to restoration of streams and watersheds.

     ``SEC. 205. RESOURCE ADVISORY COMMITTEES.

       ``(a) Establishment and Purpose of Resource Advisory 
     Committees.--
       ``(1) Establishment.--The Secretary concerned shall 
     establish and maintain resource advisory committees to 
     perform the duties in subsection (b), except as provided in 
     paragraph (4).
       ``(2) Purpose.--The purpose of a resource advisory 
     committee shall be--
       ``(A) to improve collaborative relationships; and
       ``(B) to provide advice and recommendations to the land 
     management agencies consistent with the purposes of this 
     title.
       ``(3) Access to resource advisory committees.--To ensure 
     that each unit of Federal land has access to a resource 
     advisory committee, and that there is sufficient interest in 
     participation on a committee to ensure that membership can be 
     balanced in terms of the points of view represented and the 
     functions to be performed, the Secretary concerned may, 
     establish resource advisory committees for part of, or 1 or 
     more, units of Federal land.
       ``(4) Existing advisory committees.--
       ``(A) In general.--An advisory committee that meets the 
     requirements of this section, an advisory committee 
     established before the date of enactment of this Act, or an 
     advisory committee determined by the Secretary concerned to 
     meet the requirements of this section before the date of 
     enactment of this Act may be deemed by the Secretary 
     concerned to be a resource advisory committee for the 
     purposes of this title.
       ``(B) Charter.--A charter for a committee described in 
     subparagraph (A) that was filed on or before September 29, 
     2006, shall be considered to be filed for purposes of this 
     Act.
       ``(C) Bureau of land management advisory committees.--The 
     Secretary of the Interior may deem a resource advisory 
     committee meeting the requirements of subpart 1784 of part 
     1780 of title 43, Code of Federal Regulations, as a resource 
     advisory committee for the purposes of this title.
       ``(b) Duties.--A resource advisory committee shall--
       ``(1) review projects proposed under this title by 
     participating counties and other persons;

[[Page S3896]]

       ``(2) propose projects and funding to the Secretary 
     concerned under section 203;
       ``(3) provide early and continuous coordination with 
     appropriate land management agency officials in recommending 
     projects consistent with purposes of this Act under this 
     title;
       ``(4) provide frequent opportunities for citizens, 
     organizations, tribes, land management agencies, and other 
     interested parties to participate openly and meaningfully, 
     beginning at the early stages of the project development 
     process under this title;
       ``(5)(A) monitor projects that have been approved under 
     section 204; and
       ``(B) advise the designated Federal official on the 
     progress of the monitoring efforts under subparagraph (A); 
     and
       ``(6) make recommendations to the Secretary concerned for 
     any appropriate changes or adjustments to the projects being 
     monitored by the resource advisory committee.
       ``(c) Appointment by the Secretary.--
       ``(1) Appointment and term.--
       ``(A) In general.--The Secretary concerned, shall appoint 
     the members of resource advisory committees for a term of 4 
     years beginning on the date of appointment.
       ``(B) Reappointment.--The Secretary concerned may reappoint 
     members to subsequent 4-year terms.
       ``(2) Basic requirements.--The Secretary concerned shall 
     ensure that each resource advisory committee established 
     meets the requirements of subsection (d).
       ``(3) Initial appointment.--Not later than 180 days after 
     the date of the enactment of this Act, the Secretary 
     concerned shall make initial appointments to the resource 
     advisory committees.
       ``(4) Vacancies.--The Secretary concerned shall make 
     appointments to fill vacancies on any resource advisory 
     committee as soon as practicable after the vacancy has 
     occurred.
       ``(5) Compensation.--Members of the resource advisory 
     committees shall not receive any compensation.
       ``(d) Composition of Advisory Committee.--
       ``(1) Number.--Each resource advisory committee shall be 
     comprised of 15 members.
       ``(2) Community interests represented.--Committee members 
     shall be representative of the interests of the following 3 
     categories:
       ``(A) 5 persons that--
       ``(i) represent organized labor or non-timber forest 
     product harvester groups;
       ``(ii) represent developed outdoor recreation, off highway 
     vehicle users, or commercial recreation activities;
       ``(iii) represent--

       ``(I) energy and mineral development interests; or
       ``(II) commercial or recreational fishing interests;

       ``(iv) represent the commercial timber industry; or
       ``(v) hold Federal grazing or other land use permits, or 
     represent nonindustrial private forest land owners, within 
     the area for which the committee is organized.
       ``(B) 5 persons that represent--
       ``(i) nationally recognized environmental organizations;
       ``(ii) regionally or locally recognized environmental 
     organizations;
       ``(iii) dispersed recreational activities;
       ``(iv) archaeological and historical interests; or
       ``(v) nationally or regionally recognized wild horse and 
     burro interest groups, wildlife or hunting organizations, or 
     watershed associations.
       ``(C) 5 persons that--
       ``(i) hold State elected office (or a designee);
       ``(ii) hold county or local elected office;
       ``(iii) represent American Indian tribes within or adjacent 
     to the area for which the committee is organized;
       ``(iv) are school officials or teachers; or
       ``(v) represent the affected public at large.
       ``(3) Balanced representation.--In appointing committee 
     members from the 3 categories in paragraph (2), the Secretary 
     concerned shall provide for balanced and broad representation 
     from within each category.
       ``(4) Geographic distribution.--The members of a resource 
     advisory committee shall reside within the State in which the 
     committee has jurisdiction and, to extent practicable, the 
     Secretary concerned shall ensure local representation in each 
     category in paragraph (2).
       ``(5) Chairperson.--A majority on each resource advisory 
     committee shall select the chairperson of the committee.
       ``(e) Approval Procedures.--
       ``(1) In general.--Subject to paragraph (3), each resource 
     advisory committee shall establish procedures for proposing 
     projects to the Secretary concerned under this title.
       ``(2) Quorum.--A quorum must be present to constitute an 
     official meeting of the committee.
       ``(3) Approval by majority of members.--A project may be 
     proposed by a resource advisory committee to the Secretary 
     concerned under section 203(a), if the project has been 
     approved by a majority of members of the committee from each 
     of the 3 categories in subsection (d)(2).
       ``(f) Other Committee Authorities and Requirements.--
       ``(1) Staff assistance.--A resource advisory committee may 
     submit to the Secretary concerned a request for periodic 
     staff assistance from Federal employees under the 
     jurisdiction of the Secretary.
       ``(2) Meetings.--All meetings of a resource advisory 
     committee shall be announced at least 1 week in advance in a 
     local newspaper of record and shall be open to the public.
       ``(3) Records.--A resource advisory committee shall 
     maintain records of the meetings of the committee and make 
     the records available for public inspection.

     ``SEC. 206. USE OF PROJECT FUNDS.

       ``(a) Agreement Regarding Schedule and Cost of Project.--
       ``(1) Agreement between parties.--The Secretary concerned 
     may carry out a project submitted by a resource advisory 
     committee under section 203(a) using project funds or other 
     funds described in section 203(a)(2), if, as soon as 
     practicable after the issuance of a decision document for the 
     project and the exhaustion of all administrative appeals and 
     judicial review of the project decision, the Secretary 
     concerned and the resource advisory committee enter into an 
     agreement addressing, at a minimum, the following:
       ``(A) The schedule for completing the project.
       ``(B) The total cost of the project, including the level of 
     agency overhead to be assessed against the project.
       ``(C) For a multiyear project, the estimated cost of the 
     project for each of the fiscal years in which it will be 
     carried out.
       ``(D) The remedies for failure of the Secretary concerned 
     to comply with the terms of the agreement consistent with 
     current Federal law.
       ``(2) Limited use of federal funds.--The Secretary 
     concerned may decide, at the sole discretion of the Secretary 
     concerned, to cover the costs of a portion of an approved 
     project using Federal funds appropriated or otherwise 
     available to the Secretary for the same purposes as the 
     project.
       ``(b) Transfer of Project Funds.--
       ``(1) Initial transfer required.--As soon as practicable 
     after the agreement is reached under subsection (a) with 
     regard to a project to be funded in whole or in part using 
     project funds, or other funds described in section 203(a)(2), 
     the Secretary concerned shall transfer to the applicable unit 
     of National Forest System land or Bureau of Land Management 
     District an amount of project funds equal to--
       ``(A) in the case of a project to be completed in a single 
     fiscal year, the total amount specified in the agreement to 
     be paid using project funds, or other funds described in 
     section 203(a)(2); or
       ``(B) in the case of a multiyear project, the amount 
     specified in the agreement to be paid using project funds, or 
     other funds described in section 203(a)(2) for the first 
     fiscal year.
       ``(2) Condition on project commencement.--The unit of 
     National Forest System land or Bureau of Land Management 
     District concerned, shall not commence a project until the 
     project funds, or other funds described in section 203(a)(2) 
     required to be transferred under paragraph (1) for the 
     project, have been made available by the Secretary concerned.
       ``(3) Subsequent transfers for multiyear projects.--
       ``(A) In general.--For the second and subsequent fiscal 
     years of a multiyear project to be funded in whole or in part 
     using project funds, the unit of National Forest System land 
     or Bureau of Land Management District concerned shall use the 
     amount of project funds required to continue the project in 
     that fiscal year according to the agreement entered into 
     under subsection (a).
       ``(B) Suspension of work.--The Secretary concerned shall 
     suspend work on the project if the project funds required by 
     the agreement in the second and subsequent fiscal years are 
     not available.

     ``SEC. 207. AVAILABILITY OF PROJECT FUNDS.

       ``(a) Submission of Proposed Projects to Obligate Funds.--
     By September 30 of each fiscal year through fiscal year 2011, 
     a resource advisory committee shall submit to the Secretary 
     concerned pursuant to section 203(a)(1) a sufficient number 
     of project proposals that, if approved, would result in the 
     obligation of at least the full amount of the project funds 
     reserved by the participating county in the preceding fiscal 
     year.
       ``(b) Use or Transfer of Unobligated Funds.--Subject to 
     section 208, if a resource advisory committee fails to comply 
     with subsection (a) for a fiscal year, any project funds 
     reserved by the participating county in the preceding fiscal 
     year and remaining unobligated shall be available for use as 
     part of the project submissions in the next fiscal year.
       ``(c) Effect of Rejection of Projects.--Subject to section 
     208, any project funds reserved by a participating county in 
     the preceding fiscal year that are unobligated at the end of 
     a fiscal year because the Secretary concerned has rejected 
     one or more proposed projects shall be available for use as 
     part of the project submissions in the next fiscal year.
       ``(d) Effect of Court Orders.--
       ``(1) In general.--If an approved project under this Act is 
     enjoined or prohibited by a Federal court, the Secretary 
     concerned shall return the unobligated project funds related 
     to the project to the participating county or counties that 
     reserved the funds.
       ``(2) Expenditure of funds.--The returned funds shall be 
     available for the county to expend in the same manner as the 
     funds reserved by the county under subparagraph (B) or (C)(i) 
     of section 102(d)(1).

     ``SEC. 208. TERMINATION OF AUTHORITY.

       ``(a) In General.--The authority to initiate projects under 
     this title shall terminate on September 30, 2011.

[[Page S3897]]

       ``(b) Deposits in Treasury.--Any project funds not 
     obligated by September 30, 2012, shall be deposited in the 
     Treasury of the United States.

                       ``TITLE III--COUNTY FUNDS

     ``SEC. 301. DEFINITIONS.

       ``In this title:
       ``(1) County funds.--The term `county funds' means all 
     funds an eligible county elects under section 102(d) to 
     reserve for expenditure in accordance with this title.
       ``(2) Participating county.--The term `participating 
     county' means an eligible county that elects under section 
     102(d) to expend a portion of the Federal funds received 
     under section 102 in accordance with this title.

     ``SEC. 302. USE.

       ``(a) Authorized Uses.--A participating county, including 
     any applicable agencies of the participating county, shall 
     use county funds, in accordance with this title, only--
       ``(1) to carry out activities under the Firewise 
     Communities program to provide to homeowners in fire-
     sensitive ecosystems education on, and assistance with 
     implementing, techniques in home siting, home construction, 
     and home landscaping that can increase the protection of 
     people and property from wildfires;
       ``(2) to reimburse the participating county for search and 
     rescue and other emergency services, including firefighting, 
     that are--
       ``(A) performed on Federal land after the date on which the 
     use was approved under subsection (b);
       ``(B) paid for by the participating county; and
       ``(3) to develop community wildfire protection plans in 
     coordination with the appropriate Secretary concerned.
       ``(b) Proposals.--A participating county shall use county 
     funds for a use described in subsection (a) only after a 45-
     day public comment period, at the beginning of which the 
     participating county shall--
       ``(1) publish in any publications of local record a 
     proposal that describes the proposed use of the county funds; 
     and
       ``(2) submit the proposal to any resource advisory 
     committee established under section 205 for the participating 
     county.

     ``SEC. 303. CERTIFICATION.

       ``(a) In General.--Not later than February 1 of the year 
     after the year in which any county funds were expended by a 
     participating county, the appropriate official of the 
     participating county shall submit to the Secretary concerned 
     a certification that the county funds expended in the 
     applicable year have been used for the uses authorized under 
     section 302(a), including a description of the amounts 
     expended and the uses for which the amounts were expended.
       ``(b) Review.--The Secretary concerned shall review the 
     certifications submitted under subsection (a) as the 
     Secretary concerned determines to be appropriate.

     ``SEC. 304. TERMINATION OF AUTHORITY.

       ``(a) In General.--The authority to initiate projects under 
     this title terminates on September 30, 2011.
       ``(b) Availability.--Any county funds not obligated by 
     September 30, 2012, shall be deposited in the Treasury of the 
     United States.

                  ``TITLE IV--MISCELLANEOUS PROVISIONS

     ``SEC. 401. REGULATIONS.

       ``The Secretary of Agriculture and the Secretary of the 
     Interior shall jointly issue regulations to carry out the 
     purposes of this Act.

     ``SEC. 402. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--There are authorized to be appropriated 
     such sums as are necessary to carry out this Act for each of 
     fiscal years 2007 through 2011.
       ``(b) Emergency Designation.--Of the amounts authorized to 
     be appropriated under subsection (a) for fiscal year 2007, 
     $425,000,000 is designated as an emergency requirement 
     pursuant to section 402 of H. Con. Res. 95 (109th Congress).

     ``SEC. 403. TREATMENT OF FUNDS AND REVENUES.

       ``(a) Relation to Other Appropriations.--Funds made 
     available under section 402 and funds made available to a 
     Secretary concerned under section 206 shall be in addition to 
     any other annual appropriations for the Forest Service and 
     the Bureau of Land Management.
       ``(b) Deposit of Revenues and Other Funds.--All revenues 
     generated from projects pursuant to title II, including any 
     interest accrued from the revenues, shall be deposited in the 
     Treasury of the United States.''.
       (b) Forest Receipt Payments to Eligible States and 
     Counties.--
       (1) Act of may 23, 1908.--The sixth paragraph under the 
     heading ``forest service'' in the Act of May 23, 1908 (16 
     U.S.C. 500) is amended in the first sentence by striking 
     ``twenty-five percentum'' and all that follows through 
     ``shall be paid'' and inserting the following: ``an amount 
     equal to the annual average of 25 percent of all amounts 
     received for the applicable fiscal year and each of the 
     preceding 6 fiscal years from each national forest shall be 
     paid''.
       (2) Weeks law.--Section 13 of the Act of March 1, 1911 
     (commonly known as the ``Weeks Law'') (16 U.S.C. 500) is 
     amended in the first sentence by striking ``twenty-five 
     percentum'' and all that follows through ``shall be paid'' 
     and inserting the following: ``an amount equal to the annual 
     average of 25 percent of all amounts received for the 
     applicable fiscal year and each of the preceding 6 fiscal 
     years from each national forest shall be paid''.
       (c) Payments in Lieu of Taxes.--
       (1) In general.--Section 6906 of title 31, United States 
     Code, is amended to read as follows:

     ``Sec. 6906. Funding

       ``For each of fiscal years 2008 through 2012, such sums as 
     are authorized under this chapter shall be made available to 
     the Secretary of the Interior, out of any amounts in the 
     Treasury not otherwise appropriated, for obligation or 
     expenditure in accordance with this chapter.''.
       (2) Conforming amendment.--The table of sections for 
     chapter 69 of title 31, United States Code, is amended by 
     striking the item relating to section 6906 and inserting the 
     following:

``6906. Funding.''.
       (d) Increase in Information Return Penalties.--
       (1) Failure to file correct information returns.--
       (A) In general.--Section 6721(a)(1) of the Internal Revenue 
     Code of 1986 is amended--
       (i) by striking ``$50'' and inserting ``$250'', and
       (ii) by striking ``$250,000'' and inserting ``$3,000,000''.
       (B) Reduction where correction in specified period.--
       (i) Correction within 30 days.--Section 6721(b)(1) of such 
     Code is amended--

       (I) by striking ``$15'' and inserting ``$50'',
       (II) by striking ``$50'' and inserting ``$250'', and
       (III) by striking ``$75,000'' and inserting ``$500,000''.

       (ii) Failures corrected on or before august 1.--Section 
     6721(b)(2) of such Code is amended--

       (I) by striking ``$30'' and inserting ``$100'',
       (II) by striking ``$50'' and inserting ``$250'', and
       (III) by striking ``$150,000'' and inserting 
     ``$1,500,000''.

       (C) Lower limitation for persons with gross receipts of not 
     more than $5,000,000.--Section 6721(d)(1) of such Code is 
     amended--
       (i) in subparagraph (A)--

       (I) by striking ``$100,000'' and inserting ``$1,000,000'', 
     and
       (II) by striking ``$250,000'' and inserting ``$3,000,000'',

       (ii) in subparagraph (B)--

       (I) by striking ``$25,000'' and inserting ``$175,000'', and
       (II) by striking ``$75,000'' and inserting ``$500,000'', 
     and

       (iii) in subparagraph (C)--

       (I) by striking ``$50,000'' and inserting ``$500,000'', and
       (II) by striking ``$150,000'' and inserting ``$1,500,000''.

       (D) Penalty in case of intentional disregard.--Section 
     6721(e) of such Code is amended--
       (i) by striking ``$100'' in paragraph (2) and inserting 
     ``$500'',
       (ii) by striking ``$250,000'' in paragraph (3)(A) and 
     inserting ``$3,000,000''.
       (2) Failure to furnish correct payee statements.--
       (A) In general.--Section 6722(a) of the Internal Revenue 
     Code of 1986 is amended--
       (i) by striking ``$50'' and inserting ``$250'', and
       (ii) by striking ``$100,000'' and inserting ``$1,000,000''.
       (B) Penalty in case of intentional disregard.--Section 
     6722(c) of such Code is amended--
       (i) by striking ``$100'' in paragraph (1) and inserting 
     ``$500'', and
       (ii) by striking ``$100,000'' in paragraph (2)(A) and 
     inserting ``$1,000,000''.
       (3) Failure to comply with other information reporting 
     requirements.--Section 6723 of the Internal Revenue Code of 
     1986 is amended--
       (A) by striking ``$50'' and inserting ``$250'', and
       (B) by striking ``$100,000'' and inserting ``$1,000,000''.
       (4) Effective date.--The amendments made by this section 
     shall apply with respect to information returns required to 
     be filed on or after January 1, 2008.
       (e) Repeal of Suspension of Certain Penalties and 
     Interest.--
       (1) In general.--Section 6404 of the Internal Revenue Code 
     of 1986 is amended by striking subsection (g).
       (2) Effective date.--
       (A) In general.--Except as provided in paragraph (2), the 
     amendment made by this section shall apply to notices 
     provided by the Secretary of the Treasury, or his delegate 
     after the date which is 6 months after the date of the 
     enactment of this Act.
       (B) Exception for certain taxpayers.--The amendment made by 
     this section shall not apply to any taxpayer with respect to 
     whom a suspension of any interest, penalty, addition to tax, 
     or other amount is in effect on the date which is 6 months 
     after the date of the enactment of this Act.
       (f) Participants in Government Section 457 Plans Allowed to 
     Treat Elective Deferrals as Roth Contributions.--
       (1) In general.--Section 402A(e)(1) of the Internal Revenue 
     Code of 1986 (defining applicable retirement plan) 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) an eligible deferred compensation plan (as defined in 
     section 457(b)) of an eligible employer described in section 
     457(e)(1)(A).''.

[[Page S3898]]

       (2) Elective deferrals.--Section 402A(e)(2) of the Internal 
     Revenue Code of 1986 (defining elective deferral) is amended 
     to read as follows:
       ``(2) Elective deferral.--The term `elective deferral' 
     means--
       ``(A) any elective deferral described in subparagraph (A) 
     or (C) of section 402(g)(3), and
       ``(B) any elective deferral of compensation by an 
     individual under an eligible deferred compensation plan (as 
     defined in section 457(b)) of an eligible employer described 
     in section 457(e)(1)(A).''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2007.
                                 ______
                                 
  SA 710. Mr. KYL submitted an amendment intended to be proposed by him 
to the bill H.R. 1591, making emergency supplemental appropriations for 
the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At page 52, line 16, strike ``may determine'' and all that 
     follows through page 53, line 11 and insert the following:
       ``may determine in such Secretary's sole unreviewable 
     discretion that--
       (1) subsection (a)(3)(B)(i)(IV)(bb) of this section shall 
     not apply to an alien;
       (II) subsection (a)(3)(B)(i)(VII) of this section shall not 
     apply to an alien who endorsed or espoused terrorist activity 
     or persuaded others to endorse or espouse terrorist activity 
     or support a terrorist organization described in clause 
     (vi)(III);
       (III) subsection (a)(3)(B)(iv)(VI) of this section shall 
     not apply with respect to any material support that an alien 
     afforded under duress (as that term is defined in common law) 
     to an organization or individual that has engaged in a 
     terrorist activity; or
       (IV) subsection (a)(3)(B)(vi)(III) of this section shall 
     not apply to a group that--
       (aa) does not pose a threat to the United States or other 
     democratic countries; and
       (bb) has not engaged in terrorist activity targeted at 
     civilians; or
       (V) subsection (a)(3)(B)(vi)(III) of this section shall not 
     apply to a group solely by virtue of its having a subgroup 
     within the scope of that subsection.
       ``Such a determination shall neither prejudice the ability 
     of the United States Government to commence criminal or civil 
     proceedings involving a beneficiary of such a determination 
     or any other person, nor create any substantive or procedural 
     right or benefit for a beneficiary of such a determination or 
     any other person. Not withstanding any other provision of law 
     (statutory or non-statutory), including but not limited to 
     section 2241 of title 28, or any other habeas corpus 
     provision, and sections 1361 and 1651 of such title, no court 
     shall have jurisdiction to review such a determination or 
     revocation except in a proceeding for review of a final order 
     of removal pursuant to section 242 and only to the extent 
     provided in section 242(a)(2)(D). The Secretary of State may 
     not exercise the discretion provided in this clause with 
     respect to an alien at any time during which the alien is the 
     subject of pending removal proceedings under section 1229a of 
     title 8.''.
                                 ______
                                 
  SA 711. Mr. GREGG submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 50, strike line 7 and all that follows through page 
     52, line 5.
                                 ______
                                 
  SA 712. Mr. DOMENICI submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       On page 62, line 18, insert the following before the 
     period:
       Provided further, That the Secretary of the Army, acting 
     through the Chief of Engineers, is provided an additional 
     $10,000,000 under this heading to rehabilitate the flood 
     damage projects for the Albuquerque Middle Rio Grande levee, 
     New Mexico; the Abeytas to Bernardo levee in Socorro County, 
     New Mexico; and the Glenwood/Whitewater Creek levee in Catron 
     County, New Mexico, to Federal levee standards: Provided 
     further, That the amount provided under this heading is 
     designated as an emergency requirement pursuant to section 
     402 of H. Con. Res. 95 (109th Congress).
                                 ______
                                 
  SA 713. Mr. COLEMAN (for himself and Ms. Klobuchar) submitted an 
amendment intended to be proposed by him to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of chapter 9 of title II, add the following:


  CONVEYANCE OF A-12 BLACKBIRD AIRCRAFT TO THE MINNESOTA AIR NATIONAL 
                      GUARD HISTORICAL FOUNDATION

       Sec. 2904. (a) Conveyance Required.--The Secretary of the 
     Air Force shall convey, without consideration, to the 
     Minnesota Air National Guard Historical Foundation, Inc. (in 
     this section referred to as the ``Foundation''), a non-profit 
     entity located in the State of Minnesota, A-12 Blackbird 
     aircraft with tail number 60-6931 that is under the 
     jurisdiction of the National Museum of the United States Air 
     Force and, as of January 1, 2007, was on loan to the 
     Foundation and display with the 133rd Airlift Wing at 
     Minneapolis-St. Paul International Airport, Minnesota.
       (b) Condition.--The conveyance required by subsection (a) 
     shall be subject to the requirement that Foundation utilize 
     and display the aircraft described in that subsection for 
     educational and other appropriate public purposes as jointly 
     agreed upon by the Secretary and the Foundation before the 
     conveyance.
       (c) Relocation of Aircraft.--As part of the conveyance 
     required by subsection (a), the Secretary shall relocate the 
     aircraft described in that subsection to Minneapolis-St. Paul 
     International Airport and undertake any reassembly of the 
     aircraft required as part of the conveyance and relocation. 
     Any costs of the Secretary under this subsection shall be 
     borne by the Secretary.
       (d) Maintenance Support.--The Secretary may authorize the 
     133rd Airlift Wing to provide support to the Foundation for 
     the maintenance of the aircraft relocated under subsection 
     (a) after its relocation under that subsection.
       (e) Reversion of Aircraft.--
       (1) Reversion.--In the event the Foundation ceases to 
     exist, all right, title, and interest in and to the aircraft 
     conveyed under subsection (a) shall revert to the United 
     States, and the United States shall have immediate right of 
     possession of the aircraft.
       (2) Assumption of possession.--Possession under paragraph 
     (1) of the aircraft conveyed under subsection (a) shall be 
     assumed by the 133rd Airlift Wing.
       (f) Additional Terms and Conditions.--The Secretary may 
     require such additional terms and conditions in connection 
     with the conveyance required by subsection (a) as the 
     Secretary considers appropriate to protect the interests of 
     the United States.
                                 ______
                                 
  SA 714. Mr. VOINOVICH submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. SENSE OF CONGRESS REGARDING BUDGETING FOR OPERATION 
                   IRAQI FREEDOM AND THE GLOBAL WAR ON TERRORISM.

       (a) Findings.--Congress makes the following findings:
       (1) The global war on terrorism began in September 2001 and 
     military operations in Iraq began in March 2003, and United 
     States military involvement in Iraq and Afghanistan no longer 
     represents unforeseen, unpredictable, or unanticipated 
     events.
       (2) Since the beginning of the global war on terrorism and 
     the military operations in Iraq, Congress has provided 
     $503,000,000,000 in budget authority to carry out Operation 
     Iraqi Freedom and the global war on terrorism, including 
     funding for military operations and other defense activities, 
     indigenous security forces, diplomatic operations, and 
     foreign aid.
       (3) The President has requested $98,000,000,000 in 
     additional fiscal year 2007 supplemental appropriations to 
     carry out Operation Iraqi Freedom and the global war on 
     terrorism, bringing the total appropriated upon the date of 
     the enactment of this Act for that purpose to 
     $601,000,000,000.
       (4) The President has requested $145,000,000,000 in fiscal 
     year 2008 supplemental appropriations to carry out Operation 
     Iraqi Freedom and the global war on terrorism.
       (5) During the past few years, both the President and 
     Congress have consistently underestimated the future costs of 
     carrying out Operation Iraqi Freedom and the global war on 
     terrorism in budget requests and in congressional budget 
     resolutions.
       (6) The President and Congress have provided funds to carry 
     out Operation Iraqi Freedom and the global war on terrorism 
     largely through the use of supplemental appropriations bills 
     that escape the budget limitations imposed on regular 
     appropriations.
       (7) As a result of insufficient budget projections and 
     exemption of supplemental appropriations from budget rules, 
     Congress and the President have provided the public with 
     erroneous information regarding the true impact of Operation 
     Iraqi Freedom and the global war on terrorism on future 
     budget deficits and the growth of the national debt.
       (b) Sense of Congress.--It is the sense of Congress that--
       (1) fiscal year 2008 should be the last fiscal year for 
     which Congress provides funding to carry out Operation Iraqi 
     Freedom and the global war on terrorism through the use of 
     supplemental appropriations that generally are not subject to 
     budget limitations; and
       (2) beginning in fiscal year 2009, Congress should include 
     funding to carry out Operation Iraqi Freedom and the global 
     war on terrorism in the regular budget and appropriations 
     processes so that the public is able to recognize and 
     understand the costs of carrying out such activities and 
     Congress may consider whether additional spending and revenue 
     policies should be enacted to offset such costs.

[[Page S3899]]

                                 ______
                                 
  SA 715. Mr. COBURN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:
       Sec. __. In accordance with paragraphs (4) and (5) of 
     section 203(d) of the Legislative Reorganization Act of 1946 
     (2 U.S.C. 166(d)), the Congressional Research Service may not 
     refuse a request from a Member of the Senate or House of 
     Representatives for compilation and analysis of earmarks 
     contained in appropriations bills and amendments.
                                 ______
                                 
  SA 716. Mr. BURR proposed an amendment to amendment SA 709 proposed 
by Mr. Wyden (for himself, Mr. Reid, Mr. Baucus, Mr. Bingaman, Mr. 
Smith, Ms. Cantwell, Mr. Domenici, Mrs. Boxer, Mr. Craig, Mrs. Murray, 
Mr. Crapo, Mr. Tester, Mr. Stevens, Mr. Bennett, Ms. Murkowski, Mr. 
Salazar, and Mrs. Feinstein) to the bill H.R. 1591, making emergency 
supplemental appropriations for the fiscal year ending September 30, 
2007, and for other purposes; as follows:

       Beginning on page 13, strike line 22 and all that follows 
     through page 17, line 18, and insert the following:
       ``(2) Expenditure purposes.--Subject to subsection (d), 
     payments received by a State under subsection (a) and 
     distributed to eligible counties shall be expended only for 
     public schools of the eligible county.
       ``(d) Expenditure Rules for Eligible Counties.--
       ``(1) Allocations.--
       ``(A) In general.--Except as provided in paragraph (3)(B), 
     if an eligible county elects to receive its share of the 
     State payment or the county payment, not less than 80 
     percent, but not more than 85 percent, of the funds shall be 
     expended only for public schools of the eligible county.
       ``(B) Election as to use of balance.--Except as provided in 
     subparagraph (C), an eligible county shall elect to do 1 or 
     more of the following with the balance of any funds not 
     expended pursuant to subparagraph (A):
       ``(i) Reserve any portion of the balance for projects in 
     accordance with title II.
       ``(ii) Reserve not more than 7 percent of the total share 
     for the eligible county of the State payment or the county 
     payment for projects in accordance with title III.
       ``(iii) Return the portion of the balance not reserved 
     under clauses (i) and (ii) to the Treasury of the United 
     States.
       ``(C) Counties with modest distributions.--In the case of 
     each eligible county to which more than $100,000, but less 
     than $350,000, is distributed for any fiscal year pursuant to 
     either or both of paragraphs (1)(B) and (2)(B) of subsection 
     (a), the eligible county, with respect to the balance of any 
     funds not expended pursuant to subparagraph (A) for that 
     fiscal year, shall--
       ``(i) reserve any portion of the balance for--

       ``(I) carrying out projects under title II;
       ``(II) carrying out projects under title III; or
       ``(III) a combination of the purposes described in 
     subclauses (I) and (II); or

       ``(ii) return the portion of the balance not reserved under 
     clause (i) to the Treasury of the United States.
       ``(2) Distribution of funds.--
       ``(A) In general.--Funds reserved by an eligible county 
     under subparagraph (B)(i) or (C)(i)(I) of paragraph (1) shall 
     be deposited in a special account in the Treasury of the 
     United States.
       ``(B) Availability.--Amounts deposited under subparagraph 
     (A) shall--
       ``(i) be available for expenditure by the Secretary 
     concerned, without further appropriation; and
       ``(ii) remain available until expended in accordance with 
     title II.
       ``(3) Election.--
       ``(A) Notification.--
       ``(i) In general.--An eligible county shall notify the 
     Secretary concerned of an election by the eligible county 
     under this subsection not later than September 30 of each 
     fiscal year.
       ``(ii) Failure to elect.--Except as provided in 
     subparagraph (B), if the eligible county fails to make an 
     election by the date specified in clause (i), the eligible 
     county shall--

       ``(I) be considered to have elected to expend 85 percent of 
     the funds in accordance with paragraph (1)(A); and
       ``(II) return the balance to the Treasury of the United 
     States.

       ``(B) Counties with minor distributions.--In the case of 
     each eligible county to which less than $100,000 is 
     distributed for any fiscal year pursuant to either or both of 
     paragraphs (1)(B) and (2)(B) of subsection (a), the eligible 
     county may elect to expend all the funds for public schools 
     in the eligible county.
                                 ______
                                 
  SA 717. Mr. COBURN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
as follows:

       At the appropriate place, insert the following:

     SEC. __. INAPPLICABILITY OF CERTAIN PROVISIONS.

       Notwithstanding any other provision of this Act, titles II, 
     III, and IV of this Act shall not take effect.
                                 ______
                                 
  SA 718. Mr. COBURN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
as follows:

     SEC. __. INAPPLICABILITY OF CERTAIN PROVISIONS.

       Notwithstanding any provision of this Act, titles II 
     (except for chapter 8 and 9 of title II), III, and IV of this 
     Act shall not take effect.
                                 ______
                                 
  SA 719. Mr. ALEXANDER submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       Beginning on page 95, strike line 22 and all that follows 
     through page 96, line 8.
                                 ______
                                 
  SA 720. Mr. ALEXANDER submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       On page 96, lines 5 and 6, strike ``a State found within 
     Federal Emergency Management Agency Region IV or VI'' and 
     insert ``the State of Alabama, Florida, Louisiana, 
     Mississippi, or Texas''.
                                 ______
                                 
  SA 721. Mr. ALEXANDER submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       On page 96, lines 6 through 8, strike ``The provisions of 
     this section shall cease to be in effect twenty-four months 
     following the date of enactment of this Act.'' and insert 
     ``This section shall cease to be in effect as of the date 
     that is 180 days after the date of enactment of this Act, and 
     the authority provided by this section is contingent on 
     authorization by the appropriate committees of Congress prior 
     to implementation.''.
                                 ______
                                 
  SA 722. Mr. DOMENICI (for himself and Mrs. Hutchison) submitted an 
amendment intended to be proposed by him to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       On page 37, between lines 10 and 11, insert the following:

                       International Commissions

 international boundary and water commission, united states and mexico

                    (including rescission of funds)

       For an additional amount for the ``International Boundary 
     and Water Commission, United States and Mexico'', 
     $21,700,000, to remain available until expended: Provided, 
     That of the funds appropriated under this heading, not less 
     than $11,700,000 shall be made available for sediment removal 
     and construction associated with the Rio Grande Canalization 
     project in Dona Ana County, New Mexico: Provided further,  
     That of the funds appropriated under this heading, not less 
     than $10,000,000 shall be made available for sediment removal 
     associated with the Rio Grande Flood Control System 
     Rehabilitation project in El Paso County, Texas.
       Of the funds appropriated for the ``Millennium Challenge 
     Corporation'' under the Foreign Operations, Export Financing, 
     and Related Programs Appropriations Act, 2006 (Public Law 
     109-102), $21,700,000 are rescinded.
                                 ______
                                 
  SA 723. Mr. DOMENICI submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       On page 62, line 18, insert the following before the 
     period:
       Provided further, That the Secretary of the Army, acting 
     through the Chief of Engineers, is provided an additional 
     $10,000,000 under this heading to rehabilitate the flood 
     damage projects for the Albuquerque Middle Rio Grande levee, 
     New Mexico; the Abeytas to Bernardo levee in Socorro County, 
     New Mexico; and the Glenwood/Whitewater Creek levee in Catron 
     County, New Mexico, to Federal levee standards.
                                 ______
                                 
  SA 724. Mrs. BOXER submitted an amendment intended to be proposed by 
her to the bill H.R. 1591, making emergency supplemental appropriations 
for

[[Page S3900]]

the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 28, between lines 18 and 19, insert the following:
       Sec. 1316. It is the sense of the Senate that a portion of 
     the funds appropriated or otherwise made available by this 
     Act should be used to begin the phased redeployment of United 
     States military forces from Iraq.
                                 ______
                                 
  SA 725. Mrs. BOXER submitted an amendment intended to be proposed by 
her to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of chapter 3 of title I, add the following:

     SEC. 1316. RESEARCH ON MENTAL HEALTH NEEDS OF FEMALE MEMBERS 
                   OF THE ARMED FORCES.

       Of the amount appropriated or otherwise made available by 
     this chapter under the heading ``Defense Health Program'', 
     $10,000,000 shall be available for research on the mental 
     health needs of female members of the Armed Forces, with a 
     specific emphasis on post traumatic stress disorder and 
     sexual trauma and the development of new treatment models.
                                 ______
                                 
  SA 726. Mr. KERRY submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 40, line 3, insert after ``Public Law 109-13:'' the 
     following: ``Provided further, That of the funds appropriated 
     under this heading that are available for assistance for 
     Iraq, not less than $1,000,000 shall be made available for a 
     Youth Center/Work Study Program in Iraq to be administered by 
     the Iraqi Ministry of Youth and Sport:''.
                                 ______
                                 
  SA 727. Mr. STEVENS submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of chapter 3 of title I, add the following:

     SEC. 1316. REDEVELOPMENT OF INDUSTRIAL SECTOR IN IRAQ.

       Of the amount appropriated or otherwise made available by 
     this chapter under the heading ``Iraq Freedom Fund'', up to 
     $100,000,000 may be obligated and expended for purposes of 
     the Task Force to Improve Business and Stability Operations 
     in Iraq.
                                 ______
                                 
  SA 728. Mr. BOND submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table, as follows:

       At the end of chapter 10 of title II, insert the following:
       Sec. 4004. In section 21307 of Public Law 110-5, in the 
     first proviso, strike out ``for such account''.
                                 ______
                                 
  SA 729. Mr. VITTER submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 64, between lines 15 and 16, insert the following:
       Sec. 23__. Not later than 90 days after the date of 
     enactment of this Act, the Chief of Engineers shall, at full 
     Federal expense, investigate and submit to Congress an 
     analysis of--
       (1) the overall technical advantages, disadvantages, and 
     operational effectiveness of operating the new pumping 
     stations at the mouths of the 17th Street, Orleans Avenue, 
     and London Avenue canals in the New Orleans area directed for 
     construction in the matter under the heading ``flood control 
     and coastal emergencies'' of chapter 3 of title II of the 
     Emergency Supplemental Appropriations Act for Defense, the 
     Global War on Terror, and Hurricane Recovery, 2006 (Public 
     Law 109-234; 120 Stat. 454) concurrently or in series with 
     existing pumping stations serving those canals;
       (2) the advantages, disadvantages, and technical 
     operational effectiveness of removing the existing pumping 
     stations and configuring the new pumping stations and 
     associated canals to handle all needed discharges; and
       (3) the advantages, disadvantages, and technical 
     operational effectiveness of replacing or improving the 
     floodwalls and levees adjacent to the 3 canals specified in 
     paragraph (1).

                                 ______
                                 
  SA 730. Mr. VITTER submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       Beginning on page 60, strike line 23 and all that follows 
     through page 70, line 13, and insert the following:
       Flood Control and Coastal Emergencies.--For an additional 
     amount for ``Flood Control and Coastal Emergencies'', as 
     authorized by section 5 of the Act of August 18, 1941 (33 
     U.S.C. 701n), for necessary expenses relating to the 
     consequences of Hurricanes Katrina and Rita and for other 
     purposes, $2,257,700,000, to remain available until expended: 
     Provided, That $2,000,000,000 of the amount provided may be 
     used by the Secretary of the Army to carry out projects and 
     measures to provide the level of protection necessary to 
     achieve the certification required for the 100-year level of 
     flood protection in accordance with the national flood 
     insurance program under the base flood elevations in 
     existence at the time of construction of the enhancements for 
     the West Bank and Vicinity and Lake Ponchartrain and 
     Vicinity, Louisiana, projects, as described under the heading 
     ``Flood Control and Coastal Emergencies'', in chapter 3 of 
     Public Law 109-148: Provided further, That $150,000,000 of 
     the amount provided may be used to support emergency 
     operations, repairs and other activities in response to 
     flood, drought and earthquake emergencies as authorized by 
     law: Provided further, That $107,700,000 of the amount 
     provided may be used to implement the projects for hurricane 
     storm damage reduction, flood damage reduction, and ecosystem 
     restoration within Hancock, Harrison, and Jackson Counties, 
     Mississippi substantially in accordance with the Report of 
     the Chief of Engineers dated December 31, 2006, and entitled 
     ``Mississippi, Coastal Improvements Program Interim Report, 
     Hancock, Harrison, and Jackson Counties, Mississippi'': 
     Provided further, That projects authorized for implementation 
     under this Chief's report shall be carried out at full 
     Federal expense, except that the non-Federal interests shall 
     be responsible for providing any lands, easements, rights-of-
     way, disposal areas, and relocations required for 
     construction of the project and for all costs associated with 
     operation and maintenance of the project: Provided further, 
     That any project using funds appropriated under this heading 
     shall be initiated only after non-Federal interests have 
     entered into binding agreements with the Secretary requiring 
     the non-Federal interests to pay 100 percent of the 
     operation, maintenance, repair, replacement, and 
     rehabilitation costs of the project and to hold and save the 
     United States free from damages due to the construction or 
     operation and maintenance of the project, except for damages 
     due to the fault or negligence of the United States or its 
     contractors.


                        DEPARTMENT OF INTERIOR.

                         BUREAU OF RECLAMATION.

       WATER AND RELATED RESOURCES.--For an additional amount for 
     ``Water and Related Resources'', $18,000,000, to remain 
     available until expended for drought assistance: Provided, 
     That drought assistance may be provided under the Reclamation 
     States Drought Emergency Act or other applicable Reclamation 
     authorities to assist drought plagued areas of the West.

     SEC. 2301. GENERAL PROVISIONS--THIS CHAPTER.

       The Secretary is authorized and directed to reimburse local 
     governments for expenses they have incurred in storm-proofing 
     pumping stations, constructing safe houses for operators, and 
     other interim flood control measures in and around the New 
     Orleans metropolitan area, provided the Secretary determines 
     those elements of work and related expenses to be integral to 
     the overall plan to ensure operability of the stations during 
     hurricanes, storms and high water events and the flood 
     control plan for the area.
       Sec. 2302. The limitation concerning total project costs in 
     section 902 of the Water Resources Development Act of 1986, 
     as amended (33 U.S.C. 2280), shall not apply during fiscal 
     year 2008 to any water resources project for which funds were 
     made available during fiscal year 2007.
       Sec. 2303.(a) The Secretary of the Army is authorized and 
     directed to utilize funds remaining available for obligation 
     from the amounts appropriated in chapter 3 of Public Law 109-
     234 under the heading ``Flood Control and Coastal 
     Emergencies'' for projects in the greater New Orleans 
     metropolitan area to prosecute these projects in a manner 
     which promotes the goal of continuing work at an optimal 
     pace, while maximizing, to the greatest extent practicable, 
     levels of protection to reduce the risk of storm damage to 
     people and property.
       (b) The expenditure of funds as provided in subsection (a) 
     may be made without regard to individual amounts or purposes 
     specified in chapter 3 of Public Law 109-234.
       (c) Any reallocation of funds that are necessary to 
     accomplish the goal established in subsection (a) are 
     authorized. Reallocation of funds in excess of $250,000,000 
     or 50 percent, whichever is less, of the individual amounts 
     specified in chapter 3 of Public Law 109-234 require 
     notifications of the House and Senate Committees on 
     Appropriation.

   CHAPTER 4--SMALL BUSINESS ADMINISTRATION--DISASTER LOANS PROGRAM 
                                ACCOUNT

     (INCLUDING TRANSFER OF FUNDS)

       For an additional amount for ``Disaster Loans Program 
     Account'' for administrative expenses to carry out the 
     disaster loan program, $25,069,000, to remain available until

[[Page S3901]]

     expended, which may be transferred to and merged with ``Small 
     Business Administration, Salaries and Expenses''.

     SEC. 2401. GENERAL PROVISIONS--THIS CHAPTER.

       In this section--
       (1) the term ``Administrator'' means the Administrator of 
     the Small Business Administration;
       (2) the term ``covered small business concern'' means a 
     small business concern--
       (A) that is located in any area in Louisiana or Mississippi 
     for which the President declared a major disaster because of 
     Hurricane Katrina of 2005 or Hurricane Rita of 2005;
       (B) that has not more than 50 full-time employees; and
       (C) that--
       (i)(I) suffered a substantial economic injury as a result 
     of Hurricane Katrina of 2005 or Hurricane Rita of 2005, 
     because of a reduction in travel or tourism to the area 
     described in subparagraph (A); and
       (II) demonstrates that, during the 1-year period ending on 
     August 28, 2005, not less than 45 percent of the revenue of 
     that small business concern resulted from tourism or travel 
     related sales; or
       (ii)(I) suffered a substantial economic injury as a result 
     of Hurricane Katrina of 2005 or Hurricane Rita of 2005; and
       (II) operates in a parish or county for which the 
     population on the date of enactment of this Act, as 
     determined by the Administrator, is not greater than 75 
     percent of the population of that parish or county before 
     August 28, 2005, based on the most recent United States 
     population estimate available before August 28, 2005;
       (3) the term ``major disaster'' has the meaning given that 
     term in section 102 of the Robert T. Stafford Disaster Relief 
     and Emergency Assistance Act (42 U.S.C. 5122); and
       (4) the term ``small business concern'' has the meaning 
     given that term in section 3 of the Small Business Act (15 
     U.S.C. 632).
       (b) Appropriation.--
       (1) In General.--There are appropriated, out of any money 
     in the Treasury not otherwise appropriated, $25,000,000 to 
     the Administrator, which, except as provided in paragraph (2) 
     or (3), shall be used for loans under section 7(b)(2) of the 
     Small Business Act (15 U.S.C. 636(b)(2)) to covered small 
     business concerns.
       (2) Administrative Expenses.--Of the amounts made available 
     under paragraph (1), not more than $8,750,000 may be 
     transferred to and merged with ``Salaries and Expenses'' to 
     carry out the disaster loan program of the Small Business 
     Administration.
       (3) Other Uses of Funds.--The Administrator may use amounts 
     made available under paragraph (1) for other purposes 
     authorized for amounts in the ``Disaster Loans Program 
     Account'' or transfer such amounts to and merge such amounts 
     with ``Salaries and Expenses'', if--
       (A) such amounts are--
       (i) not obligated on the later of 5 months after the date 
     of enactment of this Act and August 29, 2007; or
       (ii) necessary to provide assistance in the event of a 
     major disaster; and
       (B) not later than 5 days before any such use or transfer 
     of amounts, the Administrator provides written notification 
     of such use or transfer to the Committee on Appropriations of 
     the Senate and the Committee on Appropriations of the House 
     of Representatives.

     SEC. 2402. OTHER PROGRAMS.

       (a) HUBZONES.--Section 3(p) of the Small Business Act (15 
     U.S.C. 632(p)) is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (D), by striking ``or'';
       (B) in subparagraph (E), by striking the period at the end 
     and inserting ``; or''; and
       (C) by adding at the end the following:
       ``(F) an area in which the President has declared a major 
     disaster (as that term is defined in section 102 of the 
     Robert T. Stafford Disaster Relief and Emergency Assistance 
     Act (42 U.S.C. 5122)) as a result of Hurricane Katrina of 
     August 2005 or Hurricane Rita of September 2005, during the 
     time period described in paragraph (8).''; and
       (2) by adding at the end the following:
       ``(8) Time period.--The time period for the purposes of 
     paragraph (1)(F)--
       ``(A) shall be the 2-year period beginning on the later of 
     the date of enactment of this paragraph and August 29, 2007; 
     and
       ``(B) may, at the discretion of the Administrator, be 
     extended to be the 3-year period beginning on the later of 
     the date of enactment of this paragraph and August 29, 
     2007.''.
       (b) Relief From Test Program.--Section 711(d) of the Small 
     Business Competitive Demonstration Program Act of 1988 (15 
     U.S.C. 644 note) is amended--
       (1) by striking ``The Program'' and inserting the 
     following:
       ``(1) In general.--Except as provided in paragraph (2), the 
     Program''; and
       (2) by adding at the end the following:
       ``(2) Exception.--
       ``(A) In general.--The Program shall not apply to any 
     contract related to relief or reconstruction from Hurricane 
     Katrina of 2005 or Hurricane Rita of 2005 during the time 
     period described in subparagraph (B).
       ``(B) Time period.--The time period for the purposes of 
     subparagraph (A)--
       ``(i) shall be the 2-year period beginning on the later of 
     the date of enactment of this paragraph and August 29, 2007; 
     and
       ``(ii) may, at the discretion of the Administrator, be 
     extended to be the 3-year period beginning on the later of 
     the date of enactment of this paragraph and August 29, 
     2007.''.

     CHAPTER 5--DEPARTMENT OF HOMELAND SECURITY--FEDERAL EMERGENCY 
                           MANAGEMENT AGENCY

     DISASTER RELIEF.

       For an additional amount for ``Disaster Relief'' for 
     necessary expenses under the Robert T. Stafford Disaster 
     Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.), 
     $3,610,000,000, to remain available until expended.
                                 ______
                                 
  SA 731. Mr. VITTER submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 64, between lines 15 and 16, insert the following:
       Section 23_. (a) Using funds made available in Chapter 3 
     under Title II of Public Law 109-234 (120 Stat. 453), under 
     the heading ``Investigations'', within three months after the 
     date of enactment of this Act, the Secretary of the Army, in 
     consultation with other agencies and the State of Louisiana 
     shall submit to Congress a final report of the Chief of 
     Engineers recommending a comprehensive plan to install a 
     permanent storm surge and intrusion barrier on the lower 
     Mississippi River Gulf-outlet and to restore associated 
     structural and non-structural hurricane and storm surge 
     reduction in this region to ensure the level of protection 
     necessary to achieve the certification required for the 100-
     year level of flood protection in accordance with the 
     national flood insurance program under the base flood 
     elevations in existence at the time of construction of the 
     enhancements as part of the Lake Pontchartrain and Vicinity 
     Louisiana project as described under the heading ``Flood 
     Control and Coastal Emergencies'', in chapter 3 of Public Law 
     109-148: Provided, That the plan shall incorporate and build 
     upon the Interim Mississippi River Gulf Outlet Deep-Draft De-
     Authorization Report submitted to Congress in December 2006 
     pursuant to Public Law 109-234.
                                 ______
                                 
  SA 732. Ms. LANDRIEU submitted an amendment intended to be proposed 
by her to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the appropriate place in title II Chapter 3 General 
     Provisions, insert the following:
       Section _. The Chief of Engineers shall investigate the 
     overall technical advantages, disadvantages and operational 
     effectiveness of operating the new pumping stations at the 
     mouths of the 17th Street, Orleans Avenue and London Avenue 
     canals in the New Orleans area directed for construction in 
     Public Law 109-234 concurrently or in series with existing 
     pumping stations serving these canals and the advantages, 
     disadvantages and technical operational effectiveness of 
     removing the existing pumping stations and configuring the 
     new pumping stations and associated canals to handle all 
     needed discharges: Provided, That the analysis should be 
     conducted at Federal expense: Provided further, that the 
     analysis shall be completed and furnished to the Congress not 
     later than three months after enactment of this Act.
                                 ______
                                 
  SA 733. Ms. LANDRIEU submitted an amendment intended to be proposed 
by her to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows;

       On page 59, between lines 23 and 24, insert the following:


                  ECONOMIC DEVELOPMENT ADMINISTRATION

        For an additional amount for the Economic Development 
     Administration, $175,000,000, to remain available until 
     expended, for use in providing grants to the Port of New 
     Orleans to relocate public facilities located along the 
     Mississippi River Gulf Outlet that are adversely affected by 
     the closing of the Mississippi River Gulf Outlet: Provided, 
     That the amount provided under this heading is designated as 
     an emergency requirement pursuant to section 402 of H. Con. 
     Res. 95 (109th Congress).
                                 ______
                                 
  SA 734. Mr. SANDERS submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows;

       At the end of title III, add the following:


         NO AUTHORITY TO INITIATE MILITARY ACTION AGAINST IRAN

       Sec. 4104. No provision of this Act, the Authorization for 
     Use of Military Force (Public Law 107-40; 50 U.S.C. 1541 
     note), or the Authorization for Use of Military Force Against 
     Iraq Resolution of 2002 (Public Law 107-243; 50 U.S.C. 1541 
     note), may be construed as granting authority to the 
     President to initiate military action against Iran.
                                 ______
                                 
  SA 735. Mr. SANDERS submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for

[[Page S3902]]

the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows;

       At the end of title III, add the following:


   PROHIBITION ON USE OF FUNDS TO INITIATE OFFENSIVE MILITARY ACTION

       Sec. 4104. None of the funds appropriated or otherwise made 
     available by this Act may be obligated or expended to 
     initiate offensive military action against any country, 
     including Iran, that is not authorized by law.
                                 ______
                                 
  SA 736. Mr. SANDERS submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows;

       At the end of title III, add the following:


  SENSE OF CONGRESS REGARDING INITIATING MILITARY ACTION AGAINST IRAN

       Sec. 4104. It is the sense of Congress that--
       (1) initiating military action against Iran without 
     congressional approval does not fall within the President's 
     ``Commander in Chief'' powers under article II, section 2, of 
     the Constitution of the United States;
       (2) the Authorization for Use of Military Force (Public Law 
     107-40; 50 U.S.C. 1541 note), approved in response to the 
     terrorist attacks of September 11, 2001, does not explicitly 
     or implicitly extend to authorizing military action against 
     Iran, including over its nuclear program;
       (3) the Authorization for Use of Military Force Against 
     Iraq Resolution of 2002 (Public Law 107-243; 50 U.S.C. 1541 
     note) does not explicitly or implicitly extend to authorizing 
     military action against Iran, including over its nuclear 
     program; and
       (4) seeking congressional authority prior to taking 
     military action against Iran is not discretionary, but is a 
     legal and constitutional requirement.
                                 ______
                                 
  SA 737. Mr. SANDERS (for himself, Mr. Reed, Mr. Bingaman, Mr. 
Menendez, Mr. Kerry, Mr. Harkin, Mr. Wyden, Mrs. Clinton, and Mr. 
Sununu) submitted an amendment intended to be proposed by him to the 
bill H.R. 1591, making emergency supplemental appropriations for the 
fiscal year ending September 30, 2007, and for other purposes; which 
was ordered to lie on the table; as follows;



 =========================== NOTE =========================== 

  
  On page S3902, March 27, 2007, the following appears: SA 737. 
Mr. SANDERS submitted an amendment
  
  The online version has been corrected to read: SA 737. Mr. 
SANDERS (for himself, Mr. Reed, Mr. Bingaman, Mr. Menendez, Mr. 
Kerry, Mr. Harkin, Mr. Wyden, Mrs. Clinton, and Mr. Sununu) 
submitted an amendment


 ========================= END NOTE ========================= 

       On page 99, line 4, strike ``ties'' and insert ``ties: 
     Provided further, That $242,200,000 of the amount provided 
     shall be used for the weatherization assistance program of 
     the Department of Energy''.
                                 ______
                                 
  SA 738. Mr. BIDEN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows;

       At the appropriate place, insert the following:

               TITLE VI--FUNDING FOR GLOBAL WAR ON TERROR

     SEC. 601. FINDINGS.

       The Congress finds the following:
       (1) It is estimated that the top 1 percent of income 
     earners in the United States will receive at total of $715 
     billion in tax cuts between 2001 and 2010 under current law.
       (2) It is estimated that in the single year 2009, tax cuts 
     for the top 1 percent of income earners will total over $94 
     billion.
       (3) To date all of the funds for military operations in 
     Iraq and Afghanistan have been designated as emergency 
     spending.
       (4) Operations in Iraq alone have now lasted longer than 
     World War II and are not ``unanticipated uncontrollable 
     expenditures'' as defined by the Congressional Budget Act.

     SEC. 602. SENSE OF THE SENATE.

       It is the sense of the Senate that in order to fund the 
     operations of the Government under chapter 3 of title I of 
     this Act, including $1,500,000,000 for mine resistant ambush 
     protected vehicles, the Committee on Finance of the Senate 
     should report to the Senate not later than 30 days after the 
     date of the enactment of this Act legislation which increases 
     revenues to the Treasury in the amount of $93,500,000,000 
     during taxable years 2007 through 2011 by reducing scheduled 
     and existing income tax reductions enacted since taxable year 
     2001 with respect to the top 1 percent of income earners.
                                 ______
                                 
  SA 739. Mr. BIDEN (for himself, Mr. Kennedy, Mr. Kerry, Mr. Durbin, 
and Mr. Pryor) submitted an amendment intended to be proposed by him to 
the bill H.R. 1591, making emergency supplemental appropriations for 
the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of chapter 3 of title I, add the following:

     SEC. 1316. ADDITIONAL AMOUNT FOR PROCUREMENT, MARINE CORPS, 
                   FOR ACCELERATION OF PROCUREMENT OF ADDITIONAL 
                   2,500 MINE RESISTANT AMBUSH PROTECTED VEHICLES 
                   FOR THE ARMED FORCES.

       (a) Additional Amount.--The amount appropriated by this 
     chapter under the heading ``Procurement, Marine Corps'' is 
     hereby increased by $1,500,000,000, with the amount of the 
     increase to be available to the Marine Corps for the 
     procurement of an additional 2,500 Mine Resistant Ambush 
     Protected (MRAP) vehicles for the regular and reserve 
     components of the Armed Forces by not later than December 31, 
     2007.
       (b) Supplement Not Supplant.--The amount available under 
     subsection (a) for the procurement of vehicles described in 
     that subsection is in addition to any other amounts available 
     under this chapter for that purpose.
                                 ______
                                 
  SA 740. Mr. CASEY submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of subtitle A of title IV, add the following:

     SEC. 4__. DAIRY LOSSES.

       The Secretary shall use such funds of the Commodity Credit 
     Corporation as are necessary to make payments to producers on 
     a dairy farm in the State of Pennsylvania in the amount of 
     $2.50 per hundredweight of milk produced by the dairy 
     producers during the period beginning on August 1, 2006, and 
     ending on February 28, 2007.
                                 ______
                                 
  SA 741. Mr. KENNEDY submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

                       TITLE V--FAIR MINIMUM WAGE

     SEC. 500. SHORT TITLE.

       This title may be cited as the ``Fair Minimum Wage Act of 
     2007''.

     SEC. 501. MINIMUM WAGE.

       (a) In General.--Section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to 
     read as follows:
       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $5.85 an hour, beginning on the 60th day after the 
     date of enactment of the Fair Minimum Wage Act of 2007;
       ``(B) $6.55 an hour, beginning 12 months after that 60th 
     day; and
       ``(C) $7.25 an hour, beginning 24 months after that 60th 
     day;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 60 days after the date of enactment of this 
     Act.

     SEC. 502. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH 
                   OF THE NORTHERN MARIANA ISLANDS.

       (a) In General.--Section 6 of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of 
     the Northern Mariana Islands.
       (b) Transition.--Notwithstanding subsection (a), the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--
       (1) $3.55 an hour, beginning on the 60th day after the date 
     of enactment of this Act; and
       (2) increased by $0.50 an hour (or such lesser amount as 
     may be necessary to equal the minimum wage under section 
     6(a)(1) of such Act), beginning 6 months after the date of 
     enactment of this Act and every 6 months thereafter until the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under this subsection is equal to the minimum 
     wage set forth in such section.
                                 ______
                                 
  SA 742. Mr. BAUCUS submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows;

       On page 35, line 3, insert after ``law'' the following: ``: 
     Provided, That of the funds appropriated under this heading, 
     up to $1,900,000 may be available for the construction of a 
     Deployment Processing Facility for the Montana Air National 
     Guard''.
                                 ______
                                 
  SA 743. Mr. LAUTENBERG submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

      SEC. . FAA PERSONNEL MANAGEMENT SYSTEM ARBITRATION.

       Section 40122(a) of title 49, United States Code, is 
     amended--
       (1) by striking the second and third sentences of paragraph 
     (2);
       (2) by redesignating paragraphs (3) and (4) as paragraphs 
     (4) and (5), respectively; and
       (3) by inserting after paragraph (2) the following:
       ``(3) Arbitration.--
       ``(A) In general.--If the services of the Federal Mediation 
     and Conciliation Service under paragraph (2) do not lead to 
     an agreement, the Federal Service Impasses Panel shall assert 
     jurisdiction over the issues in controversy in accordance 
     with subsection (g)(2)(C) and order binding arbitration.
       ``(B) Arbitration board.--The Panel shall appoint an 
     arbitration board composed of 3

[[Page S3903]]

     professional private arbitrators with Federal sector 
     experience. The Executive Director of the Panel shall request 
     a list of not fewer than 15 arbitrators from the Director of 
     the Federal Mediation and Conciliation Service. Each party 
     shall select one arbitrator and the Executive Director of the 
     Panel shall select the third and final member of the 
     arbitration board.
       ``(C) Ratification and approval.--In accordance with 
     subsection (g)(2)(C), upon reaching agreement or at the 
     conclusion of the binding arbitration, the final agreement 
     shall be subject to ratification by the exclusive 
     representative, upon request, and approval by the head of the 
     agency.
       ``(D) Enforcement actions.--Each United States district 
     court and each United States court of a place subject to the 
     jurisdiction of the United States shall have jurisdiction of 
     any action brought to enforce this paragraph. Upon the 
     application of any exclusive bargaining representative, any 
     changes implemented in the personnel management system by the 
     Administrator after July 9, 2005, without the agreement of 
     the exclusive bargaining representative and before the 
     agreement ratified and approved under subparagraph (C) takes 
     effect shall be reversed and the status quo ante shall be 
     restored until the date certified by the exclusive bargaining 
     representative and the Administrator as the date on which the 
     ratified and approved agreement takes effect.''
                                 ______
                                 
  SA 744. Ms. STABENOW submitted an amendment intended to be proposed 
by her to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       In section 402, strike paragraph (2) and insert the 
     following:
       (2) Applicable crop.--The term ``applicable crop'' means--
       (A) 1 or more crops planted, or prevented from being 
     planted, during, as elected by the producers on a farm, 1 
     of--
       (i) the 2005 crop year;
       (ii) the 2006 crop year; or
       (iii) that part of the 2007 crop year that takes place 
     before the end of the applicable period; and
       (B) that part of the 2004 crop of sugar beets that was 
     damaged during calendar year 2005.

                                 ______
                                 
  SA 745. Mr. PRYOR submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of chapter 5 of title I, add the following:

     SEC. 1503. DOMESTIC PREPAREDNESS EQUIPMENT TECHNICAL 
                   ASSISTANCE PROGRAM.

       Of the amount appropriated or otherwise made available by 
     this chapter under the heading ``state and local program'' 
     and available under that heading for regional grants and 
     technical assistance, $5,000,000 shall be available for the 
     Domestic Preparedness Equipment Technical Assistance Program 
     (DPETAP).
                                 ______
                                 
  SA 746. Mr. TESTER submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 94, between lines 10 and 11, insert the following:
       Sec. 2904. (a) Additional Amount for Medical Services.--The 
     amount appropriated or otherwise made available by this 
     chapter under the heading ``medical services'' is increased 
     by $127,000,000.
       (b) Availability.--Of the amount appropriated or otherwise 
     made available by this chapter under the heading ``medical 
     services'', as increased by subsection (a), $127,000,000 
     shall be available for increasing the reimbursement rate for 
     beneficiary travel described in section 111 of title 38, 
     United States Code.

                                 ______
                                 
  SA 747. Mr. PRYOR submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 25, strike line 11 and all that follows through 
     page 26, line 24 and insert:
       (b) Classified Campaign Plan.--The President shall create a 
     classified campaign plan for Iraq, including strategic and 
     operational benchmarks and projected redeployment dates of US 
     forces ITom Iraq as those benchmarks are met.
       (c) Commencement of Phased Redeployment of United States 
     Forces From Iraq.--
       (1) Transition of mission.--The President shall promptly 
     transition the mission of United States forces in Iraq to the 
     limited purposes set forth in paragraph (2)
       (2) Commencement of phased redeployment from iraq.--The 
     President shall commence the phased redeployment of United 
     States forces from Iraq pursuant to the plan required in 
     subsection
       (b) except for the limited number that are essential for 
     the following Purposes:
       (A) Protecting United States and coalition personnel and 
     infrastructure.
       (B) Training and equipping Iraqi forces.
       (C) Conducting targeted counter-terrorism operations.
       (3) Comprehensive strategy.--Paragraph (2) shall be 
     implemented as part of a comprehensive diplomatic, political, 
     and economic strategy that includes sustained engagement with 
     Iraq's neighbors and the international community for the 
     purpose of working collectively to bring stability to Iraq.
       (4) Reports required.--Not later than 60 days after the 
     date of enactment of this Act, the President shall submit the 
     plan required in subsection (b), and every 90 days 
     thereafter, provide classified reports to Congress on the 
     progress made in transitioning the mission of United States 
     forces in Iraq and implementing the phased redeployment of 
     United States forces from Iraq as required by subsection (b).
       (d) Benchmarks for the Government of Iraq.--
                                 ______
                                 
  SA 748. Mr. CHAMBLISS submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ____. AUTHORITY TO WAIVE ANNUAL LIMITATIONS ON TOTAL 
                   COMPENSATION PAID TO CERTAIN FEDERAL CIVILIAN 
                   EMPLOYEES.

       (a) Waiver Authority.--For pay earned during calendar years 
     2006 and 2007 and notwithstanding section 5547 of title 5, 
     United States Code, the head of an executive agency or the 
     head of a military department may waive, subject to 
     subsection (c), the limitation established in that section 
     for total compensation (including limitations on the 
     aggregate of basic pay and premium pay payable in a calendar 
     year) of an employee who performs work while engaged in 
     repair, recovery, restoration, and other authorized actions 
     associated with the destruction caused by natural disasters 
     in Louisiana, Mississippi, and Alabama.
       (b) Pay Earned in 2006 but Paid in 2007.--With regard to 
     subsection (c), to the extent that a waiver granted under 
     subsection (a) results in additional pay for calendar year 
     2006 that is paid in calendar year 2007, such additional pay 
     paid in calendar year 2007 shall not be used to compute the 
     total maximum compensation for calendar year 2007.
       (c) Maximum Total Compensation.--The total compensation of 
     an employee whose pay is covered by a waiver under subsection 
     (a) may not exceed $200,000 in calendar year 2006 and 
     $212,000 in calendar year 2007.
       (d) Additional Pay Not Considered Basic Pay.--To the extent 
     that a waiver under subsection (a) results in payment of 
     additional premium pay of a type that is normally creditable 
     as basic pay for retirement or any other purpose, such 
     additional pay--
       (1) shall not be considered to be basic pay for any 
     purpose; and
       (2) shall not be used in computing a lump sum payment for 
     accumulated and accrued annual leave under section 5551 of 
     title 5, United States Code.
                                 ______
                                 
  SA 749. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 63, strike lines 14 through 19.
                                 ______
                                 
  SA 750. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of title III, insert the following:


                               RESCISSION

       Sec. __. Five percent of each amount appropriated under the 
     Continuing Appropriations Resolution, 2007 (as amended by the 
     Revised Continuing Appropriations Resolution, 2007 (Public 
     Law 110-5)) is rescinded, except that none of the amount 
     appropriated under the following provisions of the Continuing 
     Appropriations Resolution, 2007 shall be rescinded:
       (1) Section 101(a)(7).
       (2) Chapter 2 or 8 of title II.
                                 ______
                                 
  SA 751. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       In the second sentence of the matter under the heading 
     ``low-income home energy assistance'' in the matter under the 
     heading ``Administration for Children and Families'' in the 
     matter under the heading ``DEPARTMENT OF HEALTH AND HUMAN 
     SERVICES'', in chapter 7 of title II (relating to amounts for 
     section 2604(e) of the Low-Income Home Energy Assistance Act 
     of 1981),

[[Page S3904]]

     strike ``$320,000,000'' and insert the following 
     ``$320,000,000: Provided,  That $80,000,000 of that 
     $320,000,000 shall be transferred to the Secretary of the 
     Interior, for the account entitled `payments in lieu of 
     taxes', to implement sections 6901 through 6907 of title 31, 
     United States Code''.
                                 ______
                                 
  SA 752. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 3, strike lines 13 through 22 and insert the 
     following:

             salaries and expenses, united states attorneys

       For an additional amount for ``Salaries and Expenses, 
     United States Attorneys'', $17,500,000, to remain available 
     until September 30, 2008.

                     United States Marshals Service

         salaries and expenses, united states marshals service

       For an additional amount for ``Salaries and Expenses, 
     United States Marshals Service'', $37,500,000, to remain 
     available until September 30, 2008: Provided, That of the 
     amounts made available in this Act for ``Educational and 
     Cultural Exchange Programs'', $25,000,000 is rescinded.
                                 ______
                                 
  SA 753. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 3, strike lines 13 through 22 and insert the 
     following:

             salaries and expenses, united states attorneys

       For an additional amount for ``Salaries and Expenses, 
     United States Attorneys'', $17,500,000, to remain available 
     until September 30, 2008: Provided, That $12,500,000 of such 
     amount shall be used by the United States Attorneys' Offices 
     to prosecute child pornographers and individuals who exploit 
     children.

                     United States Marshals Service

         salaries and expenses, united states marshals service

       For an additional amount for ``Salaries and Expenses, 
     United States Marshals Service'', $37,500,000, to remain 
     available until September 30, 2008: Provided, That 
     $12,500,000 of such amount shall be used by the United States 
     Marshals Service to carry out the Adam Walsh Child Protection 
     and Safety Act of 2006 (Public Law 109-248; 120 Stat. 587), 
     and the amendments made by that Act, and to track down 
     unregistered convicted sex offenders: Provided Further, That 
     of the amounts made available in this Act for ``Educational 
     and Cultural Exchange Programs'', $25,000,000 is rescinded.
                                 ______
                                 
  SA 754. Mr. SHELBY (for himself and Ms. Mikulski) submitted an 
amendment intended to be proposed by him to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       On page 60, line 4, strike the period and insert the 
     following ``: Provided, that of the amount made available 
     under this heading, $20,000,000 shall be for the Lunar 
     Precursor and Robotic Program.''
                                 ______
                                 
  SA 755. Mr. LEAHY (for himself and Mr. Specter) submitted an 
amendment intended to be proposed by him to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the appropriate place, insert the following:

                       CHAPTER __--THE JUDICIARY

                   Supreme Court of the United States

                         salaries and expenses

       For an additional amount for ``salaries and expenses'' for 
     the salaries of Justices of the Supreme Court, $27,000, 
     Provided, That the amount provided under this heading is 
     designated as an emergency requirement pursuant to section 
     402 of H. Con. Res. 95 (109th Congress).

         United States Court of Appeals for the Federal Circuit

                         salaries and expenses

       For an additional amount for ``salaries and expenses'' for 
     the salaries of the judges of the United States Court of 
     Appeals for the Federal Circuit, $29,000, Provided, That the 
     amount provided under this heading is designated as an 
     emergency requirement pursuant to section 402 of H. Con. Res. 
     95 (109th Congress).

               United States Court of International Trade

                         salaries and expenses

       For an additional amount for ``salaries and expenses'' for 
     the salaries of the judges of the United States Court of 
     International Trade, $18,000, Provided, That the amount 
     provided under this heading is designated as an emergency 
     requirement pursuant to section 402 of H. Con. Res. 95 (109th 
     Congress).

    Courts of Appeals, District Courts, and Other Judicial Services

                         salaries and expenses

       For an additional amount for ``salaries and expenses'' for 
     the salaries of the judges of the Courts of Appeals and 
     District Courts, $5,279,000, Provided, That the amount 
     provided under this heading is designated as an emergency 
     requirement pursuant to section 402 of H. Con. Res. 95 (109th 
     Congress).

                   General Provisions--The Judiciary

       Sec. ____. (a) Pursuant to section 140 of Public Law 97-92, 
     justices and judges of the United States are authorized 
     during fiscal year 2007 to receive a salary adjustment in 
     accordance with section 461 of title 28, United States Code.
       (b) This section shall be effective as of January 1, 2007, 
     and shall apply only with respect to the salaries of justices 
     and judges for whom appropriations are made available under 
     this chapter, notwithstanding section 603 of title 28, United 
     States Code, or similar provision of law.
                                 ______
                                 
  SA 756. Mrs. LANDRIEU submitted an amendment intended to be proposed 
by her to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of chapter 3 of title I, add the following:

     SEC. __. ADDITIONAL AMOUNT FOR DEFENSE HEALTH PROGRAM.

       The amount appropriated or otherwise made available by this 
     chapter under the heading ``DEFENSE HEALTH PROGRAM'' is 
     hereby increased by $20,000,000, with the amount of the 
     increase to be available to provide for:
       (1) The development of a field-deployable system which 
     would mitigate the impact of traumatic brain injury, such as 
     deployable ice water immersion cooling system.
       (2) The development of an ice water immersion cooling 
     system to treat traumatic brain injuries, suitable for use in 
     a stationary medical treatment center.
                                 ______
                                 
  SA 757. Mr. BYRD (for himself and Mr. Inouye) submitted an amendment 
intended to be proposed by him to the bill H.R. 1591, making emergency 
supplemental appropriations for the fiscal year ending September 30, 
2007, and for other purposes; which was ordered to lie on the table; as 
follows:

       On page 11, between lines 4 and 5, insert the following:


                              (rescission)

       Of the amount appropriated by title III of division A of 
     Public Law 109-148 under the heading ``Other Procurement 
     Army'', $6,250,000 is hereby rescinded.
       On page 34, line 5, strike ``$1,261,390,000'' and insert 
     ``$1,267,640,000''.
                                 ______
                                 
  SA 758. Mr. INOUYE submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of chapter 3 of title I, add the following:

     SEC. 1316. STUDY ON REFORM OF NATIONAL SECURITY SYSTEM.

       Of the amount appropriated or otherwise made available by 
     this chapter under the heading ``Operation and Maintenance, 
     Defense-Wide'', up to $4,000,000 may be available for a 
     detailed, objective study of the current national security 
     system in order to identify the reforms to the system that 
     will be required to assure that the system possesses the 
     capabilities required to meet the future national security 
     interests of the United States.
                                 ______
                                 
  SA 759. Mrs. CLINTON (for herself and Mr. Schumer) submitted an 
amendment intended to be proposed by her to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the appropriate place in chapter 7 of title II, insert 
     the following:
       Sec. __. For an additional amount to enable the Centers for 
     Disease Control and Prevention to carry out activities under 
     section 5011(b) of the Department of Defense, Emergency 
     Supplemental Appropriations to Address Hurricanes in the Gulf 
     of Mexico, and Pandemic Influenza Act, 2006 (Public law 109-
     148), and in addition to giving first priority to the 
     entities described in such section, also including first 
     priority for the World Trade Center Environmental Health 
     Center at Bellevue Hospital, $296,700,000 to remain available 
     until September 30, 2008.
                                 ______
                                 
  SA 760. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30,

[[Page S3905]]

2007, and for other purposes; which was ordered to lie on the table; as 
follows:

       On page 83, strike lines 14 through 20, and insert the 
     following:
       ``(C) Limitation on use of funds.--A State shall not use 
     amounts allotted under this paragraph for expenditures for 
     providing child health assistance or other health benefits 
     coverage for any nonpregnant adult.
       ``(D) Appropriation; allotment authority.--For the purpose 
     of providing additional allotments to remaining shortfall 
     States under this paragraph there is appropriated, out of any 
     funds in the Treasury not otherwise appropriated, such sums 
     as are necessary for fiscal year 2007.''.
                                 ______
                                 
  SA 761. Mr. ENSIGN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 83, strike lines 14 through 20, and insert the 
     following:
       ``(C) Limitation on use of funds.--A State shall not use 
     amounts allotted under this paragraph for expenditures for 
     providing child health assistance or other health benefits 
     coverage for any nonpregnant childless adult.
       ``(D) Appropriation; allotment authority.--For the purpose 
     of providing additional allotments to remaining shortfall 
     States under this paragraph there is appropriated, out of any 
     funds in the Treasury not otherwise appropriated, such sums 
     as are necessary for fiscal year 2007.''.
                                 ______
                                 
  SA 762. Mr. VOINOVICH (for himself, Mr. Inhofe, Mr. Warner, Mrs. 
Hutchison, Mr. Craig, Mr. Coburn, and Mr. Enzi) submitted an amendment 
intended to be proposed by him to the bill H.R. 1591, making emergency 
supplemental appropriations for the fiscal year ending September 30, 
2007, and for other purposes; which was ordered to lie on the table; as 
follows:

       On page 33, strike lines 11 through 23.
                                 ______
                                 
  SA 763. Mr. BROWNBACK (for himself and Mr. Roberts) submitted an 
amendment intended to be proposed by him to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the appropriate place, insert the following:


IMPORTANCE OF OMITTING PROVISIONS THAT THREATEN PASSAGE OF LEGISLATION 
           FUNDING THE IMPLEMENTATION OF BRAC RECOMMENDATIONS

       Sec. __. (a) The Senate makes the following findings:
       (1) Congress and President George W. Bush approved the 
     final recommendations of the Defense Base Closure and 
     Realignment Commission under the 2005 round of defense base 
     closure and realignment.
       (2) These recommendations propose major changes in the 
     positioning of United States military personnel.
       (3) The Department of Defense is moving rapidly to 
     implement these recommendations.
       (4) The communities near military installations that are 
     slated to receive major troop increases have already invested 
     time and capital in making preparations for upcoming 
     increases in population.
       (5) Funding these recommendations on an annual basis is 
     absolutely necessary for their implementation and the 
     economic confidence of the communities that are expecting 
     increases in population.
       (b) It is the sense of the Senate that Congress should not 
     include provisions that provoke veto threats from the 
     President in bills that appropriate funds for the 
     implementation of recommendations of the Base Closure and 
     Realignment Commission.
                                 ______
                                 
  SA 764. Mr. BINGAMAN submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       On page 37, between lines 10 and 11, insert the following:

                       International Commissions

 international boundary and water commission, united states and mexico

                              construction

       For an additional amount for ``Construction'' for the 
     ``International Boundary and Water Commission, United States 
     and Mexico'', $4,300,000, to remain available until expended.
                                 ______
                                 
  SA 765. Mr. SMITH (for himself and Mr. Coleman) submitted an 
amendment intended to be proposed to amendment SA 680 submitted by Mr. 
Kennedy (for himself, Mr. Enzi, Mr. Baucus, and Mr. Grassley) by him to 
the bill H.R. 1591, making emergency supplemental appropriations for 
the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       Beginning on page 32, line 13, strike all through page 39, 
     line 10, and insert the following:

                  Subtitle B--Subchapter S Provisions

     SEC. 521. CAPITAL GAIN OF S CORPORATION NOT TREATED AS 
                   PASSIVE INVESTMENT INCOME.

       (a) In General.--Section 1362(d)(3) is amended by striking 
     subparagraphs (B), (C), (D), (E), and (F) and inserting the 
     following new subparagraph:
       ``(B) Passive investment income defined.--
       ``(i) In general.--Except as otherwise provided in this 
     subparagraph, the term `passive investment income' means 
     gross receipts derived from royalties, rents, dividends, 
     interest, and annuities.
       ``(ii) Exception for interest on notes from sales of 
     inventory.--The term `passive investment income' shall not 
     include interest on any obligation acquired in the ordinary 
     course of the corporation's trade or business from its sale 
     of property described in section 1221(a)(1).
       ``(iii) Treatment of certain lending or finance 
     companies.--If the S corporation meets the requirements of 
     section 542(c)(6) for the taxable year, the term `passive 
     investment income' shall not include gross receipts for the 
     taxable year which are derived directly from the active and 
     regular conduct of a lending or finance business (as defined 
     in section 542(d)(1)).
       ``(iv) Treatment of certain dividends.--If an S corporation 
     holds stock in a C corporation meeting the requirements of 
     section 1504(a)(2), the term `passive investment income' 
     shall not include dividends from such C corporation to the 
     extent such dividends are attributable to the earnings and 
     profits of such C corporation derived from the active conduct 
     of a trade or business.
       ``(v) Exception for banks, etc.--In the case of a bank (as 
     defined in section 581) or a depository institution holding 
     company (as defined in section 3(w)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813(w)(1)), the term `passive 
     investment income' shall not include--

       ``(I) interest income earned by such bank or company, or
       ``(II) dividends on assets required to be held by such bank 
     or company, including stock in the Federal Reserve Bank, the 
     Federal Home Loan Bank, or the Federal Agricultural Mortgage 
     Bank or participation certificates issued by a Federal 
     Intermediate Credit Bank.''.

       (b) Conforming Amendment.--Clause (i) of section 
     1042(c)(4)(A) is amended by striking ``section 
     1362(d)(3)(C)'' and inserting ``section 1362(d)(3)(B)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 522. TREATMENT OF BANK DIRECTOR SHARES.

       (a) In General.--Section 1361 (defining S corporation) is 
     amended by adding at the end the following new subsection:
       ``(f) Restricted Bank Director Stock.--
       ``(1) In general.--Restricted bank director stock shall not 
     be taken into account as outstanding stock of the S 
     corporation in applying this subchapter (other than section 
     1368(f)).
       ``(2) Restricted bank director stock.--For purposes of this 
     subsection, the term `restricted bank director stock' means 
     stock in a bank (as defined in section 581) or a depository 
     institution holding company (as defined in section 3(w)(1) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1)), if 
     such stock--
       ``(A) is required to be held by an individual under 
     applicable Federal or State law in order to permit such 
     individual to serve as a director, and
       ``(B) is subject to an agreement with such bank or company 
     (or a corporation which controls (within the meaning of 
     section 368(c)) such bank or company) pursuant to which the 
     holder is required to sell back such stock (at the same price 
     as the individual acquired such stock) upon ceasing to hold 
     the office of director.
       ``(3) Cross reference.--

``For treatment of certain distributions with respect to restricted 
              bank director stock, see section 1368(f)''.
       (b) Distributions.--Section 1368 (relating to 
     distributions) is amended by adding at the end the following 
     new subsection:
       ``(f) Restricted Bank Director Stock.--If a director 
     receives a distribution (not in part or full payment in 
     exchange for stock) from an S corporation with respect to any 
     restricted bank director stock (as defined in section 
     1361(f)), the amount of such distribution--
       ``(1) shall be includible in gross income of the director, 
     and
       ``(2) shall be deductible by the corporation for the 
     taxable year of such corporation in which or with which ends 
     the taxable year in which such amount in included in the 
     gross income of the director.''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006.
       (2) Special rule for treatment as second class of stock.--
     In the case of any taxable year beginning after December 31, 
     1996, restricted bank director stock (as defined in section 
     1361(f) of the Internal Revenue Code of 1986, as added by 
     this section) shall not be taken into account in determining 
     whether

[[Page S3906]]

     an S corporation has more than 1 class of stock.

     SEC. 523. SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE 
                   RESERVE METHOD OF ACCOUNTING ON BECOMING S 
                   CORPORATION.

       (a) In General.--Section 1361, as amended by this Act, is 
     amended by adding at the end the following new subsection:
       ``(g) Special Rule for Bank Required to Change From the 
     Reserve Method of Accounting on Becoming S Corporation.--In 
     the case of a bank which changes from the reserve method of 
     accounting for bad debts described in section 585 or 593 for 
     its first taxable year for which an election under section 
     1362(a) is in effect, the bank may elect to take into account 
     any adjustments under section 481 by reason of such change 
     for the taxable year immediately preceding such first taxable 
     year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 524. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED 
                   SUBCHAPTER S SUBSIDIARY.

       (a) In General.--Subparagraph (C) of section 1361(b)(3) 
     (relating to treatment of terminations of qualified 
     subchapter S subsidiary status) is amended--
       (1) by striking ``For purposes of this title,'' and 
     inserting the following:
       ``(i) In general.--For purposes of this title,'', and
       (2) by inserting at the end the following new clause:
       ``(ii) Termination by reason of sale of stock.--If the 
     failure to meet the requirements of subparagraph (B) is by 
     reason of the sale of stock of a corporation which is a 
     qualified subchapter S subsidiary, the sale of such stock 
     shall be treated as if--

       ``(I) the sale were a sale of an undivided interest in the 
     assets of such corporation (based on the percentage of the 
     corporation's stock sold), and
       ``(II) the sale were followed by an acquisition by such 
     corporation of all of its assets (and the assumption by such 
     corporation of all of its liabilities) in a transaction to 
     which section 351 applies.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 525. ELIMINATION OF ALL EARNINGS AND PROFITS 
                   ATTRIBUTABLE TO PRE-1983 YEARS FOR CERTAIN 
                   CORPORATIONS.

       In the case of a corporation which is--
       (1) described in section 1311(a)(1) of the Small Business 
     Job Protection Act of 1996, and
       (2) not described in section 1311(a)(2) of such Act,
     the amount of such corporation's accumulated earnings and 
     profits (for the first taxable year beginning after December 
     31, 2006) shall be reduced by an amount equal to the portion 
     (if any) of such accumulated earnings and profits which were 
     accumulated in any taxable year beginning before January 1, 
     1983, for which such corporation was an electing small 
     business corporation under subchapter S of the Internal 
     Revenue Code of 1986.

     SEC. 526. EXPANSION OF QUALIFYING BENEFICIARIES OF AN 
                   ELECTING SMALL BUSINESS TRUST.

       (a) No Look Through for Eligibility Purposes.--Clause (v) 
     of section 1361(c)(2)(B) is amended by adding at the end the 
     following new sentence: ``This clause shall not apply for 
     purposes of subsection (b)(1)(C).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.
                                 ______
                                 
  SA 766. Mr. BIDEN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. PROHIBITION ON COMPETITIVE SOURCING OF CERTAIN 
                   ACTIVITIES AT MEDICAL FACILITIES OF THE 
                   DEPARTMENT OF DEFENSE.

       (a) Prohibition on Competitive Sourcing of Certain 
     Activities at Medical Facilities of the Department of 
     Defense.--
       (1) Prohibition on initiation of competitive sourcing 
     activities at medical facilities of department of defense 
     during period of major military conflict.--
       (A) In general.--Except as provided in paragraph (2), 
     during a period in which the Armed Forces are involved in a 
     major military conflict, the Secretary of Defense shall not 
     take any action under the Office of Management and Budget 
     Circular A-76 or any other similar administrative regulation, 
     directive, or policy--
       (i) to subject work performed by an employee of a medical 
     facility of the Department of Defense or employee of a 
     private contractor of such a medical facility to public-
     private competition; or
       (ii) to convert such employee or the work performed by such 
     employee to private contractor performance.
       (B) Exception to prevent negative impact on provision of 
     services.--Paragraph (1) shall not apply to any action at a 
     medical facility of the Department of Defense if the 
     Secretary of Defense certifies to Congress that not 
     initiating such action during such period would have a 
     negative impact on the provision of services at such military 
     medical facility.
       (2) Study on competitive sourcing activities at medical 
     facilities of department of defense.--The Comptroller General 
     of the United States shall assess the efficiency and 
     advisability of subjecting work performed by an employee of a 
     medical facility of the Department of Defense or a private 
     contractor of such a medical facility to public-private 
     competition, or converting such employee or the work 
     performed by such employee to private contractor performance, 
     under the Office of Management and Budget Circular A-76 or 
     any other similar administrative regulation, directive, or 
     policy.
       (b) Minimum Budget for Medical Services of the Armed Forces 
     During Period of Major Military Conflict.--
       (1) In general.--Except as provided in paragraph (2), if 
     the Armed Forces are involved in a major military conflict at 
     the time the President submits the budget for a fiscal year 
     to Congress, the President shall not include in that budget a 
     total aggregate amount allocated for medical services for the 
     Department of Defense and the Department of Veterans Affairs 
     that is less than the total aggregate amount allocated for 
     such purposes in the budget submitted by the President to 
     Congress for the previous fiscal year.
       (2) Exception.--Paragraph (1) shall not apply if the 
     President--
       (A) certifies to Congress that submitting a total aggregate 
     amount allocated for medical services for the Department of 
     Defense and the Department of Veterans Affairs that is less 
     than that required under paragraph (1) is in the national 
     interest; and
       (B) submits to Congress a report on the reasons for the 
     reduction described by subparagraph (A).
       (c) Limitation on Implementation of Recommendation To Close 
     Walter Reed Army Medical Center.--
       (1) Limitation on implementation of recommendations.--The 
     Secretary of Defense shall not take any action to implement 
     the recommendations of the Defense Base Closure and 
     Realignment Commission under the 2005 round of defense base 
     closure and realignment relating to the transfer of medical 
     services from Walter Reed Army Medical Center to the National 
     Naval Medical Center at Bethesda and at Fort Belvoir during 
     the period beginning on the date of the enactment of this Act 
     and ending on the date that is 60 days after the date on 
     which Congress receives the plan required under paragraph 
     (2).
       (2) Plan required.--Not later than one year after the date 
     of the enactment of this Act, the Secretary of Defense shall 
     submit to Congress a plan that includes an assessment of the 
     following:
       (A) The feasibility and advisability of providing current 
     or prospective employees at Walter Reed Army Medical Center a 
     guarantee that their employment will continue for more than 
     two years after the date on which Walter Reed Army Medical 
     Center is closed.
       (B) Detailed construction plans for new medical facilities 
     and family housing at the National Naval Medical Center at 
     Bethesda and at Fort Belvoir to accommodate the transfer of 
     medical services from Walter Reed Army Medical Center to the 
     National Naval Medical Center at Bethesda and at Fort 
     Belvoir.
       (C) The costs, feasibility, and advisability of completing 
     all of the construction planned for the transfer of medical 
     services from Walter Reed Army Medical Center to the National 
     Naval Medical Center at Bethesda and at Fort Belvoir before 
     any patients are transferred to such new facilities from 
     Walter Reed Army Medical Center as a result of the 
     recommendations of the Defense Base Closure and Realignment 
     Commission under the 2005 round of defense base closure and 
     realignment.
       (d) Improving Case Management Services for Members of the 
     Armed Forces.--
       (1) Case managers.--
       (A) In general.--The Secretary of Defense shall assign at 
     least one case manager for every 20 recovering servicemembers 
     to assist in the recovery of such recovering servicemember.
       (B) Minimum contact.--The Secretary of Defense shall ensure 
     that case managers meet with each of their assigned 
     recovering servicemembers not less than once per week.
       (C) Training.--The Secretary of Defense shall ensure that 
     case managers of the Department of Defense are familiar with 
     the disability and discharge system of the Department of 
     Defense and that such case managers are able to assist 
     recovering servicemembers complete necessary and related 
     forms.
       (2) Recovering servicemember.--In this subsection, the term 
     ``recovering servicemember'' means a member of the Armed 
     Forces, including a member of the National Guard or a 
     Reserve, who is undergoing medical treatment, recuperation, 
     or therapy, or is otherwise in medical hold or holdover 
     status, for an injury, illness, or disease incurred or 
     aggravated while on active duty in the Armed Forces.
       (e) Screening for Traumatic Brain Injury.--
       (1) Screening required.--The Secretary of Defense shall 
     screen every member of the Armed Forces returning from 
     deployment in Operation Iraqi Freedom or Operation Enduring 
     Freedom for traumatic brain injury upon the return of each 
     such member.
       (2) Studies on treating traumatic brain injury as 
     presumptive condition for disability compensation.--

[[Page S3907]]

       (A) Study by secretary of defense.--
       (i) In general.--The Secretary of Defense shall conduct a 
     study on the feasability and advisability of treating 
     traumatic brain injury as a presumptive condition for members 
     of the Armed Forces who served in Operation Iraqi Freedom or 
     Operation Enduring Freedom for the qualification for 
     disability compensation under laws administered by the 
     Secretary of Defense.
       (ii) Report.--Not later than 180 days after the date of the 
     enactment of this Act, the Secretary of Defense shall submit 
     to Congress a report on the results of the study required by 
     clause (i).
       (B) Study by secretary of veterans affairs.--
       (i) In general.--The Secretary of Veterans Affairs shall 
     conduct a study on the feasability and advisability of 
     treating traumatic brain injury as a presumptive condition 
     for the qualification for veterans who served as members of 
     the Armed Forces in Operation Iraqi Freedom or Operation 
     Enduring Freedom for disability compensation under laws 
     administered by the Secretary of Veterans Affairs.
       (ii) Report.--Not later than 180 days after the date of the 
     enactment of this Act, the Secretary of Veterans Affairs 
     shall submit to Congress a report on the results of the study 
     required by clause (i).
       (C) Study by director of national institutes of health.--
       (i) In general.--The Director of the National Institutes of 
     Health shall conduct a study on traumatic brain injury, 
     including the detection of traumatic brain injury and the 
     measurement and classification of the severity of traumatic 
     brain injury.
       (ii) Report.--Not later than 180 days after the date of the 
     enactment of this Act, the Director of the National 
     Institutes of Health shall submit to Congress a report on the 
     results of the study required by clause (i).
       (f) Requiring Medical Records Management Systems of 
     Department of Defense To Communicate With Medical Records 
     Management Systems of Department of Veterans Affairs.--
       (1) In general.--Not later than two years after the date of 
     the enactment of this Act, the Secretary of Defense shall 
     ensure that the medical records management systems of the 
     Department of Defense are capable of transmitting medical 
     records to and receiving medical records from the medical 
     records management systems of the Department of Veterans 
     Affairs electronically.
       (2) Initiation of activities.--Not later than one year 
     after the date of the enactment of this Act, the Secretary of 
     Defense shall begin any activities required to meet the 
     requirements of paragraph (1).
       (g) Department of Veterans Affairs Assessment of Long-Term 
     Care Needs of Veterans.--
       (1) Assessment of long-term care needs.--The Secretary of 
     Veterans Affairs shall assess the current ability of the 
     Department of Veterans Affairs to meet long-term care needs 
     of veterans during the 50-year period that begins on the date 
     of the enactment of this Act.
       (2) Determination of actions required to meet long-term 
     care needs.--The Secretary of Veterans Affairs shall 
     determine what actions are required to ensure that the needs 
     described in paragraph (1) are satisfied.
       (3) Report required.--Not later than one year after the 
     date of the enactment of this Act, the Secretary of Veterans 
     Affairs shall submit to Congress a report on the assessment 
     required in paragraph (1) and the determination required in 
     paragraph (2).
                                 ______
                                 
  SA 767. Mr. KENNEDY (for himself, Mr. Lieberman, Mr. Leahy, Mr. 
Smith, and Mr. Levin) submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. TEMPORARY INCREASE IN NUMBER OF IRAQI AND AFGHAN 
                   TRANSLATORS IN THE UNITED STATES ARMED FORCES 
                   ELIGIBLE FOR SPECIAL IMMIGRANT STATUS.

       Section 1059(c) of the National Defense Authorization Act 
     for Fiscal Year 2006 (8 U.S.C. 1101 note) is amended--
       (1) in paragraph (1), by striking ``The total'' and 
     inserting ``Except as provided under paragraph (3), the 
     total'';
       (2) in paragraph (2), by inserting ``and shall not be 
     counted against the numerical limitations under sections 
     202(a) and 203(b)(4) of the Immigration and Nationality Act 
     (8 U.S.C. 1152(a) and 1153(b)(4))'' before the period at the 
     end; and
       (3) by adding at the end the following:
       ``(3) Additional visas available for fiscal year 2007.--
     Notwithstanding paragraph (1), up to 500 principal aliens may 
     be provided special immigrant status under this section 
     during fiscal year 2007.''.
                                 ______
                                 
  SA 768. Mrs. CLINTON (for herself and Mr. Schumer) submitted an 
amendment intended to be proposed by her to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the appropriate place in chapter 7 of title II, insert 
     the following:
       Sec. __. For an additional amount to enable the Centers for 
     Disease Control and Prevention to carry out activities under 
     section 5011(b) of the Department of Defense, Emergency 
     Supplemental Appropriations to Address Hurricanes in the Gulf 
     of Mexico, and Pandemic Influenza Act, 2006 (Public Law 109-
     148), $296,700,000 to remain available until expended.
                                 ______
                                 
  SA 769. Ms. SNOWE submitted an amendment intended to be proposed by 
her to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 70, between lines 5 and 6, insert the following:
       (c) Catastrophic Disaster Areas.--Section 3(p) of the Small 
     Business Act (15 U.S.C. 632(p)) is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (F), as added by subsection (a) of this 
     section, by striking the period at the end and inserting ``; 
     or''; and
       (B) by adding at the end the following:
       ``(G) catastrophic disaster areas, for a period of not 
     longer than 3 years, as determined by the Administrator.''; 
     and
       (2) in paragraph (4), by adding at the end the following:
       ``(E) Catastrophic disaster area.--The term `catastrophic 
     disaster area' means an area--
       ``(i) affected by--

       ``(I) a disaster determined to be an incident of national 
     significance under Homeland Security Presidential Directive-
     5, or any successor to that directive; or
       ``(II) a catastrophic incident, as that term is defined in 
     section 501 of the Homeland Security Act of 2002 (6 U.S.C. 
     311); and

       ``(ii) for which the Administrator determines that 
     designation as a HUBZone would substantially contribute to 
     the reconstruction and recovery effort in that area.''.
                                 ______
                                 
  SA 770. Ms. SNOWE (for herself and Mr. Kohl) submitted an amendment 
intended to be proposed by her to the bill H.R. 1591, making emergency 
supplemental appropriations for the fiscal year ending September 30, 
2007, and for other purposes; which was ordered to lie on the table; as 
follows:

       At the appropriate place, insert the following:

     SEC. ___. CLARIFICATION OF ELIGIBLE CONTRIBUTIONS IN 
                   CONNECTION WITH REGIONAL CENTERS RESPONSIBLE 
                   FOR IMPLEMENTING THE OBJECTIVES OF THE HOLLINGS 
                   MANUFACTURING PARTNERSHIP PROGRAM.

       Paragraph (3) of section 25(c) of the National Institute of 
     Standards and Technology Act (15 U.S.C. 278k(c)(3)) is 
     amended to read as follows:
       ``(3) Financial Support.--
       ``(A) In general.--Any nonprofit institution, or group 
     thereof, or consortia of nonprofit institutions, including 
     entities existing on August 23, 1988, may submit to the 
     Secretary an application for financial support under this 
     subsection, in accordance with the procedures established by 
     the Secretary and published in the Federal Register under 
     paragraph (2).
       ``(B) Center contributions.--In order to receive assistance 
     under this section, an applicant for financial assistance 
     under subparagraph (A) shall provide adequate assurances that 
     non-Federal assets obtained from the applicant and the 
     applicant's partnering organizations will be used as a 
     funding source to meet not less than 50 percent of the costs 
     incurred in connection with the activities undertaken to 
     improve the management, productivity, and technological 
     performance of small- and medium-sized manufacturing 
     companies.
       ``(C) Agreements with other entities.--In meeting the 50 
     percent requirement, it is anticipated that a Center will 
     enter into agreements with other entities such as private 
     industry, universities, other Federal agencies, and State 
     governments to accomplish programmatic objectives and access 
     new and existing resources that will further the impact of 
     the Federal investment made on behalf of small- and medium-
     sized manufacturing companies. All non-Federal costs, 
     contributed by such entities and determined by a Center as 
     programmatically reasonable and allocable are includable as a 
     portion of the Center's contribution.
       ``(D) Allocation of legal rights.--Each applicant under 
     subparagraph (A) shall also submit a proposal for the 
     allocation of any legal right associated with any invention 
     that may result from an activity of a Center for which such 
     applicant receives financial assistance under this 
     section.''.
                                 ______
                                 
  SA 771. Ms. SNOWE submitted an amendment intended to be proposed by 
her to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 70, between lines 5 and 6, insert the following:
       (c) Subcontracts.--Section 15 of the Small Business Act (15 
     U.S.C. 640) is amended by adding at the end the following:
       ``(q) Disaster Subcontracting Policy.--As soon as is 
     practicable, the Administrator may issue a policy reflecting 
     the recommendations of the Comptroller General in

[[Page S3908]]

     the report titled `Hurricane Katrina: Agency Contracting 
     Should Be More Complete Regarding Subcontracting 
     Opportunities for Small Businesses' (relating to small 
     business disaster subcontracting compliance and reporting), 
     GAO-07-205, dated March 2007.''.
                                 ______
                                 
  SA 772. Ms. SNOWE submitted an amendment intended to be proposed by 
her to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 69, strike line 5 and all that follows through page 
     70, line 5, and insert the following:
       (b) Termination of Program.--Section 711(c) of the Small 
     Business Competitive Demonstration Program Act of 1988 (15 
     U.S.C. 644 note) is amended by inserting after ``January 1, 
     1989'' the following: ``, and shall terminate on the date of 
     enactment of the U.S. Troop Readiness, Veterans' Care, 
     Katrina Recovery, and Iraq Accountability Appropriations Act, 
     2007''.
                                 ______
                                 
  SA 773. Mr. LEAHY submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. INCREASING NUMBER OF H-2B NONIMMIGRANT VISAS FOR 
                   FISCAL YEAR 2007.

       Section 214(g)(1)(B) of the Immigration and Nationality Act 
     (8 U.S.C. 1184(g)(1)(B)) is amended to read as follows:
       ``(B) under section 101(a)(15)(H)(ii)(b), may not exceed--
       ``(i) 106,000 in fiscal year 2007; and
       ``(ii) 66,000 in any fiscal year other than fiscal year 
     2007.''.
                                 ______
                                 
  SA 774. Mr. BAUCUS submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 85, line 21, strike ``20'' and insert ``17.4''.
                                 ______
                                 
  SA 775. Mr. BAUCUS submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 85, strike lines 8 through 21.
                                 ______
                                 
  SA 776. Ms. LANDRIEU (for herself and Mr. Cochran) submitted an 
amendment intended to be proposed by her to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the appropriate place, insert the following:

                      Hurricane Education Recovery

        For carrying out activities authorized by subpart 1 of 
     part D of title V of the Elementary and Secondary Education 
     Act of 1965, $30,000,000, to remain available until expended, 
     for use by the States of Louisiana, Mississippi, and Alabama 
     primarily for recruiting, retaining, and compensating new and 
     current teachers, principals, school leaders, and other 
     educators for positions in public elementary and secondary 
     schools located in an area with respect to which a major 
     disaster was declared under section 401 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5170) by reason of Hurricane Katrina or Hurricane 
     Rita, including through such mechanisms as paying salary 
     premiums, performance bonuses, housing subsidies, and 
     relocation costs, with priority given to teachers and school 
     leaders who were displaced from, or lost employment in, 
     Louisiana, Mississippi, or Alabama by reason of Hurricane 
     Katrina or Hurricane Rita and who return to and are rehired 
     by such State or local educational agency; Provided,  That 
     funds available under this heading to such States may also be 
     used for 1 or more of the following activities: (1) to build 
     the capacity of such public elementary and secondary schools 
     to provide an effective education, including the design, 
     adaptation, and implementation of high-quality formative 
     assessments; (2) the establishment of partnerships with 
     nonprofit entities with a demonstrated track record in 
     recruiting and retaining outstanding teachers and other 
     school leaders; and (3) paid release time for teachers and 
     principals to identify and replicate successful practices 
     from the fastest-improving and highest-performing schools: 
     Provided further, That the Secretary of Education shall 
     allocate amounts available under this heading among such 
     States that submit applications; that such allocation shall 
     be based on the number of public elementary and secondary 
     schools in each State that were closed for 19 days or more 
     during the period beginning on August 29, 2005, and ending on 
     December 31, 2005, due to Hurricane Katrina or Hurricane 
     Rita; and that such States shall in turn allocate funds, on a 
     competitive basis, to local educational agencies, with 
     priority given first to such agencies with the highest 
     percentages of public elementary and secondary schools that 
     are closed as a result of such hurricanes as of the date of 
     enactment of this Act and then to such agencies with the 
     highest percentages of public elementary and secondary 
     schools with a student-teacher ratio of at least 25 to 1, and 
     with any remaining amounts to be distributed to such agencies 
     with demonstrated need, as determined by the State 
     educational agency: Provided further, That, in the case of a 
     State that chooses to use amounts available under this 
     heading for performance bonuses, not later than 60 days after 
     the date of enactment of this Act and after consultation 
     with, as applicable, local educational agencies, teachers' 
     unions, local principals' organizations, local parents' 
     organizations, local business organizations, and local 
     charter schools organizations, such State shall establish and 
     implement a rating system for such performance bonuses based 
     on strong learning gains for students and growth in student 
     achievement, based on classroom observation and feedback at 
     least 4 times annually, conducted by multiple sources 
     (including principals and master teachers), and evaluated 
     against research-validated rubrics that use planning, 
     instructional, and learning environment standards to measure 
     teaching performance: Provided further, That the amount 
     provided under this heading is designated as an emergency 
     requirement pursuant to section 402 of H. Con. Res. 95 (109th 
     Congress).

                      Hurricane Education Recovery

                 programs to restart school operations

       Funds made available under section 102 of the Hurricane 
     Education Recovery Act (title IV of division B of Public Law 
     109-148) may be used by the States of Louisiana, Mississippi, 
     Alabama, and Texas, in addition to the uses of funds 
     described in section 102(e) for the following costs: (1) 
     recruiting, retaining and compensating new and current 
     teachers, principals, school leaders, other school 
     administrators, and other educators for positions in 
     reopening public elementary and secondary schools impacted by 
     Hurricane Katrina or Hurricane Rita, including through such 
     mechanisms as paying salary premiums, performance bonuses, 
     housing subsidies and relocation costs; and (2) activities to 
     build the capacity of reopening such public elementary and 
     secondary schools to provide an effective education, 
     including the design, adaptation, and implementation of high-
     quality formative assessments; the establishment of 
     partnerships with nonprofit entities with a demonstrated 
     track record in recruiting and retaining outstanding teachers 
     and other school leaders; and paid release time for teachers 
     and principals to identify and replicate successful practices 
     from the fastest-improving and highest-performing schools: 
     Provided, further, That in the case of a State that chooses 
     to use amounts available under this heading for performance 
     bonuses, not later than 60 days after the date of enactment 
     of this Act, and after consultation with, as applicable, 
     local educational agencies, teachers' unions, local 
     principals' organizations, local parents' organizations, 
     local business organizations, and local charter schools 
     organizations, such State shall establish and implement a 
     rating system that shall be based on strong learning gains 
     for students and growth in student achievement, based on 
     classroom observation and feedback at least 4 times annually, 
     conducted by multiple sources (including principals and 
     master teachers), and evaluated against research-validated 
     rubrics that use planning, instructional, and learning 
     environment standards to measure teaching performance: 
     Provided further, That the amount provided under this heading 
     is designated as an emergency requirement pursuant to section 
     402 of H. Con. Res. 95 (109th Congress).
                                 ______
                                 
  SA 777. Mr. THUNE submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At end of chapter 3 of title I, add the following:

     SEC. 1316. ADDITIONAL AMOUNT FOR OPERATION AND MAINTENANCE, 
                   AIR FORCE.

       (a) Additional Amount.--The amount appropriated or 
     otherwise made available by this chapter under the heading 
     ``Operation and Maintenance, Air Force'' is hereby increased 
     by $100,000,000.
       (b) Offset.--The amount appropriated or otherwise made 
     available by chapter 2 of title II under the heading ``State 
     and Local Law Enforcement Assistance'' is hereby decreased by 
     $100,000,000, with the amount of the decrease to be allocated 
     to amounts otherwise available under that heading for 
     reimbursement of State and local law enforcement entities for 
     security and related costs associated with the 2008 
     Presidential Candidate Nominating Conventions.
                                 ______
                                 
  SA 778. Ms. COLLINS submitted an amendment intended to be proposed by 
her to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:


[[Page S3909]]


       On page 33, strike lines 11 through 23 and insert the 
     following:
       Sec. 1502. (a) Any provision of the interim final 
     regulations issued under section 550 of the Department of 
     Homeland Security Appropriations Act, 2007 (6 U.S.C. 121 
     note) relating to the preemption of State law, or the law of 
     a political subdivision thereof, shall have no force or 
     effect.
       (b) Nothing in subsection (a) shall be construed to effect 
     the interpretation by any court of Federal preemption of 
     State law, or the law of a political subdivision thereof, 
     under section 550 of the Department of Homeland Security 
     Appropriations Act, 2007 (6 U.S.C. 121 note).
                                 ______
                                 
  SA 779. Ms. SNOWE submitted an amendment intended to be proposed by 
her to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:
     Not later than 120 days after enactment of this provision, 
     the Commander, Multi-National Forces-Iraq, having consulted 
     with the relevant U.S. and Iraqi officials, shall provide a 
     report detailing the status of the specific 5 benchmarks 
     described below and declaring, in his judgment, whether each 
     has been met:
       (a) Iraqi assumption of control of its military;
       (b) enactment of a Militia Law to disarm and demobilize 
     militias and to ensure that such security forces are 
     accountable only to the central government and loyal to the 
     constitution of Iraq;
       (c) completion of the constitutional review and a 
     referendum held on special amendments to the Iraq 
     Constitution that ensure equitable participation in 
     the Government of Iraq without regard to religious sect or 
     ethnicity;
       (d) completion of provincial election law and preparation 
     for the conduct of provincial elections that ensures 
     equitable constitution of provincial representative bodies 
     without regard to religious sect or ethnicity;
       (e) enactment and implementation of legislation to ensure 
     that the energy resources of Iraq benefit Sunni Arabs, Shia 
     Arabs, Kurds, and other Iraqi citizens in an equitable 
     manner; and
       (f) enactment and implementation of legislation that 
     equitably reforms the de-Ba'athification process in Iraq.
       Not later than 14 days after submission of that report to 
     Congress, the Commander, Multi-National Forces-Iraq shall 
     appear to testify before the relevant committees of 
     jurisdiction in both the House of Representatives and the 
     Senate to provide his personal and professional opinion 
     regarding:
       (a) the Iraqi government's success or failure to meet the 
     benchmarks listed
       (b) the ability of the Iraqi government to meet these 
     benchmarks Should the Commander, Multi-National Forces, Iraq 
     report and testify that the Iraqi government has failed to 
     meet the benchmarks listed, then the Commander, Multi-
     National Forces, Iraq shall be required to present:
       (a) plans for the phased redeployment of U.S. Armed Forces 
     deployed to Iraq in support of the Baghdad Security Plan as 
     outlined by the President
       (b) plans for changing the mission of US forces to: (i) 
     Train and equip Iraqi forces. (ii) Assist Iraqi deployed 
     brigades with intelligence, transportation, air support, and 
     logistics support. (iii) Protect United States and coalition 
     personnel and infrastructure. (iv) Maintain rapid-reaction 
     teams and special operations teams to undertake strike 
     missions against al Qaeda in Iraq, and for other missions 
     considered vital by the U.S. commander in Iraq.''
                                 ______
                                 
  SA 780. Mr. GRASSLEY (for himself and Mr. Baucus) submitted an 
amendment intended to be proposed by him to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       Strike all after the first word and insert the following:

                  V--FAIR MINIMUM WAGE AND TAX RELIEF

                     Subtitle A--Fair Minimum Wage

     SEC. 500. SHORT TITLE.

       This subtitle may be cited as the ``Fair Minimum Wage Act 
     of 2007''.

     SEC. 501. MINIMUM WAGE.

       (a) In General.--Section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to 
     read as follows:
       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $5.85 an hour, beginning on the 60th day after the 
     date of enactment of the Fair Minimum Wage Act of 2007;
       ``(B) $6.55 an hour, beginning 12 months after that 60th 
     day; and
       ``(C) $7.25 an hour, beginning 24 months after that 60th 
     day;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 60 days after the date of enactment of this 
     Act.

     SEC. 502. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH 
                   OF THE NORTHERN MARIANA ISLANDS.

       (a) In General.--Section 6 of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of 
     the Northern Mariana Islands.
       (b) Transition.--Notwithstanding subsection (a), the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--
       (1) $3.55 an hour, beginning on the 60th day after the date 
     of enactment of this Act; and
       (2) increased by $0.50 an hour (or such lesser amount as 
     may be necessary to equal the minimum wage under section 
     6(a)(1) of such Act), beginning 6 months after the date of 
     enactment of this Act and every 6 months thereafter until the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under this subsection is equal to the minimum 
     wage set forth in such section.

               Subtitle B--Small Business Tax Incentives

     SEC. 510. SHORT TITLE; AMENDMENT OF CODE.

       (a) Short Title.--This subtitle may be cited as the ``Small 
     Business and Work Opportunity Act of 2007''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this subtitle 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.

              PART I--SMALL BUSINESS TAX RELIEF PROVISIONS

                     Subpart A--General Provisions

     SEC. 511. EXTENSION OF INCREASED EXPENSING FOR SMALL 
                   BUSINESSES.

       Section 179 (relating to election to expense certain 
     depreciable business assets) is amended by striking ``2010'' 
     each place it appears and inserting ``2011''.

     SEC. 512. EXTENSION AND MODIFICATION OF 15-YEAR STRAIGHT-LINE 
                   COST RECOVERY FOR QUALIFIED LEASEHOLD 
                   IMPROVEMENTS AND QUALIFIED RESTAURANT 
                   IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST 
                   RECOVERY FOR CERTAIN IMPROVEMENTS TO RETAIL 
                   SPACE.

       (a) Extension of Leasehold and Restaurant Improvements.--
       (1) In general.--Clauses (iv) and (v) of section 
     168(e)(3)(E) (relating to 15-year property) are each amended 
     by striking ``January 1, 2008'' and inserting ``January 1, 
     2009''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to property placed in service after December 31, 
     2007.
       (b) Modification of Treatment of Qualified Restaurant 
     Property as 15-Year Property for Purposes of Depreciation 
     Deduction.--
       (1) Treatment to include new construction.--Paragraph (7) 
     of section 168(e) (relating to classification of property) is 
     amended to read as follows:
       ``(7) Qualified restaurant property.--The term `qualified 
     restaurant property' means any section 1250 property which is 
     a building (or its structural components) or an improvement 
     to such building if more than 50 percent of such building's 
     square footage is devoted to preparation of, and seating for 
     on-premises consumption of, prepared meals.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to any property placed in service after the date 
     of the enactment of this Act, the original use of which 
     begins with the taxpayer after such date.
       (c) Recovery Period for Depreciation of Certain 
     Improvements to Retail Space.--
       (1) 15-year recovery period.--Section 168(e)(3)(E) 
     (relating to 15-year property) is amended by striking ``and'' 
     at the end of clause (vii), by striking the period at the end 
     of clause (viii) and inserting ``, and'', and by adding at 
     the end the following new clause:
       ``(ix) any qualified retail improvement property placed in 
     service before January 1, 2009.''.
       (2) Qualified retail improvement property.--Section 168(e) 
     is amended by adding at the end the following new paragraph:
       ``(8) Qualified retail improvement property.--
       ``(A) In general.--The term `qualified retail improvement 
     property' means any improvement to an interior portion of a 
     building which is nonresidential real property if--
       ``(i) such portion is open to the general public and is 
     used in the retail trade or business of selling tangible 
     personal property to the general public, and
       ``(ii) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Improvements made by owner.--In the case of an 
     improvement made by the owner of such improvement, such 
     improvement shall be qualified retail improvement property 
     (if at all) only so long as such improvement is held by such 
     owner. Rules similar to the rules under paragraph (6)(B) 
     shall apply for purposes of the preceding sentence.
       ``(C) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefitting a common area, 
     or
       ``(iv) the internal structural framework of the 
     building.''.
       (3) Requirement to use straight line method.--Section 
     168(b)(3) is amended by

[[Page S3910]]

     adding at the end the following new subparagraph:
       ``(I) Qualified retail improvement property described in 
     subsection (e)(8).''.
       (4) Alternative system.--The table contained in section 
     168(g)(3)(B) is amended by inserting after the item relating 
     to subparagraph (E)(viii) the following new item:

(E)(ix)...........................................................39''.

       (5) Effective date.--The amendments made by this subsection 
     shall apply to property placed in service after the date of 
     the enactment of this Act.

     SEC. 513. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL 
                   BUSINESS.

       (a) Cash Accounting Permitted.--
       (1) In general.--Section 446 (relating to general rule for 
     methods of accounting) is amended by adding at the end the 
     following new subsection:
       ``(g) Certain Small Business Taxpayers Permitted To Use 
     Cash Accounting Method Without Limitation.--
       ``(1) In general.--An eligible taxpayer shall not be 
     required to use an accrual method of accounting for any 
     taxable year.
       ``(2) Eligible taxpayer.--For purposes of this subsection, 
     a taxpayer is an eligible taxpayer with respect to any 
     taxable year if--
       ``(A) for each of the prior taxable years ending on or 
     after the date of the enactment of this subsection, the 
     taxpayer (or any predecessor) met the gross receipts test in 
     effect under section 448(c) for such taxable year, and
       ``(B) the taxpayer is not subject to section 447 or 448.''.
       (2) Expansion of gross receipts test.--
       (A) In general.--Paragraph (3) of section 448(b) (relating 
     to entities with gross receipts of not more than $5,000,000) 
     is amended to read as follows:
       ``(3) Entities meeting gross receipts test.--Paragraphs (1) 
     and (2) of subsection (a) shall not apply to any corporation 
     or partnership for any taxable year if, for each of the prior 
     taxable years ending on or after the date of the enactment of 
     the Small Business and Work Opportunity Act of 2007, the 
     entity (or any predecessor) met the gross receipts test in 
     effect under subsection (c) for such prior taxable year.''.
       (B) Conforming amendments.--Section 448(c) of such Code is 
     amended--
       (i) by striking ``$5,000,000'' in the heading thereof,
       (ii) by striking ``$5,000,000'' each place it appears in 
     paragraph (1) and inserting ``$10,000,000'', and
       (iii) by adding at the end the following new paragraph:
       ``(4) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2008, the dollar 
     amount contained in paragraph (1) shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2007' for 
     `calendar year 1992' in subparagraph (B) thereof.
       ``If any amount as adjusted under this subparagraph is not 
     a multiple of $100,000, such amount shall be rounded to the 
     nearest multiple of $100,000.''.
       (b) Clarification of Inventory Rules for Small Business.--
       (1) In general.--Section 471 (relating to general rule for 
     inventories) is amended by redesignating subsection (c) as 
     subsection (d) and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Small Business Taxpayers Not Required To Use 
     Inventories.--
       ``(1) In general.--A qualified taxpayer shall not be 
     required to use inventories under this section for a taxable 
     year.
       ``(2) Treatment of taxpayers not using inventories.--If a 
     qualified taxpayer does not use inventories with respect to 
     any property for any taxable year beginning after the date of 
     the enactment of this subsection, such property shall be 
     treated as a material or supply which is not incidental.
       ``(3) Qualified taxpayer.--For purposes of this subsection, 
     the term `qualified taxpayer' means--
       ``(A) any eligible taxpayer (as defined in section 
     446(g)(2)), and
       ``(B) any taxpayer described in section 448(b)(3).''.
       (2) Conforming amendments.--
       (A) Subpart D of part II of subchapter E of chapter 1 is 
     amended by striking section 474.
       (B) The table of sections for subpart D of part II of 
     subchapter E of chapter 1 is amended by striking the item 
     relating to section 474.
       (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. 514. EXTENSION AND MODIFICATION OF COMBINED WORK 
                   OPPORTUNITY TAX CREDIT AND WELFARE-TO-WORK 
                   CREDIT.

       (a) Extension.--Section 51(c)(4)(B) (relating to 
     termination) is amended by striking ``2007'' and inserting 
     ``2012''.
       (b) Increase in Maximum Age for Designated Community 
     Residents.--
       (1) In general.--Paragraph (5) of section 51(d) is amended 
     to read as follows:
       ``(5) Designated community residents.--
       ``(A) In general.--The term `designated community resident' 
     means any individual who is certified by the designated local 
     agency--
       ``(i) as having attained age 18 but not age 40 on the 
     hiring date, and
       ``(ii) as having his principal place of abode within an 
     empowerment zone, enterprise community, renewal community, or 
     rural renewal county.
       ``(B) Individual must continue to reside in zone, 
     community, or county.--In the case of a designated community 
     resident, the term `qualified wages' shall not include wages 
     paid or incurred for services performed while the 
     individual's principal place of abode is outside an 
     empowerment zone, enterprise community, renewal community, or 
     rural renewal county.
       ``(C) Rural renewal county.--For purposes of this 
     paragraph, the term `rural renewal county' means any county 
     which--
       ``(i) is outside a metropolitan statistical area (defined 
     as such by the Office of Management and Budget), and
       ``(ii) during the 5-year periods 1990 through 1994 and 1995 
     through 1999 had a net population loss.''.
       (2) Conforming amendment.--Subparagraph (D) of section 
     51(d)(1) is amended to read as follows:
       ``(D) a designated community resident,''.
       (c) Clarification of Treatment of Individuals Under 
     Individual Work Plans.--Subparagraph (B) of section 51(d)(6) 
     (relating to vocational rehabilitation referral) is amended 
     by striking ``or'' at the end of clause (i), by striking the 
     period at the end of clause (ii) and inserting ``, or'', and 
     by adding at the end the following new clause:
       ``(iii) an individual work plan developed and implemented 
     by an employment network pursuant to subsection (g) of 
     section 1148 of the Social Security Act with respect to which 
     the requirements of such subsection are met.''.
       (d) Treatment of Disabled Veterans Under the Work 
     Opportunity Tax Credit.--
       (1) Disabled veterans treated as members of targeted 
     group.--
       (A) In general.--Subparagraph (A) of section 51(d)(3) 
     (relating to qualified veteran) is amended by striking 
     ``agency as being a member of a family'' and all that follows 
     and inserting ``agency as--
       ``(i) being a member of a family receiving assistance under 
     a food stamp program under the Food Stamp Act of 1977 for at 
     least a 3-month period ending during the 12-month period 
     ending on the hiring date, or
       ``(ii) entitled to compensation for a service-connected 
     disability incurred after September 10, 2001.''.
       (B) Definitions.--Paragraph (3) of section 51(d) is amended 
     by adding at the end the following new subparagraph:
       ``(C) Other definitions.--For purposes of subparagraph (A), 
     the terms `compensation' and `service-connected' have the 
     meanings given such terms under section 101 of title 38, 
     United States Code.''.
       (2) Increase in amount of wages taken into account for 
     disabled veterans.--Paragraph (3) of section 51(b) is 
     amended--
       (A) by inserting ``($12,000 per year in the case of any 
     individual who is a qualified veteran by reason of subsection 
     (d)(3)(A)(ii))'' before the period at the end, and
       (B) by striking ``ONLY FIRST  $6,000 of'' in the heading 
     and inserting ``LIMITATION ON''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after the date of the enactment of this Act, in taxable years 
     ending after such date.

     SEC. 515. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       (a) Employment Taxes.--Chapter 25 (relating to general 
     provisions relating to employment taxes) is amended by adding 
     at the end the following new section:

     ``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       ``(a) General Rules.--For purposes of the taxes, and other 
     obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer (and no other person shall be 
     treated as the employer) of any work site employee performing 
     services for any customer of such organization, but only with 
     respect to remuneration remitted by such organization to such 
     work site employee, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(b) Successor Employer Status.--For purposes of sections 
     3121(a)(1), 3231(e)(2)(C), and 3306(b)(1)--
       ``(1) a certified professional employer organization 
     entering into a service contract with a customer with respect 
     to a work site employee shall be treated as a successor 
     employer and the customer shall be treated as a predecessor 
     employer during the term of such service contract, and
       ``(2) a customer whose service contract with a certified 
     professional employer organization is terminated with respect 
     to a work site employee shall be treated as a successor 
     employer and the certified professional employer organization 
     shall be treated as a predecessor employer.
       ``(c) Liability of Certified Professional Employer 
     Organization.--Solely for purposes of its liability for the 
     taxes, and other obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer of any individual (other than a 
     work site employee or a person described in subsection (f)) 
     who is performing services covered by a

[[Page S3911]]

     contract meeting the requirements of section 7705(e)(2), but 
     only with respect to remuneration remitted by such 
     organization to such individual, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(d) Treatment of Credits.--
       ``(1) In general.--For purposes of any credit specified in 
     paragraph (2)--
       ``(A) such credit with respect to a work site employee 
     performing services for the customer applies to the customer, 
     not the certified professional employer organization,
       ``(B) the customer, and not the certified professional 
     employer organization, shall take into account wages and 
     employment taxes--
       ``(i) paid by the certified professional employer 
     organization with respect to the work site employee, and
       ``(ii) for which the certified professional employer 
     organization receives payment from the customer, and
       ``(C) the certified professional employer organization 
     shall furnish the customer with any information necessary for 
     the customer to claim such credit.
       ``(2) Credits specified.--A credit is specified in this 
     paragraph if such credit is allowed under--
       ``(A) section 41 (credit for increasing research activity),
       ``(B) section 45A (Indian employment credit),
       ``(C) section 45B (credit for portion of employer social 
     security taxes paid with respect to employee cash tips),
       ``(D) section 45C (clinical testing expenses for certain 
     drugs for rare diseases or conditions),
       ``(E) section 51 (work opportunity credit),
       ``(F) section 51A (temporary incentives for employing long-
     term family assistance recipients),
       ``(G) section 1396 (empowerment zone employment credit),
       ``(H) 1400(d) (DC Zone employment credit),
       ``(I) Section 1400H (renewal community employment credit), 
     and
       ``(J) any other section as provided by the Secretary.
       ``(e) Special Rule for Related Party.--This section shall 
     not apply in the case of a customer which bears a 
     relationship to a certified professional employer 
     organization described in section 267(b) or 707(b). For 
     purposes of the preceding sentence, such sections shall be 
     applied by substituting `10 percent' for `50 percent'.
       ``(f) Special Rule for Certain Individuals.--For purposes 
     of the taxes imposed under this subtitle, an individual with 
     net earnings from self-employment derived from the customer's 
     trade or business is not a work site employee with respect to 
     remuneration paid by a certified professional employer 
     organization.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Certified Professional Employer Organization Defined.--
     Chapter 79 (relating to definitions) is amended by adding at 
     the end the following new section:

     ``SEC. 7705. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS 
                   DEFINED.

       ``(a) In General.--For purposes of this title, the term 
     `certified professional employer organization' means a person 
     who has been certified by the Secretary for purposes of 
     section 3511 as meeting the requirements of subsection (b).
       ``(b) General Requirements.--A person meets the 
     requirements of this subsection if such person--
       ``(1) demonstrates that such person (and any owner, 
     officer, and such other persons as may be specified in 
     regulations) meets such requirements as the Secretary shall 
     establish with respect to tax status, background, experience, 
     business location, and annual financial audits,
       ``(2) computes its taxable income using an accrual method 
     of accounting unless the Secretary approves another method,
       ``(3) agrees that it will satisfy the bond and independent 
     financial review requirements of subsection (c) on an ongoing 
     basis,
       ``(4) agrees that it will satisfy such reporting 
     obligations as may be imposed by the Secretary,
       ``(5) agrees to verify on such periodic basis as the 
     Secretary may prescribe that it continues to meet the 
     requirements of this subsection, and
       ``(6) agrees to notify the Secretary in writing within such 
     time as the Secretary may prescribe of any change that 
     materially affects whether it continues to meet the 
     requirements of this subsection.
       ``(c) Bond and Independent Financial Review Requirements.--
       ``(1) In general.--An organization meets the requirements 
     of this paragraph if such organization--
       ``(A) meets the bond requirements of paragraph (2), and
       ``(B) meets the independent financial review requirements 
     of paragraph (3).
       ``(2) Bond.--
       ``(A) In general.--A certified professional employer 
     organization meets the requirements of this paragraph if the 
     organization has posted a bond for the payment of taxes under 
     subtitle C (in a form acceptable to the Secretary) in an 
     amount at least equal to the amount specified in subparagraph 
     (B).
       ``(B) Amount of bond.--For the period April 1 of any 
     calendar year through March 31 of the following calendar 
     year, the amount of the bond required is equal to the greater 
     of--
       ``(i) 5 percent of the organization's liability under 
     section 3511 for taxes imposed by subtitle C during the 
     preceding calendar year (but not to exceed $1,000,000), or
       ``(ii) $50,000.
       ``(3) Independent financial review requirements.--A 
     certified professional employer organization meets the 
     requirements of this paragraph if such organization--
       ``(A) has, as of the most recent review date, caused to be 
     prepared and provided to the Secretary (in such manner as the 
     Secretary may prescribe) an opinion of an independent 
     certified public accountant that the certified professional 
     employer organization's financial statements are presented 
     fairly in accordance with generally accepted accounting 
     principles, and
       ``(B) provides, not later than the last day of the second 
     month beginning after the end of each calendar quarter, to 
     the Secretary from an independent certified public accountant 
     an assertion regarding Federal employment tax payments and an 
     examination level attestation on such assertion.

     Such assertion shall state that the organization has withheld 
     and made deposits of all taxes imposed by chapters 21, 22, 
     and 24 of the Internal Revenue Code in accordance with 
     regulations imposed by the Secretary for such calendar 
     quarter and such examination level attestation shall state 
     that such assertion is fairly stated, in all material 
     respects.
       ``(4) Controlled group rules.--For purposes of the 
     requirements of paragraphs (2) and (3), all professional 
     employer organizations that are members of a controlled group 
     within the meaning of sections 414(b) and (c) shall be 
     treated as a single organization.
       ``(5) Failure to file assertion and attestation.--If the 
     certified professional employer organization fails to file 
     the assertion and attestation required by paragraph (3) with 
     respect to any calendar quarter, then the requirements of 
     paragraph (3) with respect to such failure shall be treated 
     as not satisfied for the period beginning on the due date for 
     such attestation.
       ``(6) Review date.--For purposes of paragraph (3)(A), the 
     review date shall be 6 months after the completion of the 
     organization's fiscal year.
       ``(d) Suspension and Revocation Authority.--The Secretary 
     may suspend or revoke a certification of any person under 
     subsection (b) for purposes of section 3511 if the Secretary 
     determines that such person is not satisfying the 
     representations or requirements of subsections (b) or (c), or 
     fails to satisfy applicable accounting, reporting, payment, 
     or deposit requirements.
       ``(e) Work Site Employee.--For purposes of this title--
       ``(1) In general.--The term `work site employee' means, 
     with respect to a certified professional employer 
     organization, an individual who--
       ``(A) performs services for a customer pursuant to a 
     contract which is between such customer and the certified 
     professional employer organization and which meets the 
     requirements of paragraph (2), and
       ``(B) performs services at a work site meeting the 
     requirements of paragraph (3).
       ``(2) Service contract requirements.--A contract meets the 
     requirements of this paragraph with respect to an individual 
     performing services for a customer if such contract is in 
     writing and provides that the certified professional employer 
     organization shall--
       ``(A) assume responsibility for payment of wages to such 
     individual, without regard to the receipt or adequacy of 
     payment from the customer for such services,
       ``(B) assume responsibility for reporting, withholding, and 
     paying any applicable taxes under subtitle C, with respect to 
     such individual's wages, without regard to the receipt or 
     adequacy of payment from the customer for such services,
       ``(C) assume responsibility for any employee benefits which 
     the service contract may require the organization to provide, 
     without regard to the receipt or adequacy of payment from the 
     customer for such services,
       ``(D) assume responsibility for hiring, firing, and 
     recruiting workers in addition to the customer's 
     responsibility for hiring, firing and recruiting workers,
       ``(E) maintain employee records relating to such 
     individual, and
       ``(F) agree to be treated as a certified professional 
     employer organization for purposes of section 3511 with 
     respect to such individual.
       ``(3) Work site coverage requirement.--The requirements of 
     this paragraph are met with respect to an individual if at 
     least 85 percent of the individuals performing services for 
     the customer at the work site where such individual performs 
     services are subject to 1 or more contracts with the 
     certified professional employer organization which meet the 
     requirements of paragraph (2) (but not taking into account 
     those individuals who are excluded employees within the 
     meaning of section 414(q)(5)).
       ``(f) Determination of Employment Status.--Except to the 
     extent necessary for purposes of section 3511, nothing in 
     this section shall be construed to affect the determination 
     of who is an employee or employer for purposes of this title.

[[Page S3912]]

       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (c) Conforming Amendments.--
       (1) Section 3302 is amended by adding at the end the 
     following new subsection:
       ``(h) Treatment of Certified Professional Employer 
     Organizations.--If a certified professional employer 
     organization (as defined in section 7705), or a customer of 
     such organization, makes a contribution to the State's 
     unemployment fund with respect to a work site employee, such 
     organization shall be eligible for the credits available 
     under this section with respect to such contribution.''.
       (2) Section 3303(a) is amended--
       (A) by striking the period at the end of paragraph (3) and 
     inserting ``; and'' and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) if the taxpayer is a certified professional employer 
     organization (as defined in section 7705) that is treated as 
     the employer under section 3511, such certified professional 
     employer organization is permitted to collect and remit, in 
     accordance with paragraphs (1), (2), and (3), contributions 
     during the taxable year to the State unemployment fund with 
     respect to a work site employee.'', and
       (B) in the last sentence--
       (i) by striking ``paragraphs (1), (2), and (3)'' and 
     inserting ``paragraphs (1), (2), (3), and (4)'', and
       (ii) by striking ``paragraph (1), (2), or (3)'' and 
     inserting ``paragraph (1), (2), (3), or (4)''.
       (3) Section 6053(c) (relating to reporting of tips) is 
     amended by adding at the end the following new paragraph:
       ``(8) Certified professional employer organizations.--For 
     purposes of any report required by this subsection, in the 
     case of a certified professional employer organization that 
     is treated under section 3511 as the employer of a work site 
     employee, the customer with respect to whom a work site 
     employee performs services shall be the employer for purposes 
     of reporting under this section and the certified 
     professional employer organization shall furnish to the 
     customer any information necessary to complete such reporting 
     no later than such time as the Secretary shall prescribe.''.
       (d) Clerical Amendments.--
       (1) The table of sections for chapter 25 is amended by 
     adding at the end the following new item:

``Sec. 3511. Certified professional employer organizations''.

       (2) The table of sections for chapter 79 is amended by 
     inserting after the item relating to section 7704 the 
     following new item:

``Sec. 7705. Certified professional employer organizations defined''.

       (e) Reporting Requirements and Obligations.--The Secretary 
     of the Treasury shall develop such reporting and 
     recordkeeping rules, regulations, and procedures as the 
     Secretary determines necessary or appropriate to ensure 
     compliance with the amendments made by this section with 
     respect to entities applying for certification as certified 
     professional employer organizations or entities that have 
     been so certified. Such rules shall be designed in a manner 
     which streamlines, to the extent possible, the application of 
     requirements of such amendments, the exchange of information 
     between a certified professional employer organization and 
     its customers, and the reporting and recordkeeping 
     obligations of the certified professional employer 
     organization.
       (f) User Fees.--Subsection (b) of section 7528 (relating to 
     Internal Revenue Service user fees) is amended by adding at 
     the end the following new paragraph:
       ``(4) Certified professional employer organizations.--The 
     fee charged under the program in connection with the 
     certification by the Secretary of a professional employer 
     organization under section 7705 shall not exceed $500.''.
       (g) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to wages for services performed on or 
     after January 1 of the first calendar year beginning more 
     than 12 months after the date of the enactment of this Act.
       (2) Certification program.--The Secretary of the Treasury 
     shall establish the certification program described in 
     section 7705(b) of the Internal Revenue Code of 1986, as 
     added by subsection (b), not later than 6 months before the 
     effective date determined under paragraph (1).
       (h) No Inference.--Nothing contained in this section or the 
     amendments made by this section shall be construed to create 
     any inference with respect to the determination of who is an 
     employee or employer--
       (1) for Federal tax purposes (other than the purposes set 
     forth in the amendments made by this section), or
       (2) for purposes of any other provision of law.

     SEC. 516. ACCELERATED DEPRECIATION FOR INVESTMENT IN HIGH 
                   OUT-MIGRATION COUNTIES.

       (a) In General.--Section 168 (relating to accelerated cost 
     recovery system) is amended by adding at the end the 
     following new subsection:
       ``(m) Rural Investment Property.--
       ``(1) In general.--For purposes of subsection (a), the 
     applicable recovery period for qualified rural investment 
     property shall be determined in accordance with the table 
     contained in paragraph (2) in lieu of the table contained in 
     subsection (c).
       ``(2) Applicable recovery period for rural investment 
     property.--For purposes of paragraph (1)--
                                                         The applicable
``  ``In the case of:                               recovery period is:
    3-year property...........................................2 years  
    5-year property...........................................3 years  
    7-year property...........................................4 years  
    10-year property..........................................6 years  
    15-year property..........................................9 years  
    20-year property.........................................12 years  
      Nonresidential real property............................22 years.
       ``(3) Qualified rural investment property defined.--For 
     purposes of this subsection--
       ``(A) In general.--The term `qualified rural investment 
     property' means property which is property described in the 
     table in paragraph (2) and which is--
       ``(i) used by the taxpayer predominantly in the active 
     conduct of a trade or business within a high out-migration 
     county,
       ``(ii) not used or located outside such county on a regular 
     basis,
       ``(iii) not acquired (directly or indirectly) by the 
     taxpayer from a person who is related to the taxpayer (within 
     the meaning of section 465(b)(3)(C)), and
       ``(iv) not property (or any portion thereof) placed in 
     service for purposes of operating any racetrack or other 
     facility used for gambling.
       ``(B) High out-migration county.--The term `high out-
     migration county' means any county which--
       ``(i) is outside a metropolitan statistical area (defined 
     as such by the Office of Management and Budget), and
       ``(ii) during the 5-year periods 1990 through 1994 and 1995 
     through 1999 had a net population loss.
       ``(4) Termination.--This subsection shall not apply to 
     property placed in service after March 31, 2008.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act, the original use of which begins 
     with the taxpayer after such date.

                   Subpart B--Subchapter S Provisions

     SEC. 521. CAPITAL GAIN OF S CORPORATION NOT TREATED AS 
                   PASSIVE INVESTMENT INCOME.

       (a) In General.--Section 1362(d)(3) is amended by striking 
     subparagraphs (B), (C), (D), (E), and (F) and inserting the 
     following new subparagraph:
       ``(B) Passive investment income defined.--
       ``(i) In general.--Except as otherwise provided in this 
     subparagraph, the term `passive investment income' means 
     gross receipts derived from royalties, rents, dividends, 
     interest, and annuities.
       ``(ii) Exception for interest on notes from sales of 
     inventory.--The term `passive investment income' shall not 
     include interest on any obligation acquired in the ordinary 
     course of the corporation's trade or business from its sale 
     of property described in section 1221(a)(1).
       ``(iii) Treatment of certain lending or finance 
     companies.--If the S corporation meets the requirements of 
     section 542(c)(6) for the taxable year, the term `passive 
     investment income' shall not include gross receipts for the 
     taxable year which are derived directly from the active and 
     regular conduct of a lending or finance business (as defined 
     in section 542(d)(1)).
       ``(iv) Treatment of certain dividends.--If an S corporation 
     holds stock in a C corporation meeting the requirements of 
     section 1504(a)(2), the term `passive investment income' 
     shall not include dividends from such C corporation to the 
     extent such dividends are attributable to the earnings and 
     profits of such C corporation derived from the active conduct 
     of a trade or business.
       ``(v) Exception for banks, etc.--In the case of a bank (as 
     defined in section 581) or a depository institution holding 
     company (as defined in section 3(w)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813(w)(1)), the term `passive 
     investment income' shall not include--

       ``(I) interest income earned by such bank or company, or
       ``(II) dividends on assets required to be held by such bank 
     or company, including stock in the Federal Reserve Bank, the 
     Federal Home Loan Bank, or the Federal Agricultural Mortgage 
     Bank or participation certificates issued by a Federal 
     Intermediate Credit Bank.''.

       (b) Conforming Amendment.--Clause (i) of section 
     1042(c)(4)(A) is amended by striking ``section 
     1362(d)(3)(C)'' and inserting ``section 1362(d)(3)(B)''.
       (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. 522. TREATMENT OF BANK DIRECTOR SHARES.

       (a) In General.--Section 1361 (defining S corporation) is 
     amended by adding at the end the following new subsection:
       ``(f) Restricted Bank Director Stock.--

[[Page S3913]]

       ``(1) In general.--Restricted bank director stock shall not 
     be taken into account as outstanding stock of the S 
     corporation in applying this subchapter (other than section 
     1368(f)).
       ``(2) Restricted bank director stock.--For purposes of this 
     subsection, the term `restricted bank director stock' means 
     stock in a bank (as defined in section 581) or a depository 
     institution holding company (as defined in section 3(w)(1) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1)), if 
     such stock--
       ``(A) is required to be held by an individual under 
     applicable Federal or State law in order to permit such 
     individual to serve as a director, and
       ``(B) is subject to an agreement with such bank or company 
     (or a corporation which controls (within the meaning of 
     section 368(c)) such bank or company) pursuant to which the 
     holder is required to sell back such stock (at the same price 
     as the individual acquired such stock) upon ceasing to hold 
     the office of director.
       ``(3) Cross reference.--

``For treatment of certain distributions with respect to restricted 
              bank director stock, see section 1368(f)''.

       (b) Distributions.--Section 1368 (relating to 
     distributions) is amended by adding at the end the following 
     new subsection:
       ``(f) Restricted Bank Director Stock.--If a director 
     receives a distribution (not in part or full payment in 
     exchange for stock) from an S corporation with respect to any 
     restricted bank director stock (as defined in section 
     1361(f)), the amount of such distribution--
       ``(1) shall be includible in gross income of the director, 
     and
       ``(2) shall be deductible by the corporation for the 
     taxable year of such corporation in which or with which ends 
     the taxable year in which such amount in included in the 
     gross income of the director.''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006.
       (2) Special rule for treatment as second class of stock.--
     In the case of any taxable year beginning after December 31, 
     1996, restricted bank director stock (as defined in section 
     1361(f) of the Internal Revenue Code of 1986, as added by 
     this section) shall not be taken into account in determining 
     whether an S corporation has more than 1 class of stock.

     SEC. 523. SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE 
                   RESERVE METHOD OF ACCOUNTING ON BECOMING S 
                   CORPORATION.

       (a) In General.--Section 1361, as amended by this Act, is 
     amended by adding at the end the following new subsection:
       ``(g) Special Rule for Bank Required To Change From the 
     Reserve Method of Accounting on Becoming S Corporation.--In 
     the case of a bank which changes from the reserve method of 
     accounting for bad debts described in section 585 or 593 for 
     its first taxable year for which an election under section 
     1362(a) is in effect, the bank may elect to take into account 
     any adjustments under section 481 by reason of such change 
     for the taxable year immediately preceding such first taxable 
     year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 524. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED 
                   SUBCHAPTER S SUBSIDIARY.

       (a) In General.--Subparagraph (C) of section 1361(b)(3) 
     (relating to treatment of terminations of qualified 
     subchapter S subsidiary status) is amended--
       (1) by striking ``For purposes of this title,'' and 
     inserting the following:
       ``(i) In general.--For purposes of this title,'', and
       (2) by inserting at the end the following new clause:
       ``(ii) Termination by reason of sale of stock.--If the 
     failure to meet the requirements of subparagraph (B) is by 
     reason of the sale of stock of a corporation which is a 
     qualified subchapter S subsidiary, the sale of such stock 
     shall be treated as if--

       ``(I) the sale were a sale of an undivided interest in the 
     assets of such corporation (based on the percentage of the 
     corporation's stock sold), and
       ``(II) the sale were followed by an acquisition by such 
     corporation of all of its assets (and the assumption by such 
     corporation of all of its liabilities) in a transaction to 
     which section 351 applies.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006 .

     SEC. 525. ELIMINATION OF ALL EARNINGS AND PROFITS 
                   ATTRIBUTABLE TO PRE-1983 YEARS FOR CERTAIN 
                   CORPORATIONS.

       In the case of a corporation which is--
       (1) described in section 1311(a)(1) of the Small Business 
     Job Protection Act of 1996, and
       (2) not described in section 1311(a)(2) of such Act,

       the amount of such corporation's accumulated earnings and 
     profits (for the first taxable year beginning after the date 
     of the enactment of this Act) shall be reduced by an amount 
     equal to the portion (if any) of such accumulated earnings 
     and profits which were accumulated in any taxable year 
     beginning before January 1, 1983, for which such corporation 
     was an electing small business corporation under subchapter S 
     of the Internal Revenue Code of 1986.

     SEC. 526. EXPANSION OF QUALIFYING BENEFICIARIES OF AN 
                   ELECTING SMALL BUSINESS TRUST.

       (a) No Look Through for Eligibility Purposes.--Clause (v) 
     of section 1361(c)(2)(B) is amended by adding at the end the 
     following new sentence: ``This clause shall not apply for 
     purposes of subsection (b)(1)(C).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 527. DEDUCTIBILITY OF INTEREST EXPENSE ON INDEBTEDNESS 
                   INCURRED BY AN ELECTING SMALL BUSINESS TRUST TO 
                   ACQUIRE S CORPORATION STOCK.

       (a) In General.--Subparagraph (C) of section 641(c)(2) 
     (relating to modifications) is amended by inserting after 
     clause (iii) the following new clause:
       ``(iv) Any interest expense paid or accrued on indebtedness 
     incurred to acquire stock in an S corporation.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

                      PART II--REVENUE PROVISIONS

     SEC. 531. MODIFICATION OF EFFECTIVE DATE OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) Leases to Foreign Entities.--Section 849(b) of the 
     American Jobs Creation Act of 2004 is amended by adding at 
     the end the following new paragraph:
       ``(5) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2006, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.

     SEC. 532. APPLICATION OF RULES TREATING INVERTED CORPORATIONS 
                   AS DOMESTIC CORPORATIONS TO CERTAIN 
                   TRANSACTIONS OCCURRING AFTER MARCH 20, 2002.

       (a) In General.--Section 7874(b) (relating to inverted 
     corporations treated as domestic corporations) is amended to 
     read as follows:
       ``(b) Inverted Corporations Treated as Domestic 
     Corporations.--
       ``(1) In general.--Notwithstanding section 7701(a)(4), a 
     foreign corporation shall be treated for purposes of this 
     title as a domestic corporation if such corporation would be 
     a surrogate foreign corporation if subsection (a)(2) were 
     applied by substituting `80 percent' for `60 percent'.
       ``(2) Special rule for certain transactions occurring after 
     march 20, 2002.--
       ``(A) In general.--If--
       ``(i) paragraph (1) does not apply to a foreign 
     corporation, but
       ``(ii) paragraph (1) would apply to such corporation if, in 
     addition to the substitution under paragraph (1), subsection 
     (a)(2) were applied by substituting `March 20, 2002' for 
     `March 4, 2003' each place it appears,
     then paragraph (1) shall apply to such corporation but only 
     with respect to taxable years of such corporation beginning 
     after December 31, 2006.
       ``(B) Special rules.--Subject to such rules as the 
     Secretary may prescribe, in the case of a corporation to 
     which paragraph (1) applies by reason of this paragraph--
       ``(i) the corporation shall be treated, as of the close of 
     its last taxable year beginning before January 1, 2007, as 
     having transferred all of its assets, liabilities, and 
     earnings and profits to a domestic corporation in a 
     transaction with respect to which no tax is imposed under 
     this title,
       ``(ii) the bases of the assets transferred in the 
     transaction to the domestic corporation shall be the same as 
     the bases of the assets in the hands of the foreign 
     corporation, subject to any adjustments under this title for 
     built-in losses,
       ``(iii) the basis of the stock of any shareholder in the 
     domestic corporation shall be the same as the basis of the 
     stock of the shareholder in the foreign corporation for which 
     it is treated as exchanged, and
       ``(iv) the transfer of any earnings and profits by reason 
     of clause (i) shall be disregarded in determining any deemed 
     dividend or foreign tax creditable to the domestic 
     corporation with respect to such transfer.
       ``(C) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this paragraph, including regulations to prevent the 
     avoidance of the purposes of this paragraph.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 533. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.

       (a) Disallowance of Deduction.--
       (1) In general.--Section 162(g) (relating to treble damage 
     payments under the antitrust laws) is amended--
       (A) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively,
       (B) by striking ``If'' and inserting:
       ``(1) Treble damages.--If'', and
       (C) by adding at the end the following new paragraph:
       ``(2) Punitive damages.--No deduction shall be allowed 
     under this chapter for any amount paid or incurred for 
     punitive damages in connection with any judgment in, or 
     settlement of, any action. This paragraph

[[Page S3914]]

     shall not apply to punitive damages described in section 
     104(c).''.
       (2) Conforming amendment.--The heading for section 162(g) 
     is amended by inserting ``Or Punitive Damages'' after 
     ``Laws''.
       (b) Inclusion in Income of Punitive Damages Paid by Insurer 
     or Otherwise.--
       (1) In general.--Part II of subchapter B of chapter 1 
     (relating to items specifically included in gross income) is 
     amended by adding at the end the following new section:

     ``SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR 
                   OTHERWISE.

       ``Gross income shall include any amount paid to or on 
     behalf of a taxpayer as insurance or otherwise by reason of 
     the taxpayer's liability (or agreement) to pay punitive 
     damages.''.
       (2) Reporting requirements.--Section 6041 (relating to 
     information at source) is amended by adding at the end the 
     following new subsection:
       ``(h) Section To Apply to Punitive Damages Compensation.--
     This section shall apply to payments by a person to or on 
     behalf of another person as insurance or otherwise by reason 
     of the other person's liability (or agreement) to pay 
     punitive damages.''.
       (3) Conforming amendment.--The table of sections for part 
     II of subchapter B of chapter 1 is amended by adding at the 
     end the following new item:

``Sec. 91. Punitive damages compensated by insurance or otherwise''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to damages paid or incurred on or after the date 
     of the enactment of this Act.

     SEC. 534. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, 
                   AND OTHER AMOUNTS.

       (a) In General.--Subsection (f) of section 162 (relating to 
     trade or business expenses) is amended to read as follows:
       ``(f) Fines, Penalties, and Other Amounts.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     deduction otherwise allowable shall be allowed under this 
     chapter for any amount paid or incurred (whether by suit, 
     agreement, or otherwise) to, or at the direction of, a 
     government or entity described in paragraph (4) in relation 
     to--
       ``(A) the violation of any law, or
       ``(B) an investigation or inquiry into the potential 
     violation of any law which is initiated by such government or 
     entity.
       ``(2) Exception for amounts constituting restitution or 
     paid to come into compliance with law.--Paragraph (1) shall 
     not apply to any amount which--
       ``(A) the taxpayer establishes--
       ``(i) constitutes restitution (or remediation of property) 
     for damage or harm caused by, or which may be caused by, the 
     violation of any law or the potential violation of any law, 
     or
       ``(ii) is paid to come into compliance with any law which 
     was violated or involved in the investigation or inquiry, and
       ``(B) is identified as an amount described in clause (i) or 
     (ii) of subparagraph (A), as the case may be, in the court 
     order or settlement agreement, except that the requirement of 
     this subparagraph shall not apply in the case of any 
     settlement agreement which requires the taxpayer to pay or 
     incur an amount not greater than $1,000,000.

     A taxpayer shall not meet the requirements of subparagraph 
     (A) solely by reason an identification under subparagraph 
     (B). This paragraph shall not apply to any amount paid or 
     incurred as reimbursement to the government or entity for the 
     costs of any investigation or litigation unless such amount 
     is paid or incurred for a cost or fee regularly charged for 
     any routine audit or other customary review performed by the 
     government or entity.
       ``(3) Exception for amounts paid or incurred as the result 
     of certain court orders.--Paragraph (1) shall not apply to 
     any amount paid or incurred by order of a court in a suit in 
     which no government or entity described in paragraph (4) is a 
     party.
       ``(4) Certain nongovernmental regulatory entities.--An 
     entity is described in this paragraph if it is--
       ``(A) a nongovernmental entity which exercises self-
     regulatory powers (including imposing sanctions) in 
     connection with a qualified board or exchange (as defined in 
     section 1256(g)(7)), or
       ``(B) to the extent provided in regulations, a 
     nongovernmental entity which exercises self-regulatory powers 
     (including imposing sanctions) as part of performing an 
     essential governmental function.
       ``(5) Exception for taxes due.--Paragraph (1) shall not 
     apply to any amount paid or incurred as taxes due.''.
       (b) Reporting of Deductible Amounts.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6050V the 
     following new section:

     ``SEC. 6050W. INFORMATION WITH RESPECT TO CERTAIN FINES, 
                   PENALTIES, AND OTHER AMOUNTS.

       ``(a) Requirement of Reporting.--
       ``(1) In general.--The appropriate official of any 
     government or entity which is described in section 162(f)(4) 
     which is involved in a suit or agreement described in 
     paragraph (2) shall make a return in such form as determined 
     by the Secretary setting forth--
       ``(A) the amount required to be paid as a result of the 
     suit or agreement to which paragraph (1) of section 162(f) 
     applies,
       ``(B) any amount required to be paid as a result of the 
     suit or agreement which constitutes restitution or 
     remediation of property, and
       ``(C) any amount required to be paid as a result of the 
     suit or agreement for the purpose of coming into compliance 
     with any law which was violated or involved in the 
     investigation or inquiry.
       ``(2) Suit or agreement described.--
       ``(A) In general.--A suit or agreement is described in this 
     paragraph if--
       ``(i) it is--

       ``(I) a suit with respect to a violation of any law over 
     which the government or entity has authority and with respect 
     to which there has been a court order, or
       ``(II) an agreement which is entered into with respect to a 
     violation of any law over which the government or entity has 
     authority, or with respect to an investigation or inquiry by 
     the government or entity into the potential violation of any 
     law over which such government or entity has authority, and

       ``(ii) the aggregate amount involved in all court orders 
     and agreements with respect to the violation, investigation, 
     or inquiry is $600 or more.
       ``(B) Adjustment of reporting threshold.--The Secretary may 
     adjust the $600 amount in subparagraph (A)(ii) as necessary 
     in order to ensure the efficient administration of the 
     internal revenue laws.
       ``(3) Time of filing.--The return required under this 
     subsection shall be filed not later than--
       ``(A) 30 days after the date on which a court order is 
     issued with respect to the suit or the date the agreement is 
     entered into, as the case may be, or
       ``(B) the date specified by the Secretary.
       ``(b) Statements To Be Furnished to Individuals Involved in 
     the Settlement.--Every person required to make a return under 
     subsection (a) shall furnish to each person who is a party to 
     the suit or agreement a written statement showing--
       ``(1) the name of the government or entity, and
       ``(2) the information supplied to the Secretary under 
     subsection (a)(1).

     The written statement required under the preceding sentence 
     shall be furnished to the person at the same time the 
     government or entity provides the Secretary with the 
     information required under subsection (a).
       ``(c) Appropriate Official Defined.--For purposes of this 
     section, the term `appropriate official' means the officer or 
     employee having control of the suit, investigation, or 
     inquiry or the person appropriately designated for purposes 
     of this section.''.
       (2) Conforming amendment.--The table of sections for 
     subpart B of part III of subchapter A of chapter 61 is 
     amended by inserting after the item relating to section 6050V 
     the following new item:

``Sec. 6050W. Information with respect to certain fines, penalties, and 
              other amounts''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred on or after the date 
     of the enactment of this Act, except that such amendments 
     shall not apply to amounts paid or incurred under any binding 
     order or agreement entered into before such date. Such 
     exception shall not apply to an order or agreement requiring 
     court approval unless the approval was obtained before such 
     date.

     SEC. 535. REVISION OF TAX RULES ON EXPATRIATION OF 
                   INDIVIDUALS.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 is amended by inserting after section 877 the 
     following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market.--Except as provided in subsections 
     (d) and (f), all property of a covered expatriate to whom 
     this section applies shall be treated as sold on the day 
     before the expatriation date for its fair market value.
       ``(2) Recognition of gain or loss.--In the case of any sale 
     under paragraph (1)--
       ``(A) notwithstanding any other provision of this title, 
     any gain arising from such sale shall be taken into account 
     for the taxable year of the sale, and
       ``(B) any loss arising from such sale shall be taken into 
     account for the taxable year of the sale to the extent 
     otherwise provided by this title, except that section 1091 
     shall not apply to any such loss.

     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence.
       ``(3) Exclusion for certain gain.--
       ``(A) In general.--The amount which, but for this 
     paragraph, would be includible in the gross income of any 
     individual by reason of this section shall be reduced (but 
     not below zero) by $600,000. For purposes of this paragraph, 
     allocable expatriation gain taken into account under 
     subsection (f)(2) shall be treated in the same manner as an 
     amount required to be includible in gross income.
       ``(B) Cost-of-living adjustment.--
       ``(i) In general.--In the case of an expatriation date 
     occurring in any calendar year after 2007, the $600,000 
     amount under subparagraph (A) shall be increased by an amount 
     equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, determined by 
     substituting `calendar

[[Page S3915]]

     year 2006' for `calendar year 1992' in subparagraph (B) 
     thereof.

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $1,000, such amount 
     shall be rounded to the next lower multiple of $1,000.
       ``(4) Election to continue to be taxed as united states 
     citizen.--
       ``(A) In general.--If a covered expatriate elects the 
     application of this paragraph--
       ``(i) this section (other than this paragraph and 
     subsection (i)) shall not apply to the expatriate, but
       ``(ii) in the case of property to which this section would 
     apply but for such election, the expatriate shall be subject 
     to tax under this title in the same manner as if the 
     individual were a United States citizen.
       ``(B) Requirements.--Subparagraph (A) shall not apply to an 
     individual unless the individual--
       ``(i) provides security for payment of tax in such form and 
     manner, and in such amount, as the Secretary may require,
       ``(ii) consents to the waiver of any right of the 
     individual under any treaty of the United States which would 
     preclude assessment or collection of any tax which may be 
     imposed by reason of this paragraph, and
       ``(iii) complies with such other requirements as the 
     Secretary may prescribe.
       ``(C) Election.--An election under subparagraph (A) shall 
     apply to all property to which this section would apply but 
     for the election and, once made, shall be irrevocable. Such 
     election shall also apply to property the basis of which is 
     determined in whole or in part by reference to the property 
     with respect to which the election was made.
       ``(b) Election To Defer Tax.--
       ``(1) In general.--If the taxpayer elects the application 
     of this subsection with respect to any property treated as 
     sold by reason of subsection (a), the payment of the 
     additional tax attributable to such property shall be 
     postponed until the due date of the return for the taxable 
     year in which such property is disposed of (or, in the case 
     of property disposed of in a transaction in which gain is not 
     recognized in whole or in part, until such other date as the 
     Secretary may prescribe).
       ``(2) Determination of tax with respect to property.--For 
     purposes of paragraph (1), the additional tax attributable to 
     any property is an amount which bears the same ratio to the 
     additional tax imposed by this chapter for the taxable year 
     solely by reason of subsection (a) as the gain taken into 
     account under subsection (a) with respect to such property 
     bears to the total gain taken into account under subsection 
     (a) with respect to all property to which subsection (a) 
     applies.
       ``(3) Termination of postponement.--No tax may be postponed 
     under this subsection later than the due date for the return 
     of tax imposed by this chapter for the taxable year which 
     includes the date of death of the expatriate (or, if earlier, 
     the time that the security provided with respect to the 
     property fails to meet the requirements of paragraph (4), 
     unless the taxpayer corrects such failure within the time 
     specified by the Secretary).
       ``(4) Security.--
       ``(A) In general.--No election may be made under paragraph 
     (1) with respect to any property unless adequate security is 
     provided to the Secretary with respect to such property.
       ``(B) Adequate security.--For purposes of subparagraph (A), 
     security with respect to any property shall be treated as 
     adequate security if--
       ``(i) it is a bond in an amount equal to the deferred tax 
     amount under paragraph (2) for the property, or
       ``(ii) the taxpayer otherwise establishes to the 
     satisfaction of the Secretary that the security is adequate.
       ``(5) Waiver of certain rights.--No election may be made 
     under paragraph (1) unless the taxpayer consents to the 
     waiver of any right under any treaty of the United States 
     which would preclude assessment or collection of any tax 
     imposed by reason of this section.
       ``(6) Elections.--An election under paragraph (1) shall 
     only apply to property described in the election and, once 
     made, is irrevocable. An election may be made under paragraph 
     (1) with respect to an interest in a trust with respect to 
     which gain is required to be recognized under subsection 
     (f)(1).
       ``(7) Interest.--For purposes of section 6601--
       ``(A) the last date for the payment of tax shall be 
     determined without regard to the election under this 
     subsection, and
       ``(B) section 6621(a)(2) shall be applied by substituting 
     `5 percentage points' for `3 percentage points' in 
     subparagraph (B) thereof.
       ``(c) Covered Expatriate.--For purposes of this section--
       ``(1) In general.--Except as provided in paragraph (2), the 
     term `covered expatriate' means an expatriate.
       ``(2) Exceptions.--An individual shall not be treated as a 
     covered expatriate if--
       ``(A) the individual--
       ``(i) became at birth a citizen of the United States and a 
     citizen of another country and, as of the expatriation date, 
     continues to be a citizen of, and is taxed as a resident of, 
     such other country, and
       ``(ii) has not been a resident of the United States (as 
     defined in section 7701(b)(1)(A)(ii)) during the 5 taxable 
     years ending with the taxable year during which the 
     expatriation date occurs, or
       ``(B)(i) the individual's relinquishment of United States 
     citizenship occurs before such individual attains age 18\1/
     2\, and
       ``(ii) the individual has been a resident of the United 
     States (as so defined) for not more than 5 taxable years 
     before the date of relinquishment.
       ``(d) Exempt Property; Special Rules for Pension Plans.--
       ``(1) Exempt property.--This section shall not apply to the 
     following:
       ``(A) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the day before the 
     expatriation date, meet the requirements of section 
     897(c)(2).
       ``(B) Specified property.--Any property or interest in 
     property not described in subparagraph (A) which the 
     Secretary specifies in regulations.
       ``(2) Special rules for certain retirement plans.--
       ``(A) In general.--If a covered expatriate holds on the day 
     before the expatriation date any interest in a retirement 
     plan to which this paragraph applies--
       ``(i) such interest shall not be treated as sold for 
     purposes of subsection (a)(1), but
       ``(ii) an amount equal to the present value of the 
     expatriate's nonforfeitable accrued benefit shall be treated 
     as having been received by such individual on such date as a 
     distribution under the plan.
       ``(B) Treatment of subsequent distributions.--In the case 
     of any distribution on or after the expatriation date to or 
     on behalf of the covered expatriate from a plan from which 
     the expatriate was treated as receiving a distribution under 
     subparagraph (A), the amount otherwise includible in gross 
     income by reason of the subsequent distribution shall be 
     reduced by the excess of the amount includible in gross 
     income under subparagraph (A) over any portion of such amount 
     to which this subparagraph previously applied.
       ``(C) Treatment of subsequent distributions by plan.--For 
     purposes of this title, a retirement plan to which this 
     paragraph applies, and any person acting on the plan's 
     behalf, shall treat any subsequent distribution described in 
     subparagraph (B) in the same manner as such distribution 
     would be treated without regard to this paragraph.
       ``(D) Applicable plans.--This paragraph shall apply to--
       ``(i) any qualified retirement plan (as defined in section 
     4974(c)),
       ``(ii) an eligible deferred compensation plan (as defined 
     in section 457(b)) of an eligible employer described in 
     section 457(e)(1)(A), and
       ``(iii) to the extent provided in regulations, any foreign 
     pension plan or similar retirement arrangements or programs.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes 
     citizenship, and
       ``(B) any long-term resident of the United States who--
       ``(i) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(ii) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.
       ``(2) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date of the event described in clause (i) or (ii) 
     of paragraph (1)(B).
       ``(3) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces such individual's 
     United States nationality before a diplomatic or consular 
     officer of the United States pursuant to paragraph (5) of 
     section 349(a) of the Immigration and Nationality Act (8 
     U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.

     Subparagraph (A) or (B) shall not apply to any individual 
     unless the renunciation or voluntary relinquishment is 
     subsequently approved by the issuance to the individual of a 
     certificate of loss of nationality by the United States 
     Department of State.
       ``(4) Long-term resident.--The term `long-term resident' 
     has the meaning given to such term by section 877(e)(2).
       ``(f) Special Rules Applicable to Beneficiaries' Interests 
     in Trust.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     an individual is determined under paragraph (3) to hold an 
     interest in a trust on the day before the expatriation date--
       ``(A) the individual shall not be treated as having sold 
     such interest,

[[Page S3916]]

       ``(B) such interest shall be treated as a separate share in 
     the trust, and
       ``(C)(i) such separate share shall be treated as a separate 
     trust consisting of the assets allocable to such share,
       ``(ii) the separate trust shall be treated as having sold 
     its assets on the day before the expatriation date for their 
     fair market value and as having distributed all of its assets 
     to the individual as of such time, and
       ``(iii) the individual shall be treated as having 
     recontributed the assets to the separate trust.

     Subsection (a)(2) shall apply to any income, gain, or loss of 
     the individual arising from a distribution described in 
     subparagraph (C)(ii). In determining the amount of such 
     distribution, proper adjustments shall be made for 
     liabilities of the trust allocable to an individual's share 
     in the trust.
       ``(2) Special rules for interests in qualified trusts.--
       ``(A) In general.--If the trust interest described in 
     paragraph (1) is an interest in a qualified trust--
       ``(i) paragraph (1) and subsection (a) shall not apply, and
       ``(ii) in addition to any other tax imposed by this title, 
     there is hereby imposed on each distribution with respect to 
     such interest a tax in the amount determined under 
     subparagraph (B).
       ``(B) Amount of tax.--The amount of tax under subparagraph 
     (A)(ii) shall be equal to the lesser of--
       ``(i) the highest rate of tax imposed by section 1(e) for 
     the taxable year which includes the day before the 
     expatriation date, multiplied by the amount of the 
     distribution, or
       ``(ii) the balance in the deferred tax account immediately 
     before the distribution determined without regard to any 
     increases under subparagraph (C)(ii) after the 30th day 
     preceding the distribution.
       ``(C) Deferred tax account.--For purposes of subparagraph 
     (B)(ii)--
       ``(i) Opening balance.--The opening balance in a deferred 
     tax account with respect to any trust interest is an amount 
     equal to the tax which would have been imposed on the 
     allocable expatriation gain with respect to the trust 
     interest if such gain had been included in gross income under 
     subsection (a).
       ``(ii) Increase for interest.--The balance in the deferred 
     tax account shall be increased by the amount of interest 
     determined (on the balance in the account at the time the 
     interest accrues), for periods after the 90th day after the 
     expatriation date, by using the rates and method applicable 
     under section 6621 for underpayments of tax for such periods, 
     except that section 6621(a)(2) shall be applied by 
     substituting `5 percentage points' for `3 percentage points' 
     in subparagraph (B) thereof.
       ``(iii) Decrease for taxes previously paid.--The balance in 
     the tax deferred account shall be reduced--

       ``(I) by the amount of taxes imposed by subparagraph (A) on 
     any distribution to the person holding the trust interest, 
     and
       ``(II) in the case of a person holding a nonvested 
     interest, to the extent provided in regulations, by the 
     amount of taxes imposed by subparagraph (A) on distributions 
     from the trust with respect to nonvested interests not held 
     by such person.

       ``(D) Allocable expatriation gain.--For purposes of this 
     paragraph, the allocable expatriation gain with respect to 
     any beneficiary's interest in a trust is the amount of gain 
     which would be allocable to such beneficiary's vested and 
     nonvested interests in the trust if the beneficiary held 
     directly all assets allocable to such interests.
       ``(E) Tax deducted and withheld.--
       ``(i) In general.--The tax imposed by subparagraph (A)(ii) 
     shall be deducted and withheld by the trustees from the 
     distribution to which it relates.
       ``(ii) Exception where failure to waive treaty rights.--If 
     an amount may not be deducted and withheld under clause (i) 
     by reason of the distributee failing to waive any treaty 
     right with respect to such distribution--

       ``(I) the tax imposed by subparagraph (A)(ii) shall be 
     imposed on the trust and each trustee shall be personally 
     liable for the amount of such tax, and
       ``(II) any other beneficiary of the trust shall be entitled 
     to recover from the distributee the amount of such tax 
     imposed on the other beneficiary.

       ``(F) Disposition.--If a trust ceases to be a qualified 
     trust at any time, a covered expatriate disposes of an 
     interest in a qualified trust, or a covered expatriate 
     holding an interest in a qualified trust dies, then, in lieu 
     of the tax imposed by subparagraph (A)(ii), there is hereby 
     imposed a tax equal to the lesser of--
       ``(i) the tax determined under paragraph (1) as if the day 
     before the expatriation date were the date of such cessation, 
     disposition, or death, whichever is applicable, or
       ``(ii) the balance in the tax deferred account immediately 
     before such date.
     Such tax shall be imposed on the trust and each trustee shall 
     be personally liable for the amount of such tax and any other 
     beneficiary of the trust shall be entitled to recover from 
     the covered expatriate or the estate the amount of such tax 
     imposed on the other beneficiary.
       ``(G) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Qualified trust.--The term `qualified trust' means a 
     trust which is described in section 7701(a)(30)(E).
       ``(ii) Vested interest.--The term `vested interest' means 
     any interest which, as of the day before the expatriation 
     date, is vested in the beneficiary.
       ``(iii) Nonvested interest.--The term `nonvested interest' 
     means, with respect to any beneficiary, any interest in a 
     trust which is not a vested interest. Such interest shall be 
     determined by assuming the maximum exercise of discretion in 
     favor of the beneficiary and the occurrence of all 
     contingencies in favor of the beneficiary.
       ``(iv) Adjustments.--The Secretary may provide for such 
     adjustments to the bases of assets in a trust or a deferred 
     tax account, and the timing of such adjustments, in order to 
     ensure that gain is taxed only once.
       ``(v) Coordination with retirement plan rules.--This 
     subsection shall not apply to an interest in a trust which is 
     part of a retirement plan to which subsection (d)(2) applies.
       ``(3) Determination of beneficiaries' interest in trust.--
       ``(A) Determinations under paragraph (1).--For purposes of 
     paragraph (1), a beneficiary's interest in a trust shall be 
     based upon all relevant facts and circumstances, including 
     the terms of the trust instrument and any letter of wishes or 
     similar document, historical patterns of trust distributions, 
     and the existence of and functions performed by a trust 
     protector or any similar adviser.
       ``(B) Other determinations.--For purposes of this section--
       ``(i) Constructive ownership.--If a beneficiary of a trust 
     is a corporation, partnership, trust, or estate, the 
     shareholders, partners, or beneficiaries shall be deemed to 
     be the trust beneficiaries for purposes of this section.
       ``(ii) Taxpayer return position.--A taxpayer shall clearly 
     indicate on its income tax return--

       ``(I) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(II) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.

       ``(g) Termination of Deferrals, Etc.--In the case of any 
     covered expatriate, notwithstanding any other provision of 
     this title--
       ``(1) any period during which recognition of income or gain 
     is deferred shall terminate on the day before the 
     expatriation date, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply on the day before the expatriation date and the 
     unpaid portion of such tax shall be due and payable at the 
     time and in the manner prescribed by the Secretary.
       ``(h) Imposition of Tentative Tax.--
       ``(1) In general.--If an individual is required to include 
     any amount in gross income under subsection (a) for any 
     taxable year, there is hereby imposed, immediately before the 
     expatriation date, a tax in an amount equal to the amount of 
     tax which would be imposed if the taxable year were a short 
     taxable year ending on the expatriation date.
       ``(2) Due date.--The due date for any tax imposed by 
     paragraph (1) shall be the 90th day after the expatriation 
     date.
       ``(3) Treatment of tax.--Any tax paid under paragraph (1) 
     shall be treated as a payment of the tax imposed by this 
     chapter for the taxable year to which subsection (a) applies.
       ``(4) Deferral of tax.--The provisions of subsection (b) 
     shall apply to the tax imposed by this subsection to the 
     extent attributable to gain includible in gross income by 
     reason of this section.
       ``(i) Special Liens for Deferred Tax Amounts.--
       ``(1) Imposition of lien.--
       ``(A) In general.--If a covered expatriate makes an 
     election under subsection (a)(4) or (b) which results in the 
     deferral of any tax imposed by reason of subsection (a), the 
     deferred amount (including any interest, additional amount, 
     addition to tax, assessable penalty, and costs attributable 
     to the deferred amount) shall be a lien in favor of the 
     United States on all property of the expatriate located in 
     the United States (without regard to whether this section 
     applies to the property).
       ``(B) Deferred amount.--For purposes of this subsection, 
     the deferred amount is the amount of the increase in the 
     covered expatriate's income tax which, but for the election 
     under subsection (a)(4) or (b), would have occurred by reason 
     of this section for the taxable year including the 
     expatriation date.
       ``(2) Period of lien.--The lien imposed by this subsection 
     shall arise on the expatriation date and continue until--
       ``(A) the liability for tax by reason of this section is 
     satisfied or has become unenforceable by reason of lapse of 
     time, or
       ``(B) it is established to the satisfaction of the 
     Secretary that no further tax liability may arise by reason 
     of this section.
       ``(3) Certain rules apply.--The rules set forth in 
     paragraphs (1), (3), and (4) of section 6324A(d) shall apply 
     with respect to the lien imposed by this subsection as if it 
     were a lien imposed by section 6324A.
       ``(j) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Inclusion in Income of Gifts and Bequests Received by 
     United States Citizens and Residents From Expatriates.--
     Section 102 (relating to gifts, etc. not included in

[[Page S3917]]

     gross income) is amended by adding at the end the following 
     new subsection:
       ``(d) Gifts and Inheritances From Covered Expatriates.--
       ``(1) Treatment of gifts and inheritances.--
       ``(A) In general.--Subsection (a) shall not exclude from 
     gross income the value of any property acquired by gift, 
     bequest, devise, or inheritance from a covered expatriate 
     after the expatriation date.
       ``(B) Determination of basis.--Notwithstanding sections 
     1015 or 1022, the basis of any property described in 
     subparagraph (A) in the hands of the donee or the person 
     acquiring such property from the decedent shall be equal to 
     the fair market value of the property at the time of the 
     gift, bequest, devise, or inheritance.
       ``(2) Exceptions for transfers otherwise subject to estate 
     or gift tax.--Paragraph (1) shall not apply to any property 
     if either--
       ``(A) the gift, bequest, devise, or inheritance is--
       ``(i) shown on a timely filed return of tax imposed by 
     chapter 12 as a taxable gift by the covered expatriate, or
       ``(ii) included in the gross estate of the covered 
     expatriate for purposes of chapter 11 and shown on a timely 
     filed return of tax imposed by chapter 11 of the estate of 
     the covered expatriate, or
       ``(B) no such return was timely filed but no such return 
     would have been required to be filed even if the covered 
     expatriate were a citizen or long-term resident of the United 
     States.
       ``(3) Definitions.--For purposes of this subsection, any 
     term used in this subsection which is also used in section 
     877A shall have the same meaning as when used in section 
     877A.''.
       (c) Definition of Termination of United States 
     Citizenship.--Section 7701(a) is amended by adding at the end 
     the following new paragraph:
       ``(50) Termination of united states citizenship.--
       ``(A) In general.--An individual shall not cease to be 
     treated as a United States citizen before the date on which 
     the individual's citizenship is treated as relinquished under 
     section 877A(e)(3).
       ``(B) Dual citizens.--Under regulations prescribed by the 
     Secretary, subparagraph (A) shall not apply to an individual 
     who became at birth a citizen of the United States and a 
     citizen of another country.''.
       (d) Ineligibility for Visa or Admission to United States.--
       (1) In general.--Section 212(a)(10)(E) of the Immigration 
     and Nationality Act (8 U.S.C. 1182(a)(10)(E)) is amended to 
     read as follows:
       ``(E) Former citizens not in compliance with expatriation 
     revenue provisions.--Any alien who is a former citizen of the 
     United States who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3) of the Internal 
     Revenue Code of 1986) and who is not in compliance with 
     section 877A of such Code (relating to expatriation) is 
     inadmissible.''.
       (2) Availability of information.--
       (A) In general.--Section 6103(l) (relating to disclosure of 
     returns and return information for purposes other than tax 
     administration) is amended by adding at the end the following 
     new paragraph:
       ``(21) Disclosure to deny visa or admission to certain 
     expatriates.--Upon written request of the Attorney General or 
     the Attorney General's delegate, the Secretary shall disclose 
     whether an individual is in compliance with section 877A (and 
     if not in compliance, any items of noncompliance) to officers 
     and employees of the Federal agency responsible for 
     administering section 212(a)(10)(E) of the Immigration and 
     Nationality Act solely for the purpose of, and to the extent 
     necessary in, administering such section 212(a)(10)(E).''.
       (B) Safeguards.--Section 6103(p)(4) (relating to 
     safeguards) is amended by striking ``or (20)'' each place it 
     appears and inserting ``(20), or (21)''.
       (3) Effective dates.--The amendments made by this 
     subsection shall apply to individuals who relinquish United 
     States citizenship on or after the date of the enactment of 
     this Act.
       (e) Conforming Amendments.--
       (1) Section 877 is amended by adding at the end the 
     following new subsection:
       ``(h) Application.--This section shall not apply to an 
     expatriate (as defined in section 877A(e)) whose expatriation 
     date (as so defined) occurs on or after the date of the 
     enactment of this subsection.''.
       (2) Section 2107 is amended by adding at the end the 
     following new subsection:
       ``(f) Application.--This section shall not apply to any 
     expatriate subject to section 877A.''.
       (3) Section 2501(a)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Application.--This paragraph shall not apply to any 
     expatriate subject to section 877A.''.
       (4) Section 6039G(a) is amended by inserting ``or 877A'' 
     after ``section 877(b)''.
       (5) The second sentence of section 6039G(d) is amended by 
     inserting ``or who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3))'' after ``section 
     877(a))''.
       (f) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 is amended by 
     inserting after the item relating to section 877 the 
     following new item:

``Sec. 877A. Tax responsibilities of expatriation''.

       (g) Effective Date.--
       (1) In general.--Except as provided in this subsection, the 
     amendments made by this section shall apply to expatriates 
     (within the meaning of section 877A(e) of the Internal 
     Revenue Code of 1986, as added by this section) whose 
     expatriation date (as so defined) occurs on or after the date 
     of the enactment of this Act.
       (2) Gifts and bequests.--Section 102(d) of the Internal 
     Revenue Code of 1986 (as added by subsection (b)) shall apply 
     to gifts and bequests received on or after the date of the 
     enactment of this Act, from an individual or the estate of an 
     individual whose expatriation date (as so defined) occurs 
     after such date.
       (3) Due date for tentative tax.--The due date under section 
     877A(h)(2) of the Internal Revenue Code of 1986, as added by 
     this section, shall in no event occur before the 90th day 
     after the date of the enactment of this Act.

     SEC. 536. LIMITATION ON ANNUAL AMOUNTS WHICH MAY BE DEFERRED 
                   UNDER NONQUALIFIED DEFERRED COMPENSATION 
                   ARRANGEMENTS.

       (a) In General.--Section 409A(a) of the Internal Revenue 
     Code of 1986 (relating to inclusion of gross income under 
     nonqualified deferred compensation plans) is amended--
       (1) by striking ``and (4)'' in subclause (I) of paragraph 
     (1)(A)(i) and inserting ``(4), and (5)'', and
       (2) by adding at the end the following new paragraph:
       ``(5) Annual limitation on aggregate deferred amounts.--
       ``(A) Limitation.--The requirements of this paragraph are 
     met if the plan provides that the aggregate amount of 
     compensation which is deferred for any taxable year with 
     respect to a participant under the plan may not exceed the 
     applicable dollar amount for the taxable year.
       ``(B) Inclusion of future earnings.--If an amount is 
     includible under paragraph (1) in the gross income of a 
     participant for any taxable year by reason of any failure to 
     meet the requirements of this paragraph, any income (whether 
     actual or notional) for any subsequent taxable year shall be 
     included in gross income under paragraph (1)(A) in such 
     subsequent taxable year to the extent such income--
       ``(i) is attributable to compensation (or income 
     attributable to such compensation) required to be included in 
     gross income by reason of such failure (including by reason 
     of this subparagraph), and
       ``(ii) is not subject to a substantial risk of forfeiture 
     and has not been previously included in gross income.
       ``(C) Aggregation rule.--For purposes of this paragraph, 
     all nonqualified deferred compensation plans maintained by 
     all employers treated as a single employer under subsection 
     (d)(6) shall be treated as 1 plan.
       ``(D) Applicable dollar amount.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable dollar amount' 
     means, with respect to any participant, the lesser of--

       ``(I) the average annual compensation which was payable 
     during the base period to the participant by the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) and which was includible in 
     the participant's gross income for taxable years in the base 
     period, or
       ``(II) $1,000,000.

       ``(ii) Base period.--

       ``(I) In general.--The term `base period' means, with 
     respect to any computation year, the 5-taxable year period 
     ending with the taxable year preceding the computation year.
       ``(II) Elections made before computation year.--If, before 
     the beginning of the computation year, an election described 
     in paragraph (4)(B) is made by the participant to have 
     compensation for services performed in the computation year 
     deferred under a nonqualified deferred compensation plan, the 
     base period shall be the 5-taxable year period ending with 
     the taxable year preceding the taxable year in which the 
     election is made.
       ``(III) Computation year.--For purposes of this clause, the 
     term `computation year' means any taxable year of the 
     participant for which the limitation under subparagraph (A) 
     is being determined.
       ``(IV) Special rule for employees of less than 5 years.--If 
     a participant did not perform services for the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) during the entire 5-taxable 
     year period referred to in subparagraph (A) or (B), only the 
     portion of such period during which the participant performed 
     such services shall be taken into account.''.

       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006, 
     except that--
       (A) the amendments shall only apply to amounts deferred 
     after December 31, 2006 (and to earnings on such amounts), 
     and
       (B) taxable years beginning on or before December 31, 2006, 
     shall be taken into account in determining the average annual 
     compensation of a participant during any base period for 
     purposes of section 409A(a)(5)(D) of the Internal Revenue 
     Code of 1986 (as added by such amendments).
       (2) Guidance relating to certain existing arrangements.--
     Not later than 60 days after the date of the enactment of 
     this Act, the

[[Page S3918]]

     Secretary of the Treasury shall issue guidance providing a 
     limited period during which a nonqualified deferred 
     compensation plan adopted before December 31, 2006, may, 
     without violating the requirements of section 409A(a) of such 
     Code, be amended--
       (A) to provide that a participant may, no later than 
     December 31, 2007, cancel or modify an outstanding deferral 
     election with regard to all or a portion of amounts deferred 
     after December 31, 2006, to the extent necessary for the plan 
     to meet the requirements of section 409A(a)(5) of such Code 
     (as added by the amendments made by this section), but only 
     if amounts subject to the cancellation or modification are, 
     to the extent not previously included in gross income, 
     includible in income of the participant when no longer 
     subject to substantial risk of forfeiture, and
       (B) to conform to the requirements of section 409A(a)(5) of 
     such Code (as added by the amendments made by this section) 
     with regard to amounts deferred after December 31, 2006.

     SEC. 537. MODIFICATION OF CRIMINAL PENALTIES FOR WILLFUL 
                   FAILURES INVOLVING TAX PAYMENTS AND FILING 
                   REQUIREMENTS.

       (a) Increase in Penalty for Attempt to Evade or Defeat 
     Tax.--Section 7201 (relating to attempt to evade or defeat 
     tax) is amended--
       (1) by striking ``$100,000'' and inserting ``$500,000'',
       (2) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (3) by striking ``5 years'' and inserting ``10 years''.
       (b) Modification of Penalties for Willful Failure to File 
     Return, Supply Information, or Pay Tax.--
       (1) In general.--Section 7203 (relating to willful failure 
     to file return, supply information, or pay tax) is amended--
       (A) in the first sentence--
       (i) by striking ``Any person'' and inserting the following:
       ``(a) In General.--Any person'', and
       (ii) by striking ``$25,000'' and inserting ``$50,000'',
       (B) in the third sentence, by striking ``section'' and 
     inserting ``subsection'', and
       (C) by adding at the end the following new subsection:
       ``(b) Aggravated Failure to File.--
       ``(1) In general.--In the case of any failure described in 
     paragraph (2), the first sentence of subsection (a) shall be 
     applied by substituting--
       ``(A) `felony' for `misdemeanor',
       ``(B) `$250,000 ($500,000' for `$50,000 ($100,000', and
       ``(C) `5 years' for `1 year'.
       ``(2) Failure described.--A failure described in this 
     paragraph is--
       ``(A) a failure to make a return described in subsection 
     (a) for any 3 taxable years occurring during any period of 5 
     consecutive taxable years if the aggregate tax liability for 
     such period is not less than $50,000, or
       ``(B) a failure to make a return if the tax liability 
     giving rise to the requirement to make such return is 
     attributable to an activity which is a felony under any State 
     or Federal law.''.
       (2) Penalty may be applied in addition to other 
     penalties.--Section 7204 (relating to fraudulent statement or 
     failure to make statement to employees) is amended by 
     striking ``the penalty provided in section 6674'' and 
     inserting ``the penalties provided in sections 6674 and 
     7203(b)''.
       (c) Fraud and False Statements.--Section 7206 (relating to 
     fraud and false statements) is amended--
       (1) by striking ``$100,000'' and inserting ``$500,000'',
       (2) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (3) by striking ``3 years'' and inserting ``5 years''.
       (d) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--Section 7206 (relating to 
     fraud and false statements), as amended by subsection (a)(3), 
     is amended--
       (1) by striking ``Any person who--''and inserting ``(a) In 
     General.--Any person who--'', and
       (2) by adding at the end the following new subsection:
       ``(b) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--If any portion of any 
     underpayment (as defined in section 6664(a)) or overpayment 
     (as defined in section 6401(a)) of tax required to be shown 
     on a return is attributable to fraudulent action described in 
     subsection (a), the applicable dollar amount under subsection 
     (a) shall in no event be less than an amount equal to such 
     portion. A rule similar to the rule under section 6663(b) 
     shall apply for purposes of determining the portion so 
     attributable.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to actions, and failures to act, occurring after 
     the date of the enactment of this Act.

     SEC. 538. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST 
                   ON UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE 
                   FINANCIAL ARRANGEMENTS.

       (a) Determination of Penalty.--
       (1) In general.--Notwithstanding any other provision of 
     law, in the case of an applicable taxpayer--
       (A) the determination as to whether any interest or 
     applicable penalty is to be imposed with respect to any 
     arrangement described in paragraph (2), or to any 
     underpayment of Federal income tax attributable to items 
     arising in connection with any such arrangement, shall be 
     made without regard to the rules of subsections (b), (c), and 
     (d) of section 6664 of the Internal Revenue Code of 1986, and
       (B) if any such interest or applicable penalty is imposed, 
     the amount of such interest or penalty shall be equal to 
     twice that determined without regard to this section.
       (2) Applicable taxpayer.--For purposes of this subsection--
       (A) In general.--The term ``applicable taxpayer'' means a 
     taxpayer which--
       (i) has underreported its United States income tax 
     liability with respect to any item which directly or 
     indirectly involves--

       (I) any financial arrangement which in any manner relies on 
     the use of offshore payment mechanisms (including credit, 
     debit, or charge cards) issued by banks or other entities in 
     foreign jurisdictions, or
       (II) any offshore financial arrangement (including any 
     arrangement with foreign banks, financial institutions, 
     corporations, partnerships, trusts, or other entities), and

       (ii) has neither signed a closing agreement pursuant to the 
     Voluntary Offshore Compliance Initiative established by the 
     Department of the Treasury under Revenue Procedure 2003-11 
     nor voluntarily disclosed its participation in such 
     arrangement by notifying the Internal Revenue Service of such 
     arrangement prior to the issue being raised by the Internal 
     Revenue Service during an examination.
       (B) Authority to waive.--The Secretary of the Treasury or 
     the Secretary's delegate may waive the application of 
     paragraph (1) to any taxpayer if the Secretary or the 
     Secretary's delegate determines that the use of such offshore 
     payment mechanisms is incidental to the transaction and, in 
     addition, in the case of a trade or business, such use is 
     conducted in the ordinary course of the type of trade or 
     business of the taxpayer.
       (C) Issues raised.--For purposes of subparagraph (A)(ii), 
     an item shall be treated as an issue raised during an 
     examination if the individual examining the return--
       (i) communicates to the taxpayer knowledge about the 
     specific item, or
       (ii) has made a request to the taxpayer for information and 
     the taxpayer could not make a complete response to that 
     request without giving the examiner knowledge of the specific 
     item.
       (b) Applicable Penalty.--For purposes of this section, the 
     term ``applicable penalty'' means any penalty, addition to 
     tax, or fine imposed under chapter 68 of the Internal Revenue 
     Code of 1986.
       (c) Effective Date.--The provisions of this section shall 
     apply to interest, penalties, additions to tax, and fines 
     with respect to any taxable year if, as of the date of the 
     enactment of this Act, the assessment of any tax, penalty, or 
     interest with respect to such taxable year is not prevented 
     by the operation of any law or rule of law.

     SEC. 539. INCREASE IN PENALTY FOR BAD CHECKS AND MONEY 
                   ORDERS.

       (a) In General.--Section 6657 (relating to bad checks) is 
     amended--
       (1) by striking ``$750'' and inserting ``$1,250'', and
       (2) by striking ``$15'' and inserting ``$25''.
       (b) Effective Date.--The amendments made by this section 
     apply to checks or money orders received after the date of 
     the enactment of this Act.

     SEC. 540. TREATMENT OF CONTINGENT PAYMENT CONVERTIBLE DEBT 
                   INSTRUMENTS.

       (a) In General.--Section 1275(d) (relating to regulation 
     authority) is amended--
       (1) by striking ``The Secretary'' and inserting the 
     following:
       ``(1) In general.--The Secretary'', and
       (2) by adding at the end the following new paragraph:
       ``(2) Treatment of contingent payment convertible debt.--
       ``(A) In general.--In the case of a debt instrument which--
       ``(i) is convertible into stock of the issuing corporation, 
     into stock or debt of a related party (within the meaning of 
     section 267(b) or 707(b)(1)), or into cash or other property 
     in an amount equal to the approximate value of such stock or 
     debt, and
       ``(ii) provides for 1 or more contingent payments,

     any regulations which require original issue discount to be 
     determined by reference to the comparable yield of a fixed-
     rate debt instrument shall be applied as if the regulations 
     require that such comparable yield be determined by reference 
     to a fixed-rate debt instrument which is convertible into 
     stock.
       ``(B) Special rule.--For purposes of subparagraph (A), the 
     comparable yield shall be determined without taking into 
     account the yield resulting from the conversion of a debt 
     instrument into stock.''.
       (b) Cross Reference.--Section 163(e)(6) (relating to cross 
     references) is amended by adding at the end the following:
       ``For the treatment of contingent payment convertible debt, 
     see section 1275(d)(2).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to debt instruments issued on or after the date 
     of the enactment of this Act.

     SEC. 541. EXTENSION OF IRS USER FEES.

       Subsection (c) of section 7528 (relating to Internal 
     Revenue Service user fees) is amended by striking ``September 
     30, 2014'' and inserting ``September 30, 2016''.

[[Page S3919]]

     SEC. 542. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES 
                   FOR EMPLOYMENT TAX LIABILITIES.

       (a) In General.--Section 6330(f) (relating to jeopardy and 
     State refund collection) is amended--
       (1) by striking ``; or'' at the end of paragraph (1) and 
     inserting a comma,
       (2) by adding ``or'' at the end of paragraph (2), and
       (3) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) the Secretary has served a levy in connection with 
     the collection of taxes under chapter 21, 22, 23, or 24,''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to levies issued on or after the date that is 120 
     days after the date of the enactment of this Act.

     SEC. 543. MODIFICATIONS TO WHISTLEBLOWER REFORMS.

       (a) Modification of Tax Threshold for Awards.--Subparagraph 
     (B) of section 7623(b)(5), as added by the Tax Relief and 
     Health Care Act of 2006, is amended by striking 
     ``$2,000,000'' and inserting ``$20,000''.
       (b) Whistleblower Office.--
       (1) In general.--Section 7623 is amended by adding at the 
     end the following new subsections:
       ``(c) Whistleblower Office.--
       ``(1) In general.--There is established in the Internal 
     Revenue Service an office to be known as the `Whistleblower 
     Office' which--
       ``(A) shall at all times operate at the direction of the 
     Commissioner and coordinate and consult with other divisions 
     in the Internal Revenue Service as directed by the 
     Commissioner,
       ``(B) shall analyze information received from any 
     individual described in subsection (b) and either investigate 
     the matter itself or assign it to the appropriate Internal 
     Revenue Service office,
       ``(C) shall monitor any action taken with respect to such 
     matter,
       ``(D) shall inform such individual that it has accepted the 
     individual's information for further review,
       ``(E) may require such individual and any legal 
     representative of such individual to not disclose any 
     information so provided,
       ``(F) in its sole discretion, may ask for additional 
     assistance from such individual or any legal representative 
     of such individual, and
       ``(G) shall determine the amount to be awarded to such 
     individual under subsection (b).
       ``(2) Funding for office.--There is authorized to be 
     appropriated $10,000,000 for each fiscal year for the 
     Whistleblower Office. These funds shall be used to maintain 
     the Whistleblower Office and also to reimburse other Internal 
     Revenue Service offices for related costs, such as costs of 
     investigation and collection.
       ``(3) Request for assistance.--
       ``(A) In general.--Any assistance requested under paragraph 
     (1)(F) shall be under the direction and control of the 
     Whistleblower Office or the office assigned to investigate 
     the matter under subparagraph (A). No individual or legal 
     representative whose assistance is so requested may by reason 
     of such request represent himself or herself as an employee 
     of the Federal Government.
       ``(B) Funding of assistance.--From the amounts available 
     for expenditure under subsection (b), the Whistleblower 
     Office may, with the agreement of the individual described in 
     subsection (b), reimburse the costs incurred by any legal 
     representative of such individual in providing assistance 
     described in subparagraph (A).
       ``(d) Reports.--The Secretary shall each year conduct a 
     study and report to Congress on the use of this section, 
     including--
       ``(1) an analysis of the use of this section during the 
     preceding year and the results of such use, and
       ``(2) any legislative or administrative recommendations 
     regarding the provisions of this section and its 
     application.''.
       (2) Conforming amendment.--Section 406 of division A of the 
     Tax Relief and Health Care Act of 2006 is amended by striking 
     subsections (b) and (c).
       (3) Report on implementation.--Not later than 6 months 
     after the date of the enactment of this Act, the Secretary of 
     the Treasury shall submit to Congress a report on the 
     establishment and operation of the Whistleblower Office under 
     section 7623(c) of the Internal Revenue Code of 1986.
       (c) Publicity of Award Appeals.--Paragraph (4) of section 
     7623(b), as added by the Tax Relief and Health Care Act of 
     2006, is amended to read as follows:
       ``(4) Appeal of award determination.--
       ``(A) In general.--Any determination regarding an award 
     under paragraph (1), (2), or (3) may, within 30 days of such 
     determination, be appealed to the Tax Court (and the Tax 
     Court shall have jurisdiction with respect to such matter).
       ``(B) Publicity of appeals.--Notwithstanding sections 7458 
     and 7461, the Tax Court may, in order to preserve the 
     anonymity, privacy, or confidentiality of any person under 
     this subsection, provide by rules adopted under section 7453 
     that portions of filings, hearings, testimony, evidence, and 
     reports in connection with proceedings under this subsection 
     may be closed to the public or to inspection by the 
     public.''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to information 
     provided on or after the date of the enactment of this Act.
       (2) Publicity of award appeals.--The amendment made by 
     subsection (c) shall take effect as if included in the 
     amendments made by section 406 of the Tax Relief and Health 
     Care Act of 2006.

     SEC. 544. MODIFICATIONS OF DEFINITION OF EMPLOYEES COVERED BY 
                   DENIAL OF DEDUCTION FOR EXCESSIVE EMPLOYEE 
                   REMUNERATION.

       (a) In General.--Paragraph (3) of section 162(m) is amended 
     to read as follows:
       ``(3) Covered employee.--For purposes of this subsection, 
     the term `covered employee' means, with respect to any 
     taxpayer for any taxable year, an individual who--
       ``(A) was the chief executive officer of the taxpayer, or 
     an individual acting in such a capacity, at any time during 
     the taxable year,
       ``(B) is 1 of the 4 highest compensated officers of the 
     taxpayer for the taxable year (other than the individual 
     described in subparagraph (A)), or
       ``(C) was a covered employee of the taxpayer (or any 
     predecessor) for any preceding taxable year beginning after 
     December 31, 2006.
       ``In the case of an individual who was a covered employee 
     for any taxable year beginning after December 31, 2006, the 
     term `covered employee' shall include a beneficiary of such 
     employee with respect to any remuneration for services 
     performed by such employee as a covered employee (whether or 
     not such services are performed during the taxable year in 
     which the remuneration is paid).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 545. INCREASE IN AGE OF MINOR CHILDREN WHOSE UNEARNED 
                   INCOME IS TAXED AS IF PARENT'S INCOME.

       (a) In General.--Subparagraph (A) of section 1(g)(2) 
     (relating to child to whom subsection applies) is amended to 
     read as follows:
       ``(A) such child--
       ``(i) has not attained age 18 before the close of the 
     taxable year, or
       ``(ii)(I) has attained age 18 before the close of the 
     taxable year and meets the age requirements of section 
     152(c)(3) (determined without regard to subparagraph (B) 
     thereof), and
       ``(II) whose earned income (as defined in section 
     911(d)(2)) for such taxable year does not exceed one-half of 
     the amount of the individual's support (within the meaning of 
     section 152(c)(1)(D) after the application of section 
     152(f)(5)) for such taxable year,''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 546. INCREASE IN INFORMATION RETURN PENALTIES.

       (a) Failure to File Correct Information Returns.--
       (1) In general.--Section 6721(a)(1) is amended--
       (A) by striking ``$50'' and inserting ``$250'', and
       (B) by striking ``$250,000'' and inserting ``$3,000,000''.
       (2) Reduction where correction in specified period.--
       (A) Correction within 30 days.--Section 6721(b)(1) is 
     amended--
       (i) by striking ``$15'' and inserting ``$50'',
       (ii) by striking ``$50'' and inserting ``$250'', and
       (iii) by striking ``$75,000'' and inserting ``$500,000''.
       (B) Failures corrected on or before august 1.--Section 
     6721(b)(2) is amended--
       (i) by striking ``$30'' and inserting ``$100'',
       (ii) by striking ``$50'' and inserting ``$250'', and
       (iii) by striking ``$150,000'' and inserting 
     ``$1,500,000''.
       (3) Lower limitation for persons with gross receipts of not 
     more than $5,000,000.--Section 6721(d)(1) is amended--
       (A) in subparagraph (A)--
       (i) by striking ``$100,000'' and inserting ``$1,000,000'', 
     and
       (ii) by striking ``$250,000'' and inserting ``$3,000,000'',
       (B) in subparagraph (B)--
       (i) by striking ``$25,000'' and inserting ``$175,000'', and
       (ii) by striking ``$75,000'' and inserting ``$500,000'', 
     and
       (C) in subparagraph (C)--
       (i) by striking ``$50,000'' and inserting ``$500,000'', and
       (ii) by striking ``$150,000'' and inserting ``$1,500,000''.
       (4) Penalty in case of intentional disregard.--Section 
     6721(e) is amended--
       (A) by striking ``$100'' in paragraph (2) and inserting 
     ``$500'',
       (B) by striking ``$250,000'' in paragraph (3)(A) and 
     inserting ``$3,000,000''.
       (b) Failure to Furnish Correct Payee Statements.--
       (1) In general.--Section 6722(a) is amended--
       (A) by striking ``$50'' and inserting ``$250'', and
       (B) by striking ``$100,000'' and inserting ``$1,000,000''.
       (2) Penalty in case of intentional disregard.--Section 
     6722(c) is amended--
       (A) by striking ``$100'' in paragraph (1) and inserting 
     ``$500'', and
       (B) by striking ``$100,000'' in paragraph (2)(A) and 
     inserting ``$1,000,000''.
       (c) Failure to Comply With Other Information Reporting 
     Requirements.--Section 6723 is amended--

[[Page S3920]]

       (1) by striking ``$50'' and inserting ``$250'', and
       (2) by striking ``$100,000'' and inserting ``$1,000,000''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to information returns required to 
     be filed on or after January 1, 2008.

     SEC. 547. E-FILING REQUIREMENT FOR CERTAIN LARGE 
                   ORGANIZATIONS.

       (a) In General.--The first sentence of section 6011(e)(2) 
     is amended to read as follows: ``In prescribing regulations 
     under paragraph (1), the Secretary shall take into account 
     (among other relevant factors) the ability of the taxpayer to 
     comply at reasonable cost with the requirements of such 
     regulations.''.
       (b) Conforming Amendment.--Section 6724 is amended by 
     striking subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending on or after December 31, 
     2008.

     SEC. 548. EXPANSION OF IRS ACCESS TO INFORMATION IN NATIONAL 
                   DIRECTORY OF NEW HIRES FOR TAX ADMINISTRATION 
                   PURPOSES.

       (a) In General.--Paragraph (3) of section 453(j) of the 
     Social Security Act (42 U.S.C. 653(j)) is amended to read as 
     follows:
       ``(3) Administration of federal tax laws.--The Secretary of 
     the Treasury shall have access to the information in the 
     National Directory of New Hires for purposes of administering 
     the Internal Revenue Code of 1986.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 549. DISCLOSURE OF PRISONER RETURN INFORMATION TO 
                   FEDERAL BUREAU OF PRISONS.

       (a) Disclosure.--
       (1) In general.--Subsection (l) of section 6103 (relating 
     to disclosure of returns and return information for purposes 
     other than tax administration) is amended by adding at the 
     end the following new paragraph:
       ``(21) Disclosure of return information of prisoners to 
     federal bureau of prisons.--
       ``(A) In general.--Under such procedures as the Secretary 
     may prescribe, the Secretary may disclose return information 
     with respect to persons incarcerated in Federal prisons whom 
     the Secretary believes filed or facilitated the filing of 
     false or fraudulent returns to the head of the Federal Bureau 
     of Prisons if the Secretary determines that such disclosure 
     is necessary to permit effective tax administration.
       ``(B) Disclosure by agency to employees.--The head of the 
     Federal Bureau of Prisons may redisclose information received 
     under subparagraph (A)--
       ``(i) only to those officers and employees of the Bureau 
     who are personally and directly engaged in taking 
     administrative actions to address violations of 
     administrative rules and regulations of the prison facility, 
     and
       ``(ii) solely for the purposes described in subparagraph 
     (C).
       ``(C) Restriction on use of disclosed information.--Return 
     information disclosed under this paragraph may be used only 
     for the purposes of--
       ``(i) preventing the filing of false or fraudulent returns; 
     and
       ``(ii) taking administrative actions against individuals 
     who have filed or attempted to file false or fraudulent 
     returns.''.
       (2) Procedures and record keeping related to disclosure.--
     Subsection (p)(4) of section 6103 is amended--
       (A) by striking ``(14), or (17)'' in the matter before 
     subparagraph (A) and inserting ``(14), (17), or (21)'', and
       (B) by striking ``(9), or (16)'' in subparagraph (F)(i) and 
     inserting ``(9), (16), or (21)''.
       (3) Evaluation by treasury inspector general for tax 
     administration.--Paragraph (3) of section 7803(d) is amended 
     by striking ``and'' at the end of subparagraph (A), by 
     striking the period at the end of subparagraph (B) and 
     inserting ``; and'', and by adding at the end the following 
     new subparagraph:
       ``(C) not later than 3 years after the date of the 
     enactment of section 6103(l)(21), submit a written report to 
     Congress on the implementation of such section.''.
       (b) Annual Reports.--
       (1) In general.--The Secretary of the Treasury shall submit 
     to Congress and make publicly available an annual report on 
     the filing of false and fraudulent returns by individuals 
     incarcerated in Federal and State prisons.
       (2) Contents of report.--The report submitted under 
     paragraph (1) shall contain statistics on the number of false 
     or fraudulent returns associated with each Federal and State 
     prison and such other information that the Secretary 
     determines is appropriate.
       (3) Exchange of information.--For the purpose of gathering 
     information necessary for the reports required under 
     paragraph (1), the Secretary of the Treasury shall enter into 
     agreements with the head of the Federal Bureau of Prisons and 
     the heads of State agencies charged with responsibility for 
     administration of State prisons under which the head of the 
     Bureau or Agency provides to the Secretary not less 
     frequently than annually the names and other identifying 
     information of prisoners incarcerated at each facility 
     administered by the Bureau or Agency.
       (c) Effective Date.--The amendments made by this section 
     shall apply to disclosures on or after January 1, 2008.

     SEC. 550. UNDERSTATEMENT OF TAXPAYER LIABILITY BY RETURN 
                   PREPARERS.

       (a) Application of Return Preparer Penalties to All Tax 
     Returns.--
       (1) Definition of tax return preparer.--Paragraph (36) of 
     section 7701(a) (relating to income tax preparer) is 
     amended--
       (A) by striking ``income'' each place it appears in the 
     heading and the text, and
       (B) in subparagraph (A), by striking ``subtitle A'' each 
     place it appears and inserting ``this title''.
       (2) Conforming amendments.--
       (A)(i) Section 6060 is amended by striking ``INCOME TAX 
     RETURN PREPARERS'' in the heading and inserting ``TAX RETURN 
     PREPARERS''.
       (ii) Section 6060(a) is amended--
       (I) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (II) by striking ``each income tax return preparer'' and 
     inserting ``each tax return preparer'', and
       (III) by striking ``another income tax return preparer'' 
     and inserting ``another tax return preparer''.
       (iii) The item relating to section 6060 in the table of 
     sections for subpart F of part III of subchapter A of chapter 
     61 is amended by striking ``income tax return preparers'' and 
     inserting ``tax return preparers''.
       (iv) Subpart F of part III of subchapter A of chapter 61 is 
     amended by striking ``INCOME TAX RETURN PREPARERS'' in the 
     heading and inserting ``TAX RETURN PREPARERS''.
       (v) The item relating to subpart F in the table of subparts 
     for part III of subchapter A of chapter 61 is amended by 
     striking ``income tax return preparers'' and inserting ``tax 
     return preparers''.
       (B) Section 6103(k)(5) is amended--
       (i) by striking ``income tax return preparer'' each place 
     it appears and inserting ``tax return preparer'', and
       (ii) by striking ``income tax return preparers'' each place 
     it appears and inserting ``tax return preparers''.
       (C)(i) Section 6107 is amended--
       (I) by striking ``INCOME TAX RETRUN PREPARER'' in the 
     heading and inserting ``TAX RETRUN PREPARER'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears in subsections (a) and (b) and inserting ``a 
     tax return preparer'',
       (III) by striking ``Income Tax Return Preparer'' in the 
     heading for subsection (b) and inserting ``Tax Return 
     Preparer'', and
       (IV) in subsection (c), by striking ``income tax return 
     preparers'' and inserting ``tax return preparers''.
       (ii) The item relating to section 6107 in the table of 
     sections for subchapter B of chapter 61 is amended by 
     striking ``Income tax return preparer'' and inserting ``Tax 
     return preparer''.
       (D) Section 6109(a)(4) is amended--
       (i) by striking ``an income tax return preparer'' and 
     inserting ``a tax return preparer'', and
       (ii) by striking ``income return preparer'' in the heading 
     and inserting ``tax return preparer''.
       (E) Section 6503(k)(4) is amended by striking ``Income tax 
     return preparers'' and inserting ``Tax return preparers''.
       (F)(i) Section 6694 is amended--
       (I) by striking ``INCOME TAX RETRUN PREPARER'' in the 
     heading and inserting ``TAX RETRUN PREPARER'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (III) in subsection (c)(2), by striking ``the income tax 
     return preparer'' and inserting ``the tax return preparer'',
       (IV) in subsection (e), by striking ``subtitle A'' and 
     inserting ``this title'', and
       (V) in subsection (f), by striking ``income tax return 
     preparer'' and inserting ``tax return preparer''.
       (ii) The item relating to section 6694 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by striking ``income tax return preparer'' and inserting 
     ``tax return preparer''.
       (G)(i) Section 6695 is amended--
       (I) by striking ``INCOME'' in the heading, and
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer''.
       (ii) Section 6695(f) is amended--
       (I) by striking ``subtitle A'' and inserting ``this 
     title'', and
       (II) by striking ``the income tax return preparer'' and 
     inserting ``the tax return preparer''.
       (iii) The item relating to section 6695 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by striking ``income''.
       (H) Section 6696(e) is amended by striking ``subtitle A'' 
     each place it appears and inserting ``this title''.
       (I)(i) Section 7407 is amended--
       (I) by striking ``INCOME TAX RETRUN PREPARERS'' in the 
     heading and inserting ``TAX RETRUN PREPARERS'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (III) by striking ``income tax preparer'' both places it 
     appears in subsection (a) and inserting ``tax return 
     preparer'', and
       (IV) by striking ``income tax return'' in subsection (a) 
     and inserting ``tax return''.
       (ii) The item relating to section 7407 in the table of 
     sections for subchapter A of chapter 76 is amended by 
     striking ``income tax return preparers'' and inserting ``tax 
     return preparers''.

[[Page S3921]]

       (J)(i) Section 7427 is amended--
       (I) by striking ``INCOME TAX RETRUN PREPARERS'' in the 
     heading and inserting ``TAX RETRUN PREPARERS'', and
       (II) by striking ``an income tax return preparer'' and 
     inserting ``a tax return preparer''.
       (ii) The item relating to section 7427 in the table of 
     sections for subchapter B of chapter 76 is amended to read as 
     follows:

``Sec. 7427. Tax return preparers.''.
       (b) Modification of Penalty for Understatement of 
     Taxpayer's Liability by Tax Return Preparer.--Subsections (a) 
     and (b) of section 6694 are amended to read as follows:
       ``(a) Understatement Due to Unreasonable Positions.--
       ``(1) In general.--Any tax return preparer who prepares any 
     return or claim for refund with respect to which any part of 
     an understatement of liability is due to a position described 
     in paragraph (2) shall pay a penalty with respect to each 
     such return or claim in an amount equal to the greater of--
       ``(A) $1,000, or
       ``(B) 50 percent of the income derived (or to be derived) 
     by the tax return preparer with respect to the return or 
     claim.
       ``(2) Unreasonable position.--A position is described in 
     this paragraph if--
       ``(A) the tax return preparer knew (or reasonably should 
     have known) of the position,
       ``(B) there was not a reasonable belief that the position 
     would more likely than not be sustained on its merits, and
       ``(C)(i) the position was not disclosed as provided in 
     section 6662(d)(2)(B)(ii), or
       ``(ii) there was no reasonable basis for the position.
       ``(3) Reasonable cause exception.--No penalty shall be 
     imposed under this subsection if it is shown that there is 
     reasonable cause for the understatement and the tax return 
     preparer acted in good faith.
       ``(b) Understatement Due to Willful or Reckless Conduct.--
       ``(1) In general.--Any tax return preparer who prepares any 
     return or claim for refund with respect to which any part of 
     an understatement of liability is due to a conduct described 
     in paragraph (2) shall pay a penalty with respect to each 
     such return or claim in an amount equal to the greater of--
       ``(A) $5,000, or
       ``(B) 50 percent of the income derived (or to be derived) 
     by the tax return preparer with respect to the return or 
     claim.
       ``(2) Willful or reckless conduct.--Conduct described in 
     this paragraph is conduct by the tax return preparer which 
     is--
       ``(A) a willful attempt in any manner to understate the 
     liability for tax on the return or claim, or
       ``(B) a reckless or intentional disregard of rules or 
     regulations.
       ``(3) Reduction in penalty.--The amount of any penalty 
     payable by any person by reason of this subsection for any 
     return or claim for refund shall be reduced by the amount of 
     the penalty paid by such person by reason of subsection 
     (a).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns prepared after the date of the 
     enactment of this Act.

     SEC. 551. PENALTY FOR FILING ERRONEOUS REFUND CLAIMS.

       (a) In General.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6675 the following new section:

     ``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

       ``(a) Civil Penalty.--If a claim for refund or credit with 
     respect to income tax (other than a claim for a refund or 
     credit relating to the earned income credit under section 32) 
     is made for an excessive amount, unless it is shown that the 
     claim for such excessive amount has a reasonable basis, the 
     person making such claim shall be liable for a penalty in an 
     amount equal to 20 percent of the excessive amount.
       ``(b) Excessive Amount.--For purposes of this section, the 
     term `excessive amount' means in the case of any person the 
     amount by which the amount of the claim for refund or credit 
     for any taxable year exceeds the amount of such claim 
     allowable under this title for such taxable year.
       ``(c) Coordination With Other Penalties.--This section 
     shall not apply to any portion of the excessive amount of a 
     claim for refund or credit on which a penalty is imposed 
     under part II of subchapter A of chapter 68.''.
       (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 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any claim--
       (1) filed or submitted after the date of the enactment of 
     this Act, or
       (2) filed or submitted prior to such date but not withdrawn 
     before the date which is 30 days after such date of 
     enactment.

     SEC. 552. SUSPENSION OF CERTAIN PENALTIES AND INTEREST.

       (a) In General.--Paragraphs (1)(A) and (3)(A) of section 
     6404(g) are each amended by striking ``18-month period'' and 
     inserting ``36-month period''.
       (b) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to notices 
     provided by the Secretary of the Treasury, or his delegate 
     after the date which is 6 months after the date of the 
     enactment of this Act.
       (2) Exception for certain taxpayers.--The amendments made 
     by this section shall not apply to any taxpayer with respect 
     to whom a suspension of any interest, penalty, addition to 
     tax, or other amount is in effect on the date which is 6 
     months after the date of the enactment of this Act.

     SEC. 553. ADDITIONAL REASONS FOR SECRETARY TO TERMINATE 
                   INSTALLMENT AGREEMENTS.

       (a) In General.--Section 6159(b)(4) (relating to failure to 
     pay an installment or any other tax liability when due or to 
     provide requested financial information) is amended by 
     striking ``or'' at the end of subparagraph (B), by 
     redesignating subparagraph (C) as subparagraph (E), and by 
     inserting after subparagraph (B) the following new 
     subparagraphs:
       ``(C) to make a Federal tax deposit under section 6302 at 
     the time such deposit is required to be made,
       ``(D) to file a return of tax imposed under this title by 
     its due date (including extensions), or''.
       (b) Conforming Amendment.--The heading for paragraph (4) of 
     section 6159(b) is amended by striking ``Failure to pay an 
     installment or any other tax liability when due or to provide 
     requested financial information'' and inserting ``Failure to 
     make payments or deposits or file returns when due or to 
     provide requested financial information''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to failures occurring on or after the date of the 
     enactment of this Act.

     SEC. 554. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS-IN-
                   COMPROMISE.

       (a) In General.--Section 7122(b) (relating to record) is 
     amended by striking ``Whenever a compromise'' and all that 
     follows through ``his delegate, with his reasons therefor'' 
     and inserting ``If the Secretary determines that an opinion 
     of the General Counsel for the Department of the Treasury, or 
     the Counsel's delegate, is required with respect to a 
     compromise, there shall be placed on file in the office of 
     the Secretary such opinion, with the reasons therefor''.
       (b) Conforming Amendments.--Section 7122(b) is amended by 
     striking the second and third sentences.
       (c) Effective Date.--The amendments made by this section 
     shall apply to offers-in-compromise submitted or pending on 
     or after the date of the enactment of this Act.

     SEC. 555. AUTHORIZATION FOR FINANCIAL MANAGEMENT SERVICE 
                   RETENTION OF TRANSACTION FEES FROM LEVIED 
                   AMOUNTS.

       (a) In General.--Subsection (h) of section 6331 (relating 
     to continuing levy on certain payments) is amended by adding 
     at the end the following new paragraph:
       ``(4) Imposition of financial management services 
     transaction fees.--If the Secretary approves a levy under 
     this subsection, the Secretary may impose on the taxpayer a 
     transaction fee sufficient to cover the full cost of 
     implementing the levy under this subsection. Such fee--
       ``(A) shall be treated as an expense under section 6341,
       ``(B) may be collected through a levy under this 
     subsection, and
       ``(C) shall be in addition to the amount of tax liability 
     with respect to which such levy was approved.''.
       (b) Retention of Fees by Financial Management Service.--The 
     Financial Management Service may retain the amount of any 
     transaction fee imposed under section 6331(h)(4) of the 
     Internal Revenue Code of 1986. Any amount retained by the 
     Financial Management Service under that section shall be 
     deposited into the account of the Department of the Treasury 
     under section 3711(g)(7) of title 31, United States Code.
       (c) Effective Date.--The amendment made by this section 
     shall apply to amounts levied after the date of the enactment 
     of this Act.

     SEC. 556. AUTHORITY FOR UNDERCOVER OPERATIONS.

       Paragraph (6) of section 7608(c) (relating to application 
     of section) is amended by striking ``2007'' both places it 
     appears and inserting ``2008''.

     SEC. 557. INCREASE IN PENALTY EXCISE TAXES ON THE POLITICAL 
                   AND EXCESS LOBBYING ACTIVITIES OF SECTION 
                   501(C)(3) ORGANIZATIONS.

       (a) Taxes on Disqualifying Lobbying Expenditures of Certain 
     Organizations.--
       (1) In general.--Section 4912(a) (relating to tax on 
     organization) is amended by striking ``5 percent'' and 
     inserting ``10 percent''.
       (2) Tax on management.--Section 4912(b) is amended by 
     striking ``5 percent'' and inserting ``10 percent''.
       (b) Taxes on Political Expenditures of Section 501(c)(3) 
     Organizations.--
       (1) In general.--Section 4955(a) (relating to initial 
     taxes) is amended--
       (A) in paragraph (1), by striking ``10 percent'' and 
     inserting ``20 percent'', and
       (B) in paragraph (2), by striking ``2\1/2\ percent'' and 
     inserting ``5 percent''.
       (2) Increased limitation for managers.--Section 4955(c)(2) 
     is amended--
       (A) by striking ``$5,000'' and inserting ``$10,000'', and
       (B) by striking ``$10,000'' and inserting ``$20,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

[[Page S3922]]

     SEC. 558. INCREASED PENALTY FOR FAILURE TO FILE FOR EXEMPT 
                   ORGANIZATIONS.

       (a) In General.--Subparagraph (A) of section 6652(c)(1) 
     (relating to annual returns under section 6033(a)(1) or 
     6012(a)(6)) is amended by adding at the end the following new 
     sentence: ``In the case of an organization having gross 
     receipts exceeding $25,000,000 for any year, with respect to 
     the return so required, the first sentence of this 
     subparagraph shall be applied by substituting `$250' for 
     `$20' and, in lieu of applying the second sentence of this 
     subparagraph, the maximum penalty under this subparagraph 
     shall not exceed $125,000.''.
       (b) Conforming Amendment.--The third sentence of section 
     6652(c)(1)(A) is amended by inserting ``but not exceeding 
     $25,000,000'' after ``$1,000,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed on or after 
     January 1, 2008.

     SEC. 559. PENALTIES FOR FAILURE TO FILE CERTAIN RETURNS 
                   ELECTRONICALLY.

       (a) In General.--Part I of subchapter A of chapter 68 
     (relating to additions to the tax, additional amounts, and 
     assessable penalties) is amended by inserting after section 
     6652 the following new section:

     ``SEC. 6652A. FAILURE TO FILE CERTAIN RETURNS ELECTRONICALLY.

       ``(a) In General.--If a person fails to file a return 
     described in section 6651 or 6652(c)(1) in electronic form as 
     required under section 6011(e)--
       ``(1) such failure shall be treated as a failure to file 
     such return (even if filed in a form other than electronic 
     form), and
       ``(2) the penalty imposed under section 6651 or 6652(c), 
     whichever is appropriate, shall be equal to the greater of--
       ``(A) the amount of the penalty under such section, 
     determined without regard to this section, or
       ``(B) the amount determined under subsection (b).
       ``(b) Amount of Penalty.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the penalty determined under this subsection is equal to 
     $40 for each day during which a failure described under 
     subsection (a) continues. The maximum penalty under this 
     paragraph on failures with respect to any 1 return shall not 
     exceed the lesser of $20,000 or 10 percent of the gross 
     receipts of the taxpayer for the year.
       ``(2) Increased penalties for taxpayers with gross receipts 
     between $1,000,000 and $100,000,000.--
       ``(A) Taxpayers with gross receipts between $1,000,000 and 
     $25,000,000.--In the case of a taxpayer having gross receipts 
     exceeding $1,000,000 but not exceeding $25,000,000 for any 
     year--
       ``(i) the first sentence of paragraph (1) shall be applied 
     by substituting `$200' for `$40', and
       ``(ii) in lieu of applying the second sentence of paragraph 
     (1), the maximum penalty under paragraph (1) shall not exceed 
     $100,000.
       ``(B) Taxpayers with gross receipts over $25,000,000.--
     Except as provided in paragraph (3), in the case of a 
     taxpayer having gross receipts exceeding $25,000,000 for any 
     year--
       ``(i) the first sentence of paragraph (1) shall be applied 
     by substituting `$500' for `$40', and
       ``(ii) in lieu of applying the second sentence of paragraph 
     (1), the maximum penalty under paragraph (1) shall not exceed 
     $250,000.
       ``(3) Increased penalties for certain taxpayers with gross 
     receipts exceeding $100,000,000.--In the case of a return 
     described in section 6651--
       ``(A) Taxpayers with gross receipts between $100,000,000 
     and $250,000,000.--In the case of a taxpayer having gross 
     receipts exceeding $100,000,000 but not exceeding 
     $250,000,000 for any year--
       ``(i) the amount of the penalty determined under this 
     subsection shall equal the sum of--

       ``(I) $50,000, plus
       ``(II) $1,000 for each day during which such failure 
     continues (twice such amount for each day such failure 
     continues after the first such 60 days), and

       ``(ii) the maximum amount under clause (i)(II) on failures 
     with respect to any 1 return shall not exceed $200,000.
       ``(B) Taxpayers with gross receipts over $250,000,000.--In 
     the case of a taxpayer having gross receipts exceeding 
     $250,000,000 for any year--
       ``(i) the amount of the penalty determined under this 
     subsection shall equal the sum of--

       ``(I) $250,000, plus
       ``(II) $2,500 for each day during which such failure 
     continues (twice such amount for each day such failure 
     continues after the first such 60 days), and

       ``(ii) the maximum amount under clause (i)(II) on failures 
     with respect to any 1 return shall not exceed $250,000.
       ``(C) Exception for certain returns.--Subparagraphs (A) and 
     (B) shall not apply to any return of tax imposed under 
     section 511.''.
       (b) Clerical Amendment.--The table of sections for part I 
     of subchapter A of chapter 68 is amended by inserting after 
     the item relating to section 6652 the following new item:

``Sec. 6652A. Failure to file certain returns electronically.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed on or after 
     January 1, 2008.

                      PART III--GENERAL PROVISIONS

     SEC. 561. ENHANCED COMPLIANCE ASSISTANCE FOR SMALL 
                   BUSINESSES.

       (a) In General.--Section 212 of the Small Business 
     Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 601 
     note) is amended by striking subsection (a) and inserting the 
     following:
       ``(a) Compliance Guide.--
       ``(1) In general.--For each rule or group of related rules 
     for which an agency is required to prepare a final regulatory 
     flexibility analysis under section 605(b) of title 5, United 
     States Code, the agency shall publish 1 or more guides to 
     assist small entities in complying with the rule and shall 
     entitle such publications `small entity compliance guides'.
       ``(2) Publication of guides.--The publication of each guide 
     under this subsection shall include--
       ``(A) the posting of the guide in an easily identified 
     location on the website of the agency; and
       ``(B) distribution of the guide to known industry contacts, 
     such as small entities, associations, or industry leaders 
     affected by the rule.
       ``(3) Publication date.--An agency shall publish each guide 
     (including the posting and distribution of the guide as 
     described under paragraph (2))--
       ``(A) on the same date as the date of publication of the 
     final rule (or as soon as possible after that date); and
       ``(B) not later than the date on which the requirements of 
     that rule become effective.
       ``(4) Compliance actions.--
       ``(A) In general.--Each guide shall explain the actions a 
     small entity is required to take to comply with a rule.
       ``(B) Explanation.--The explanation under subparagraph 
     (A)--
       ``(i) shall include a description of actions needed to meet 
     the requirements of a rule, to enable a small entity to know 
     when such requirements are met; and
       ``(ii) if determined appropriate by the agency, may include 
     a description of possible procedures, such as conducting 
     tests, that may assist a small entity in meeting such 
     requirements, except that, compliance with any procedures 
     described pursuant to this section does not establish 
     compliance with the rule, or establish a presumption or 
     inference of such compliance.
       ``(C) Procedures.--Procedures described under subparagraph 
     (B)(ii)--
       ``(i) shall be suggestions to assist small entities; and
       ``(ii) shall not be additional requirements, or diminish 
     requirements, relating to the rule.
       ``(5) Agency preparation of guides.--The agency shall, in 
     its sole discretion, taking into account the subject matter 
     of the rule and the language of relevant statutes, ensure 
     that the guide is written using sufficiently plain language 
     likely to be understood by affected small entities. Agencies 
     may prepare separate guides covering groups or classes of 
     similarly affected small entities and may cooperate with 
     associations of small entities to develop and distribute such 
     guides. An agency may prepare guides and apply this section 
     with respect to a rule or a group of related rules.
       ``(6) Reporting.--Not later than 1 year after the date of 
     enactment of the Fair Minimum Wage Act of 2007, and annually 
     thereafter, the head of each agency shall submit a report to 
     the Committee on Small Business and Entrepreneurship of the 
     Senate, the Committee on Small Business of the House of 
     Representatives, and any other committee of relevant 
     jurisdiction describing the status of the agency's compliance 
     with paragraphs (1) through (5).''.
       (b) Technical and Conforming Amendment.--Section 211(3) of 
     the Small Business Regulatory Enforcement Fairness Act of 
     1996 (5 U.S.C. 601 note) is amended by inserting ``and 
     entitled'' after ``designated''.

     SEC. 562. SMALL BUSINESS CHILD CARE GRANT PROGRAM.

       (a) Establishment.--The Secretary of Health and Human 
     Services (referred to in this section as the ``Secretary'') 
     shall establish a program to award grants to States, on a 
     competitive basis, to assist States in providing funds to 
     encourage the establishment and operation of employer-
     operated child care programs.
       (b) Application.--To be eligible to receive a grant under 
     this section, a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require, 
     including an assurance that the funds required under 
     subsection (e) will be provided.
       (c) Amount and Period of Grant.--The Secretary shall 
     determine the amount of a grant to a State under this section 
     based on the population of the State as compared to the 
     population of all States receiving grants under this section. 
     The Secretary shall make the grant for a period of 3 years.
       (d) Use of Funds.--
       (1) In general.--A State shall use amounts provided under a 
     grant awarded under this section to provide assistance to 
     small businesses (or consortia formed in accordance with 
     paragraph (3)) located in the State to enable the small 
     businesses (or consortia) to establish and operate child care 
     programs. Such assistance may include--
       (A) technical assistance in the establishment of a child 
     care program;
       (B) assistance for the startup costs related to a child 
     care program;
       (C) assistance for the training of child care providers;
       (D) scholarships for low-income wage earners;

[[Page S3923]]

       (E) the provision of services to care for sick children or 
     to provide care to school-aged children;
       (F) the entering into of contracts with local resource and 
     referral organizations or local health departments;
       (G) assistance for care for children with disabilities;
       (H) payment of expenses for renovation or operation of a 
     child care facility; or
       (I) assistance for any other activity determined 
     appropriate by the State.
       (2) Application.--In order for a small business or 
     consortium to be eligible to receive assistance from a State 
     under this section, the small business involved shall prepare 
     and submit to the State an application at such time, in such 
     manner, and containing such information as the State may 
     require.
       (3) Preference.--
       (A) In general.--In providing assistance under this 
     section, a State shall give priority to an applicant that 
     desires to form a consortium to provide child care in a 
     geographic area within the State where such care is not 
     generally available or accessible.
       (B) Consortium.--For purposes of subparagraph (A), a 
     consortium shall be made up of 2 or more entities that shall 
     include small businesses and that may include large 
     businesses, nonprofit agencies or organizations, local 
     governments, or other appropriate entities.
       (4) Limitations.--With respect to grant funds received 
     under this section, a State may not provide in excess of 
     $500,000 in assistance from such funds to any single 
     applicant.
       (e) Matching Requirement.--To be eligible to receive a 
     grant under this section, a State shall provide assurances to 
     the Secretary that, with respect to the costs to be incurred 
     by a covered entity receiving assistance in carrying out 
     activities under this section, the covered entity will make 
     available (directly or through donations from public or 
     private entities) non-Federal contributions to such costs in 
     an amount equal to--
       (1) for the first fiscal year in which the covered entity 
     receives such assistance, not less than 50 percent of such 
     costs ($1 for each $1 of assistance provided to the covered 
     entity under the grant);
       (2) for the second fiscal year in which the covered entity 
     receives such assistance, not less than 66\2/3\ percent of 
     such costs ($2 for each $1 of assistance provided to the 
     covered entity under the grant); and
       (3) for the third fiscal year in which the covered entity 
     receives such assistance, not less than 75 percent of such 
     costs ($3 for each $1 of assistance provided to the covered 
     entity under the grant).
       (f) Requirements of Providers.--To be eligible to receive 
     assistance under a grant awarded under this section, a child 
     care provider--
       (1) who receives assistance from a State shall comply with 
     all applicable State and local licensing and regulatory 
     requirements and all applicable health and safety standards 
     in effect in the State; and
       (2) who receives assistance from an Indian tribe or tribal 
     organization shall comply with all applicable regulatory 
     standards.
       (g) State-Level Activities.--A State may not retain more 
     than 3 percent of the amount described in subsection (c) for 
     State administration and other State-level activities.
       (h) Administration.--
       (1) State responsibility.--A State shall have 
     responsibility for administering a grant awarded for the 
     State under this section and for monitoring covered entities 
     that receive assistance under such grant.
       (2) Audits.--A State shall require each covered entity 
     receiving assistance under the grant awarded under this 
     section to conduct an annual audit with respect to the 
     activities of the covered entity. Such audits shall be 
     submitted to the State.
       (3) Misuse of funds.--
       (A) Repayment.--If the State determines, through an audit 
     or otherwise, that a covered entity receiving assistance 
     under a grant awarded under this section has misused the 
     assistance, the State shall notify the Secretary of the 
     misuse. The Secretary, upon such a notification, may seek 
     from such a covered entity the repayment of an amount equal 
     to the amount of any such misused assistance plus interest.
       (B) Appeals process.--The Secretary shall by regulation 
     provide for an appeals process with respect to repayments 
     under this paragraph.
       (i) Reporting Requirements.--
       (1) 2-year study.--
       (A) In general.--Not later than 2 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine--
       (i) the capacity of covered entities to meet the child care 
     needs of communities within States;
       (ii) the kinds of consortia that are being formed with 
     respect to child care at the local level to carry out 
     programs funded under this section; and
       (iii) who is using the programs funded under this section 
     and the income levels of such individuals.
       (B) Report.--Not later than 28 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on the results of the study 
     conducted in accordance with subparagraph (A).
       (2) 4-year study.--
       (A) In general.--Not later than 4 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine the number 
     of child care facilities that are funded through covered 
     entities that received assistance through a grant awarded 
     under this section and that remain in operation, and the 
     extent to which such facilities are meeting the child care 
     needs of the individuals served by such facilities.
       (B) Report.--Not later than 52 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on the results of the study 
     conducted in accordance with subparagraph (A).
       (j) Definitions.--In this section:
       (1) Covered entity.--The term ``covered entity'' means a 
     small business or a consortium formed in accordance with 
     subsection (d)(3).
       (2) Indian community.--The term ``Indian community'' means 
     a community served by an Indian tribe or tribal organization.
       (3) Indian tribe; tribal organization.--The terms ``Indian 
     tribe'' and ``tribal organization'' have the meanings given 
     the terms in section 658P of the Child Care and Development 
     Block Grant Act of 1990 (42 U.S.C. 9858n).
       (4) Small business.--The term ``small business'' means an 
     employer who employed an average of at least 2 but not more 
     than 50 employees on the business days during the preceding 
     calendar year.
       (5) State.--The term ``State'' has the meaning given the 
     term in section 658P of the Child Care and Development Block 
     Grant Act of 1990 (42 U.S.C. 9858n).
       (k) Application to Indian Tribes and Tribal 
     Organizations.--In this section:
       (1) In general.--Except as provided in subsection (f)(1), 
     and in paragraphs (2) and (3), the term ``State'' includes an 
     Indian tribe or tribal organization.
       (2) Geographic references.--The term ``State'' includes an 
     Indian community in subsections (c) (the second and third 
     place the term appears), (d)(1) (the second place the term 
     appears), (d)(3)(A) (the second place the term appears), and 
     (i)(1)(A)(i).
       (3) State-level activities.--The term ``State-level 
     activities'' includes activities at the tribal level.
       (l) Authorization of Appropriations.--
       (1) In general.--There is authorized to be appropriated to 
     carry out this section, $50,000,000 for the period of fiscal 
     years 2008 through 2012.
       (2) Studies and administration.--With respect to the total 
     amount appropriated for such period in accordance with this 
     subsection, not more than $2,500,000 of that amount may be 
     used for expenditures related to conducting studies required 
     under, and the administration of, this section.
       (m) Termination of Program.--The program established under 
     subsection (a) shall terminate on September 30, 2012.

     SEC. 563. STUDY OF UNIVERSAL USE OF ADVANCE PAYMENT OF EARNED 
                   INCOME CREDIT.

       Not later than 180 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall report to 
     Congress on a study of the benefits, costs, risks, and 
     barriers to workers and to businesses (with a special 
     emphasis on small businesses) if the advance earned income 
     tax credit program (under section 3507 of the Internal 
     Revenue Code of 1986) included all recipients of the earned 
     income tax credit (under section 32 of such Code) and what 
     steps would be necessary to implement such inclusion.

     SEC. 564. SENSE OF THE SENATE CONCERNING PERSONAL SAVINGS.

       (a) Findings.--The Senate finds that--
       (1) the personal saving rate in the United States is at its 
     lowest point since the Great Depression, with the rate having 
     fallen into negative territory;
       (2) the United States ranks at the bottom of the Group of 
     Twenty (G-20) nations in terms of net national saving rate;
       (3) approximately half of all the working people of the 
     United States work for an employer that does not offer any 
     kind of retirement plan;
       (4) existing savings policies enacted by Congress provide 
     limited incentives to save for low- and moderate-income 
     families; and
       (5) the Social Security program was enacted to serve as the 
     safest component of a retirement system that also includes 
     employer-sponsored retirement plans and personal savings.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) Congress should enact policies that promote savings 
     vehicles for retirement that are simple, easily accessible 
     and provide adequate financial security for all the people of 
     the United States;
       (2) it is important to begin retirement saving as early as 
     possible to take full advantage of the power of compound 
     interest; and
       (3) regularly contributing money to a financially-sound 
     investment account is one important method for helping to 
     achieve one's retirement goals.

     SEC. 565. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

       (a) In General.--Section 29 of the Small Business Act (15 
     U.S.C. 656) is amended by adding at the end the following:
       ``(m) Continued Funding for Centers.--
       ``(1) In general.--A nonprofit organization described in 
     paragraph (2) shall be eligible to receive, subject to 
     paragraph (3), a 3-year grant under this subsection.

[[Page S3924]]

       ``(2) Applicability.--A nonprofit organization described in 
     this paragraph is a nonprofit organization that has received 
     funding under subsection (b) or (l).
       ``(3) Application and approval criteria.--
       ``(A) Criteria.--Subject to subparagraph (B), the 
     Administrator shall develop and publish criteria for the 
     consideration and approval of applications by nonprofit 
     organizations under this subsection.
       ``(B) Contents.--Except as otherwise provided in this 
     subsection, the conditions for participation in the grant 
     program under this subsection shall be the same as the 
     conditions for participation in the program under subsection 
     (l), as in effect on the date of enactment of this Act.
       ``(C) Notification.--Not later than 60 days after the date 
     of the deadline to submit applications for each fiscal year, 
     the Administrator shall approve or deny any application under 
     this subsection and notify the applicant for each such 
     application.
       ``(4) Award of grants.--
       ``(A) In general.--Subject to the availability of 
     appropriations, the Administrator shall make a grant for the 
     Federal share of the cost of activities described in the 
     application to each applicant approved under this subsection.
       ``(B) Amount.--A grant under this subsection shall be for 
     not more than $150,000, for each year of that grant.
       ``(C) Federal share.--The Federal share under this 
     subsection shall be not more than 50 percent.
       ``(D) Priority.--In allocating funds made available for 
     grants under this section, the Administrator shall give 
     applications under this subsection or subsection (l) priority 
     over first-time applications under subsection (b).
       ``(5) Renewal.--
       ``(A) In general.--The Administrator may renew a grant 
     under this subsection for additional 3-year periods, if the 
     nonprofit organization submits an application for such 
     renewal at such time, in such manner, and accompanied by such 
     information as the Administrator may establish.
       ``(B) Unlimited renewals.--There shall be no limitation on 
     the number of times a grant may be renewed under subparagraph 
     (A).
       ``(n) Privacy Requirements.--
       ``(1) In general.--A women's business center may not 
     disclose the name, address, or telephone number of any 
     individual or small business concern receiving assistance 
     under this section without the consent of such individual or 
     small business concern, unless--
       ``(A) the Administrator is ordered to make such a 
     disclosure by a court in any civil or criminal enforcement 
     action initiated by a Federal or State agency; or
       ``(B) the Administrator considers such a disclosure to be 
     necessary for the purpose of conducting a financial audit of 
     a women's business center, but a disclosure under this 
     subparagraph shall be limited to the information necessary 
     for such audit.
       ``(2) Administration use of information.--This subsection 
     shall not--
       ``(A) restrict Administration access to program activity 
     data; or
       ``(B) prevent the Administration from using client 
     information (other than the information described in 
     subparagraph (A)) to conduct client surveys.
       ``(3) Regulations.--The Administrator shall issue 
     regulations to establish standards for requiring disclosures 
     during a financial audit under paragraph (1)(B).''.
       (b) Repeal.--Section 29(l) of the Small Business Act (15 
     U.S.C. 656(l)) is repealed effective October 1 of the first 
     full fiscal year after the date of enactment of this Act.
       (c) Transitional Rule.--Notwithstanding any other provision 
     of law, a grant or cooperative agreement that was awarded 
     under subsection (l) of section 29 of the Small Business Act 
     (15 U.S.C. 656), on or before the day before the date 
     described in subsection (b) of this section, shall remain in 
     full force and effect under the terms, and for the duration, 
     of such grant or agreement.

     SEC. 566. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND 
                   SUPPLIES MANUFACTURED OUTSIDE THE UNITED 
                   STATES.

       Section 2 of the Buy American Act (41 U.S.C. 10a) is 
     amended--
       (1) by striking ``Notwithstanding'' and inserting the 
     following:
       ``(a) In General.--Notwithstanding''; and
       (2) by adding at the end the following:
       ``(b) Reports.--
       ``(1) In general.--Not later than 180 days after the end of 
     each of fiscal years 2007 through 2011, the head of each 
     Federal agency shall submit to the Committee on Homeland 
     Security and Governmental Affairs of the Senate and the 
     Committee on Oversight and Government Reform of the House of 
     Representatives a report on the amount of the acquisitions 
     made by the agency in that fiscal year of articles, 
     materials, or supplies purchased from entities that 
     manufacture the articles, materials, or supplies outside of 
     the United States.
       ``(2) Contents of report.--The report required by paragraph 
     (1) shall separately include, for the fiscal year covered by 
     such report--
       ``(A) the dollar value of any articles, materials, or 
     supplies that were manufactured outside the United States;
       ``(B) an itemized list of all waivers granted with respect 
     to such articles, materials, or supplies under this Act, and 
     a citation to the treaty, international agreement, or other 
     law under which each waiver was granted;
       ``(C) if any articles, materials, or supplies were acquired 
     from entities that manufacture articles, materials, or 
     supplies outside the United States, the specific exception 
     under this section that was used to purchase such articles, 
     materials, or supplies; and
       ``(D) a summary of--
       ``(i) the total procurement funds expended on articles, 
     materials, and supplies manufactured inside the United 
     States; and
       ``(ii) the total procurement funds expended on articles, 
     materials, and supplies manufactured outside the United 
     States.
       ``(3) Public availability.--The head of each Federal agency 
     submitting a report under paragraph (1) shall make the report 
     publicly available to the maximum extent practicable.
       ``(4) Exception for intelligence community.--This 
     subsection shall not apply to acquisitions made by an agency, 
     or component thereof, that is an element of the intelligence 
     community as specified in, or designated under, section 3(4) 
     of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.

     SEC. 567. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME 
                   TAX INCREASE ON SOCIAL SECURITY BENEFITS.

       It is the sense of the Senate that Congress should repeal 
     the 1993 tax increase on Social Security benefits and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     repeal and avoid forcing taxpayers to pay substantially more 
     interest to foreign creditors.

     SEC. 568. SENSE OF THE SENATE REGARDING PERMANENT TAX 
                   INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE 
                   AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.

       It is the sense of the Senate that Congress should make 
     permanent the tax incentives to make education more 
     affordable and more accessible for American families and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     incentives and avoid forcing taxpayers to pay substantially 
     more interest to foreign creditors.

     SEC. 569. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

       Section 274A(e) of the Immigration and Nationality Act (8 
     U.S.C. 1324a(e)) is amended by adding at the end the 
     following new paragraph:
       ``(10) Prohibition on award of government contracts, 
     grants, and agreements.--
       ``(A) Employers with no contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subparagraph 
     (C), if an employer who does not hold a Federal contract, 
     grant, or cooperative agreement is determined to have 
     violated this section, the employer shall be debarred from 
     the receipt of a Federal contract, grant, or cooperative 
     agreement for a period of 7 years.
       ``(ii) Placement on excluded list.--The Secretary of 
     Homeland Security or the Attorney General shall advise the 
     Administrator of General Services of the debarment of an 
     employer under clause (i) and the Administrator of General 
     Services shall list the employer on the List of Parties 
     Excluded from Federal Procurement and Nonprocurement Programs 
     for a period of 7 years.
       ``(iii) Waiver.--

       ``(I) Authority.--The Administrator of General Services, in 
     consultation with the Secretary of Homeland Security and the 
     Attorney General, may waive operation of clause (i) or may 
     limit the duration or scope of a debarment under clause (i) 
     if such waiver or limitation is necessary to national defense 
     or in the interest of national security.
       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternative action under this clause 
     shall not be judicially reviewed.

       ``(B) Employers with contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subclause 
     (C), an employer who holds a Federal contract, grant, or 
     cooperative agreement and is determined to have violated this 
     section shall be debarred from the receipt of new Federal 
     contracts, grants, or cooperative agreements for a period of 
     10 years.
       ``(ii) Notice to agencies.--Prior to debarring the employer 
     under clause (i), the Secretary of Homeland Security, in 
     cooperation with the Administrator of General Services, shall 
     advise any agency or department holding a contract, grant, or 
     cooperative agreement with the employer of the Government's 
     intention to debar the employer from the receipt of new 
     Federal contracts, grants, or cooperative agreements for a 
     period of 10 years.
       ``(iii) Waiver.--

       ``(I) Authority.--After consideration of the views of any 
     agency or department that holds a contract, grant, or 
     cooperative agreement with the employer, the Administrator of 
     General Services, in consultation with the Secretary of 
     Homeland Security and the Attorney General, may waive 
     operation of clause (i) or may limit the duration or scope of 
     the debarment under clause (i) if such waiver or limitation 
     is necessary to the national defense or in the interest of 
     national security.

[[Page S3925]]

       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternate action under this clause 
     shall not be judicially reviewed.

       ``(C) Exemption from penalty for employers participating in 
     the basic pilot program.--In the case of imposition on an 
     employer of a debarment from the receipt of a Federal 
     contract, grant, or cooperative agreement under subparagraph 
     (A) or (B), that penalty shall be waived if the employer 
     establishes that the employer was voluntarily participating 
     in the basic pilot program under section 403(a) of the 
     Illegal Immigration Reform and Immigrant Responsibility Act 
     of 1996 (8 U.S.C. 1324a note) at the time of the violations 
     of this section that resulted in the debarment.''.

     SEC. 570. DISABILITY PREFERENCE PROGRAM FOR TAX COLLECTION 
                   CONTRACTS.

       (a) In General.--Section 6306 (relating to qualified tax 
     collection contracts) is amended--
       (1) by striking ``Nothing'' in subsection (a) and inserting 
     ``Except as provided in subsection (c), nothing'',
       (2) by redesignating subsections (c), (d), (e), and (f) as 
     subsections (d), (e), (f), and (g), respectively, and
       (3) by inserting after subsection (b) the following new 
     subsection:
       ``(c) Disability Preference Program for Tax Collection 
     Contracts.--
       ``(1) In general.--The Secretary shall provide a qualifying 
     disability preference to any program under which any 
     qualified tax collection contract is awarded on or after the 
     effective date of this subsection and shall ensure compliance 
     with the requirements of paragraph (3).
       ``(2) Qualifying disability preference.--
       ``(A) In general.--For purposes of this subsection, the 
     term `qualifying disability preference' means a preference 
     pursuant to which at least 10 percent (in both number and 
     aggregate dollar amount) of the accounts covered by qualified 
     tax collection contracts are awarded to persons satisfying 
     the following criteria:
       ``(i) Such person employs within the United States at least 
     50 severely disabled individuals.
       ``(ii) Such person shall agree as an enforceable condition 
     of its bid for a qualified tax collection contract that 
     within 90 days after the date such contract is awarded, not 
     less than 35 percent of the employees of such person employed 
     in connection with providing services under such contract 
     shall--

       ``(I) be hired after the date such contract is awarded, and
       ``(II) be severely disabled individuals.

       ``(B) Determination of satisfaction of criteria.--Within 60 
     days after the end of the period specified in subparagraph 
     (A)(ii), the Secretary shall determine whether such person 
     has met the 35 percent requirement specified in such 
     subparagraph, and if such requirement has not been met, shall 
     terminate the contract for nonperformance. For purposes of 
     determining whether such 35 percent requirement has been 
     satisfied, severely disabled individuals providing services 
     under such contract shall not include any severely disabled 
     individuals who were counted toward satisfaction of the 50-
     employee requirement specified in subparagraph (A)(i), unless 
     such person replaced such individuals by hiring additional 
     severely disabled individuals who do not perform services 
     under such contract.
       ``(3) Program-wide employment of severely disabled 
     individuals.--Not less than 15 percent of all individuals 
     hired by all persons to whom tax collection contracts are 
     issued by the Secretary under this section, to perform work 
     under such tax collection contracts, shall qualify as 
     severely disabled individuals.
       ``(4) Severely disabled individual.--For purposes of this 
     subsection, the term `severely disabled individual' means any 
     one of the following:
       ``(A) Any veteran of the United States Armed Forces with--
       ``(i) a disability determined by the Secretary of Veterans 
     Affairs to be service-connected, or
       ``(ii) a disability deemed by statute to be service-
     connected.
       ``(B) Any individual who is a disabled beneficiary (as 
     defined in section 1148(k)(2) of the Social Security Act (42 
     U.S.C. 1320b-19(k)(2)) or who would be considered to be such 
     a disabled beneficiary but for having income or assets in 
     excess of the income or asset eligibility limits established 
     under title II or XVI of the Social Security Act, 
     respectively.''.
       (b) Report by Government Accountability Office.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study of the effectiveness and 
     efficiency of the use of private contractors for Internal 
     Revenue Service debt collection. The study required by this 
     paragraph shall be completed in time to be taken into account 
     by Congress before any new contracting is carried out under 
     section 6306 of the Internal Revenue Code of 1986 in years 
     following 2008.
       (2) Study of comparable efforts.--As part of the study 
     required under paragraph (1), the Comptroller General shall--
       (A) make every effort to determine the relative 
     effectiveness and efficiency of debt collection contracting 
     by Federal staff compared to private contractors, using a 
     cost calculation for both Federal staff and private 
     contractors which includes all benefits and overhead costs,
       (B) compare the cost effectiveness of the contracting 
     approach of the Department of the Treasury to that of the 
     Department of Education's Office of Student Financial 
     Assistance, and
       (C) survey State tax debt collection experiences for 
     lessons that may be applicable to the Internal Revenue 
     Service collection efforts.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any tax collection contract awarded on or 
     after the date of the enactment of this Act.
                                 ______
                                 
  SA 781. Mrs. LINCOLN (for herself, Mr. Smith, and Ms. Cantwell) 
submitted an amendment intended to be proposed by her to the bill H.R. 
1591, making emergency supplemental appropriations for the fiscal year 
ending September 30, 2007, and for other purposes; which was ordered to 
lie on the table; as follows:

       At the end of title V, add the following:

     SEC. ___. DEDUCTION FOR QUALIFIED TIMBER GAIN.

       (a) In General.--Part I of subchapter P of chapter 1 is 
     amended by adding at the end the following new section:

     ``SEC. 1203. DEDUCTION FOR QUALIFIED TIMBER GAIN.

       ``(a) In General.--In the case of a taxpayer which elects 
     the application of this section for a taxable year, there 
     shall be allowed a deduction against gross income equal to 60 
     percent of the lesser of--
       ``(1) the taxpayer's qualified timber gain for such year, 
     or
       ``(2) the taxpayer's net capital gain for such year.
       ``(b) Qualified Timber Gain.--For purposes of this section, 
     the term `qualified timber gain' means, with respect to any 
     taxpayer for any taxable year, the excess (if any) of--
       ``(1) the sum of the taxpayer's gains described in 
     subsections (a) and (b) of section 631 for such year, over
       ``(2) the sum of the taxpayer's losses described in such 
     subsections for such year.
       ``(c) Special Rules for Pass-Thru Entities.--In the case of 
     any qualified timber gain of a pass-thru entity (as defined 
     in section 1(h)(10)), the election under this section shall 
     be made separately by each taxpayer subject to tax on such 
     gain.''.
       (b) Coordination With Maximum Capital Gains Rates.--
       (1) Taxpayers other than corporations.--Paragraph (2) of 
     section 1(h) is amended to read as follows:
       ``(2) Reduction of net capital gain.--For purposes of this 
     subsection, the net capital gain for any taxable year shall 
     be reduced (but not below zero) by the sum of--
       ``(A) the amount which the taxpayer takes into account as 
     investment income under section 163(d)(4)(B)(iii), and
       ``(B) the lesser of--
       ``(i) the amount described in paragraph (1) of section 
     1203(a), or
       ``(ii) the amount described in paragraph (2) of such 
     section.''.
       (2) Corporations.--Section 1201 is amended by redesignating 
     subsection (b) as subsection (c) and inserting after 
     subsection (a) the following new subsection:
       ``(b) Qualified Timber Gain Not Taken Into Account.--For 
     purposes of this section, in the case of a corporation with 
     respect to which an election is in effect under section 1203, 
     the net capital gain for any taxable year shall be reduced 
     (but not below zero) by the corporation's qualified timber 
     gain (as defined in section 1203(b)).''.
       (c) Deduction Allowed Whether or Not Individual Itemizes 
     Other Deductions.--Subsection (a) of section 62 is amended by 
     inserting before the last sentence the following new 
     paragraph:
       ``(21) Qualified timber gains.--The deduction allowed by 
     section 1203.''.
       (d) Deduction Allowed in Computing Adjusted Current 
     Earnings.--Subparagraph (C) of section 56(g)(4) is amended by 
     adding at the end the following new clause:
       ``(vii) Deduction for qualified timber gain.--Clause (i) 
     shall not apply to any deduction allowed under section 
     1203.''.
       (e) Deduction Allowed in Computing Taxable Income of 
     Electing Small Business Trusts.--Subparagraph (C) of section 
     641(c)(2) is amended by inserting after clause (iii) the 
     following new clause:
       ``(iv) The deduction allowed under section 1203.''.
       (f) Conforming Amendments.--
       (1) Subparagraph (B) of section 172(d)(2) is amended to 
     read as follows:
       ``(B) the exclusion under section 1202 and the deduction 
     under section 1203 shall not be allowed.''.
       (2) Paragraph (4) of section 642(c) is amended by striking 
     the first sentence and inserting the following: ``To the 
     extent that the amount otherwise allowable as a deduction 
     under this subsection consists of gain described in section 
     1202(a) or qualified timber gain (as defined in section 
     1203(b)), proper adjustment shall be made for any exclusion 
     allowable to the estate or trust under section 1202 and for 
     any deduction allowable to the estate or trust under section 
     1203.''

[[Page S3926]]

       (3) Paragraph (3) of section 643(a) is amended by striking 
     the last sentence and inserting the following: ``The 
     exclusion under section 1202 and the deduction under section 
     1203 shall not be taken into account.''
       (4) Subparagraph (C) of section 643(a)(6) is amended to 
     read as follows:
       ``(C) Paragraph (3) shall not apply to a foreign trust. In 
     the case of such a trust--
       ``(i) there shall be included gains from the sale or 
     exchange of capital assets, reduced by losses from such sales 
     or exchanges to the extent such losses do not exceed gains 
     from such sales or exchanges, and
       ``(ii) the deduction under section 1203 shall not be taken 
     into account.''.
       (5) Paragraph (4) of section 691(c) is amended by inserting 
     ``1203,'' after ``1202,''.
       (6) Paragraph (2) of section 871(a) is amended by inserting 
     ``and 1203'' after ``section 1202''.
       (7) The table of sections for part I of subchapter P of 
     chapter 1 is amended by adding at the end the following new 
     item:

``Sec. 1203. Deduction for qualified timber gain.''.

       (g) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years ending after the date of the enactment 
     of this Act and before January 1, 2009.
       (2) Taxable years which include date of enactment.--In the 
     case of any taxable year which includes the date of the 
     enactment of this Act, for purposes of the Internal Revenue 
     Code of 1986, the taxpayer's qualified timber gain shall not 
     exceed the excess that would be described in section 1203(b) 
     of such Code, as added by this section, if only dispositions 
     of timber after such date were taken into account.
                                 ______
                                 
  SA 782. Mrs. LINCOLN submitted an amendment intended to be proposed 
by her to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of title V, add the following:

     SEC. ___. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED 
                   SERVICES RETIRED PAY IS REDUCED AS A RESULT OF 
                   AWARD OF DISABILITY COMPENSATION.

       (a) In General.--Subsection (d) of section 6511 (relating 
     to special rules applicable to income taxes) is amended by 
     adding at the end the following new paragraph:
       ``(8) Special rules when uniformed services retired pay is 
     reduced as a result of award of disability compensation.--
       ``(A) Period of limitation on filing claim.--If the claim 
     for credit or refund relates to an overpayment of tax imposed 
     by subtitle A on account of--
       ``(i) the reduction of uniformed services retired pay 
     computed under section 1406 or 1407 of title 10, United 
     States Code, or
       ``(ii) the waiver of such pay under section 5305 of title 
     38 of such Code,
     as a result of an award of compensation under title 38 of 
     such Code pursuant to a determination by the Secretary of 
     Veterans Affairs, the 3-year period of limitation prescribed 
     in subsection (a) shall be extended, for purposes of 
     permitting a credit or refund based upon the amount of such 
     reduction or waiver, until the end of the 1-year period 
     beginning on the date of such determination.
       ``(B) Limitation to 5 taxable years.--Subparagraph (A) 
     shall not apply with respect to any taxable year which began 
     more than 5 years before the date of such determination.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to claims for credit or refund filed after the 
     date of the enactment of this Act.
       (c) Transition Rules.--In the case of a determination 
     described in paragraph (8) of section 6511(d) of the Internal 
     Revenue Code of 1986 (as added by this section) which is made 
     by the Secretary of Veterans Affairs after December 31, 2000, 
     and before the date of the enactment of this Act, such 
     paragraph--
       (1) shall not apply with respect to any taxable year which 
     began before January 1, 2001, and
       (2) shall be applied by substituting ``the date of the 
     enactment of this paragraph'' for ``the date of such 
     determination'' in subparagraph (A) thereof.
       (d) Penalty for Filing Erroneous Refund Claims.--
       (1) In general.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6675 the following new section:

     ``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

       ``(a) Civil Penalty.--If a claim for refund or credit with 
     respect to income tax (other than a claim for a refund or 
     credit relating to the earned income credit under section 32) 
     is made for an excessive amount, unless it is shown that the 
     claim for such excessive amount has a reasonable basis, the 
     person making such claim shall be liable for a penalty in an 
     amount equal to 20 percent of the excessive amount.
       ``(b) Excessive Amount.--For purposes of this section, the 
     term `excessive amount' means in the case of any person the 
     amount by which the amount of the claim for refund or credit 
     for any taxable year exceeds the amount of such claim 
     allowable under this title for such taxable year.
       ``(c) Coordination With Other Penalties.--This section 
     shall not apply to any portion of the excessive amount of a 
     claim for refund or credit on which a penalty is imposed 
     under part II of subchapter A of chapter 68.''.
       (2) 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 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.

       (3) Effective date.--The amendments made by this subsection 
     shall apply to any return filed on or after January 1, 2008.

                                 ______
                                 
  SA 783. Mr. DORGAN submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On Page 62, line 18, insert the following before the 
     period:
       Provided further, That the Secretary of the Army, acting 
     through the Chief of Engineers, is provided an additional 
     $3,000,000 under this heading to rehabilitate the flood 
     damage project for Marmarth, North Dakota, to Federal levee 
     standards: Provided further, That the amount provided under 
     this heading is designated as an emergency requirement 
     pursuant to section 402 of H. Con. Res. 95 (109th Congress).
                                 ______
                                 
  SA 784. Mr. DURBIN (for himself, Mr. Biden, Mr. Menendez, Mr. Levin, 
and Mr. Cardin) submitted an amendment intended to be proposed by him 
to the bill H.R. 1591, making emergency supplemental appropriations for 
the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 44, beginning on line 16, strike ``$323,000,000'' 
     and all that follows through ``$128,000,000'' on line 17 and 
     insert the following: ``$373,000,000, to remain available 
     until September 30, 2008, of which up to $178,000,000''.

                                 ______
                                 
  SA 785. Mr. DURBIN (for himself, Mrs. Boxer, and Mr. Brown) submitted 
an amendment intended to be proposed by him to the bill H.R. 1591, 
making emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       Beginning on page 37, line 25, strike ``$161,000,000'' and 
     all that follows through page 38, line 7, and insert the 
     following: ``$211,000,000, to remain available until 
     September 30, 2008: Provided, That notwithstanding any other 
     provision of law, funds made available under the heading 
     `Millennium Challenge Corporation' and `Global HIV/AIDS 
     Initiative' in prior Acts making appropriations for foreign 
     operations, export financing and related programs may be made 
     available to combat the avian influenza, subject to the 
     regular notification procedures of the Committees on 
     Appropriations: Provided further, That of the funds 
     appropriated under this heading, $50,000,000 shall be made 
     available to combat the spread of multidrug resistant 
     tuberculosis (MDR-TB) and extremely or extensively drug 
     resistant tuberculosis (XDR-TB) in sub-Saharan Africa.''.

                                 ______
                                 
  SA 786. Mr. BINGAMAN (for himself and Mrs. Hutchison) submitted an 
amendment intended to be proposed by him to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       On page 14, line 21, strike beginning with ``to'' through 
     ``Asia:'' on line 24 and insert ``, to remain available until 
     expended of which $20,000,000 shall be for the National Guard 
     Counterdrug Support Program to be allocated to States based 
     on the most immediate drug threats: Provided, That the 
     remainder of these funds may be used only for such activities 
     related to Afghanistan and Central Asia:''.

                                 ______
                                 
  SA 787. Mr. LEVIN (for himself, Ms. Stabenow, and Mr. Durbin) 
submitted an amendment intended to be proposed by him to the bill H.R. 
1591, making emergency supplemental appropriations for the fiscal year 
ending September 30, 2007, and for other purposes; which was ordered to 
lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. EMERALD ASH BORER.

       The Secretary shall use $15,000,000 of funds of the 
     Commodity Credit Corporation to carry out activities for the 
     eradication of the emerald ash borer in the States of 
     Michigan, Ohio, Indiana, Illinois and Maryland.
                                 ______
                                 
  SA 788. Mr. GREGG submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:


[[Page S3927]]


       On page 11, strike line 1 and all that follows through page 
     155, line 15, and insert the following:

                        Other Procurement, Army

       For an additional amount for ``Other Procurement, Army'', 
     $12,588,272,000, to remain available until September 30, 
     2009.

                       Aircraft Procurement, Navy

       For an additional amount for ``Aircraft Procurement, 
     Navy'', $963,903,000, to remain available until September 30, 
     2009.

                       Weapons Procurement, Navy

       For an additional amount for ``Weapons Procurement, Navy'', 
     $163,813,000, to remain available until September 30, 2009.

            Procurement of Ammunition, Navy and Marine Corps

       For an additional amount for ``Procurement of Ammunition, 
     Navy and Marine Corps'', $159,833,000, to remain available 
     until September 30, 2009.

                        Other Procurement, Navy

       For an additional amount for ``Other Procurement, Navy'', 
     $722,506,000, to remain available until September 30, 2009.

                       Procurement, Marine Corps

       For an additional amount for ``Procurement, Marine Corps'', 
     $3,896,389,000, to remain available until September 30, 2009.

                    Aircraft Procurement, Air Force

       For an additional amount for ``Aircraft Procurement, Air 
     Force'', $1,431,756,000, to remain available until September 
     30, 2009.

                     Missile Procurement, Air Force

       For an additional amount for ``Missile Procurement, Air 
     Force'', $78,900,000, to remain available until September 30, 
     2009.

                  Procurement of Ammunition, Air Force

       For an additional amount for ``Procurement of Ammunition, 
     Air Force'', $6,000,000, to remain available until September 
     30, 2009.

                      Other Procurement, Air Force

       For an additional amount for ``Other Procurement, Air 
     Force'', $1,972,131,000, to remain available until September 
     30, 2009.

                       Procurement, Defense-Wide

       For an additional amount for ``Procurement, Defense-Wide'', 
     $903,092,000, to remain available until September 30, 2009.

                  National Guard and Reserve Equipment

       For an additional amount for ``National Guard and Reserve 
     Equipment'', $1,000,000,000, to remain available until 
     September 30, 2009.

               RESEARCH, DEVELOPMENT, TEST AND EVALUATION

            Research, Development, Test and Evaluation, Army

       For an additional amount for ``Research, Development, Test 
     and Evaluation, Army'', $125,576,000, to remain available 
     until September 30, 2008.

            Research, Development, Test and Evaluation, Navy

       For an additional amount for ``Research, Development, Test 
     and Evaluation, Navy'', $308,212,000, to remain available 
     until September 30, 2008.

         Research, Development, Test and Evaluation, Air Force

       For an additional amount for ``Research, Development, Test 
     and Evaluation, Air Force'', $233,869,000, to remain 
     available until September 30, 2008.

        Research, Development, Test and Evaluation, Defense-Wide

       For an additional amount for ``Research, Development, Test 
     and Evaluation, Defense-Wide'', $522,804,000, to remain 
     available until September 30, 2008.

                     REVOLVING AND MANAGEMENT FUNDS

                     National Defense Sealift Fund

       For an additional amount for ``National Defense Sealift 
     Fund'', $5,000,000.

                     Defense Working Capital Funds

       For an additional amount for ``Defense Working Capital 
     Funds'', $1,315,526,000.

                  OTHER DEPARTMENT OF DEFENSE PROGRAMS

                         Defense Health Program

       For an additional amount for ``Defense Health Program'', 
     $2,466,847,000; of which $2,277,147,000 shall be for 
     operation and maintenance; of which $118,000,000, to remain 
     available for obligation until September 30, 2009, shall be 
     for Procurement; and of which $71,700,000, to remain 
     available for obligation until September 30, 2008, shall be 
     for Research, development, test and evaluation.

         Drug Interdiction and Counter-Drug Activities, Defense


                     (including transfer of funds)

       For an additional amount for ``Drug Interdiction and 
     Counter-Drug Activities, Defense'', $254,665,000, to remain 
     available until expended: Provided, That these funds may be 
     used only for such activities related to Afghanistan and 
     Central Asia: Provided further, That the Secretary of Defense 
     may transfer such funds only to appropriations for military 
     personnel; operation and maintenance; procurement; and 
     research, development, test and evaluation: Provided further, 
     That the funds transferred shall be merged with and be 
     available for the same purposes and for the same time period 
     as the appropriation to which transferred: Provided further, 
     That the transfer authority provided in this paragraph is in 
     addition to any other transfer authority available to the 
     Department of Defense: Provided further, That upon a 
     determination that all or part of the funds transferred from 
     this appropriation are not necessary for the purposes 
     provided herein, such amounts may be transferred back to this 
     appropriation.

                             RELATED AGENCY

               Intelligence Community Management Account

       For an additional amount for ``Intelligence Community 
     Management Account'', $71,726,000.

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 1301. Appropriations provided in this chapter are 
     available for obligation until September 30, 2007, unless 
     otherwise provided in this chapter.


                          (transfer of funds)

       Sec. 1302. Upon his determination that such action is 
     necessary in the national interest, the Secretary of Defense 
     may transfer between appropriations up to $3,500,000,000 of 
     the funds made available to the Department of Defense in this 
     title: Provided, That the Secretary shall notify the Congress 
     promptly of each transfer made pursuant to the authority in 
     this section: Provided further, That the authority provided 
     in this section is in addition to any other transfer 
     authority available to the Department of Defense and is 
     subject to the same terms and conditions as the authority 
     provided in section 8005 of the Department of Defense 
     Appropriations Act, 2007 (Public Law 109-289; 120 Stat. 
     1257), except for the fourth proviso: Provided further, That 
     funds previously transferred to the ``Joint Improvised 
     Explosive Device Defeat Fund'' and the ``Iraq Security Forces 
     Fund'' under the authority of section 8005 of Public Law 109-
     289 and transferred back to their source appropriations 
     accounts shall not be taken into account for purposes of the 
     limitation on the amount of funds that may be transferred 
     under section 8005.
       Sec. 1303. Funds appropriated in this chapter, or made 
     available by the transfer of funds in or pursuant to this 
     chapter, for intelligence activities are deemed to be 
     specifically authorized by the Congress for purposes of 
     section 504(a)(1) of the National Security Act of 1947 (50 
     U.S.C. 414(a)(1)).
       Sec. 1304. None of the funds provided in this chapter may 
     be used to finance programs or activities denied by Congress 
     in fiscal years 2006 or 2007 appropriations to the Department 
     of Defense or to initiate a procurement or research, 
     development, test and evaluation new start program without 
     prior written notification to the congressional defense 
     committees.
       Sec. 1305. During fiscal year 2007, the Secretary of 
     Defense may transfer not to exceed $6,300,000 of the amounts 
     in or credited to the Defense Cooperation Account, pursuant 
     to 10 U.S.C. 2608, to such appropriations or funds of the 
     Department of Defense as he shall determine for use 
     consistent with the purposes for which such funds were 
     contributed and accepted: Provided, That such amounts shall 
     be available for the same time period as the appropriation to 
     which transferred: Provided further, That the Secretary shall 
     report to the Congress all transfers made pursuant to this 
     authority.
       Sec. 1306. (a) Authority to Provide Support.--Of the amount 
     appropriated by this title under the heading, ``Drug 
     Interdiction and Counter-Drug Activities, Defense'', not to 
     exceed $60,000,000 may be used for support for counter-drug 
     activities of the Governments of Afghanistan, Kazakhstan, and 
     Pakistan: Provided, That such support shall be in addition to 
     support provided for the counter-drug activities of such 
     Governments under any other provision of the law.
       (b) Types of Support.--
       (1) Except as specified in subsection (b)(2) of this 
     section, the support that may be provided under the authority 
     in this section shall be limited to the types of support 
     specified in section 1033(c)(1) of the National Defense 
     Authorization Act for Fiscal Year 1998 (Public Law 105-85, as 
     amended by Public Laws 106-398, 108-136, and 109-364) and 
     conditions on the provision of support as contained in 
     section 1033 shall apply for fiscal year 2007.
       (2) The Secretary of Defense may transfer vehicles, 
     aircraft, and detection, interception, monitoring and testing 
     equipment to said Governments for counter-drug activities.
       Sec. 1307. (a) From funds made available for operations and 
     maintenance in this title to the Department of Defense, not 
     to exceed $456,400,000 may be used, notwithstanding any other 
     provision of law, to fund the Commander's Emergency Response 
     Program, for the purpose of enabling military commanders in 
     Iraq and Afghanistan to respond to urgent humanitarian relief 
     and reconstruction requirements within their areas of 
     responsibility by carrying out programs that will immediately 
     assist the Iraqi and Afghan people.
       (b) Quarterly Reports.--Not later than 15 days after the 
     end of each fiscal year quarter, the Secretary of Defense 
     shall submit to the congressional defense committees a report 
     regarding the source of funds and the allocation and use of 
     funds during that quarter that were made available pursuant 
     to the authority provided in this section or under any other 
     provision of law for the purposes of the programs under 
     subsection (a).
       Sec. 1308. During fiscal year 2007, supervision and 
     administration costs associated with projects carried out 
     with funds appropriated to ``Afghanistan Security Forces 
     Fund'' or ``Iraq Security Forces Fund'' in this chapter may 
     be obligated at the time a construction contract is awarded: 
     Provided,

[[Page S3928]]

     That for the purpose of this section, supervision and 
     administration costs include all in-house Government costs.
       Sec. 1309. Section 1005(c)(2) of the National Defense 
     Authorization Act, Fiscal Year 2007 (Public Law 109-364) is 
     amended by striking ``$310,277,000'' and inserting 
     ``$376,446,000''.
       Sec. 1310. None of the funds appropriated or otherwise made 
     available by this or any other Act shall be obligated or 
     expended by the United States Government for a purpose as 
     follows:
       (1) To establish any military installation or base for the 
     purpose of providing for the permanent stationing of United 
     States Armed Forces in Iraq.
       (2) To exercise United States control over any oil resource 
     of Iraq.
       Sec. 1311. None of the funds made available in this Act may 
     be used in contravention of the following laws enacted or 
     regulations promulgated to implement the United Nations 
     Convention Against Torture and Other Cruel, Inhuman or 
     Degrading Treatment or Punishment (done at New York on 
     December 10, 1984):
       (1) Section 2340A of title 18, United States Code;
       (2) Section 2242 of the Foreign Affairs Reform and 
     Restructuring Act of 1998 (division G of Public Law 105-277; 
     112 Stat. 2681-822; 8 U.S.C. 1231 note) and regulations 
     prescribed thereto, including regulations under part 208 of 
     title 8, Code of Federal Regulations, and part 95 of title 
     22, Code of Federal Regulations; and
       (3) Sections 1002 and 1003 of the Department of Defense, 
     Emergency Supplemental Appropriations to Address Hurricanes 
     in the Gulf of Mexico, and Pandemic Influenza Act, 2006 
     (Public Law 109-148).
       Sec. 1312. Section 9007 of Public Law 109-289 is amended by 
     striking ``20'' and inserting ``287''.
       Sec. 1313. Inspection of Military Medical Treatment 
     Facilities, Military Quarters Housing Medical Hold Personnel, 
     and Military Quarters Housing Medical Holdover Personnel.l 
     (a) Periodic Inspection Required.--
       (1) In general.--Not later than 180 days after the date of 
     the enactment of this Act, and annually thereafter, the 
     Secretary of Defense shall inspect each facility of the 
     Department of Defense as follows:
       (A) Each military medical treatment facility.
       (B) Each military quarters housing medical hold personnel.
       (C) Each military quarters housing medical holdover 
     personnel.
       (2) Purpose.--The purpose of an inspection under this 
     subsection is to ensure that the facility or quarters 
     concerned meets acceptable standards for the maintenance and 
     operation of medical facilities, quarters housing medical 
     hold personnel, or quarters housing medical holdover 
     personnel, as applicable.
       (b) Acceptable Standards.--For purposes of this section, 
     acceptable standards for the operation and maintenance of 
     military medical treatment facilities, military quarters 
     housing medical hold personnel, or military quarters housing 
     medical holdover personnel are each of the following:
       (1) Generally accepted standards for the accreditation of 
     non-military medical facilities, or for facilities used to 
     quarter individuals with medical conditions that may require 
     medical supervision, as applicable, in the United States.
       (2) Standards under the Americans with Disabilities Act of 
     1990 (42 U.S.C. 12101 et seq.).
       (c) Additional Inspections on Identified Deficiencies.--
       (1) In general.--In the event a deficiency is identified 
     pursuant to subsection (a) at a facility or quarters 
     described in paragraph (1) of that subsection--
       (A) the commander of such facility or quarters, as 
     applicable, shall submit to the Secretary a detailed plan to 
     correct the deficiency; and
       (B) the Secretary shall reinspect such facility or 
     quarters, as applicable, not less often than once every 180 
     days until the deficiency is corrected.
       (2) Construction with other inspections.--An inspection of 
     a facility or quarters under this subsection is in addition 
     to any inspection of such facility or quarters under 
     subsection (a).
       (d) Reports on Inspections.--A complete copy of the report 
     on each inspection conducted under subsections (a) and (c) 
     shall be submitted in unclassified form to the applicable 
     military medical command and to the congressional defense 
     committees.
       (e) Report on Standards.--In the event no standards for the 
     maintenance and operation of military medical treatment 
     facilities, military quarters housing medical hold personnel, 
     or military quarters housing medical holdover personnel exist 
     as of the date of the enactment of this Act, or such 
     standards as do exist do not meet acceptable standards for 
     the maintenance and operation of such facilities or quarters, 
     as the case may be, the Secretary shall, not later than 30 
     days after that date, submit to Congress a report setting 
     forth the plan of the Secretary to ensure--
       (1) the adoption by the Department of standards for the 
     maintenance and operation of military medical facilities, 
     military quarters housing medical hold personnel, or military 
     quarters housing medical holdover personnel, as applicable, 
     that meet--
       (A) acceptable standards for the maintenance and operation 
     of such facilities or quarters, as the case may be; and
       (B) standards under the Americans with Disabilities Act of 
     1990; and
       (2) the comprehensive implementation of the standards 
     adopted under paragraph (1) at the earliest date practicable.
       Sec. 1314. From funds made available for the ``Iraq 
     Security Forces Fund'' for fiscal year 2007, up to 
     $155,500,000 may be used, notwithstanding any other provision 
     of law, to provide assistance, with the concurrence of the 
     Secretary of State, to the Government of Iraq to support the 
     disarmament, demobilization, and reintegration of militias 
     and illegal armed groups.
       Sec. 1315. Revision of United States Policy on Iraq. (a) 
     Findings.--Congress makes the following findings:
       (1) Congress and the American people will continue to 
     support and protect the members of the United States Armed 
     Forces who are serving or have served bravely and honorably 
     in Iraq.
       (2) The circumstances referred to in the Authorization for 
     Use of Military Force Against Iraq Resolution of 2002 (Public 
     Law 107-243) have changed substantially.
       (3) United States troops should not be policing a civil 
     war, and the current conflict in Iraq requires principally a 
     political solution.
       (4) United States policy on Iraq must change to emphasize 
     the need for a political solution by Iraqi leaders in order 
     to maximize the chances of success and to more effectively 
     fight the war on terror.
       (b) Prompt Commencement of Phased Redeployment of United 
     States Forces From Iraq.--
       (1) Transition of mission.--The President shall promptly 
     transition the mission of United States forces in Iraq to the 
     limited purposes set forth in paragraph (2).
       (2) Commencement of phased redeployment from iraq.--The 
     President shall commence the phased redeployment of United 
     States forces from Iraq not later than 120 days after the 
     date of the enactment of this Act, with the goal of 
     redeploying, by March 31, 2008, all United States combat 
     forces from Iraq except for a limited number that are 
     essential for the following purposes:
       (A) Protecting United States and coalition personnel and 
     infrastructure.
       (B) Training and equipping Iraqi forces.
       (C) Conducting targeted counter-terrorism operations.
       (3) Comprehensive strategy.--Paragraph (2) shall be 
     implemented as part of a comprehensive diplomatic, political, 
     and economic strategy that includes sustained engagement with 
     Iraq's neighbors and the international community for the 
     purpose of working collectively to bring stability to Iraq.
       (4) Reports required.--Not later than 60 days after the 
     date of the enactment of this Act, and every 90 days 
     thereafter, the President shall submit to Congress a report 
     on the progress made in transitioning the mission of the 
     United States forces in Iraq and implementing the phased 
     redeployment of United States forces from Iraq as required 
     under this subsection, as well as a classified campaign plan 
     for Iraq, including strategic and operational benchmarks and 
     projected redeployment dates of United States forces from 
     Iraq.
       (c) Benchmarks for the Government of Iraq.--
       (1) Sense of congress.--It is the sense of Congress that--
       (A) achieving success in Iraq is dependent on the 
     Government of Iraq meeting specific benchmarks, as reflected 
     in previous commitments made by the Government of Iraq, 
     including--
       (i) deploying trained and ready Iraqi security forces in 
     Baghdad;
       (ii) strengthening the authority of Iraqi commanders to 
     make tactical and operational decisions without political 
     intervention;
       (iii) disarming militias and ensuring that Iraqi security 
     forces are accountable only to the central government and 
     loyal to the constitution of Iraq;
       (iv) enacting and implementing legislation to ensure that 
     the energy resources of Iraq benefit all Iraqi citizens in an 
     equitable manner;
       (v) enacting and implementing legislation that equitably 
     reforms the de-Ba'athification process in Iraq;
       (vi) ensuring a fair process for amending the constitution 
     of Iraq so as to protect minority rights; and
       (vii) enacting and implementing rules to equitably protect 
     the rights of minority political parties in the Iraqi 
     Parliament; and
       (B) each benchmark set forth in subparagraph (A) should be 
     completed expeditiously and pursuant to a schedule 
     established by the Government of Iraq.
       (2) Report.--Not later than 30 days after the date of the 
     enactment of this Act, and every 60 days thereafter, the 
     Commander, Multi-National Forces-Iraq shall submit to 
     Congress a report describing and assessing in detail the 
     current progress being made by the Government of Iraq in 
     meeting the benchmarks set forth in paragraph (1)(A).

                               CHAPTER 4

                          DEPARTMENT OF ENERGY

                    ATOMIC ENERGY DEFENSE ACTIVITIES

                National Nuclear Security Administration


                    Defense Nuclear Nonproliferation

       For an additional amount for ``Defense Nuclear 
     Nonproliferation'', $63,000,000.

[[Page S3929]]

                               CHAPTER 5

                    DEPARTMENT OF HOMELAND SECURITY

              United States Customs and Border Protection


                         Salaries and Expenses

       For an additional amount for ``Salaries and Expenses'', 
     $140,000,000, to remain available until September 30, 2008.


 Air and Marine Interdiction, Operations, Maintenance, and Procurement

       For an additional amount for ``Air and Marine Interdiction, 
     Operations, Maintenance, and Procurement'', for air and 
     marine operations on the Northern Border and the Great Lakes, 
     including the final Northern Border air wing, $75,000,000, to 
     remain available until September 30, 2008.

                  Immigration and Customs Enforcement


                         Salaries and Expenses

       For an additional amount for ``Salaries and Expenses'', 
     $20,000,000, to remain available until September 30, 2008.

                 Transportation Security Administration


                           Aviation Security

       For an additional amount for ``Aviation Security'', 
     $660,000,000; of which $600,000,000 shall be for procurement 
     and installation of checked baggage explosives detection 
     systems, to remain available until expended; and $60,000,000 
     shall be for air cargo security, to remain available until 
     September 30, 2008.


                          Federal Air Marshals

       For an additional amount for ``Federal Air Marshals'', 
     $15,000,000, to remain available until September 30, 2008.

                              Preparedness

                     management and administration

       For an additional amount for ``Office of the Chief Medical 
     Officer'' for nuclear preparedness and other activities, 
     $18,000,000, to remain available until September 30, 2008.


           Infrastructure Protection and Information Security

       For an additional amount for ``Infrastructure Protection 
     and Information Security'' for chemical site security 
     activities, $18,000,000, to remain available until September 
     30, 2008.

                  Federal Emergency Management Agency


                 Administrative and Regional Operations

       For an additional amount for ``Administrative and Regional 
     Operations'' for necessary expenses related to title V of the 
     Homeland Security Act of 2002 (6 U.S.C. 101 et seq. (as 
     amended by section 611 of the Post-Katrina Emergency 
     Management Reform Act of 2006 (6 U.S.C. 701 note; Public Law 
     109-295))), $20,000,000, to remain available until September 
     30, 2008: Provided, That none of the funds available under 
     this heading may be obligated until the Committees on 
     Appropriations of the Senate and the House of Representatives 
     receive and approve a plan for expenditure.


                        State and Local Programs

       For an additional amount for ``State and Local Programs'', 
     $850,000,000; of which $190,000,000 shall be for port 
     security pursuant to section 70107(l) of title 46 United 
     States Code; $625,000,000 shall be for intercity rail 
     passenger transportation, freight rail, and transit security 
     grants; and $35,000,000 shall be for regional grants and 
     technical assistance to high risk urban areas for 
     catastrophic event planning and preparedness: Provided, That 
     none of the funds made available under this heading may be 
     obligated for such regional grants and technical assistance 
     until the Committees on Appropriations of the Senate and the 
     House of Representatives receive and approve a plan for 
     expenditure: Provided further, That funds for such regional 
     grants and technical assistance shall remain available until 
     September 30, 2008.


                Emergency Management Performance Grants

       For an additional amount for ``Emergency Management 
     Performance Grants'' for necessary expenses related to the 
     Nationwide Plan Review, $100,000,000.

           United States Citizenship and Immigration Services

       For an additional amount for expenses of ``United States 
     Citizenship and Immigration Services'' to address backlogs of 
     security checks associated with pending applications and 
     petitions, $30,000,000, to remain available until September 
     30, 2008: Provided, That none of the funds made available 
     under this heading shall be available for obligation until 
     the Secretary of Homeland Security, in consultation with the 
     United States Attorney General, submits to the Committees on 
     Appropriations of the Senate and the House of Representatives 
     a plan to eliminate the backlog of security checks that 
     establishes information sharing protocols to ensure United 
     States Citizenship and Immigration Services has the 
     information it needs to carry out its mission.

                         Science and Technology


           Research, Development, Acquisition, and Operations

       For an additional amount for ``Research, Development, 
     Acquisition, and Operations'' for air cargo research, 
     $15,000,000, to remain available until expended.

                   Domestic Nuclear Detection Office


                 Research, Development, and Operations

       For an additional amount for ``Research, Development, and 
     Operations'' for non-container, rail, aviation and intermodal 
     radiation detection activities, $39,000,000, to remain 
     available until expended.

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 1501. None of the funds provided in this Act, or 
     Public Law 109-295, shall be available to carry out section 
     872 of Public Law 107-296.
       Sec. 1502. Section 550 of the Department of Homeland 
     Security Appropriations Act, 2007 (6 U.S.C. 121 note) is 
     amended by adding at the end the following:
       ``(h) This section shall not preclude or deny any right of 
     any State or political subdivision thereof to adopt or 
     enforce any regulation, requirement, or standard of 
     performance with respect to chemical facility security that 
     is more stringent than a regulation, requirement, or standard 
     of performance issued under this section, or otherwise impair 
     any right or jurisdiction of any State with respect to 
     chemical facilities within that State, unless there is an 
     actual conflict between this section and the law of that 
     State.''.

                               CHAPTER 6

                         MILITARY CONSTRUCTION

                      Military Construction, Army

       For an additional amount for ``Military Construction, 
     Army'', $1,261,390,000, to remain available until September 
     30, 2008: Provided, That such funds may be obligated and 
     expended to carry out planning and design and military 
     construction projects not otherwise authorized by law: 
     Provided further, That of the funds provided under this 
     heading, $280,300,000 shall not be obligated or expended 
     until the Secretary of Defense certifies that none of the 
     funds are to be used for the purpose of providing facilities 
     for the permanent basing of U.S. military personnel in Iraq.

              Military Construction, Navy and Marine Corps

       For an additional amount for ``Military Construction, Navy 
     and Marine Corps'', $347,890,000, to remain available until 
     September 30, 2008: Provided, That such funds may be 
     obligated and expended to carry out planning and design and 
     military construction projects not otherwise authorized by 
     law.

                    Military Construction, Air Force

       For an additional amount for ``Military Construction, Air 
     Force'', $34,700,000, to remain available until September 30, 
     2008: Provided, That such funds may be obligated and expended 
     to carry out planning and design and military construction 
     projects not otherwise authorized by law.

                               CHAPTER 7

                 DEPARTMENT OF STATE AND RELATED AGENCY

                          DEPARTMENT OF STATE

                   Administration of Foreign Affairs


                    Diplomatic and Consular Programs

       For an additional amount for ``Diplomatic and Consular 
     Programs'', $815,796,000, to remain available until September 
     30, 2008, of which $70,000,000 for World Wide Security 
     Upgrades is available until expended: Provided, That of the 
     funds appropriated under this heading, not more than 
     $20,000,000 shall be made available for public diplomacy 
     programs: Provided further, That prior to the obligation of 
     funds pursuant to the previous proviso, the Secretary of 
     State shall submit a report to the Committees on 
     Appropriations describing a comprehensive public diplomacy 
     strategy, with goals and expected results, for fiscal years 
     2007 and 2008: Provided further, That within 15 days of 
     enactment of this Act, the Office of Management and Budget 
     shall apportion $15,000,000 from amounts appropriated or 
     otherwise made available by chapter 8 of title II of division 
     B of Public Law 109-148 under the heading ``Emergencies in 
     the Diplomatic and Consular Service'' for emergency 
     evacuations: Provided further, That of the amount made 
     available under this heading for Iraq, not to exceed 
     $20,000,000 may be transferred to, and merged with, funds in 
     the ``Emergencies in the Diplomatic and Consular Service'' 
     appropriations account, to be available only for emergency 
     evacuations and terrorism rewards.


                      Office of Inspector General

       For an additional amount for ``Office of Inspector 
     General'', $36,500,000, to remain available until December 
     31, 2008: Provided, That of the funds appropriated under this 
     heading, not less than $1,500,000 shall be made available for 
     activities related to oversight of assistance furnished for 
     Iraq and Afghanistan with funds appropriated in this Act and 
     in prior appropriations Acts: Provided further, That 
     $35,000,000 of these funds shall be transferred to the 
     Special Inspector General for Iraq Reconstruction for 
     reconstruction oversight.


               Educational and Cultural Exchange Programs

       For an additional amount for ``Educational and Cultural 
     Exchange Programs'', $25,000,000, to remain available until 
     expended.

                      International Organizations


              Contributions to International Organizations

       For an additional amount for ``Contributions to 
     International Organizations'', $59,000,000, to remain 
     available until September 30, 2008.


        Contributions for International Peacekeeping Activities

       For an additional amount for ``Contributions for 
     International Peacekeeping Activities'', $200,000,000, to 
     remain available until September 30, 2008.

[[Page S3930]]

                             RELATED AGENCY

                    Broadcasting Board of Governors


                 International Broadcasting Operations

       For an additional amount for ``International Broadcasting 
     Operations'' for activities related to broadcasting to the 
     Middle East, $10,000,000, to remain available until September 
     30, 2008.

                           FOREIGN OPERATIONS

                     BILATERAL ECONOMIC ASSISTANCE

                  FUNDS APPROPRIATED TO THE PRESIDENT

           United States Agency for International Development


                Child Survival and Health Programs Fund

       For an additional amount for ``Child Survival and Health 
     Programs Fund'', $161,000,000, to remain available until 
     September 30, 2008: Provided, That notwithstanding any other 
     provision of law, funds made available under the heading 
     ``Millennium Challenge Corporation'' and ``Global HIV/AIDS 
     Initiative'' in prior Acts making appropriations for foreign 
     operations, export financing and related programs may be made 
     available to combat the avian influenza, subject to the 
     regular notification procedures of the Committees on 
     Appropriations.


              International Disaster and Famine Assistance

       For an additional amount for ``International Disaster and 
     Famine Assistance'', $187,000,000, to remain available until 
     expended: Provided, That of the funds appropriated under this 
     heading, not less than $65,000,000 shall be made available 
     for assistance for internally displaced persons in Iraq, not 
     less than $18,000,000 shall be made available for emergency 
     shelter, fuel and other assistance for internally displaced 
     persons in Afghanistan, not less than $10,000,000 shall be 
     made available for assistance for northern Uganda, not less 
     than $10,000,000 shall be made available for assistance for 
     eastern Democratic Republic of the Congo, and not less than 
     $10,000,000 shall be made available for assistance for Chad.


   Operating Expenses of the United States Agency for International 
                              Development

       For an additional amount for ``Operating Expenses of the 
     United States Agency for International Development'', 
     $5,700,000, to remain available until September 30, 2008.


   OPERATING EXPENSES OF THE UNITED STATES AGENCY FOR INTERNATIONAL 
                DEVELOPMENT OFFICE OF INSPECTOR GENERAL

       For an additional amount for ``Operating Expenses of the 
     United States Agency for International Development Office of 
     Inspector General'', $4,000,000, to remain available until 
     September 30, 2008: Provided, That of the funds appropriated 
     under this heading, not less than $3,000,000 shall be made 
     available for activities related to oversight of assistance 
     furnished for Iraq with funds appropriated in this Act and in 
     prior appropriations Acts, and not less than $1,000,000 shall 
     be made available for activities related to oversight of 
     assistance furnished for Afghanistan with funds appropriated 
     in this Act and in prior appropriations Acts.

                  OTHER BILATERAL ECONOMIC ASSISTANCE

                         Economic Support Fund

       For an additional amount for ``Economic Support Fund'', 
     $2,602,200,000, to remain available until September 30, 2008: 
     Provided, That of the funds appropriated under this heading 
     that are available for assistance for Iraq, not less than 
     $100,000,000 shall be made available to the United States 
     Agency for International Development for continued support 
     for its Community Action Program in Iraq, of which not less 
     than $5,000,000 shall be made available for the fund 
     established by section 2108 of Public Law 109-13: Provided 
     further, That of the funds appropriated under this heading 
     that are available for assistance for Afghanistan, not less 
     than $10,000,000 shall be made available to the United States 
     Agency for International Development for continued support 
     for its Afghan Civilian Assistance Program: Provided further, 
     That of the funds appropriated under this heading, not less 
     than $6,000,000 shall be made available for assistance for 
     elections, reintegration of ex-combatants, and other 
     assistance to support the peace process in Nepal: Provided 
     further, That of the funds appropriated under this heading, 
     not less than $3,200,000 shall be made available, 
     notwithstanding any other provision of law, for assistance 
     for Vietnam for environmental remediation of dioxin storage 
     sites and to support health programs in communities near 
     those sites: Provided further, That funds made available 
     pursuant to the previous proviso should be matched, to the 
     maximum extent possible, with contributions from other 
     governments, multilateral organizations, and private sources: 
     Provided further, That of the funds made available under this 
     heading, not less than $6,000,000 shall be made available for 
     typhoon reconstruction assistance for the Philippines: 
     Provided further, That of the funds made available under this 
     heading, not less than $110,000,000 shall be made available 
     for assistance for Pakistan, of which not less than 
     $5,000,000 shall be made available for political party 
     development and election monitoring activities: Provided 
     further, That of the funds appropriated under this heading, 
     not less than $2,000,000 shall be made available to support 
     the peace process in northern Uganda: Provided further, That 
     of the funds made available under the heading ``Economic 
     Support Fund'' in Public Law 109-234 for Iraq to promote 
     democracy, rule of law and reconciliation, $2,000,000 should 
     be made available for the United States Institute of Peace 
     for programs and activities in Afghanistan to remain 
     available until September 30, 2008.

                          DEPARTMENT OF STATE

          Assistance for Eastern Europe and the Baltic States

       For an additional amount for ``Assistance for Eastern 
     Europe and the Baltic States'', $214,000,000, to remain 
     available until September 30, 2008, for assistance for 
     Kosovo.

                             Democracy Fund

       For an additional amount for ``Democracy Fund'', 
     $465,000,000, to remain available until September 30, 2008: 
     Provided, That of the funds appropriated under this heading, 
     not less than $385,000,000 shall be made available for the 
     Human Rights and Democracy Fund of the Bureau of Democracy, 
     Human Rights and Labor, Department of State, for democracy, 
     human rights, and rule of law programs in Iraq: Provided 
     further, That prior to the initial obligation of funds made 
     available under this heading for Iraq for the Political 
     Participation Fund or the National Institutions Fund, the 
     Secretary of State shall submit a report to the Committees on 
     Appropriations describing a comprehensive, long-term 
     strategy, with goals and expected results, for strengthening 
     and advancing democracy in Iraq: Provided further, That of 
     the funds appropriated under this heading, not less than 
     $5,000,000 shall be made available for media and 
     reconciliation programs in Somalia.

          International Narcotics Control and Law Enforcement


                    (including rescission of funds)

       For an additional amount for ``International Narcotics 
     Control and Law Enforcement'', $210,000,000, to remain 
     available until September 30, 2008.
       Of the amounts made available for procurement of a maritime 
     patrol aircraft for the Colombian Navy under this heading in 
     Public Law 109-234, $13,000,000 are rescinded.

                    Migration and Refugee Assistance

       For an additional amount for ``Migration and Refugee 
     Assistance'', $143,000,000, to remain available until 
     September 30, 2008: Provided, That of the funds appropriated 
     under this heading, not less than $65,000,000 shall be made 
     available for assistance for Iraqi refugees including not 
     less than $5,000,000 to rescue Iraqi scholars, and not less 
     than $18,000,000 shall be made available for assistance for 
     Afghan refugees.

     United States Emergency Refugee and Migration Assistance Fund

       For an additional amount for ``United States Emergency 
     Refugee and Migration Assistance Fund'', $55,000,000, to 
     remain available until expended.

    Nonproliferation, Anti-terrorism, Demining and Related Programs

       For an additional amount for ``Nonproliferation, Anti-
     Terrorism, Demining and Related Programs'', $27,500,000, to 
     remain available until September 30, 2008.

                       DEPARTMENT OF THE TREASURY

           International Affairs Technical Assistance Program

       For an additional amount for ``International Affairs 
     Technical Assistance'', $2,750,000, to remain available until 
     September 30, 2008.

                          MILITARY ASSISTANCE

                  FUNDS APPROPRIATED TO THE PRESIDENT

                   Foreign Military Financing Program

       For an additional amount for ``Foreign Military Financing 
     Program'', $220,000,000, to remain available until September 
     30, 2008, for assistance for Lebanon.

                        Peacekeeping Operations


                     (including transfer of funds)

       For an additional amount for ``Peacekeeping Operations'', 
     $323,000,000, to remain available until September 30, 2008, 
     of which up to $128,000,000 may be transferred, subject to 
     the regular notification procedures of the Committees on 
     Appropriations, to ``Contributions to International 
     Peacekeeping Activities'', to be made available, 
     notwithstanding any other provision of law, for assessed 
     costs of United Nations Peacekeeping Missions: Provided, That 
     of the funds appropriated under this heading, not less than 
     $45,000,000 shall be made available, notwithstanding section 
     660 of the Foreign Assistance Act of 1961, for assistance for 
     Liberia for security sector reform.

                    GENERAL PROVISIONS--THIS CHAPTER


                         authorization of funds

       Sec. 1701. Funds appropriated by this title may be 
     obligated and expended notwithstanding section 10 of Public 
     Law 91-672 (22 U.S.C. 2412), section 15 of the State 
     Department Basic Authorities Act of 1956 (22 U.S.C. 2680), 
     section 313 of the Foreign Relations Authorization Act, 
     Fiscal Years 1994 and 1995 (22 U.S.C. 6212), and section 
     504(a)(1) of the National Security Act of 1947 (50 U.S.C. 
     414(a)(1)).


                   extension of availability of funds

       Sec. 1702. Section 1302(a) of Public Law 109-234 is amended 
     by striking ``one additional year'' and inserting in lieu 
     thereof ``two additional years''.


                    EXTENSION OF OVERSIGHT AUTHORITY

       Sec. 1703. Section 3001(o)(1)(B) of the Emergency 
     Supplemental Appropriations Act for

[[Page S3931]]

     Defense and for the Reconstruction of Iraq and Afghanistan, 
     2004 (Public Law 108-106; 117 Stat. 1238; 5 U.S.C. App., note 
     to section 8G of Public Law 95-452), as amended by section 
     1054(b) of the John Warner National Defense Authorization Act 
     for Fiscal Year 2007 (Public Law 109-364; 120 Stat. 2397) and 
     section 2 of the Iraq Reconstruction Accountability Act of 
     2006 (Public Law 109-440), is amended by inserting ``or 
     fiscal year 2007'' after ``fiscal year 2006''.


                           DEBT RESTRUCTURING

       Sec. 1704. Amounts appropriated for fiscal year 2007 for 
     ``Bilateral Economic Assistance--Department of the Treasury--
     Debt Restructuring'' may be used to assist Liberia in 
     retiring its debt arrearages to the International Monetary 
     Fund, the International Bank for Reconstruction and 
     Development, and the African Development Bank.


                                 JORDAN

                     (Including Transfer of Funds)

       Sec. 1705. Of the funds appropriated by this Act for 
     assistance for Iraq under the heading ``Economic Support 
     Fund'' that are available to support Provincial 
     Reconstruction Team activities, up to $100,000,000 may be 
     transferred to, and merged with, funds appropriated by this 
     Act under the headings ``Foreign Military Financing Program'' 
     and ``Nonproliferation, Anti-terrorism, Demining and Related 
     Programs'' for assistance for Jordan: Provided, That funds 
     transferred pursuant to this section shall be subject to the 
     regular notification procedures of the Committees on 
     Appropriations.


                                LEBANON

       Sec. 1706. Prior to the initial obligation of funds made 
     available in this Act for assistance for Lebanon under the 
     headings ``Foreign Military Financing Program'' and 
     ``Nonproliferation, Anti-terrorism, Demining and Related 
     Programs'', the Secretary of State shall certify to the 
     Committees on Appropriations that all practicable efforts 
     have been made to ensure that such assistance is not provided 
     to or through any individual, or private or government 
     entity, that advocates, plans, sponsors, engages in, or has 
     engaged in, terrorist activity: Provided, That this section 
     shall be effective notwithstanding section 534(a) of Public 
     Law 109-102, which is made applicable to funds appropriated 
     for fiscal year 2007 by the Continuing Appropriations 
     Resolution, 2007, as amended.


                    HUMAN RIGHTS AND DEMOCRACY FUND

       Sec. 1707. The Assistant Secretary of State for Democracy, 
     Human Rights and Labor shall be responsible for all policy, 
     funding, and programming decisions regarding funds made 
     available under this Act and prior Acts making appropriations 
     for foreign operations, export financing and related programs 
     for the Human Rights and Democracy Fund of the Bureau of 
     Democracy, Human Rights and Labor.


          INSPECTOR GENERAL OVERSIGHT OF IRAQ AND AFGHANISTAN

       Sec. 1708. (a) In General.--Subject to paragraph (2), the 
     Inspector General of the Department of State and the 
     Broadcasting Board of Governors (referred to in this section 
     as the ``Inspector General'') may use personal services 
     contracts to engage citizens of the United States to 
     facilitate and support the Office of the Inspector General's 
     oversight of programs and operations related to Iraq and 
     Afghanistan. Individuals engaged by contract to perform such 
     services shall not, by virtue of such contract, be considered 
     to be employees of the United States Government for purposes 
     of any law administered by the Office of Personnel 
     Management. The Secretary of State may determine the 
     applicability to such individuals of any law administered by 
     the Secretary concerning the performance of such services by 
     such individuals.
       (b) Conditions.--The authority under paragraph (1) is 
     subject to the following conditions:
       (1) The Inspector General determines that existing 
     personnel resources are insufficient.
       (2) The contract length for a personal services contractor, 
     including options, may not exceed 1 year, unless the 
     Inspector General makes a finding that exceptional 
     circumstances justify an extension of up to 2 additional 
     years.
       (3) Not more than 20 individuals may be employed at any 
     time as personal services contractors under the program.
       (c) Termination of Authority.--The authority to award 
     personal services contracts under this section shall 
     terminate on December 31, 2008. A contract entered into prior 
     to the termination date under this paragraph may remain in 
     effect until not later than December 31, 2009.
       (d) Other Authorities Not Affected.--The authority under 
     this section is in addition to any other authority of the 
     Inspector General to hire personal services contractors.


                             FUNDING TABLES

       Sec. 1709. (a) Funds provided in this Act for the following 
     accounts shall be made available for programs and countries 
     in the amounts contained in the respective tables included in 
     the report accompanying this Act:
       ``Diplomatic and Consular Programs''.
       ``Educational and Cultural Exchange Programs''.
       ``International Disaster and Famine Assistance''.
       ``Economic Support Fund''.
       ``Assistance for Eastern Europe and Baltic States''.
       ``Democracy Fund''.
       ``Migration and Refugee Assistance''.
       ``Nonproliferation, Anti-Terrorism, Demining and Related 
     Programs''.
       ``Peacekeeping Operations''.
       (b) Any proposed increases or decreases to the amounts 
     contained in the tables in the accompanying report shall be 
     subject to the regular notification procedures of the 
     Committees on Appropriations and section 634A of the Foreign 
     Assistance Act of 1961.


       BENCHMARKS FOR CERTAIN RECONSTRUCTION ASSISTANCE FOR IRAQ

       Sec. 1710. (a) Benchmarks.--Notwithstanding any other 
     provision of law, fifty percent of the funds appropriated by 
     this Act for assistance for Iraq under the headings 
     ``Economic Support Fund'' and ``International Narcotics and 
     Law Enforcement'' shall be withheld from obligation until the 
     President certifies to the Committees on Appropriations and 
     Foreign Relations of the Senate and the Committees on 
     Appropriations and Foreign Affairs of the House of 
     Representatives that the Government of Iraq has--
       (1) enacted a broadly accepted hydro-carbon law that 
     equitably shares oil revenues among all Iraqis;
       (2) adopted legislation necessary for the conduct of 
     provincial and local elections, taken steps to implement such 
     legislation, and set a schedule to conduct provincial and 
     local elections;
       (3) reformed current laws governing the de-Baathification 
     process to allow for more equitable treatment of individuals 
     affected by such laws;
       (4) amended the Constitution of Iraq consistent with the 
     principles contained in Article 137 of such constitution; and
       (5) allocated and begun expenditure of $10,000,000,000 in 
     Iraqi revenues for reconstruction projects, including 
     delivery of essential services, on an equitable basis.
       (b) Exemptions.--The requirement to withhold funds from 
     obligation pursuant to subsection (a) shall not apply with 
     respect to funds made available under the heading ``Economic 
     Support Fund'' that are administered by the United States 
     Agency for International Development for continued support 
     for the Community Action Program, assistance for civilian 
     victims of the military operations, and the Community 
     Stabilization Program in Iraq, or for programs and activities 
     to promote democracy, governance, human rights, and rule of 
     law.
       (c) Report.--At the time the President certifies to the 
     Committees on Appropriations and Foreign Relations of the 
     Senate and the Committees on Appropriations and Foreign 
     Affairs of the House of Representatives that the Government 
     of Iraq has met the benchmarks described in subsection (a), 
     the President shall submit to such Committees a report that 
     contains a detailed description of the specific actions that 
     the Government of Iraq has taken to meet each of the 
     benchmarks referenced in the certification.


RELIEF FOR IRAQI, HMONG AND OTHER REFUGEES WHO DO NOT POSE A THREAT TO 
                           THE UNITED STATES

       Sec. 1711. (a) Amendment to Authority to Determine the Bar 
     to Admission Inapplicable.--Section 212(d)(3)(B)(i) of the 
     Immigration and Nationality Act (8 U.S.C. 1182(d)(3)(B)(i)) 
     is amended to read as follows: ``The Secretary of State, 
     after consultation with the Attorney General and the 
     Secretary of Homeland Security, or the Secretary of Homeland 
     Security, after consultation with the Secretary of State and 
     the Attorney General, may determine in such Secretary's sole 
     unreviewable discretion that subsection (a)(3)(B) shall not 
     apply with respect to an alien within the scope of that 
     subsection, or that subsection (a)(3)(B)(vi)(III) shall not 
     apply to a group. Such a determination shall neither 
     prejudice the ability of the United States Government to 
     commence criminal or civil proceedings involving a 
     beneficiary of such a determination or any other person, nor 
     create any substantive or procedural right or benefit for a 
     beneficiary of such a determination or any other person. 
     Notwithstanding any other provision of law (statutory or non-
     statutory), including but not limited to section 2241 of 
     title 28, or any other habeas corpus provision, and sections 
     1361 and 1651 of such title, no court shall have jurisdiction 
     to review such a determination or revocation except in a 
     proceeding for review of a final order of removal pursuant to 
     section 242 and only to the extent provided in section 
     242(a)(2)(D). The Secretary of State may not exercise the 
     discretion provided in this clause with respect to an alien 
     at any time during which the alien is the subject of pending 
     removal proceedings under section 1229a of title 8.''.
       (b) Automatic Relief for the Hmong and Other Groups That do 
     Not Pose a Threat to the United States.--Section 212(a)(3)(B) 
     of the Immigration and Nationality Act (8 U.S.C. 
     1182(a)(3)(B)) is amended--
       (1) in clause (vi) in the matter preceding section (I), by 
     striking ``As'' and inserting ``Except as provided in clause 
     (vii), as''; and
       (2) by adding at the end the following new clause:
       ``(vii) Notwithstanding clause (vi), for purposes of this 
     section the Hmong, the Montagnards, the Karen National Union/
     Karen Liberation Army (KNU/KNLA), the Chin National Front/
     Chin National Army (CNF/CNA), the Chin National League for 
     Democracy (CNLD), the Kayan New Land Party (KNLP), the Arakan 
     Liberation Party

[[Page S3932]]

     (ALP), the Mustangs, the Alzados, and the Karenni National 
     Progressive Party shall not be considered to be a terrorist 
     organization on the basis of any act or event occurring 
     before the date of enactment of this section. Nothing in this 
     subsection may be construed to alter or limit the authority 
     of the Secretary of State and Secretary of Homeland Security 
     to exercise their discretionary authority pursuant to 
     212(d)(3)(B)(i) (8 U.S.C. 1182(d)(3)(B)(i)).''.
       (c) Duress Exception.--Section 212(a)(3)(B)(iv)(VI) of the 
     Immigration and Nationality Act (8 U.S.C. 
     1182(a)(3)(B)(iv)(VI)) is amended by adding ``other than an 
     act carried out under duress'' after ``act'' and before 
     ``that the actor knows''.
       (d) Technical Correction.--Section 212(a)(3)(B)(ii) of the 
     Immigration and Nationality Act (8 U.S.C. 1182(a)(3)(B)(ii)) 
     is amended by striking ``Subclause (VII)'' and inserting 
     ``Subclause (IX)''.
       (e) Regulations.--Section 212(d)(3)(B) of the Immigration 
     and Nationality Act (8 U.S.C. 1182(d)(3)(B)) is amended by 
     adding the following subsection:
       ``(iii) Not later than 180 days after the date of enactment 
     of this Act, the Secretary of the Department of Homeland 
     Security and Secretary of State shall each publish in the 
     Federal Register regulations establishing the process by 
     which the eligibility of a refugee, asylum seeker, or 
     individual seeking to adjust his immigration status is 
     considered eligible for any of the exceptions authorized by 
     clause (i), including a timeline for issuing a 
     determination.''.
       (f) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this section, 
     and these amendments and sections 212(a)(3)(B) and 
     212(d)(3)(B) of the Immigration and Nationality Act (8 U.S.C. 
     1182(a)(3)(B) and 1182(d)(3)(B)), as amended by these 
     sections, shall apply to--
       (1) removal proceedings instituted before, on, or after the 
     date of enactment of this section; and
       (2) acts and conditions constituting a ground for 
     inadmissibility, excludability, deportation, or removal 
     occurring or existing before, on, or after such date.


               SPENDING PLAN AND NOTIFICATION PROCEDURES

       Sec. 1712. Not later than 45 days after enactment of this 
     Act the Secretary of State shall submit to the Committees on 
     Appropriations a report detailing planned expenditures for 
     funds appropriated under the headings in this chapter, except 
     for funds appropriated under the headings ``International 
     Disaster and Famine Assistance'', ``Office of the United 
     States Agency for International Development Inspector 
     General'', and ``Office of the Inspector General'': Provided, 
     That funds appropriated under the headings in this chapter, 
     except for funds appropriated under the headings named in 
     this section, shall be subject to the regular notification 
     procedures of the Committees on Appropriations.

                                TITLE II

        KATRINA RECOVERY, VETERANS' CARE AND FOR OTHER PURPOSES

                               CHAPTER 1

                    GENERAL PROVISION--THIS CHAPTER


            emergency forestry conservation reserve program

       Sec. 2101. Section 1231(k)(2) of the Food Security Act of 
     1985 (16 U.S.C. 3831(k)(2)) is amended by striking ``During 
     calendar year 2006, the'' and inserting ``The''.

                               CHAPTER 2

                         DEPARTMENT OF JUSTICE

                       Office of Justice Programs


               STATE AND LOCAL LAW ENFORCEMENT ASSISTANCE

       For an additional amount for ``State and Local Law 
     Enforcement Assistance'', for discretionary grants authorized 
     by subpart 2 of part E, of title I of the Omnibus Crime 
     Control and Safe Streets Act of 1968, notwithstanding the 
     provisions of section 511 of said Act, $170,000,000, to 
     remain available until September 30, 2008: Provided, That of 
     the amount made available under this heading, $70,000,000 
     shall be for local law enforcement initiatives in the gulf 
     coast region related to the aftermath of Hurricanes Katrina 
     and Rita, of which no less than $55,000,000 shall be for the 
     State of Louisiana: Provided further, That of the amount made 
     available under this heading, $100,000,000 shall be for 
     reimbursing State and local law enforcement entities for 
     security and related costs, including overtime, associated 
     with the 2008 Presidential Candidate Nominating Conventions, 
     of which $50,000,000 shall be for the city of Denver, 
     Colorado and $50,000,000 shall be for the city of St. Paul, 
     Minnesota: Provided further, That the Department of Justice 
     shall report to the Committees on Appropriations of the House 
     and the Senate on a quarterly basis on the expenditure of the 
     funds provided in the previous proviso.

                         DEPARTMENT OF COMMERCE

            National Oceanic and Atmospheric Administration


                  OPERATIONS, RESEARCH, AND FACILITIES

       For an additional amount for ``Operations, Research, and 
     Facilities'', for necessary expenses related to fisheries 
     disasters, $165,900,000, to remain available until September 
     30, 2008: Provided, That of the amount provided under this 
     heading, the National Marine Fisheries Service shall cause 
     $60,400,000 to be distributed among eligible recipients of 
     assistance for the commercial fishery failure designated 
     under section 312(a) of the Magnuson-Stevens Fishery 
     Conservation and Management Act (16 U.S.C. 1861a(a)) and 
     declared by the Secretary of Commerce on August 10, 2006: 
     Provided further, That of the amount provided under this 
     heading, $105,500,000 shall be for necessary expenses related 
     to the consequences of Hurricanes Katrina and Rita on shrimp 
     and fishing industries.


               PROCUREMENT, ACQUISITION, AND CONSTRUCTION

       For an additional amount for ``Procurement, Acquisition and 
     Construction'', for necessary expenses related to disaster 
     response and preparedness of the Gulf of Mexico coast, 
     $6,000,000, to remain available until September 30, 2008.


                   fisheries disaster mitigation fund

       For an additional amount for a ``Fisheries Disaster 
     Mitigation Fund'', $50,000,000, to remain available until 
     expended for use in mitigating the effects of commercial 
     fisheries failures and fishery resource disasters as 
     determined under the Magnuson Stevens Act (16 U.S.C. 1801 et 
     seq.) or the Interjurisdictional Fisheries Act (16 U.S.C. 
     4101 et seq.): Provided, That the Secretary of Commerce shall 
     obligate funds provided under this heading according to the 
     Magnuson Stevens Conservation Act, as amended, the 
     Interjurisdictional Fisheries Act, as amended, or other Acts 
     as the Secretary determines to be appropriate.

                    GENERAL PROVISION--THIS CHAPTER

       Sec. 2201. Up to $48,000,000 of amounts made available to 
     the National Aeronautics and Space Administration in Public 
     Law 109-148 and Public Law 109-234 for emergency hurricane 
     and other natural disaster-related expenses may be used to 
     reimburse hurricane-related costs incurred by NASA in fiscal 
     year 2005.

                               CHAPTER 3

                      DEPARTMENT OF DEFENSE--CIVIL

                         DEPARTMENT OF THE ARMY

                       Corps of Engineers--Civil


                              CONSTRUCTION

       For an additional amount for ``Construction'' for necessary 
     expenses related to the consequences of Hurricane Katrina and 
     other hurricanes of the 2005 season, $150,000,000, to remain 
     available until expended, which may be used to continue 
     construction of projects related to interior drainage for the 
     greater New Orleans metropolitan area.


                       operation and maintenance

       For an additional amount for ``Operation and Maintenance'' 
     to dredge navigation channels related to the consequences of 
     Hurricane Katrina and other hurricanes of the 2005 season, 
     $3,000,000, to remain available until expended.


                 Flood Control and Coastal Emergencies

       For an additional amount for ``Flood Control and Coastal 
     Emergencies'', as authorized by section 5 of the Act of 
     August 18, 1941 (33 U.S.C. 701n), for necessary expenses 
     relating to the consequences of Hurricanes Katrina and Rita 
     and for other purposes, $1,557,700,000, to remain available 
     until expended: Provided, That $1,300,000,000 of the amount 
     provided may be used by the Secretary of the Army to carry 
     out projects and measures to provide the level of protection 
     necessary to achieve the certification required for the 100-
     year level of flood protection in accordance with the 
     national flood insurance program under the base flood 
     elevations in existence at the time of construction of the 
     enhancements for the West Bank and Vicinity and Lake 
     Ponchartrain and Vicinity, Louisiana, projects, as described 
     under the heading ``Flood Control and Coastal Emergencies'', 
     in chapter 3 of Public Law 109-148: Provided further, That 
     $150,000,000 of the amount provided may be used to support 
     emergency operations, repairs and other activities in 
     response to flood, drought and earthquake emergencies as 
     authorized by law: Provided further, That $107,700,000 of the 
     amount provided may be used to implement the projects for 
     hurricane storm damage reduction, flood damage reduction, and 
     ecosystem restoration within Hancock, Harrison, and Jackson 
     Counties, Mississippi substantially in accordance with the 
     Report of the Chief of Engineers dated December 31, 2006, and 
     entitled ``Mississippi, Coastal Improvements Program Interim 
     Report, Hancock, Harrison, and Jackson Counties, 
     Mississippi'': Provided further, That projects authorized for 
     implementation under this Chief's report shall be carried out 
     at full Federal expense, except that the non-Federal 
     interests shall be responsible for providing any lands, 
     easements, rights-of-way, disposal areas, and relocations 
     required for construction of the project and for all costs 
     associated with operation and maintenance of the project: 
     Provided further, That any project using funds appropriated 
     under this heading shall be initiated only after non-Federal 
     interests have entered into binding agreements with the 
     Secretary requiring the non-Federal interests to pay 100 
     percent of the operation, maintenance, repair, replacement, 
     and rehabilitation costs of the project and to hold and save 
     the United States free from damages due to the construction 
     or operation and maintenance of the project, except for 
     damages due to the fault or negligence of the United States 
     or its contractors.

[[Page S3933]]

                         DEPARTMENT OF INTERIOR

                         Bureau of Reclamation


                      WATER AND RELATED RESOURCES

       For an additional amount for ``Water and Related 
     Resources'', $18,000,000, to remain available until expended 
     for drought assistance: Provided, That drought assistance may 
     be provided under the Reclamation States Drought Emergency 
     Act or other applicable Reclamation authorities to assist 
     drought plagued areas of the West.

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 2301. The Secretary is authorized and directed to 
     reimburse local governments for expenses they have incurred 
     in storm-proofing pumping stations, constructing safe houses 
     for operators, and other interim flood control measures in 
     and around the New Orleans metropolitan area, provided the 
     Secretary determines those elements of work and related 
     expenses to be integral to the overall plan to ensure 
     operability of the stations during hurricanes, storms and 
     high water events and the flood control plan for the area.
       Sec. 2302. The limitation concerning total project costs in 
     section 902 of the Water Resources Development Act of 1986, 
     as amended (33 U.S.C. 2280), shall not apply during fiscal 
     year 2008 to any water resources project for which funds were 
     made available during fiscal year 2007.
       Sec. 2303. (a) The Secretary of the Army is authorized and 
     directed to utilize funds remaining available for obligation 
     from the amounts appropriated in chapter 3 of Public Law 109-
     234 under the heading ``Flood Control and Coastal 
     Emergencies'' for projects in the greater New Orleans 
     metropolitan area to prosecute these projects in a manner 
     which promotes the goal of continuing work at an optimal 
     pace, while maximizing, to the greatest extent practicable, 
     levels of protection to reduce the risk of storm damage to 
     people and property.
       (b) The expenditure of funds as provided in subsection (a) 
     may be made without regard to individual amounts or purposes 
     specified in chapter 3 of Public Law 109-234.
       (c) Any reallocation of funds that are necessary to 
     accomplish the goal established in subsection (a) are 
     authorized. Reallocation of funds in excess of $250,000,000 
     or 50 percent, whichever is less, of the individual amounts 
     specified in chapter 3 of Public Law 109-234 require 
     notifications of the House and Senate Committees on 
     Appropriation.

                               CHAPTER 4

                     SMALL BUSINESS ADMINISTRATION

                     Disaster Loans Program Account


                     (including transfer of funds)

       For an additional amount for ``Disaster Loans Program 
     Account'' for administrative expenses to carry out the 
     disaster loan program, $25,069,000, to remain available until 
     expended, which may be transferred to and merged with ``Small 
     Business Administration, Salaries and Expenses''.

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 2401. Economic Injury Disaster Loans. (a) 
     Definitions.--In this section--
       (1) the term ``Administrator'' means the Administrator of 
     the Small Business Administration;
       (2) the term ``covered small business concern'' means a 
     small business concern--
       (A) that is located in any area in Louisiana or Mississippi 
     for which the President declared a major disaster because of 
     Hurricane Katrina of 2005 or Hurricane Rita of 2005;
       (B) that has not more than 50 full-time employees; and
       (C) that--
       (i)(I) suffered a substantial economic injury as a result 
     of Hurricane Katrina of 2005 or Hurricane Rita of 2005, 
     because of a reduction in travel or tourism to the area 
     described in subparagraph (A); and
       (II) demonstrates that, during the 1-year period ending on 
     August 28, 2005, not less than 45 percent of the revenue of 
     that small business concern resulted from tourism or travel 
     related sales; or
       (ii)(I) suffered a substantial economic injury as a result 
     of Hurricane Katrina of 2005 or Hurricane Rita of 2005; and
       (II) operates in a parish or county for which the 
     population on the date of enactment of this Act, as 
     determined by the Administrator, is not greater than 75 
     percent of the population of that parish or county before 
     August 28, 2005, based on the most recent United States 
     population estimate available before August 28, 2005;
       (3) the term ``major disaster'' has the meaning given that 
     term in section 102 of the Robert T. Stafford Disaster Relief 
     and Emergency Assistance Act (42 U.S.C. 5122); and
       (4) the term ``small business concern'' has the meaning 
     given that term in section 3 of the Small Business Act (15 
     U.S.C. 632).
       (b) Appropriation.--
       (1) In general.--There are appropriated, out of any money 
     in the Treasury not otherwise appropriated, $25,000,000 to 
     the Administrator, which, except as provided in paragraph (2) 
     or (3), shall be used for loans under section 7(b)(2) of the 
     Small Business Act (15 U.S.C. 636(b)(2)) to covered small 
     business concerns.
       (2) Administrative expenses.--Of the amounts made available 
     under paragraph (1), not more than $8,750,000 may be 
     transferred to and merged with ``Salaries and Expenses'' to 
     carry out the disaster loan program of the Small Business 
     Administration.
       (3) Other uses of funds.--The Administrator may use amounts 
     made available under paragraph (1) for other purposes 
     authorized for amounts in the ``Disaster Loans Program 
     Account'' or transfer such amounts to and merge such amounts 
     with ``Salaries and Expenses'', if--
       (A) such amounts are--
       (i) not obligated on the later of 5 months after the date 
     of enactment of this Act and August 29, 2007; or
       (ii) necessary to provide assistance in the event of a 
     major disaster; and
       (B) not later than 5 days before any such use or transfer 
     of amounts, the Administrator provides written notification 
     of such use or transfer to the Committee on Appropriations of 
     the Senate and the Committee on Appropriations of the House 
     of Representatives.
       Sec. 2402. Other Programs. (a) HUBZones.--Section 3(p) of 
     the Small Business Act (15 U.S.C. 632(p)) is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (D), by striking ``or'';
       (B) in subparagraph (E), by striking the period at the end 
     and inserting ``; or''; and
       (C) by adding at the end the following:
       ``(F) an area in which the President has declared a major 
     disaster (as that term is defined in section 102 of the 
     Robert T. Stafford Disaster Relief and Emergency Assistance 
     Act (42 U.S.C. 5122)) as a result of Hurricane Katrina of 
     August 2005 or Hurricane Rita of September 2005, during the 
     time period described in paragraph (8).''; and
       (2) by adding at the end the following:
       ``(8) Time period.--The time period for the purposes of 
     paragraph (1)(F)--
       ``(A) shall be the 2-year period beginning on the later of 
     the date of enactment of this paragraph and August 29, 2007; 
     and
       ``(B) may, at the discretion of the Administrator, be 
     extended to be the 3-year period beginning on the later of 
     the date of enactment of this paragraph and August 29, 
     2007.''.
       (b) Relief From Test Program.--Section 711(d) of the Small 
     Business Competitive Demonstration Program Act of 1988 (15 
     U.S.C. 644 note) is amended--
       (1) by striking ``The Program'' and inserting the 
     following:
       ``(1) In general.--Except as provided in paragraph (2), the 
     Program''; and
       (2) by adding at the end the following:
       ``(2) Exception.--
       ``(A) In general.--The Program shall not apply to any 
     contract related to relief or reconstruction from Hurricane 
     Katrina of 2005 or Hurricane Rita of 2005 during the time 
     period described in subparagraph (B).
       ``(B) Time period.--The time period for the purposes of 
     subparagraph (A)--
       ``(i) shall be the 2-year period beginning on the later of 
     the date of enactment of this paragraph and August 29, 2007; 
     and
       ``(ii) may, at the discretion of the Administrator, be 
     extended to be the 3-year period beginning on the later of 
     the date of enactment of this paragraph and August 29, 
     2007.''.

                               CHAPTER 5

                    DEPARTMENT OF HOMELAND SECURITY

                  Federal Emergency Management Agency


                            Disaster Relief

       For an additional amount for ``Disaster Relief'' for 
     necessary expenses under the Robert T. Stafford Disaster 
     Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.), 
     $4,310,000,000, to remain available until expended.

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 2501. (a) In General.--Notwithstanding any other 
     provision of law, including any agreement, the Federal share 
     of assistance, including direct Federal assistance, provided 
     for the States of Louisiana, Mississippi, Alabama, and Texas 
     in connection with Hurricanes Katrina and Rita under sections 
     403, 406, 407, and 408 of the Robert T. Stafford Disaster 
     Relief and Emergency Assistance Act (42 U.S.C. 5170b, 5172, 
     5173, and 5174) shall be 100 percent of the eligible costs 
     under such sections.
       (b) Applicability.--
       (1) In general.--Subject to paragraph (2), the Federal 
     share provided by subsection (a) shall apply to disaster 
     assistance applied for before the date of enactment of this 
     Act.
       (2) Limitation.--In the case of disaster assistance 
     provided under sections 403, 406, and 407 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act, the 
     Federal share provided by subsection (a) shall be limited to 
     assistance provided for projects for which applications have 
     been prepared for the Federal Emergency Management Agency 
     before the date of enactment of this Act.
       Sec. 2502. (a) Section 2(a) of the Community Disaster Loan 
     Act of 2005 (Public Law 109-88; 119 Stat. 2061) is amended by 
     striking ``: Provided further, That notwithstanding section 
     417(c)(1) of the Stafford Act, such loans may not be 
     canceled''.
       (b) Chapter 4 of title II of the Emergency Supplemental 
     Appropriations Act for Defense, the Global War on Terror, and 
     Hurricane Recovery, 2006 (Public Law 109-234; 120 Stat. 471) 
     is amended under the heading ``Disaster Assistance Direct 
     Loan Program Account'' under the heading ``Federal Emergency 
     Management Agency'' under the heading ``Department of 
     Homeland Security'', by striking ``Provided further, That 
     notwithstanding section 417(c)(1) of such Act, such loans may 
     not be canceled:''.
       Sec. 2503. Section 2401 of the Emergency Supplemental 
     Appropriations Act for Defense, the Global War on Terror, and 
     Hurricane Recovery, 2006 (Public Law 109-234; 120 Stat. 460) 
     is amended by striking ``12 months'' and inserting ``24 
     months''.

[[Page S3934]]

                               CHAPTER 6

                       DEPARTMENT OF THE INTERIOR

                       Bureau of Land Management


                        Wildland Fire Management

                     (Including Transfer of Funds)

       For an additional amount for ``Wildland Fire Management'', 
     $100,000,000, to remain available until expended, for urgent 
     wildland fire suppression activities: Provided, That such 
     funds shall only become available if funds previously 
     provided for wildland fire suppression will be exhausted 
     imminently and the Secretary of the Interior notifies the 
     House and Senate Committees on Appropriations in writing of 
     the need for these additional funds: Provided further, That 
     such funds are also available for repayment to other 
     appropriations accounts from which funds were transferred for 
     wildfire suppression.

                United States Fish and Wildlife Service


                          Resource Management

       For an additional amount for ``Resource Management'' for 
     the detection of highly pathogenic avian influenza in wild 
     birds, including the investigation of morbidity and mortality 
     events, targeted surveillance in live wild birds, and 
     targeted surveillance in hunter-taken birds, $7,398,000, to 
     remain available until September 30, 2008.

                         National Park Service


                 Operation of the National Park System

       For an additional amount for ``Operation of the National 
     Park System'' for the detection of highly pathogenic avian 
     influenza in wild birds, including the investigation of 
     morbidity and mortality events, $525,000, to remain available 
     until September 30, 2008.


                       Historic Preservation Fund

       For an additional amount for the ``Historic Preservation 
     Fund'' for necessary expenses related to the consequences of 
     Hurricane Katrina and other hurricanes of the 2005 season, 
     $15,000,000, to remain available until September 30, 2008: 
     Provided, That the funds provided under this heading shall be 
     provided to the State Historic Preservation Officer, after 
     consultation with the National Park Service, for grants for 
     disaster relief in areas of Louisiana impacted by Hurricanes 
     Katrina or Rita: Provided further, That grants shall be for 
     the preservation, stabilization, rehabilitation, and repair 
     of historic properties listed in or eligible for the National 
     Register of Historic Places, for planning and technical 
     assistance: Provided further, That grants shall only be 
     available for areas that the President determines to be a 
     major disaster under section 102(2) of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (42 U.S.C. 
     5122(2)) due to Hurricanes Katrina or Rita: Provided further, 
     That individual grants shall not be subject to a non-Federal 
     matching requirement: Provided further, That no more than 5 
     percent of funds provided under this heading for disaster 
     relief grants may be used for administrative expenses.

                    United States Geological Survey


                 Surveys, Investigations, and Research

       For an additional amount for ``Surveys, Investigations, and 
     Research'' for the detection of highly pathogenic avian 
     influenza in wild birds, including the investigation of 
     morbidity and mortality events, targeted surveillance in live 
     wild birds, and targeted surveillance in hunter-taken birds, 
     $5,270,000, to remain available until September 30, 2008.

                       DEPARTMENT OF AGRICULTURE

                             Forest Service


                         National Forest System

       For an additional amount for ``National Forest System'' for 
     the implementation of a nationwide initiative to increase 
     protection of national forest lands from foreign drug-
     trafficking organizations, including funding for additional 
     law enforcement personnel, training, equipment and 
     cooperative agreements, $12,000,000, to remain available 
     until expended.


                        Wildland Fire Management

                     (Including Transfer of Funds)

       For an additional amount for ``Wildland Fire Management'', 
     $400,000,000, to remain available until expended, for urgent 
     wildland fire suppression activities: Provided, That such 
     funds shall only become available if funds provided 
     previously for wildland fire suppression will be exhausted 
     imminently and the Secretary of Agriculture notifies the 
     House and Senate Committees on Appropriations in writing of 
     the need for these additional funds: Provided further, That 
     such funds are also available for repayment to other 
     appropriation accounts from which funds were transferred for 
     wildfire suppression.

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 2601. (a) For fiscal year 2007, payments shall be made 
     from any revenues, fees, penalties, or miscellaneous receipts 
     described in sections 102(b)(3) and 103(b)(2) of the Secure 
     Rural Schools and Community Self-Determination Act of 2000 
     (Public Law 106-393; 16 U.S.C. 500 note), not to exceed 
     $100,000,000, and the payments shall be made, to the maximum 
     extent practicable, in the same amounts, for the same 
     purposes, and in the same manner as were made to States and 
     counties in 2006 under that Act.
       (b) There is appropriated $425,000,000 to be used to cover 
     any shortfall for payments made under this section.
       (c) Titles II and III of Public Law 106-393 are amended, 
     effective September 30, 2006, by striking ``2006'' and 
     ``2007'' each place they appear and inserting ``2007'' and 
     ``2008'', respectively.
       Sec. 2602. Disaster relief funds from Public Law 109-234, 
     120 Stat. 418, 461, (June 30, 2006), chapter 5, ``National 
     Park Service--Historic Preservation Fund,'' for necessary 
     expenses related to the consequences of Hurricane Katrina and 
     other hurricanes of the 2005 season, may be used to 
     reconstruct destroyed properties that at the time of 
     destruction were listed in the National Register of Historic 
     Places and are otherwise qualified to receive these funds: 
     Provided, That the State Historic Preservation Officer 
     certifies that, for the community where that destroyed 
     property was located, that the property is iconic to or 
     essential to illustrating that community's historic identity, 
     that no other property in that community with the same 
     associative historic value has survived, and that sufficient 
     historical documentation exists to ensure an accurate 
     reproduction.

                               CHAPTER 7

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

               Centers for Disease Control and Prevention


                 DISEASE CONTROL, RESEARCH AND TRAINING

       For an additional amount for ``Department of Health and 
     Human Services, Centers for Disease Control and Prevention, 
     Disease Control, Research and Training'', to carry out 
     section 501 of the Federal Mine Safety and Health Act of 1977 
     and section 6 of the Mine Improvement and New Emergency 
     Response Act of 2006, $13,000,000 for research to develop 
     mine safety technology, including necessary repairs and 
     improvements to leased laboratories: Provided, That progress 
     reports on technology development shall be submitted to the 
     House and Senate Committees on Appropriations and the 
     Committee on Health, Education, Labor and Pensions of the 
     Senate and the Committee on Education and Labor of the House 
     of Representatives on a quarterly basis: Provided further, 
     That the amount provided under this heading shall remain 
     available until September 30, 2008.

                Administration for Children and Families


                   LOW-INCOME HOME ENERGY ASSISTANCE

       For an additional amount for ``Low-Income Home Energy 
     Assistance'' under section 2604(a) through (d) of the Low-
     Income Home Energy Assistance Act of 1981 (42 U.S.C. 8623(a) 
     through (d)), $320,000,000.
       For an additional amount for ``Low-Income Home Energy 
     Assistance'' under section 2604(e) of the Low-Income Home 
     Energy Assistance Act of 1981 (42 U.S.C. 8623(e)), 
     $320,000,000.

                        Office of the Secretary


            PUBLIC HEALTH AND SOCIAL SERVICES EMERGENCY FUND

                     (INCLUDING TRANSFER OF FUNDS)

       For an additional amount for ``Public Health and Social 
     Services Emergency Fund'' to prepare for and respond to an 
     influenza pandemic, $820,000,000, to remain available until 
     expended: Provided, That this amount shall be for activities 
     including the development and purchase of vaccine, 
     antivirals, necessary medical supplies, diagnostics, and 
     other surveillance tools: Provided further, That products 
     purchased with these funds may, at the discretion of the 
     Secretary of Health and Human Services, be deposited in the 
     Strategic National Stockpile: Provided further, That 
     notwithstanding section 496(b) of the Public Health Service 
     Act, funds may be used for the construction or renovation of 
     privately owned facilities for the production of pandemic 
     vaccine and other biologicals, where the Secretary finds such 
     a contract necessary to secure sufficient supplies of such 
     vaccines or biologicals: Provided further, That funds 
     appropriated herein may be transferred to other appropriation 
     accounts of the Department of Health and Human Services, as 
     determined by the Secretary to be appropriate, to be used for 
     the purposes specified in this sentence.


                  COVERED COUNTERMEASURE PROCESS FUND

       For carrying out section 319F-4 of the Public Health 
     Service Act (42 U.S.C. 247d-6e) to compensate individuals for 
     injuries caused by H5N1 vaccine, in accordance with the 
     declaration regarding avian influenza viruses issued by the 
     Secretary of Health and Human Services on January 26, 2007, 
     pursuant to section 319F-3(b) of such Act (42 U.S.C. 247d-
     6d(b)), $50,000,000, to remain available until expended.

                        DEPARTMENT OF EDUCATION

                            Higher Education

       For an additional amount under part B of title VII of the 
     Higher Education Act of 1965 (``HEA'') for institutions of 
     higher education (as defined in section 102 of that Act) that 
     are located in an area in which a major disaster was declared 
     in accordance with section 401 of the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act related to 
     hurricanes in the Gulf of Mexico in calendar year 2005, 
     $30,000,000: Provided, That such funds shall be available to 
     the Secretary of Education only for payments to help defray 
     the expenses (which may include lost revenue, reimbursement 
     for expenses already incurred, and construction) incurred by 
     such institutions of higher education that were forced to 
     close, relocate or significantly curtail their activities as 
     a result of damage directly caused by such hurricanes and for 
     payments to enable such institutions to provide grants to 
     students who attend such institutions for academic years 
     beginning on

[[Page S3935]]

     or after July 1, 2006: Provided further, That such payments 
     shall be made in accordance with criteria established by the 
     Secretary and made publicly available without regard to 
     section 437 of the General Education Provisions Act, section 
     553 of title 5, United States Code, or part B of title VII of 
     the HEA.

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 2701. Section 105(b) of title IV of division B of 
     Public Law 109-148 is amended by adding at the end the 
     following new sentence: ``With respect to the program 
     authorized by section 102 of this Act, the waiver authority 
     in subsection (a) of this section shall be available until 
     the end of fiscal year 2008.''


                         (including rescission)

       Sec. 2702. (a) From unexpended balances of the amounts made 
     available in the 2001 Emergency Supplemental Appropriations 
     Act for Recovery from and Response to Terrorist Attacks on 
     the United States (Public Law 107-38) for the Employment 
     Training Administration, Training and Employment Services 
     under the Department of Labor, $3,589,000 are rescinded.
       (b) For an additional amount for the Centers for Disease 
     Control and Prevention for carrying out activities under 
     section 5011(b) of the Emergency Supplemental Appropriations 
     Act to Address Hurricanes in the Gulf of Mexico and Pandemic 
     Influenza, 2006 (Public Law 109-148), $3,589,000.
       Sec. 2703. Notwithstanding section 2002(c) of the Social 
     Security Act (42 U.S.C. 1397a(c)), funds made available under 
     the heading ``Social Services Block Grant'' in division B of 
     Public Law 109-148 shall be available for expenditure by the 
     States through the end of fiscal year 2008.
       Sec. 2704. Elimination of Remainder of SCHIP Funding 
     Shortfalls for Fiscal Year 2007. (a) Elimination of Remainder 
     of Funding Shortfalls, Tiered Match, and Other Limitation on 
     Expenditures.--Section 2104(h) of the Social Security Act (42 
     U.S.C. 1397dd(h)), as added by section 201(a) of the National 
     Institutes of Health Reform Act of 2006 (Public Law 109-482), 
     is amended--
       (1) in the heading for paragraph (2), by striking 
     ``remainder of reduction'' and inserting ``part''; and
       (2) by striking paragraph (4) and inserting the following:
       ``(4) Additional amounts to eliminate remainder of fiscal 
     year 2007 funding shortfalls.--
       ``(A) In general.--The Secretary shall allot to each 
     remaining shortfall State described in subparagraph (B) such 
     amount as the Secretary determines will eliminate the 
     estimated shortfall described in such subparagraph for the 
     State for fiscal year 2007.
       ``(B) Remaining shortfall state described.--For purposes of 
     subparagraph (A), a remaining shortfall State is a State with 
     a State child health plan approved under this title for which 
     the Secretary estimates, on the basis of the most recent data 
     available to the Secretary as of the date of the enactment of 
     this paragraph, that the projected federal expenditures under 
     such plan for the State for fiscal year 2007 will exceed the 
     sum of--
       ``(i) the amount of the State's allotments for each of 
     fiscal years 2005 and 2006 that will not be expended by the 
     end of fiscal year 2006;
       ``(ii) the amount of the State's allotment for fiscal year 
     2007; and
       ``(iii) the amounts, if any, that are to be redistributed 
     to the State during fiscal year 2007 in accordance with 
     paragraphs (1) and (2).
       ``(C) Appropriation; allotment authority.--For the purpose 
     of providing additional allotments to remaining shortfall 
     States under this paragraph there is appropriated, out of any 
     funds in the Treasury not otherwise appropriated, such sums 
     as are necessary for fiscal year 2007.''.
       (b) Conforming Amendments.--Section 2104(h) of such Act (42 
     U.S.C. 1397dd(h)) (as so added), is amended--
       (1) in paragraph (1)(B), by striking ``subject to paragraph 
     (4)(B) and'';
       (2) in paragraph (2)(B), by striking ``subject to paragraph 
     (4)(B) and'';
       (3) in paragraph (5)(A), by striking ``and (3)'' and 
     inserting ``(3), and (4)''; and
       (4) in paragraph (6)--
       (A) in the first sentence_
       (i) by inserting ``or allotted'' after ``redistributed''; 
     and
       (ii) by inserting ``or allotments'' after 
     ``redistributions''; and
       (B) by striking ``and (3)'' and inserting ``(3), and (4)''.
       (c) General Effective Date; Applicability.--Except as 
     otherwise provided, the amendments made by this section take 
     effect on the date of enactment of this Act and apply without 
     fiscal year limitation.
       Sec. 2705. Notwithstanding any other provision of law, the 
     Secretary of Health and Human Services shall not, prior to 
     the date that is 2 years after the date of enactment of this 
     Act, take any action to finalize, or otherwise implement 
     provisions--
       (1) contained in the proposed rule published on January 18, 
     2007, on pages 2236 through 2258 of volume 72, Federal 
     Register (relating to parts 433, 447, and 457 of title 42, 
     Code of Federal Regulations) or any other rule that would 
     affect the Medicaid program established under title XIX of 
     the Social Security Act or the State Children's Health 
     Insurance Program established under title XXI of such Act in 
     a similar manner; or
       (2) restricting payments for graduate medical education 
     under the Medicaid program.
       (b) Increase in Basic Rebate for Single Source Drugs and 
     Innovator Multiple Source Drugs.--Section 1927(c)(1)(B)(i) of 
     the Social Security Act (42 U.S.C. 1396r-8(c)(1)(B)(i)) is 
     amended--
       (1) in subclause (IV), by striking ``and'' after the 
     semicolon;
       (2) in subclause (V)--
       (A) by inserting ``and before April 1, 2007,'' after 
     ``1995,''; and
       (B) by striking the period and inserting ``; and''; and
       (3) by adding at the end the following:

       ``(VI) after March 31, 2007, is 20 percent.''.

       Sec. 2706. (a) For grant years beginning in 2006-2007, the 
     Secretary of Health and Human Services may waive the 
     requirements of, with respect to Louisiana, Mississippi, 
     Alabama, and Texas and any eligible metropolitan area in 
     Louisiana, Mississippi, Alabama, and Texas, the following 
     sections of the Public Health Service Act:
       (1) Section 2612(e)(1) of such Act (42 U.S.C. 300ff-
     21(b)(1)).
       (2) Section 2617(b)(7)(E) of such Act (42 U.S.C. 300ff-
     27(b)(7)(E)).
       (3) Section 2617(d) of such Act (42 U.S.C. 300ff-27(d)), 
     except that such waiver shall apply so that the matching 
     requirement is reduced to $1 for each $4 of Federal funds 
     provided under the grant involved.
       (b) If the Secretary of Health and Human Services grants a 
     waiver under subsection (b), the Secretary--
       (1) may not prevent Louisiana, Mississippi, Alabama, and 
     Texas or any eligible metropolitan area in Louisiana, 
     Mississippi, Alabama, and Texas from receiving or utilizing, 
     or both, funds granted or distributed, or both, pursuant to 
     title XXVI of the Public Health Service Act (42 U.S.C. 300ff-
     11 et seq.) because of the failure of Louisiana, Mississippi, 
     Alabama, and Texas or any eligible metropolitan area in 
     Louisiana, Mississippi, Alabama, and Texas to comply with the 
     requirements of the sections listed in paragraphs (1) through 
     (3) of subsection (a);
       (2) may not take action due to such noncompliance; and
       (3) shall assess, evaluate, and review Louisiana, 
     Mississippi, Alabama, and Texas or any eligible metropolitan 
     area's eligibility for funds under such title XXVI as if 
     Louisiana, Mississippi, Alabama, and Texas or such eligible 
     metropolitan area had fully complied with the requirements of 
     the sections listed in paragraphs (1) through (3) of 
     subsection (a).
       (c) For grant years beginning in 2008, Louisiana, 
     Mississippi, Alabama, and Texas and any eligible metropolitan 
     area in Louisiana, Mississippi, Alabama, and Texas shall 
     comply with each of the applicable requirements under title 
     XXVI of the Public Health Service Act (42 U.S.C. 300ff-11 et 
     seq.).

                               CHAPTER 8

                           LEGISLATIVE BRANCH

                        ARCHITECT OF THE CAPITOL

                          Capitol Power Plant

       For an additional amount for ``Capitol Power Plant'', 
     $25,000,000, for emergency utility tunnel repairs and 
     asbestos abatement, to remain available until September 30, 
     2011: Provided, That the Architect of the Capitol may not 
     obligate any of the funds appropriated under this heading 
     without approval of an obligation plan by the Committees on 
     Appropriations of the Senate and House of Representatives.

                    GOVERNMENT ACCOUNTABILITY OFFICE

                         Salaries and Expenses

       For an additional amount for ``Salaries and Expenses'' of 
     the Government Accountability Office, $374,000, to remain 
     available until expended.

                               CHAPTER 9

                         DEPARTMENT OF DEFENSE

                         MILITARY CONSTRUCTION

                Military Construction, Air Force Reserve


                    (Including Rescission of Funds)

       For an additional amount for ``Military Construction, Air 
     Force Reserve'', $3,096,000, to remain available until 
     September 30, 2011: Provided, That such funds may be 
     obligated and expended to carry out planning and design and 
     military construction projects not otherwise authorized by 
     law.
       Of the funds appropriated for ``Military Construction, Air 
     Force Reserve'' under Public Law 109-114, $3,096,000 are 
     hereby rescinded.

            Department of Defense Base Closure Account, 2005

       For deposit into the Department of Defense Base Closure 
     Account 2005, established by section 2906(a)(1) of the 
     Defense Base Closure and Realignment Act of 1990 (10 U.S.C. 
     2687 note), $3,136,802,000, to remain available until 
     expended.

                     DEPARTMENT OF VETERANS AFFAIRS

                     Veterans Health Administration


                            MEDICAL SERVICES

       For an additional amount for ``Medical Services'', 
     $454,131,000, to remain available until expended, of which 
     $50,000,000 shall be for the establishment of new Level I 
     comprehensive polytrauma centers; $9,440,000 shall be for the 
     establishment of polytrauma residential transitional 
     rehabilitation programs; $20,000,000 shall be for additional 
     transition caseworkers; $30,000,000 shall be for substance 
     abuse treatment programs; $20,000,000 for readjustment 
     counseling; $10,000,000 shall be for blind rehabilitation 
     services; $100,000,000 shall be for enhancements to mental 
     health services; $8,000,000

[[Page S3936]]

     shall be for polytrauma support clinic teams; $5,356,000 for 
     additional polytrauma points of contacts; and $201,335,000 
     shall be for treatment of Operation Enduring Freedom and 
     Operation Iraqi Freedom veterans.


                         MEDICAL ADMINISTRATION

       For an additional amount for ``Medical Administration'', 
     $250,000,000, to remain available until expended.


                           MEDICAL FACILITIES

       For an additional amount for ``Medical Facilities'', 
     $595,000,000, to remain available until expended, of which 
     $45,000,000 shall be used for facility and equipment upgrades 
     at the Department of Veterans Affairs polytrauma 
     rehabilitation centers and the polytrauma network sites; and 
     $550,000,000 shall be for non-recurring maintenance as 
     identified in the Department of Veterans Affairs Facility 
     Condition Assessment report: Provided, That the amount 
     provided under this heading for non-recurring maintenance 
     shall be allocated in a manner outside of the Veterans 
     Equitable Resource Allocation and specific to the needs and 
     geographic distribution of Operation Enduring Freedom and 
     Operation Iraqi Freedom veterans: Provided further, That 
     within 30 days of enactment of this Act the Secretary shall 
     submit to the Committees on Appropriations of both Houses of 
     Congress an expenditure plan for non-recurring maintenance 
     prior to obligation.


                    MEDICAL AND PROSTHETIC RESEARCH

       For an additional amount for ``Medical and Prosthetic 
     Research'', $30,000,000, to remain available until expended, 
     which shall be used for research related to the unique 
     medical needs of returning Operation Enduring Freedom and 
     Operation Iraqi Freedom veterans.

                      Departmental Administration


                       GENERAL OPERATING EXPENSES

       For an additional amount for ``General Operating 
     Expenses'', $46,000,000, to remain available until expended, 
     for the hiring and training of new pension and compensation 
     claims processing personnel.


                     INFORMATION TECHNOLOGY SYSTEMS

       For an additional amount for ``Information Technology 
     Systems'', $36,100,000, to remain available until expended, 
     of which $20,000,000 shall be for information technology 
     support and improvements for processing of OIF/OEF veterans 
     benefits claims, including making electronic DOD medical 
     records available for claims processing and enabling 
     electronic benefits applications by veterans; $1,000,000 
     shall be for the digitization of benefits records; and 
     $15,100,000 shall be for electronic data breach and 
     remediation and prevention.


                      CONSTRUCTION, MINOR PROJECTS

       For an additional amount for ``Construction, Minor 
     Projects'', $355,907,000, to remain available until expended, 
     of which $36,000,000 shall be for construction costs 
     associated with the establishment of polytrauma residential 
     transitional rehabilitation programs.

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 2901. (a) Notwithstanding any other provision of law, 
     none of the funds in this or any other Act shall be used to 
     downsize staff or to close, realign or phase out essential 
     services at Walter Reed Army Medical Center until equivalent 
     medical facilities at the Walter Reed National Military 
     Medical Center at Naval Medical Center, Bethesda, Maryland, 
     and/or the Fort Belvoir, Virginia, Community Hospital have 
     been constructed and equipped, and until the Secretary of 
     Defense has certified in writing to the Congress that:
       (1) the new facilities at Walter Reed National Military 
     Medical Center at Bethesda and/or the Fort Belvoir Community 
     Hospital are complete and fully operational, and
       (2) replacement medical facilities at Walter Reed National 
     Military Medical Center at Bethesda have adequate capacity to 
     meet both the existing and projected demand for complex 
     medical care and services, including outpatient and medical 
     hold facilities, for combat veterans and other military 
     personnel.
       (b) Not later than 30 days after enactment of this Act, the 
     Secretary of Defense shall provide to the Committees on 
     Appropriations of the Senate and House of Representatives a 
     report and proposed timetable outlining the Department's plan 
     to transition patients, staff and medical services to the new 
     facilities at Bethesda and Fort Belvoir without compromising 
     patient care, staffing requirements or facility maintenance 
     at the Walter Reed Medical Center.
       (c) To ensure that the quality of care provided by the 
     Military Health System is not diminished during this 
     transition, the Walter Reed Army Medical Center shall be 
     adequately funded, to include necessary renovation and 
     maintenance of existing facilities, to continue the maximum 
     level of inpatient and outpatient services.
       Sec. 2902. Within existing funds appropriated to 
     Departmental Administration, General Operating Expenses for 
     fiscal year 2007, and within 30 days after enactment of this 
     Act, the Department of Veterans Affairs shall contract with 
     the National Academy of Public Administration for the purpose 
     of conducting an independent study and analysis of the 
     organizational structure, management and coordination 
     processes, including Seamless Transition, utilized by the 
     Department of Veterans affairs to:
       (1) provide health care to active duty and veterans of 
     Operation Enduring Freedom and Operation Iraqi Freedom; and
       (2) provide benefits to veterans of Operation Enduring 
     Freedom and Operation Iraqi Freedom.
       Sec. 2903. The Director of the Congressional Budget Office 
     shall, not later than November 15, 2007, submit to the 
     Committees on Appropriations of the House of Representatives 
     and the Senate a report projecting appropriations necessary 
     for the Departments of Defense and Veterans Affairs to 
     continue providing necessary health care to veterans of the 
     conflicts in Iraq and Afghanistan. The projections should 
     span several scenarios for the duration and number of forces 
     deployed in Iraq and Afghanistan, and more generally, for the 
     long-term health care needs of deployed troops engaged in the 
     global war on terrorism over the next ten years.

                               CHAPTER 10

                      DEPARTMENT OF TRANSPORTATION

                     Federal Highway Administration


                          Federal-Aid Highways

                        Emergency Relief Program

                    (including rescission of funds)

       For an additional amount for the Emergency Relief Program 
     as authorized under section 125 of title 23, United States 
     Code, $388,903,000, to remain available until expended: 
     Provided, That of the unobligated balances of funds 
     apportioned to each State under chapter 1 of title 23, United 
     States Code, $388,903,000 are rescinded: Provided further, 
     That such rescission shall not apply to the funds distributed 
     in accordance with sections 130(f) and 104(b)(5) of title 23, 
     United States Code; sections 133(d)(1) and 163 of such title, 
     as in effect on the day before the date of enactment of 
     Public Law 109-59; and the first sentence of section 
     133(d)(3)(A) of such title: Provided further, That section 
     4103 of title III of this Act shall not apply to the first 
     proviso under this paragraph.

                     Federal Transit Administration


                             Formula Grants

       For an additional amount to be allocated by the Secretary 
     to recipients of assistance under chapter 53 of title 49, 
     United States Code, directly affected by Hurricanes Katrina 
     and Rita, $75,000,000, for the operating and capital costs of 
     transit services, to remain available until expended: 
     Provided, That the Federal share for any project funded from 
     this amount shall be 100 percent.

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                      Office of Inspector General

       For an additional amount for the Office of Inspector 
     General, for the necessary costs related to the consequences 
     of Hurricanes Katrina and Rita, $5,000,000, to remain 
     available until expended.

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 3001. Notwithstanding part 750 of title 23, Code of 
     Federal Regulations (or a successor regulation), if permitted 
     by State law, a nonconforming sign that is or has been 
     damaged, destroyed, abandoned, or discontinued as a result of 
     a hurricane that is determined to be an act of God (as 
     defined by State law) may be repaired, replaced, or 
     reconstructed if the replacement sign has the same dimensions 
     as the original sign, and said sign is located within a State 
     found within Federal Emergency Management Agency Region IV or 
     VI. The provisions of this section shall cease to be in 
     effect twenty-four months following the date of enactment of 
     this Act.
       Sec. 3002. Section 21033 of the Continuing Appropriations 
     Resolution, 2007 (division B of Public Law 109-289, as 
     amended by Public Law 110-5) is amended by adding after the 
     third proviso: ``: Provided further, That notwithstanding the 
     previous proviso, except for applying the 2007 Annual 
     Adjustment Factor and making any other specified adjustments, 
     public housing agencies that are eligible for assistance 
     under section 901 in Public Law 109-148 (119 Stat. 2781) 
     shall receive funding for calendar year 2007 based on the 
     amount such public housing agencies were eligible to receive 
     in calendar year 2006''.

                               TITLE III

                             OTHER MATTERS

                               CHAPTER 1

                       DEPARTMENT OF AGRICULTURE

                          Farm Service Agency


                         SALARIES AND EXPENSES

       For an additional amount for ``Salaries and Expenses'' of 
     the Farm Service Agency, $75,000,000, to remain available 
     until expended: Provided, That this amount shall only be 
     available for the modernization and repair of the computer 
     systems used by the Farm Service Agency (including) software, 
     hardware, and personnel required for modernization and 
     repair): Provided further, That of this amount $27,000,000 
     shall be made available 60 days after the date on which the 
     Farm Service Agency submits to the Committee on 
     Appropriations of the Senate, the Committee on Appropriations 
     of the House of Representatives, and the Government 
     Accountability Office a spending plan for the funds.

                    GENERAL PROVISIONS--THIS CHAPTER


                              (rescission)

       Sec. 3101. Of the unobligated balances of funds made 
     available pursuant to section 298(a) of the Trade Act of 1974 
     (19 U.S.C. 2401G(a)), $75,000,000 are rescinded.
       Sec. 3102. (a) Section 1237A(f) of the Food Security Act of 
     1985 (16 U.S.C. 3837a(f)) is amended in the first sentence by 
     striking ``fair market value of the land less the fair

[[Page S3937]]

     market value of such land encumbered by the easement'' and 
     inserting ``fair market value of the land as determined in 
     accordance with the method of valuation used by the Secretary 
     as of January 1, 2003''.
       (b) Section 1238I(c)(1) of the Food Security Act of 1985 
     (16 U.S.C. 3838i(c)(1)) is amended by inserting at the end 
     the following:
       ``(C) Valuation.--The Secretary shall determine fair market 
     value under this paragraph in accordance with the method of 
     valuation used by the Secretary as of January 1, 2003.''.
       Sec. 3103. Subsection (b)(1) of section 313A of the Rural 
     Electrification Act shall not apply in the case of a 
     cooperative lender that has previously received a guarantee 
     under section 313A and such additional guarantees shall not 
     exceed the amount provided for in Public Law 110-5.

                               CHAPTER 2

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 3201. Section 20314 of the Continuing Appropriations 
     Resolution, 2007 (division B of Public Law 109-289, as 
     amended by Public Law 110-5) is amended by striking 
     ``Resources.'' and inserting in lieu thereof: ``Resources: 
     Provided, That $22,762,000 of the amount provided be for 
     geothermal research and development activities.''.
       Sec. 3202. Hereafter, federal employees at the National 
     Energy Technology Laboratory shall be classified as 
     inherently governmental for the purpose of the Federal 
     Activities Inventory Reform Act of 1998 (31 U.S.C. 501 note).
       Sec. 3203. Prohibition on Certain Uses of Funds by BPA. 
     None of the funds made available under this or any other Act 
     shall be used during fiscal year 2007 to make, or plan or 
     prepare to make, any payment on bonds issued by the 
     Administrator of the Bonneville Power Administration 
     (referred in this section as the ``Administrator'') or for an 
     appropriated Federal Columbia River Power System investment, 
     if the payment is both--
       (1) greater, during any fiscal year, than the payments 
     calculated in the rate hearing of the Administrator to be 
     made during that fiscal year using the repayment method used 
     to establish the rates of the Administrator as in effect on 
     October 1, 2006; and
       (2) based or conditioned on the actual or expected net 
     secondary power sales receipts of the Administrator.

                               CHAPTER 3

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 3301. The structure of any of the offices or 
     components within the Office of National Drug Control Policy 
     shall remain as they were on October 1, 2006. None of the 
     funds appropriated or otherwise made available in the 
     Continuing Appropriations Resolution, 2007 (Public Law 110-5) 
     may be used to implement a reorganization of offices within 
     the Office of National Drug Control Policy without the 
     explicit approval of the Committees on Appropriations of the 
     House of Representatives and the Senate.
       Sec. 3302. Funds made available in section 21075 of the 
     Continuing Appropriations Resolution, 2007 (Public Law 110-5) 
     shall be made available to a 501(c)(3) entity: (1) with a 
     wide anti-drug coalition network and membership base, and one 
     with a demonstrated track record and specific expertise in 
     providing technical assistance, training, evaluation, 
     research, and capacity building to community anti-drug 
     coalitions; (2) with authorization from Congress, both prior 
     to fiscal year 2007, and in fiscal years 2008 through 2012, 
     to perform the duties described in subsection (1) of this 
     section; and (3) that has previously received funding from 
     Congress, including through a competitive process as well as 
     direct funding, for providing the duties described in 
     subsection (1) of this section: Provided, That funds 
     appropriated in section 21075 shall be obligated within sixty 
     days after enactment of this Act.
       Sec. 3303. Funds made available under section 613 of Public 
     Law 109-108 (119 Stat. 2338) for Nevada's Commission on 
     Economic Development shall be made available to the Nevada 
     Center for Entrepreneurship and Technology (CET).
       Sec. 3304. From the amount provided by section 21067 of the 
     Continuing Appropriations Resolution, 2007 (Public Law 110-
     5), the National Archives and Records Administration may 
     obligate monies necessary to carry out the activities of the 
     Public Interest Declassification Board.
       Sec. 3305. None of the funds appropriated or otherwise made 
     available in section 21063 of the Continuing Appropriations 
     Resolution, 2007 (Public Law 110-5) for the ``General 
     Services Administration, Real Property Activities, Federal 
     Buildings Fund'', may be obligated for design, construction, 
     or acquisition until the House and Senate Committees on 
     Appropriations approve a revised detailed plan, by project, 
     on the use of such funds: Provided, That the new plan shall 
     include funding for completion of courthouse construction 
     projects which received funding in fiscal year 2006 above a 
     level of $5,000,000: Provided further, That such plan shall 
     be provided by the Administrator of the General Services 
     Administration to the House of Representatives and the Senate 
     Committees on Appropriations within seven days of enactment.
       Sec. 3306. Notwithstanding the notice requirement of the 
     Transportation, Treasury, Housing and Urban Development, the 
     Judiciary, the District of Columbia, and Independent Agencies 
     Appropriations Act, 2006, 119 Stat. 2509 (Public Law 109-
     115), as continued in section 104 of the Continuing 
     Appropriations Resolution, 2007 (Public Law 110-5), the 
     District of Columbia Courts may reallocate not more than 
     $1,000,000 of the funds provided for fiscal year 2007 under 
     the Federal Payment to the District of Columbia Courts for 
     facilities among the items and entities funded under that 
     heading for operations.
       Sec. 3307. (a) Not later than 90 days after the date of 
     enactment of this Act, the Secretary of the Treasury, in 
     coordination with the Securities and Exchange Commission and 
     in consultation with the Departments of State and Energy, 
     shall prepare and submit to the Senate Committee on 
     Appropriations, the House of Representatives Committee on 
     Appropriations, the Senate Foreign Relations Committee, and 
     the House Foreign Affairs Committee an unclassified report, 
     suitable to be made public, that contains the names of (1) 
     all companies trading in securities that are registered under 
     section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 
     781) which either directly or through a parent or subsidiary 
     company, including partly-owned subsidiaries, conduct 
     business operations in Sudan relating to natural resource 
     extraction, including oil-related activities and mining of 
     minerals; and (2) the names of all other companies, which 
     either directly or through a parent or subsidiary company, 
     including partly-owned subsidiaries, conduct business 
     operations in Sudan relating to natural resource extraction, 
     including oil-related activities and mining of minerals. The 
     reporting provision shall not apply to companies operating 
     under licenses from the Office of Foreign Assets Control or 
     otherwise expressly exempted under United States law from 
     having to obtain such licenses in order to operate in Sudan.
       (b) Not later than 20 days after enactment, the Secretary 
     of the Treasury shall inform the aforementioned committees of 
     Congress of any statutory or other legal impediments to the 
     successful completion of this report.
       (c) Not later than 45 days following the submission to 
     Congress of the list of companies conducting business 
     operations in Sudan relating to natural resource extraction 
     required above, the General Services Administration shall 
     determine whether the United States Government has an active 
     contract for the procurement of goods or services with any of 
     the identified companies, and provide notification to the 
     appropriate committees of Congress of the companies, nature 
     of the contract, and dollar amounts involved.


                         (including rescission)

       Sec. 3308. (a) Of the funds provided for the General 
     Services Administration, ``Office of Inspector General'' in 
     section 21061 of the Continuing Appropriations Resolution, 
     2007 (division B of Public Law 109-289, as amended by Public 
     Law 110-5), $8,000,000 are rescinded.
       (b) For an additional amount for the General Services 
     Administration, ``Office of Inspector General'', $8,000,000, 
     to remain available until September 30, 2008.
       Sec. 3309. Section 21073 of the Continuing Appropriations 
     Resolution, 2007 (Public Law 110-5) is amended by adding a 
     new subsection (j) as follows:
       ``(j) Notwithstanding section 101, any appropriation or 
     funds made available to the District of Columbia pursuant to 
     this division for `Federal Payment for Foster Care 
     Improvement in the District of Columbia' shall be available 
     in accordance with an expenditure plan submitted by the Mayor 
     of the District of Columbia not later than 60 days after the 
     enactment of this section which details the activities to be 
     carried out with such Federal Payment.''.

                               CHAPTER 4

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 3401. Any unobligated balances remaining from prior 
     appropriations for United States Coast Guard, ``Retired Pay'' 
     shall remain available until expended in the account and for 
     the purposes for which the appropriations were provided, 
     including the payment of obligations otherwise chargeable to 
     lapsed or current appropriations for this purpose.
       Sec. 3402. Integrated Deepwater System. (a) Competition for 
     Acquisition and Modification of Assets.--
       (1) In general.--The Commandant of the Coast Guard shall 
     utilize full and open competition for any contract entered 
     into after the date of enactment of this Act that provides 
     for the acquisition or modification of assets under, or in 
     support of, the Integrated Deepwater System Program of the 
     Coast Guard.
       (2) Exceptions.--Paragraph (1) shall not apply to the 
     following:
       (A) The acquisition or modification of the following asset 
     classes for which assets of the class and related systems and 
     components under the Integrated Deepwater System are under a 
     contract for production:
       (i) National Security Cutter;
       (ii) Maritime Patrol Aircraft;
       (iii) Deepwater Command, Control, Communications, Computer, 
     Intelligence, Surveillance, and Reconnaissance (C4ISR) 
     System; and
       (iv) HC-130J Fleet Introduction.
       (B) The modification of any legacy asset class under the 
     Integrated Deepwater System Program being performed by a 
     Coast Guard entity.
       (b) Chair of Product and Oversight Teams.--The Commandant 
     of the Coast Guard shall assign an appropriate officer or 
     employee of the Coast Guard to act as chair of each of the 
     following:
       (1) Each integrated product team under the Integrated 
     Deepwater System Program.

[[Page S3938]]

       (2) Each higher-level team assigned to the oversight of a 
     product team referred to in paragraph (1).
       (c) Life-cycle Cost Estimate.--The Commandant of the Coast 
     Guard may not enter into a contract for lead asset production 
     under the Integrated Deepwater System Program until the 
     Commandant obtains an independent estimate of life-cycle 
     costs of the asset concerned.
       (d) Review of Acquisitions and Major Design Changes.--
       (1) In general.--With the exception of assets covered under 
     (a)(2) of this section, the Commandant of the Coast Guard may 
     not carry out an action described in paragraph (2) unless an 
     independent third party with no financial interest in the 
     development, construction, or modification of any component 
     of the Integrated Deepwater System Program, selected by the 
     Commandant for purposes of the subsection, determines that 
     such action is advisable.
       (2) Covered Actions.--The actions described in the 
     paragraph are as follows:
       (A) The acquisition or modification of an asset under the 
     Integrated Deepwater System Program.
       (B) The implementation of a major design change for an 
     asset under the Integrated Deepwater System Program.
       (e) Linking of Award Fees to Successful Acquisition 
     Outcomes.--The Commandant of the Coast Guard shall require 
     that all contracts under the Integrated Deepwater System 
     Program that provide award fees link such fees to successful 
     acquisition outcomes (which shall be defined in terms of 
     cost, schedule, and performance).
       (f) Contractual Agreements.--
       (1) In general.--The Commandant of the Coast Guard may not 
     award or issue any contract, task or delivery order, letter 
     contract modification thereof, or other similar contract, for 
     the acquisition or modification of an asset under the 
     Integrated Deepwater System Program unless the Coast Guard 
     and the contractor concerned have formally agreed to all 
     terms and conditions.
       (2) Exception.--A contract, task or delivery order, letter 
     contract, modification thereof, or other similar contract 
     described in paragraph (1) may be awarded or issued if the 
     head of contracting activity of the Coast Guard determines 
     that a compelling need exists for the award or issue of such 
     instrument.
       (g) Designation of Technical Authority.--The Commandant of 
     the Coast Guard shall designate the Assistant Commandant of 
     the Coast Guard for Engineering and Logistics as the 
     technical authority for all engineering, design, and 
     logistics decisions pertaining to the Integrated Deepwater 
     System Program.
       (h) Report on Personnel Required for Acquisition 
     Management.--Not later than 30 days after the date of the 
     enactment of this Act, the Commandant of the Coast Guard 
     shall submit to the Committees on Appropriations of the 
     Senate and the House of Representatives; the Committee on 
     Commerce, Science and Transportation of the Senate; and the 
     Committee on Transportation and Infrastructure of the House 
     of Representatives a report on the resources (including 
     training, staff, and expertise) required by the Coast Guard 
     to provide appropriate management and oversight of the 
     Integrated Deepwater System Program.
       (i) Comptroller General Report on Progress.--Not later than 
     60 days after the date of enactment of this Act, the 
     Comptroller General of the United States shall submit to the 
     Committees on Appropriations of the Senate and the House of 
     Representatives; the Committee on Commerce, Science and 
     Transportation of the Senate; and the Committee on 
     Transportation and Infrastructure of the House of 
     Representatives a report describing and assessing the 
     progress of the Coast Guard in complying with the 
     requirements of this section.
       Sec. 3403. None of the funds provided in this Act or any 
     other Act may be used to alter or reduce operations within 
     the Civil Engineering Program of the Coast Guard nationwide, 
     including the civil engineering units, facilities, design and 
     construction centers, maintenance and logistics command 
     centers, the Coast Guard Academy and the Coast Guard Research 
     and Development Center, except as specifically authorized by 
     a statute enacted after the date of enactment of this Act.

                               CHAPTER 5

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 3501. Section 20515 of the Continuing Appropriations 
     Resolution, 2007 (division B of Public Law 109-289, as 
     amended by Public Law 110-5) is amended by inserting before 
     the period: ``; and of which, not to exceed $143,628,000 
     shall be available for contract support costs under the terms 
     and conditions contained in Public Law 109-54''.
       Sec. 3502. Section 20512 of the Continuing Appropriations 
     Resolution, 2007 (division B of Public Law 109-289, as 
     amended by Public Law 110-5) is amended by inserting after 
     the first dollar amount: ``, of which not to exceed 
     $7,300,000 shall be transferred to the `Indian Health 
     Facilities' account; the amount in the second proviso shall 
     be $18,000,000; the amount in the third proviso shall be 
     $525,099,000; the amount in the ninth proviso shall be 
     $269,730,000; and the $15,000,000 allocation of funding under 
     the eleventh proviso shall not be required''.
       Sec. 3503. Section 20501 of the Continuing Appropriations 
     Resolution, 2007 (division B of Public Law 109-289, as 
     amended by Public Law 110-5) is amended by inserting after 
     $55,663,000: ``of which $13,000,000 shall be for Save 
     America's Treasures''.
       Sec. 3504. Of the funds made available to the United States 
     Fish and Wildlife Service for fiscal year 2007 under the 
     heading ``Land Acquisition'', not to exceed $1,980,000 may be 
     used for land conservation partnerships authorized by the 
     Highlands Conservation Act of 2004.
       Sec. 3505. The Administrator of the Environmental 
     Protection Agency shall grant to the Water Environment 
     Research Foundation (WERF) such sums as were directed in 
     fiscal year 2005 and fiscal year 2006 for the On-Farm 
     Assessment and Environmental Review program: Provided, That 
     not less than 95 percent of funds made available shall be 
     used by WERF to award competitively a contract to perform the 
     program's environmental assessments: Provided further, That 
     WERF shall not retain more than 5 percent of such sums for 
     administrative expenses.

                               CHAPTER 6

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

                     National Institutes of Health


         National Institute of Allergy and Infectious Diseases

                          (TRANSFER OF FUNDS)

       Of the amount provided by the Continuing Appropriations 
     Resolution, 2007 for ``National Institute of Allergy and 
     Infectious Diseases'', $49,500,000 shall be transferred to 
     ``Public Health and Social Services Emergency Fund'' to carry 
     out activities relating to advanced research and development 
     as provided by section 319L of the Public Health Service Act.

                    GENERAL PROVISIONS--THIS CHAPTER


                          (TRANSFER OF FUNDS)

       Sec. 3601. Section 20602 of the Continuing Appropriations 
     Resolution, 2007 (division B of Public Law 109-289, as 
     amended by Public Law 110-5) is amended by inserting the 
     following after ``$5,000,000'': ``(together with an 
     additional $7,000,000 which shall be transferred by the 
     Pension Benefit Guaranty Corporation as an authorized 
     administrative cost)''.
       Sec. 3602. Section 20625(b)(1) of the Continuing 
     Appropriations Resolution, 2007 (division B of Public Law 
     109-289, as amended by Public Law 110-5) is amended by--
       (1) striking ``$7,172,994,000'' and inserting 
     ``$7,176,431,000'';
       (2) amending subparagraph (A) to read as follows:
       ``(A) $5,454,824,000 shall be for basic grants under 
     section 1124 of the Elementary and Secondary Education Act of 
     1965 (ESEA), of which up to $3,437,000 shall be available to 
     the Secretary of Education on October 1, 2006, to obtain 
     annually updated educational-agency-level census poverty data 
     from the Bureau of the Census;''; and
       (3) amending subparagraph (C) to read as follows:
       ``(C) not to exceed $2,352,000 may be available for section 
     1608 of the ESEA and for a clearinghouse on comprehensive 
     school reform under part D of title V of the ESEA;''.
       Sec. 3603. (a) From the amounts available for Department of 
     Education, Safe Schools and Citizenship Education as provided 
     by the Continuing Appropriations Resolution, 2007, 
     $321,500,000 shall be available for Safe and Drug-Free 
     Schools State Grants and $247,335,000 shall be available for 
     Safe and Drug-Free Schools National Programs.
       (b) Of the amount available for Safe and Drug-Free National 
     Programs, not less than $25,000,000 shall be for competitive 
     grants to local educational agencies to address youth 
     violence and related issues.
       (c) The competition under subsection (b) shall be limited 
     to local educational agencies that operate schools currently 
     identified as persistently dangerous under section 9532 of 
     the Elementary and Secondary Education Act of 1965.
       Sec. 3604. The provision in the first proviso under the 
     heading ``Rehabilitation Services and Disability Research'' 
     in the Department of Education Appropriations Act, 2006, 
     relating to alternative financing programs under section 
     4(b)(2)(D) of the Assistive Technology Act of 1998 shall not 
     apply to funds appropriated by the Continuing Appropriations 
     Resolution, 2007.


                          (transfer of funds)

       Sec. 3605. Notwithstanding sections 20639 and 20640 of the 
     Continuing Appropriations Resolution, 2007, as amended by 
     section 2 of the Revised Continuing Appropriations 
     Resolution, 2007 (Public Law 110-5), the Chief Executive 
     Officer of the Corporation for National and Community Service 
     may transfer an amount of not more than $1,360,000 from the 
     account under the heading ``National and Community Service 
     Programs, Operating Expenses'' under the heading 
     ``Corporation for National and Community Service'', to the 
     account under the heading ``Salaries and Expenses'' under the 
     heading ``Corporation for National and Community Service''.
       Sec. 3606. Section 1310.12(a) of title 45 of the Code of 
     Federal Regulations (October 1, 2004) shall be effective 30 
     days after enactment of this Act except that any vehicles in 
     use to transport Head Start children as of January 1, 2007, 
     shall not be subject to a requirement under that part 
     regarding rear emergency exit doors for two years after the 
     date of enactment.
       The Secretary of Health and Human Services shall revise the 
     allowable alternate vehicle standards described in that part 
     1310 (or any corresponding similar regulation or ruling) to 
     exempt from Federal seat spacing

[[Page S3939]]

     requirements and supporting seating requirements related to 
     compartmentalization any vehicle used to transport children 
     for a Head Start program if the vehicle meets federal motor 
     vehicle safety standards for seating systems, occupant crash 
     protection, seat belt assemblies, and child restraint 
     anchorage systems consistent with that part 1310 (or any 
     corresponding similar regulation or ruling). Such revision 
     shall be made in a manner consistent with the findings of the 
     National Highway Traffic Safety Administration, pursuant to 
     its study on occupant protection on Head Start transit 
     vehicles, related to the Government Accountability Office 
     report GAO-06-767R.


                         (including rescission)

       Sec. 3607. (a) From the amounts made available by the 
     Continuing Appropriations Resolution, 2007 (Public Law 109-
     289, as amended by the Revised Continuing Appropriations 
     Resolution, 2007 (Public Law 110-5)) for the Office of the 
     Secretary, General Departmental Management under the 
     Department of Health and Human Services, $1,000,000 are 
     rescinded.
       (b) For the activities carried out by the Secretary of 
     Education under section 3(a) of Public Law 108-406 (42 U.S.C. 
     15001 note), $1,000,000.


                         (including RESCISSION)

       Sec. 3608. (a) From the amounts made available by the 
     Continuing Appropriations Resolution, 2007 for ``Department 
     of Education, Student Aid Administration'', $2,000,000 are 
     rescinded.
       (b) For an additional amount for ``Department of Education, 
     Higher Education'' under part B of title VII of the Higher 
     Education Act of 1965 which shall be used to make a grant to 
     the University of Vermont for the Educational Excellence 
     Program, $2,000,000.
       Sec. 3609. Section 1820 of the Social Security Act (42 
     U.S.C. 1395i-4) is amended--
       (1) by redesignating subsection (j) as subsection (k); and
       (2) by inserting after subsection (i) the following new 
     subsection:
       ``(j) Delta Health Initiative.--
       ``(1) In general.--The Secretary is authorized to award a 
     grant to the Delta Health Alliance, a nonprofit alliance of 
     academic institutions in the Mississippi Delta region, to 
     solicit and fund proposals from local governments, hospitals, 
     health care clinics, academic institutions, and rural public 
     health-related entities and organizations for research 
     development, educational programs, health care services, job 
     training, planning, construction, and the equipment of public 
     health-related facilities in the Mississippi Delta region.
       ``(2) Federal interest in property.--With respect to funds 
     used under this subsection for construction or alteration of 
     property, the Federal interest in the property shall last for 
     a period of 1 year following completion or until the Federal 
     Government is compensated for its proportionate interest in 
     the property if the property use changes or the property is 
     transferred or sold, whichever time period is less. At the 
     conclusion of such period, the Notice of Federal Interest in 
     such property shall be removed.
       ``(3) Authorization of appropriations.--There are 
     authorized to be appropriated such sums as may be necessary 
     to carry out this subsection in fiscal year 2007 and in each 
     of the five succeeding fiscal years.''.

                               CHAPTER 7

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 3701. Section 2(c) of the Legislative Branch 
     Appropriations Act, 1993 (2 U.S.C. 121d(c)) is amended by 
     adding at the end the following:
       ``(3) The Secretary of the Senate may transfer from the 
     fund to the Senate Employee Child Care Center proceeds from 
     the sale of holiday ornaments by the Senate Gift Shop for the 
     purpose of funding necessary activities and expenses of the 
     Center, including scholarships, educational supplies, and 
     equipment.''.


                         (including rescission)

       Sec. 3702. (a) Of the funds provided for the ``Capitol 
     Guide Service and Special Services Office'' in section 
     20703(a) of the Continuing Appropriations Resolution, 2007 
     (as added by section 2 of the Revised Continuing 
     Appropriations Resolution, 2007 (Public Law 110-5)), 
     $3,500,000 are rescinded.
       (b) For an additional amount for ``Capitol Guide Service 
     and Special Services Office'', $3,500,000, to remain 
     available until September 30, 2008.

                               CHAPTER 8

                    GENERAL PROVISION--THIS CHAPTER

       Sec. 3801. Notwithstanding any other provision of law, 
     appropriations made by Public Law 110-5, or any other Act, 
     which the Secretary of Veterans Affairs contributes to the 
     Department of Defense/Department of Veterans Affairs Health 
     Care Sharing Incentive Fund under the authority of section 
     8111(d) of title 38, United States Code, shall remain 
     available until expended for any purpose authorized by 
     section 8111 of title 38, United States Code. 34

                               CHAPTER 9

                    GENERAL PROVISIONS--THIS CHAPTER


                        CONSULTATION REQUIREMENT

       Sec. 3901. Of the funds provided in the Revised Continuing 
     Appropriations Resolution, 2007 (Public Law 110-5) for the 
     United States-China Economic and Security Review Commission, 
     $1,000,000 shall be available for obligation only in 
     accordance with a spending plan submitted to and approved by 
     the Committees on Appropriations which addresses the 
     recommendations of the Government Accountability Office's 
     audit of the Commission.


                          TECHNICAL AMENDMENT

       Sec. 3902. (a) Notwithstanding any other provision of law, 
     subsection (c) under the heading ``Assistance for the 
     Independent States of the Former Soviet Union'' in Public Law 
     109-102, shall not apply to funds appropriated by the 
     Continuing Appropriations Resolution, 2007 (Public Law 109-
     289, division B) as amended by Public Laws 109-369, 109-383, 
     and 110-5.
       (b) Section 534(k) of the Foreign Operations, Export 
     Financing, and Related Programs Appropriations Act, 2006 
     (Public Law 109-102) is amended, in the second proviso, by 
     inserting after ``subsection (b) of that section'' the 
     following: ``and the requirement that a majority of the 
     members of the board of directors be United States citizens 
     provided in subsection (d)(3)(B) of that section''.
       (c) Subject to section 101(c)(2) of the Continuing 
     Appropriations Resolution, 2007 (division B of Public Law 
     109-289, as amended by Public Law 110-5), the amount of funds 
     appropriated for ``Foreign Military Financing Program'' 
     pursuant to such Resolution shall be construed to be the 
     total of the amount appropriated for such program by section 
     20401 of that Resolution and the amount made available for 
     such program by section 591 of the Foreign Operations, Export 
     Financing, and Related Programs Appropriations Act, 2006 
     (Public Law 109-102) which is made applicable to the fiscal 
     year 2007 by the provisions of such Resolution.

                               CHAPTER 10

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

             Office of Federal Housing Enterprise Oversight


                         Salaries and Expenses

                     (including transfer of funds)

       For an additional amount to carry out the Federal Housing 
     Enterprises Financial Safety and Soundness Act of 1992, 
     $4,800,000, to remain available until expended, to be derived 
     from the Federal Housing Enterprises Oversight Fund and to be 
     subject to the same terms and conditions pertaining to funds 
     provided under this heading in Public Law 109-115: Provided, 
     That not to exceed the total amount provided for these 
     activities for fiscal year 2007 shall be available from the 
     general fund of the Treasury to the extent necessary to incur 
     obligations and make expenditures pending the receipt of 
     collections to the Fund: Provided further, That the general 
     fund amount shall be reduced as collections are received 
     during the fiscal year so as to result in a final 
     appropriation from the general fund estimated at not more 
     than $0.

                    GENERAL PROVISIONS--THIS CHAPTER

       Sec. 4001. Hereafter, funds limited or appropriated for the 
     Department of Transportation may be obligated or expended to 
     grant authority to a Mexican motor carrier to operate beyond 
     United States municipalities and commercial zones on the 
     United States-Mexico border only to the extent that--
       (1) granting such authority is first tested as part of a 
     pilot program;
       (2) such pilot program complies with the requirements of 
     section 350 of Public Law 107-87 and the requirements of 
     section 31315(c) of title 49, United States Code, related to 
     pilot programs; and
       (3) simultaneous and comparable authority to operate within 
     Mexico is made available to motor carriers domiciled in the 
     United States.
       Sec. 4002. Section 21033 of the Continuing Appropriations 
     Resolution, 2007 (division B of Public Law 109-289, as 
     amended by Public Law 110-5) is amended by adding after the 
     second proviso: ``: Provided further, That paragraph (2) 
     under such heading in Public Law 109-115 (119 Stat. 2441) 
     shall be funded at $149,300,000, but additional section 8 
     tenant protection rental assistance costs may be funded in 
     2007 by using unobligated balances, notwithstanding the 
     purposes for which such amounts were appropriated, including 
     recaptures and carryover, remaining from funds appropriated 
     to the Department of Housing and Urban Development under this 
     heading, the heading ``Annual Contributions for Assisted 
     Housing'', the heading ``Housing Certificate Fund'', and the 
     heading ``Project-Based Rental Assistance'' for fiscal year 
     2006 and prior fiscal years: Provided further, That paragraph 
     (3) under such heading in Public Law 109-115 (119 Stat. 2441) 
     shall be funded at $47,500,000: Provided further, That 
     paragraph (4) under such heading in Public Law 109-115 (119 
     Stat. 2441) shall be funded at $5,900,000: Provided further, 
     That paragraph (5) under such heading in Public Law 109-115 
     (119 Stat. 2441) shall be funded at $1,281,100,000, of which 
     $1,251,100,000 shall be allocated for the calendar year 2007 
     funding cycle on a pro rata basis to public housing agencies 
     based on the amount public housing agencies were eligible to 
     receive in calendar year 2006, and of which up to $30,000,000 
     shall be available to the Secretary to allocate to public 
     housing agencies that need additional funds to administer 
     their section 8 programs, with up to $20,000,000 to be for 
     fees associated with section 8 tenant protection rental 
     assistance''.

[[Page S3940]]

       Sec. 4003. The dates for subsidy reductions and 
     demonstrations for discontinuance of reductions in operating 
     subsidy under the new operating fund formula, pursuant to HUD 
     regulations at 24 CFR 990.230, shall be moved forward so that 
     the first demonstration date for asset management compliance 
     shall be September 1, 2007, and reductions in subsidy for 
     calendar year 2007 shall be limited to the 5 percent amount 
     referred to in such regulations. Any public housing agency 
     that has filed information to demonstrate compliance on or 
     prior to April 15, 2007 shall be permitted to re-file the 
     same or different information to demonstrate such compliance 
     on or before September 1, 2007.

                               CHAPTER 11

                      GENERAL PROVISIONS--THIS ACT


                         AVAILABILITY OF FUNDS

       Sec. 4101. No part of any appropriation contained in this 
     Act shall remain available for obligation beyond the current 
     fiscal year unless expressly so provided herein.


                   EMERGENCY DESIGNATION FOR TITLE I

       Sec. 4102. Amounts provided in title I of this Act are 
     designated as emergency requirements pursuant to section 402 
     of H. Con. Res. 95 (109th Congress), the concurrent 
     resolution on the budget for fiscal year 2006.


                   EMERGENCY DESIGNATION FOR TITLE II

       Sec. 4103. Amounts provided in title II of this Act are 
     designated as emergency requirements pursuant to section 402 
     of H. Con. Res. 95 (109th Congress), the concurrent 
     resolution on the budget for fiscal year 2006.
                                 ______
                                 
  SA 789. Mr. GREGG submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 11, line 3, strike ``$10,589,272,000'' and insert 
     ``$12,588,272,000''.
       On page 11, line 24, strike ``$1,703,389,000'' and insert 
     ``$3,896,389,000''.
       Strike title IV.
                                 ______
                                 
  SA 790. Mr. GREGG submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       Strike title IV and insert the following:

     TITLE IV--MINE RESISTANT AMBUSH PROTECTION FOR AMERICAN TROOPS

     SEC. 401. SHORT TITLE.

       This title may be cited as the ``Mine Resistant Ambush 
     Protection for American Troops Act of 2007''.

                              PROCUREMENT

                        Other Procurement, Army

       For an additional amount for ``Other Procurement, Army'', 
     $1,999,000,000, to remain available until September 30, 2009.

                       Procurement, Marine Corps

       For an additional amount for ``Procurement, Marine Corps'', 
     $2,193,000,000, to remain available until September 30, 2009.

     SEC. 402. CONSTRUCTION.

       (a) Emergency Designation.--The amounts provided under this 
     title are designated as an emergency requirement pursuant to 
     section 402 of H. Con. Res. 95 (109th Congress).
       (b) Supplement Not Supplant.--The amounts provided in this 
     title for the purposes so provided are in addition to any 
     other amounts provided in this Act for such purposes.
                                 ______
                                 
  SA 791. Mr. BAYH submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At end of chapter 3 of title I, insert the following:

     SEC. 1316. REPORT ON CONTINGENCY PLANNING ON IRAQ.

       (a) Report Required.--Not later than 60 days after the date 
     of the enactment of this Act, the President shall submit to 
     Congress a report on United States contingency planning for 
     Iraq.
       (b) Elements.--The report required by subsection (a) shall 
     include the following:
       (1) Proposed United States strategic military and policy 
     options if the current United States plan for Iraq fails to 
     achieve its stated objective of transitioning Iraq to a 
     stable democracy and having Iraq become an ally in the war on 
     terror, including options on the following:
       (A) Prevent the emergence of terrorist safe-havens in Iraq.
       (B) An Iraq that is not allied with or a significant 
     supporter of Iran.
       (2) The number and type of United States military forces 
     needed for each option proposed under paragraph (1), 
     including the equipment required for each such option.
       (3) An estimate of the cost and schedule for each option 
     proposed under paragraph (1).
       (4) The key assumptions underlying each option proposed 
     under paragraph (1).
       (c) Form.--The report required by subsection (a) shall be 
     submitted in unclassified form, but may include a classified 
     annex.
                                 ______
                                 
  SA 792. Mr. BAYH submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

   REPORT ON CLOSING THE PREDATOR AND GLOBAL HAWK UAV PRODUCTION GAP

       (a) Report Required.--Not later than 30 days after the date 
     of the enactment of this Act, die Secretary of Defense shall 
     report to the Congress no later than 90 days after enactment 
     of this legislation on how the Department of Defense will 
     rapidly reduce the gap in available Predator unmanned aerial 
     vehicles and associated orbits with military and intelligence 
     mission requirements.
       (b) Elements.--The report and proposed plan shall include 
     the following elements:
       (1) What is the shortage of available Predators, Global 
     Hawks and orbits to stated Department of Defense requirements 
     in the field, including for U.S. forces in Iraq, Afghanistan, 
     Colombia, East, South and Southeast Asia?
       (2) What is the timeline for fully closing this shortage?
       (3) Has the Department of Defense requested all necessary 
     funds to keep Predator, Global Hawk and associated orbit 
     production lines running at maximum capacity until the 
     shortage is fully closed? If not, why not?
       (4) What steps do you recommend to close this gap?
       (5) Does having a sole source producer delay meeting 
     Predator production and procurement timelines? If so, how can 
     we best open up the competition?
       (6) Please provide the five year Predator, Global Hawk and 
     orbit requirement? Do you foresee long-endurance UAVs, armed 
     and for intelligence, surveillance and reconnaissance 
     purposes, being a long-term and growing requirement for the 
     United States Armed Forces?
       (c) Form.--The report required by subsection (a) shall be 
     submitted in unclassified form, but may include a classified 
     annex.
                                 ______
                                 
  SA 793. Ms. KLOBUCHAR submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:
       Sec. __. In providing any grants for small and rural 
     community technical and compliance assistance under the 
     Fiscal Year 2007 Operating Plan of the Environmental 
     Protection Agency, the Administrator of the Environmental 
     Protection Agency shall give priority to small systems and 
     qualified (as determined by the Administrator) organizations 
     that have the most need (or a majority of need) from small 
     communities in each State.
                                 ______
                                 
  SA 794. Mr. SALAZAR submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 56, after line 18, add the following:
       Sec. 1713. (a) Quarterly Reports on Effects of 
     Participation in the Global War on Terrorism on Veterans and 
     the Department of Veterans Affairs.--
       (1) Quarterly reports required.--Not later than 90 days 
     after the date of the enactment of this Act, and every fiscal 
     year quarter thereafter, the Secretary of Veterans Affairs 
     shall submit to the appropriate committees of Congress a 
     report on the effects of participation in the Global War on 
     Terrorism on veterans and on the Department of Veterans 
     Affairs.
       (2) Scope of report.--Each report required by paragraph (1) 
     shall provide the information specified in paragraph (3), 
     current as of the date of such report, separately for each of 
     the following periods:
       (A) The period of the fiscal year quarter for which such 
     report is submitted.
       (B) The period beginning on October 1, 2001, and ending on 
     the last day of the most recent fiscal year completed on or 
     before the date of such report, with such information set 
     forth--
       (i) in aggregate over such period; and
       (ii) separately for each complete fiscal year that falls 
     within such period.
       (3) Covered information.--The information specified in this 
     paragraph for a report under paragraph (1) is information on 
     the provision to veterans of the Global War on Terrorism of 
     benefits and services under the laws administered by the 
     Secretary of Veterans Affairs as follows:
       (A) Personal information.--Aggregated personal information 
     on veterans of the Global War on Terrorism, including--
       (i) the number of such veterans by race;
       (ii) the number of such veterans by sex;
       (iii) the number of such veterans by age;
       (iv) the number of such veterans by marital status (whether 
     married, single, separated, or divorced); and
       (v) the number of such veterans by residence (by State, 
     territory, or country).
       (B) Information on military service.--Aggregated 
     information on the military service of veterans of the Global 
     War on Terrorism, including information on the following:

[[Page S3941]]

       (i) In the case of all veterans of the Global War on 
     Terrorism--

       (I) the number of such veterans by Armed Force, and by 
     component of Armed Force, in which such veterans served in 
     the Global War on Terrorism; and
       (II) the number of such veterans by duty status in which 
     such veterans served in the Global War on Terrorism, 
     including, in the case of veterans who were members of a 
     reserve component of the Armed Forces, the number of such 
     veterans who were members of the National Guard.

       (ii) In the case of veterans of the Global War on Terrorism 
     who served only in Operation Enduring Freedom--

       (I) the number of such veterans by Armed Force, and by 
     component of Armed Force, in which such veterans served in 
     Operation Enduring Freedom; and
       (II) the number of such veterans by duty status in which 
     such veterans served in Operation Enduring Freedom, 
     including, in the case of veterans who were members of a 
     reserve component of the Armed Forces, the number of such 
     veterans who were members of the National Guard.

       (iii) In the case of veterans of the Global War on 
     Terrorism who served only in Operation Iraqi Freedom--

       (I) the number of such veterans by Armed Force, and by 
     component of Armed Force, in which such veterans served in 
     Operation Iraqi Freedom; and
       (II) the number of such veterans by duty status in which 
     such veterans served in Operation Iraqi Freedom, including, 
     in the case of veterans who were members of a reserve 
     component of the Armed Forces, the number of such veterans 
     who were members of the National Guard.

       (iv) In the case of veterans of the Global War on Terrorism 
     who served in both Operation Enduring Freedom and Operation 
     Iraqi Freedom--

       (I) the number of such veterans by Armed Force, and by 
     component of Armed Force, in which such veterans served in 
     each of Operation Enduring Freedom and Operation Iraqi 
     Freedom; and
       (II) the number of such veterans by duty status in which 
     such veterans served in Operation Enduring Freedom or 
     Operation Iraqi Freedom, including, in the case of veterans 
     who were members of a reserve component of the Armed Forces, 
     the number of such veterans who were members of the National 
     Guard.

       (v) In the case of veterans of the Global War on Terrorism 
     who served in neither Operation Enduring Freedom nor 
     Operation Iraqi Freedom--

       (I) the number of such veterans by Armed Force, and by 
     component of Armed Force, in which such veterans served in 
     the Armed Forces during the Global War on Terrorism; and
       (II) the number of such veterans by duty status in which 
     such veterans served in the Armed Forces during the Global 
     War on Terrorism, including, in the case of veterans who were 
     members of a reserve component of the Armed Forces, the 
     number of such veterans who were members of the National 
     Guard.

       (vi) The number of veterans of the Global War on Terrorism 
     by deployment location in the Global War on Terrorism, 
     including the number of such veterans deployed to each 
     location specified in subsection (c)(2).
       (vii) The deployment history of veterans during the Global 
     War on Terrorism, including--

       (I) the number of veterans who were deployed more than 
     once; and
       (II) for each number of veterans who were deployed twice, 
     three times, four times, or more than four times, the number 
     of such veterans who were deployed each such number of times.

       (viii) The number of veterans of the Global War on 
     Terrorism by grade upon completion of military service in the 
     Global War on Terrorism.
       (ix) The medical evacuation history of veterans during the 
     Global War on Terrorism, including--

       (I) the number of veterans who were evacuated once or more 
     during the Global War on Terrorism; and
       (II) for each number of veterans who were evacuated twice, 
     three times, four times, or more than four times, the number 
     of such veterans who were evacuated each such number of 
     times.

       (C) Health, counseling, and related benefits.--Aggregated 
     information on the health, counseling, and related benefits 
     and services provided by the Department of Veterans Affairs 
     to veterans of the Global War on Terrorism, including 
     information on the enrollment of such veterans in the patient 
     enrollment system under section 1705 of title 38, United 
     States Code, by priority of enrollment status.
       (D) Compensation, pension, and other benefits.--Aggregated 
     information on the compensation, pension, and other benefits 
     and services provided by the Department of Veterans Affairs 
     to veterans of the Global War on Terrorism, including 
     information on the following:
       (i) The claims of such veterans for compensation under 
     chapter 11 of title 38, United Stated Code, including--

       (I) the number of claims received;
       (II) the number of claims granted;
       (III) the number of claims denied; and
       (IV) the number of claims pending.

       (ii) The amount of compensation paid to such veterans, 
     stated as an average monthly amount for each of the periods 
     covered by such report and as a total amount for both such 
     periods.
       (iii) The claims for dependency and indemnity compensation 
     under chapter 13 of title 38, United States Code, with 
     respect to such veterans, including--

       (I) the number of claims received;
       (II) the number of claims granted;
       (III) the number of claims denied; and
       (IV) the number of claims pending.

       (iv) The amount of dependency and indemnity compensation 
     paid with respect to such veterans, stated as an average 
     monthly amount for the periods covered by such report and as 
     a total amount for such periods.
       (v) The claims for pension under chapter 15 of title 38, 
     United States Code, for or with respect to such veterans, 
     including--

       (I) the number of claims received;
       (II) the number of claims granted;
       (III) the number of claims denied; and
       (IV) the number of claims pending.

       (vi) The education benefits provided to or with respect to 
     such veterans or other individuals under chapter 30, 32, or 
     35 of title 38, United States Code, or chapter 1606 or 1607 
     of title 10, United States, including--

       (I) the number of veterans or other individuals provided 
     such benefits (set forth by chapter under which provided); 
     and
       (II) the amount of such benefits (set forth by chapter 
     under which provided).

       (vii) The vocational rehabilitation benefits and services 
     provided to such veterans, including--

       (I) the number of veterans submitting applications for such 
     benefits or services;
       (II) the number of applications granted;
       (III) the number of applications denied;
       (IV) the number of applications pending; and
       (V) the type and amount of such benefits and services 
     provided.

       (viii) The housing and small business loan guaranty 
     benefits provided to such veterans under chapter 37 of title 
     38, United States Code, and other provisions of law, 
     including--

       (I) the number of veterans submitting applications for such 
     benefits;
       (II) the type, and number and amount by type, of such 
     benefits provided; and
       (III) the number and amount by type of loans in default.

       (ix) The specially adapted housing assistance provided to 
     such veterans under chapter 21 of title 38, United States 
     Code, including the type and amount of assistance provided.
       (x) The insurance benefits provided to or with respect to 
     such veterans under chapter 19 of title 38, United States 
     Code, including the amount of benefits provided under each 
     type of insurance offered by the Secretary.
       (E) Burial and cemetery benefits.--Aggregated information 
     on the burial and cemetery benefits provided by the 
     Department of Veterans Affairs with respect to veterans of 
     the Global War on Terrorism, including information on the 
     following:
       (i) The number of burials in a cemetery of the National 
     Cemetery System or Arlington National Cemetery.
       (ii) The number of flags furnished under section 2301 of 
     title 38, United States Code.
       (iii) The amount of burial allowances paid under section 
     2302 of title 38, United States Code.
       (iv) The amount of plot allowances paid under section 2303 
     of title 38, United States Code.
       (v) The number of headstones, markers, and burial 
     receptacles furnished under section 2306 of title 38, United 
     States Code, and the cost of furnishing such headstones, 
     markers, and receptacles.
       (vi) The amount of burial and funeral expenses paid under 
     section 2307 of title 38, United States Code, for veterans 
     who die from a service-connected disability.
       (vii) The costs of the transportation of the remains of 
     deceased veterans to a national cemetery under section 2308 
     of title 38, United States Code.
       (F) Service-connected status.--A description of the way in 
     which the Secretary of Veterans Affairs distinguishes between 
     service-connected disabilities and disabilities that are not 
     service-connected.
       (4) Protection of identities.--The Secretary shall take 
     appropriate actions in preparing and submitting reports under 
     this subsection to ensure that no personally identifying 
     information on any particular veteran is included or 
     otherwise improperly released in such reports.
       (5) Definitions.--In this subsection:
       (A) Appropriate committees of congress.--The term 
     ``appropriate committees of Congress'' means--
       (i) the Committees on Armed Services, Appropriations, and 
     Veterans' Affairs of the Senate; and
       (ii) the Committees on Armed Services, Appropriations, and 
     Veterans' Affairs of the House of Representatives.
       (B) Veteran of the global war on terrorism.--The term 
     ``veteran of the Global War on Terrorism'' means a veteran of 
     the Global War on Terrorism who served on active military, 
     naval, or air service during the Global War on Terrorism in a 
     location specified in subsection (c)(2).
       (b) Quarterly Reports on Effects of Participation in the 
     Global War on Terrorism on Members of the Armed Forces and 
     the Department of Defense.--
       (1) Quarterly reports required.--Not later than 90 days 
     after the date of the enactment of this Act, and every 90 
     days thereafter, the Secretary of Defense shall submit to the 
     congressional defense committees a

[[Page S3942]]

     report on the effects of participation in the Global War on 
     Terrorism on the members of the Armed Forces and on the 
     Department of Defense.
       (2) Scope of report.--Each report required by paragraph (1) 
     shall include the information specified in paragraph (3), 
     current as of the date of such report, separately for each of 
     the following periods:
       (A) The 90-day period ending on the date of such report.
       (B) The period beginning on September 11, 2001, and ending 
     on the date of such report.
       (3) Covered information.--The information specified in this 
     paragraph for a report under paragraph (1) is information on 
     the participation of members of the Armed Forces in the 
     Global War on Terrorism as follows:
       (A) Personal information.--Aggregated personal information 
     on members of the Armed Forces participating in the Global 
     War on Terrorism, including--
       (i) the number of such members by race;
       (ii) the number of such members by sex;
       (iii) the number of such members by age;
       (iv) the number of such members by marital status (whether 
     married, single, separated, or divorced); and
       (v) the number of such members by home of record (by State 
     or territory).
       (B) Information on military service.--Aggregated 
     information on the military service of members of the Armed 
     Forces participating in the Global War on Terrorism, 
     including information on the following:
       (i) The number of such members by Armed Force, and by 
     component of Armed Force, in which such members are serving 
     in the Global War on Terrorism.
       (ii) The number of such members by duty status in which 
     such members are serving in the Global War on Terrorism, 
     including, in the case of members who are members of a 
     reserve component of the Armed Forces, the number of such 
     members who are members of the National Guard.
       (iii) The number of such members by deployment status in 
     which such members are serving in the Global War on 
     Terrorism, including the number of such members who--

       (I) have served only in Operation Enduring Freedom;
       (II) have served only in Operation Iraqi Freedom;
       (III) have served in both Operation Enduring Freedom and 
     Operation Iraqi Freedom; or
       (IV) have served in neither Operation Enduring Freedom nor 
     Operation Iraqi Freedom.

       (iv) The number of such members by deployment location in 
     the Global War on Terrorism, including the number of such 
     members deployed to each location specified in subsection 
     (c)(2).
       (v) The deployment history of such members during the 
     Global War on Terrorism, including--

       (I) the number of members who have been deployed more than 
     once; and
       (II) for each number of members who have been deployed 
     twice, three times, four times, or more than four times, the 
     number of such members who have been deployed each such 
     number of times.

       (vi) The number of such members by grade.
       (vii) The medical evacuation history of such members during 
     the Global War on Terrorism, including--

       (I) the number of members who have been evacuated once or 
     more during the Global War on Terrorism; and
       (II) for each number of members who have been evacuated 
     twice, three times, four times, or more than four times, the 
     number of such members who have been evacuated each such 
     number of times.

       (viii) The number of such members whose enlistment or 
     period of obligated service has been extended, or whose 
     eligibility for retirement has been suspended, during the 
     Global War on Terrorism under a provision of law (commonly 
     referred to as a ``stop-loss authority'') authorizing the 
     President to extend an enlistment or period of obligated 
     service, or suspend eligibility for retirement, of a member 
     of the Armed Forces in a time of war or national emergency 
     declared by Congress or the President, including--

       (I) the number of such members who have been subject to the 
     exercise of such authority; and
       (II) for each number of times being subject to the exercise 
     of such authority, the number of such members who have been 
     so subject to such authority each such number of times.

       (ix) The number of such members who have been discharged or 
     released from the Armed Forces, including, for each category 
     of condition of discharge, the number of members discharged 
     under such category.
       (C) Information on administration of armed forces.--
     Aggregated information on the administration of the Armed 
     Forces participating in of the Global War on Terrorism, 
     including information on the following:
       (i) The number of members of the reserve components of the 
     Armed Forces called or ordered to active duty for service in 
     the Global War on Terrorism, including--

       (I) the number of members of the National Guard and the 
     number of Reserves so ordered;
       (II) for each number of times of being so called or ordered 
     to active duty, the number of such members who have been so 
     called or order to active duty each such number of times; and
       (III) the average number times being so called or ordered 
     to active duty among all members of the National Guard and 
     Reserve who have been so called or ordered to active duty.

       (ii) The number of members of the Armed Forces who have 
     been subject to medical evacuation once or more in the Global 
     War on Terrorism.
       (iii) The number of members of the Armed Forces whose 
     enlistment or period of obligated service has been extended, 
     or whose eligibility for retirement has been suspended, for 
     purposes of the Global War on Terrorism under a provision of 
     law (commonly referred to as a ``stop-loss authority'') 
     authorizing the President to extend an enlistment or period 
     of obligated service, or suspend eligibility for retirement, 
     of a member of the Armed Forces in a time of war or national 
     emergency declared by Congress or the President.
       (iv) The number of members of the Armed Forces 
     participating in the Global War on Terrorism who have been 
     discharged or released from the Armed Forces, including--

       (I) the military status of such members at the time of 
     discharge or release; and
       (II) the nature of such discharge or release, including 
     less than honorable discharge for drug abuse, alcohol abuse, 
     domestic violence, discipline problems, and other war-related 
     reintegration problems.

       (v) The number of members of the Armed Forces described in 
     subparagraph (H) who have had their discharge upgraded, set 
     forth by deployment status in the Global War on Terrorism and 
     by nature of discharge upon discharge.
       (4) Definitions.--In this subsection:
       (A) Congressional defense committees.--The term 
     ``congressional defense committees'' means--
       (i) the Committees on Armed Services and Appropriations of 
     the Senate; and
       (ii) the Committees on Armed Services and Appropriations of 
     the House of Representatives.
       (B) Member of the armed forces participating in the global 
     war on terrorism.--The term ``member of the Armed Forces 
     participating in the Global War on Terrorism'' means a member 
     of the Armed Forces who served on active duty in the Global 
     War on Terrorism at a location specified in section (c)(2).
       (c) Definitional Matters.--
       (1) General definition of global war on terrorism.--In this 
     section, the term ``Global War on Terrorism'' means the 
     period beginning on September 11, 2001, and ending on the 
     date thereafter prescribed by Presidential proclamation or by 
     law.
       (2) Specification of locations of global war on 
     terrorism.--For purposes of this section, the geographic 
     location of the Global War on Terrorism shall be the 
     locations (including the airspace above) as follows: 
     Afghanistan, Algeria, the Arabian Sea, Armenia, Bab el 
     Mandeb, Bahrain, Bulgaria, Cyprus, Diego Garcia (United 
     Kingdom Indian Ocean Territory), Djibouti, Egypt, Eritrea, 
     Ethiopia, the Republic of Georgia, Greece, Guantanamo Bay, 
     Cuba, the Gulf of Aden, the Gulf of Aqaba, the Gulf of Oman, 
     the Gulf of Suez, Indonesia, the Ionian Sea, Iran, Iraq, 
     Israel, Japan, Jordan, Kazakhstan, Kenya, Kyrgyzstan, Kuwait, 
     Lebanon, the Mediterranean Sea, Oman, Pakistan, the Pentagon 
     Reservation, Virginia (but only on September 11, 2001), the 
     Persian Gulf, the Philippines, Qatar, the Red Sea, Romania, 
     Saudi Arabia, Somalia, the Spratley Islands, the Strait of 
     Hormuz, the Suez Canal, Syria, Tajikistan, Turkey, 
     Turkmenistan, the United Arab Emirates, Uzbekistan, Yemen, 
     and any other location specified for purposes of this Act by 
     the Secretary of Veterans Affairs in consultation with the 
     Secretary of Defense.
                                 ______
                                 
  SA 795. Mr. THUNE submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of chapter 3 of title I, add insert the 
     following:

     SEC. 1316. ADDITIONAL AMOUNT FOR OPERATION AND MAINTENANCE, 
                   AIR FORCE.

       The amount appropriated or otherwise made available by this 
     chapter under the heading ``Operation and Maintenance, Air 
     Force'' is hereby increased by $222,000,000: Provided, that 
     the amount provided under this heading is designated as an 
     emergency requirement pursuant to section 402 of H. Con. Res. 
     95 (109th Congress).
                                 ______
                                 
  SA 796. Mr. REID submitted an amendment intended to be proposed by 
him to the bill H.R. 1591, making emergency supplemental appropriations 
for the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       At the end of title III, insert the following:


                             CLARIFICATIONS

       Sec. __. The Consolidated Appropriations Act, 2005, is 
     amended in the matter under the heading ``community 
     development fund (including transfers of funds)'', in title 
     II, by striking ``equipment'' and inserting ``renovation and 
     construction''. The Transportation, Treasury, Housing and 
     Urban Development, the Judiciary, the District of Columbia, 
     and Independent Agencies Appropriations Act, 2006 is amended 
     in the matter under the

[[Page S3943]]

     heading ``community development fund (including transfers of 
     funds)'', in title III, by adding at the end the following: 
     ``Funds made available under this heading for a Small 
     Business Development Center shall be used for revitalization 
     costs at the College of Agriculture, Biotechnology, and 
     Natural Resources at the institution involved.''.
                                 ______
                                 
  SA 797. Mr. GRASSLEY submitted an amendment intended to be proposed 
by him to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the appropriate place insert the following:

                  V--FAIR MINIMUM WAGE AND TAX RELIEF

                     Subtitle A--Fair Minimum Wage

     SEC. 500. SHORT TITLE.

       This subtitle may be cited as the ``Fair Minimum Wage Act 
     of 2007''.

     SEC. 501. MINIMUM WAGE.

       (a) In General.--Section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to 
     read as follows:
       ``(1) except as otherwise provided in this section, not 
     less than--
       ``(A) $5.85 an hour, beginning on the 60th day after the 
     date of enactment of the Fair Minimum Wage Act of 2007;
       ``(B) $6.55 an hour, beginning 12 months after that 60th 
     day; and
       ``(C) $7.25 an hour, beginning 24 months after that 60th 
     day;''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 60 days after the date of enactment of this 
     Act.

     SEC. 502. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH 
                   OF THE NORTHERN MARIANA ISLANDS.

       (a) In General.--Section 6 of the Fair Labor Standards Act 
     of 1938 (29 U.S.C. 206) shall apply to the Commonwealth of 
     the Northern Mariana Islands.
       (b) Transition.--Notwithstanding subsection (a), the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under section 6(a)(1) of the Fair Labor 
     Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall be--
       (1) $3.55 an hour, beginning on the 60th day after the date 
     of enactment of this Act; and
       (2) increased by $0.50 an hour (or such lesser amount as 
     may be necessary to equal the minimum wage under section 
     6(a)(1) of such Act), beginning 6 months after the date of 
     enactment of this Act and every 6 months thereafter until the 
     minimum wage applicable to the Commonwealth of the Northern 
     Mariana Islands under this subsection is equal to the minimum 
     wage set forth in such section.

               Subtitle B--Small Business Tax Incentives

     SEC. 510. SHORT TITLE; AMENDMENT OF CODE.

       (a) Short Title.--This subtitle may be cited as the ``Small 
     Business and Work Opportunity Act of 2007''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this subtitle 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.

              PART I--SMALL BUSINESS TAX RELIEF PROVISIONS

                     Subpart A--General Provisions

     SEC. 511. EXTENSION OF INCREASED EXPENSING FOR SMALL 
                   BUSINESSES.

       Section 179 (relating to election to expense certain 
     depreciable business assets) is amended by striking ``2010'' 
     each place it appears and inserting ``2011''.

     SEC. 512. EXTENSION AND MODIFICATION OF 15-YEAR STRAIGHT-LINE 
                   COST RECOVERY FOR QUALIFIED LEASEHOLD 
                   IMPROVEMENTS AND QUALIFIED RESTAURANT 
                   IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST 
                   RECOVERY FOR CERTAIN IMPROVEMENTS TO RETAIL 
                   SPACE.

       (a) Extension of Leasehold and Restaurant Improvements.--
       (1) In general.--Clauses (iv) and (v) of section 
     168(e)(3)(E) (relating to 15-year property) are each amended 
     by striking ``January 1, 2008'' and inserting ``January 1, 
     2009''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to property placed in service after December 31, 
     2007.
       (b) Modification of Treatment of Qualified Restaurant 
     Property as 15-Year Property for Purposes of Depreciation 
     Deduction.--
       (1) Treatment to include new construction.--Paragraph (7) 
     of section 168(e) (relating to classification of property) is 
     amended to read as follows:
       ``(7) Qualified restaurant property.--The term `qualified 
     restaurant property' means any section 1250 property which is 
     a building (or its structural components) or an improvement 
     to such building if more than 50 percent of such building's 
     square footage is devoted to preparation of, and seating for 
     on-premises consumption of, prepared meals.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to any property placed in service after the date 
     of the enactment of this Act, the original use of which 
     begins with the taxpayer after such date.
       (c) Recovery Period for Depreciation of Certain 
     Improvements to Retail Space.--
       (1) 15-year recovery period.--Section 168(e)(3)(E) 
     (relating to 15-year property) is amended by striking ``and'' 
     at the end of clause (vii), by striking the period at the end 
     of clause (viii) and inserting ``, and'', and by adding at 
     the end the following new clause:
       ``(ix) any qualified retail improvement property placed in 
     service before January 1, 2009.''.
       (2) Qualified retail improvement property.--Section 168(e) 
     is amended by adding at the end the following new paragraph:
       ``(8) Qualified retail improvement property.--
       ``(A) In general.--The term `qualified retail improvement 
     property' means any improvement to an interior portion of a 
     building which is nonresidential real property if--
       ``(i) such portion is open to the general public and is 
     used in the retail trade or business of selling tangible 
     personal property to the general public, and
       ``(ii) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Improvements made by owner.--In the case of an 
     improvement made by the owner of such improvement, such 
     improvement shall be qualified retail improvement property 
     (if at all) only so long as such improvement is held by such 
     owner. Rules similar to the rules under paragraph (6)(B) 
     shall apply for purposes of the preceding sentence.
       ``(C) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefitting a common area, 
     or
       ``(iv) the internal structural framework of the 
     building.''.
       (3) Requirement to use straight line method.--Section 
     168(b)(3) is amended by adding at the end the following new 
     subparagraph:
       ``(I) Qualified retail improvement property described in 
     subsection (e)(8).''.
       (4) Alternative system.--The table contained in section 
     168(g)(3)(B) is amended by inserting after the item relating 
     to subparagraph (E)(viii) the following new item:

(E)(ix)...........................................................39''.

       (5) Effective date.--The amendments made by this subsection 
     shall apply to property placed in service after the date of 
     the enactment of this Act.

     SEC. 513. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL 
                   BUSINESS.

       (a) Cash Accounting Permitted.--
       (1) In general.--Section 446 (relating to general rule for 
     methods of accounting) is amended by adding at the end the 
     following new subsection:
       ``(g) Certain Small Business Taxpayers Permitted To Use 
     Cash Accounting Method Without Limitation.--
       ``(1) In general.--An eligible taxpayer shall not be 
     required to use an accrual method of accounting for any 
     taxable year.
       ``(2) Eligible taxpayer.--For purposes of this subsection, 
     a taxpayer is an eligible taxpayer with respect to any 
     taxable year if--
       ``(A) for each of the prior taxable years ending on or 
     after the date of the enactment of this subsection, the 
     taxpayer (or any predecessor) met the gross receipts test in 
     effect under section 448(c) for such taxable year, and
       ``(B) the taxpayer is not subject to section 447 or 448.''.
       (2) Expansion of gross receipts test.--
       (A) In general.--Paragraph (3) of section 448(b) (relating 
     to entities with gross receipts of not more than $5,000,000) 
     is amended to read as follows:
       ``(3) Entities meeting gross receipts test.--Paragraphs (1) 
     and (2) of subsection (a) shall not apply to any corporation 
     or partnership for any taxable year if, for each of the prior 
     taxable years ending on or after the date of the enactment of 
     the Small Business and Work Opportunity Act of 2007, the 
     entity (or any predecessor) met the gross receipts test in 
     effect under subsection (c) for such prior taxable year.''.
       (B) Conforming amendments.--Section 448(c) of such Code is 
     amended--
       (i) by striking ``$5,000,000'' in the heading thereof,
       (ii) by striking ``$5,000,000'' each place it appears in 
     paragraph (1) and inserting ``$10,000,000'', and
       (iii) by adding at the end the following new paragraph:
       ``(4) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2008, the dollar 
     amount contained in paragraph (1) shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2007' for 
     `calendar year 1992' in subparagraph (B) thereof.
       ``If any amount as adjusted under this subparagraph is not 
     a multiple of $100,000, such amount shall be rounded to the 
     nearest multiple of $100,000.''.
       (b) Clarification of Inventory Rules for Small Business.--
       (1) In general.--Section 471 (relating to general rule for 
     inventories) is amended by redesignating subsection (c) as 
     subsection (d) and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Small Business Taxpayers Not Required To Use 
     Inventories.--

[[Page S3944]]

       ``(1) In general.--A qualified taxpayer shall not be 
     required to use inventories under this section for a taxable 
     year.
       ``(2) Treatment of taxpayers not using inventories.--If a 
     qualified taxpayer does not use inventories with respect to 
     any property for any taxable year beginning after the date of 
     the enactment of this subsection, such property shall be 
     treated as a material or supply which is not incidental.
       ``(3) Qualified taxpayer.--For purposes of this subsection, 
     the term `qualified taxpayer' means--
       ``(A) any eligible taxpayer (as defined in section 
     446(g)(2)), and
       ``(B) any taxpayer described in section 448(b)(3).''.
       (2) Conforming amendments.--
       (A) Subpart D of part II of subchapter E of chapter 1 is 
     amended by striking section 474.
       (B) The table of sections for subpart D of part II of 
     subchapter E of chapter 1 is amended by striking the item 
     relating to section 474.
       (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. 514. EXTENSION AND MODIFICATION OF COMBINED WORK 
                   OPPORTUNITY TAX CREDIT AND WELFARE-TO-WORK 
                   CREDIT.

       (a) Extension.--Section 51(c)(4)(B) (relating to 
     termination) is amended by striking ``2007'' and inserting 
     ``2012''.
       (b) Increase in Maximum Age for Designated Community 
     Residents.--
       (1) In general.--Paragraph (5) of section 51(d) is amended 
     to read as follows:
       ``(5) Designated community residents.--
       ``(A) In general.--The term `designated community resident' 
     means any individual who is certified by the designated local 
     agency--
       ``(i) as having attained age 18 but not age 40 on the 
     hiring date, and
       ``(ii) as having his principal place of abode within an 
     empowerment zone, enterprise community, renewal community, or 
     rural renewal county.
       ``(B) Individual must continue to reside in zone, 
     community, or county.--In the case of a designated community 
     resident, the term `qualified wages' shall not include wages 
     paid or incurred for services performed while the 
     individual's principal place of abode is outside an 
     empowerment zone, enterprise community, renewal community, or 
     rural renewal county.
       ``(C) Rural renewal county.--For purposes of this 
     paragraph, the term `rural renewal county' means any county 
     which--
       ``(i) is outside a metropolitan statistical area (defined 
     as such by the Office of Management and Budget), and
       ``(ii) during the 5-year periods 1990 through 1994 and 1995 
     through 1999 had a net population loss.''.
       (2) Conforming amendment.--Subparagraph (D) of section 
     51(d)(1) is amended to read as follows:
       ``(D) a designated community resident,''.
       (c) Clarification of Treatment of Individuals Under 
     Individual Work Plans.--Subparagraph (B) of section 51(d)(6) 
     (relating to vocational rehabilitation referral) is amended 
     by striking ``or'' at the end of clause (i), by striking the 
     period at the end of clause (ii) and inserting ``, or'', and 
     by adding at the end the following new clause:
       ``(iii) an individual work plan developed and implemented 
     by an employment network pursuant to subsection (g) of 
     section 1148 of the Social Security Act with respect to which 
     the requirements of such subsection are met.''.
       (d) Treatment of Disabled Veterans Under the Work 
     Opportunity Tax Credit.--
       (1) Disabled veterans treated as members of targeted 
     group.--
       (A) In general.--Subparagraph (A) of section 51(d)(3) 
     (relating to qualified veteran) is amended by striking 
     ``agency as being a member of a family'' and all that follows 
     and inserting ``agency as--
       ``(i) being a member of a family receiving assistance under 
     a food stamp program under the Food Stamp Act of 1977 for at 
     least a 3-month period ending during the 12-month period 
     ending on the hiring date, or
       ``(ii) entitled to compensation for a service-connected 
     disability incurred after September 10, 2001.''.
       (B) Definitions.--Paragraph (3) of section 51(d) is amended 
     by adding at the end the following new subparagraph:
       ``(C) Other definitions.--For purposes of subparagraph (A), 
     the terms `compensation' and `service-connected' have the 
     meanings given such terms under section 101 of title 38, 
     United States Code.''.
       (2) Increase in amount of wages taken into account for 
     disabled veterans.--Paragraph (3) of section 51(b) is 
     amended--
       (A) by inserting ``($12,000 per year in the case of any 
     individual who is a qualified veteran by reason of subsection 
     (d)(3)(A)(ii))'' before the period at the end, and
       (B) by striking ``ONLY FIRST $6,000 of'' in the heading and 
     inserting ``LIMITATION ON''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after the date of the enactment of this Act, in taxable years 
     ending after such date.

     SEC. 515. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       (a) Employment Taxes.--Chapter 25 (relating to general 
     provisions relating to employment taxes) is amended by adding 
     at the end the following new section:

     ``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       ``(a) General Rules.--For purposes of the taxes, and other 
     obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer (and no other person shall be 
     treated as the employer) of any work site employee performing 
     services for any customer of such organization, but only with 
     respect to remuneration remitted by such organization to such 
     work site employee, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(b) Successor Employer Status.--For purposes of sections 
     3121(a)(1), 3231(e)(2)(C), and 3306(b)(1)--
       ``(1) a certified professional employer organization 
     entering into a service contract with a customer with respect 
     to a work site employee shall be treated as a successor 
     employer and the customer shall be treated as a predecessor 
     employer during the term of such service contract, and
       ``(2) a customer whose service contract with a certified 
     professional employer organization is terminated with respect 
     to a work site employee shall be treated as a successor 
     employer and the certified professional employer organization 
     shall be treated as a predecessor employer.
       ``(c) Liability of Certified Professional Employer 
     Organization.--Solely for purposes of its liability for the 
     taxes, and other obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer of any individual (other than a 
     work site employee or a person described in subsection (f)) 
     who is performing services covered by a contract meeting the 
     requirements of section 7705(e)(2), but only with respect to 
     remuneration remitted by such organization to such 
     individual, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(d) Treatment of Credits.--
       ``(1) In general.--For purposes of any credit specified in 
     paragraph (2)--
       ``(A) such credit with respect to a work site employee 
     performing services for the customer applies to the customer, 
     not the certified professional employer organization,
       ``(B) the customer, and not the certified professional 
     employer organization, shall take into account wages and 
     employment taxes--
       ``(i) paid by the certified professional employer 
     organization with respect to the work site employee, and
       ``(ii) for which the certified professional employer 
     organization receives payment from the customer, and
       ``(C) the certified professional employer organization 
     shall furnish the customer with any information necessary for 
     the customer to claim such credit.
       ``(2) Credits specified.--A credit is specified in this 
     paragraph if such credit is allowed under--
       ``(A) section 41 (credit for increasing research activity),
       ``(B) section 45A (Indian employment credit),
       ``(C) section 45B (credit for portion of employer social 
     security taxes paid with respect to employee cash tips),
       ``(D) section 45C (clinical testing expenses for certain 
     drugs for rare diseases or conditions),
       ``(E) section 51 (work opportunity credit),
       ``(F) section 51A (temporary incentives for employing long-
     term family assistance recipients),
       ``(G) section 1396 (empowerment zone employment credit),
       ``(H) 1400(d) (DC Zone employment credit),
       ``(I) Section 1400H (renewal community employment credit), 
     and
       ``(J) any other section as provided by the Secretary.
       ``(e) Special Rule for Related Party.--This section shall 
     not apply in the case of a customer which bears a 
     relationship to a certified professional employer 
     organization described in section 267(b) or 707(b). For 
     purposes of the preceding sentence, such sections shall be 
     applied by substituting `10 percent' for `50 percent'.
       ``(f) Special Rule for Certain Individuals.--For purposes 
     of the taxes imposed under this subtitle, an individual with 
     net earnings from self-employment derived from the customer's 
     trade or business is not a work site employee with respect to 
     remuneration paid by a certified professional employer 
     organization.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Certified Professional Employer Organization Defined.--
     Chapter 79 (relating to definitions) is amended by adding at 
     the end the following new section:

     ``SEC. 7705. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS 
                   DEFINED.

       ``(a) In General.--For purposes of this title, the term 
     `certified professional employer organization' means a person 
     who has been certified by the Secretary for purposes of 
     section 3511 as meeting the requirements of subsection (b).

[[Page S3945]]

       ``(b) General Requirements.--A person meets the 
     requirements of this subsection if such person--
       ``(1) demonstrates that such person (and any owner, 
     officer, and such other persons as may be specified in 
     regulations) meets such requirements as the Secretary shall 
     establish with respect to tax status, background, experience, 
     business location, and annual financial audits,
       ``(2) computes its taxable income using an accrual method 
     of accounting unless the Secretary approves another method,
       ``(3) agrees that it will satisfy the bond and independent 
     financial review requirements of subsection (c) on an ongoing 
     basis,
       ``(4) agrees that it will satisfy such reporting 
     obligations as may be imposed by the Secretary,
       ``(5) agrees to verify on such periodic basis as the 
     Secretary may prescribe that it continues to meet the 
     requirements of this subsection, and
       ``(6) agrees to notify the Secretary in writing within such 
     time as the Secretary may prescribe of any change that 
     materially affects whether it continues to meet the 
     requirements of this subsection.
       ``(c) Bond and Independent Financial Review Requirements.--
       ``(1) In general.--An organization meets the requirements 
     of this paragraph if such organization--
       ``(A) meets the bond requirements of paragraph (2), and
       ``(B) meets the independent financial review requirements 
     of paragraph (3).
       ``(2) Bond.--
       ``(A) In general.--A certified professional employer 
     organization meets the requirements of this paragraph if the 
     organization has posted a bond for the payment of taxes under 
     subtitle C (in a form acceptable to the Secretary) in an 
     amount at least equal to the amount specified in subparagraph 
     (B).
       ``(B) Amount of bond.--For the period April 1 of any 
     calendar year through March 31 of the following calendar 
     year, the amount of the bond required is equal to the greater 
     of--
       ``(i) 5 percent of the organization's liability under 
     section 3511 for taxes imposed by subtitle C during the 
     preceding calendar year (but not to exceed $1,000,000), or
       ``(ii) $50,000.
       ``(3) Independent financial review requirements.--A 
     certified professional employer organization meets the 
     requirements of this paragraph if such organization--
       ``(A) has, as of the most recent review date, caused to be 
     prepared and provided to the Secretary (in such manner as the 
     Secretary may prescribe) an opinion of an independent 
     certified public accountant that the certified professional 
     employer organization's financial statements are presented 
     fairly in accordance with generally accepted accounting 
     principles, and
       ``(B) provides, not later than the last day of the second 
     month beginning after the end of each calendar quarter, to 
     the Secretary from an independent certified public accountant 
     an assertion regarding Federal employment tax payments and an 
     examination level attestation on such assertion.

     Such assertion shall state that the organization has withheld 
     and made deposits of all taxes imposed by chapters 21, 22, 
     and 24 of the Internal Revenue Code in accordance with 
     regulations imposed by the Secretary for such calendar 
     quarter and such examination level attestation shall state 
     that such assertion is fairly stated, in all material 
     respects.
       ``(4) Controlled group rules.--For purposes of the 
     requirements of paragraphs (2) and (3), all professional 
     employer organizations that are members of a controlled group 
     within the meaning of sections 414(b) and (c) shall be 
     treated as a single organization.
       ``(5) Failure to file assertion and attestation.--If the 
     certified professional employer organization fails to file 
     the assertion and attestation required by paragraph (3) with 
     respect to any calendar quarter, then the requirements of 
     paragraph (3) with respect to such failure shall be treated 
     as not satisfied for the period beginning on the due date for 
     such attestation.
       ``(6) Review date.--For purposes of paragraph (3)(A), the 
     review date shall be 6 months after the completion of the 
     organization's fiscal year.
       ``(d) Suspension and Revocation Authority.--The Secretary 
     may suspend or revoke a certification of any person under 
     subsection (b) for purposes of section 3511 if the Secretary 
     determines that such person is not satisfying the 
     representations or requirements of subsections (b) or (c), or 
     fails to satisfy applicable accounting, reporting, payment, 
     or deposit requirements.
       ``(e) Work Site Employee.--For purposes of this title--
       ``(1) In general.--The term `work site employee' means, 
     with respect to a certified professional employer 
     organization, an individual who--
       ``(A) performs services for a customer pursuant to a 
     contract which is between such customer and the certified 
     professional employer organization and which meets the 
     requirements of paragraph (2), and
       ``(B) performs services at a work site meeting the 
     requirements of paragraph (3).
       ``(2) Service contract requirements.--A contract meets the 
     requirements of this paragraph with respect to an individual 
     performing services for a customer if such contract is in 
     writing and provides that the certified professional employer 
     organization shall--
       ``(A) assume responsibility for payment of wages to such 
     individual, without regard to the receipt or adequacy of 
     payment from the customer for such services,
       ``(B) assume responsibility for reporting, withholding, and 
     paying any applicable taxes under subtitle C, with respect to 
     such individual's wages, without regard to the receipt or 
     adequacy of payment from the customer for such services,
       ``(C) assume responsibility for any employee benefits which 
     the service contract may require the organization to provide, 
     without regard to the receipt or adequacy of payment from the 
     customer for such services,
       ``(D) assume responsibility for hiring, firing, and 
     recruiting workers in addition to the customer's 
     responsibility for hiring, firing and recruiting workers,
       ``(E) maintain employee records relating to such 
     individual, and
       ``(F) agree to be treated as a certified professional 
     employer organization for purposes of section 3511 with 
     respect to such individual.
       ``(3) Work site coverage requirement.--The requirements of 
     this paragraph are met with respect to an individual if at 
     least 85 percent of the individuals performing services for 
     the customer at the work site where such individual performs 
     services are subject to 1 or more contracts with the 
     certified professional employer organization which meet the 
     requirements of paragraph (2) (but not taking into account 
     those individuals who are excluded employees within the 
     meaning of section 414(q)(5)).
       ``(f) Determination of Employment Status.--Except to the 
     extent necessary for purposes of section 3511, nothing in 
     this section shall be construed to affect the determination 
     of who is an employee or employer for purposes of this title.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (c) Conforming Amendments.--
       (1) Section 3302 is amended by adding at the end the 
     following new subsection:
       ``(h) Treatment of Certified Professional Employer 
     Organizations.--If a certified professional employer 
     organization (as defined in section 7705), or a customer of 
     such organization, makes a contribution to the State's 
     unemployment fund with respect to a work site employee, such 
     organization shall be eligible for the credits available 
     under this section with respect to such contribution.''.
       (2) Section 3303(a) is amended--
       (A) by striking the period at the end of paragraph (3) and 
     inserting ``; and'' and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) if the taxpayer is a certified professional employer 
     organization (as defined in section 7705) that is treated as 
     the employer under section 3511, such certified professional 
     employer organization is permitted to collect and remit, in 
     accordance with paragraphs (1), (2), and (3), contributions 
     during the taxable year to the State unemployment fund with 
     respect to a work site employee.'', and
       (B) in the last sentence--
       (i) by striking ``paragraphs (1), (2), and (3)'' and 
     inserting ``paragraphs (1), (2), (3), and (4)'', and
       (ii) by striking ``paragraph (1), (2), or (3)'' and 
     inserting ``paragraph (1), (2), (3), or (4)''.
       (3) Section 6053(c) (relating to reporting of tips) is 
     amended by adding at the end the following new paragraph:
       ``(8) Certified professional employer organizations.--For 
     purposes of any report required by this subsection, in the 
     case of a certified professional employer organization that 
     is treated under section 3511 as the employer of a work site 
     employee, the customer with respect to whom a work site 
     employee performs services shall be the employer for purposes 
     of reporting under this section and the certified 
     professional employer organization shall furnish to the 
     customer any information necessary to complete such reporting 
     no later than such time as the Secretary shall prescribe.''.
       (d) Clerical Amendments.--
       (1) The table of sections for chapter 25 is amended by 
     adding at the end the following new item:

``Sec. 3511. Certified professional employer organizations''.

       (2) The table of sections for chapter 79 is amended by 
     inserting after the item relating to section 7704 the 
     following new item:

``Sec. 7705. Certified professional employer organizations defined''.

       (e) Reporting Requirements and Obligations.--The Secretary 
     of the Treasury shall develop such reporting and 
     recordkeeping rules, regulations, and procedures as the 
     Secretary determines necessary or appropriate to ensure 
     compliance with the amendments made by this section with 
     respect to entities applying for certification as certified 
     professional employer organizations or entities that have 
     been so certified. Such rules shall be designed in a manner 
     which streamlines, to the extent possible, the application of 
     requirements of such amendments, the exchange of information 
     between a certified professional employer organization and 
     its customers, and the reporting and recordkeeping 
     obligations of the certified professional employer 
     organization.
       (f) User Fees.--Subsection (b) of section 7528 (relating to 
     Internal Revenue Service

[[Page S3946]]

     user fees) is amended by adding at the end the following new 
     paragraph:
       ``(4) Certified professional employer organizations.--The 
     fee charged under the program in connection with the 
     certification by the Secretary of a professional employer 
     organization under section 7705 shall not exceed $500.''.
       (g) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to wages for services performed on or 
     after January 1 of the first calendar year beginning more 
     than 12 months after the date of the enactment of this Act.
       (2) Certification program.--The Secretary of the Treasury 
     shall establish the certification program described in 
     section 7705(b) of the Internal Revenue Code of 1986, as 
     added by subsection (b), not later than 6 months before the 
     effective date determined under paragraph (1).
       (h) No Inference.--Nothing contained in this section or the 
     amendments made by this section shall be construed to create 
     any inference with respect to the determination of who is an 
     employee or employer--
       (1) for Federal tax purposes (other than the purposes set 
     forth in the amendments made by this section), or
       (2) for purposes of any other provision of law.

     SEC. 516. ACCELERATED DEPRECIATION FOR INVESTMENT IN HIGH 
                   OUT-MIGRATION COUNTIES.

       (a) In General.--Section 168 (relating to accelerated cost 
     recovery system) is amended by adding at the end the 
     following new subsection:
       ``(m) Rural Investment Property.--
       ``(1) In general.--For purposes of subsection (a), the 
     applicable recovery period for qualified rural investment 
     property shall be determined in accordance with the table 
     contained in paragraph (2) in lieu of the table contained in 
     subsection (c).
       ``(2) Applicable recovery period for rural investment 
     property.--For purposes of paragraph (1)--
                                                         The applicable
``  ``In the case of:                               recovery period is:
3-year property.................................................2 years
5-year property.................................................3 years
7-year property.................................................4 years
10-year property................................................6 years
15-year property................................................9 years
20-year property...............................................12 years
Nonresidential real property..................................22 years.
       ``(3) Qualified rural investment property defined.--For 
     purposes of this subsection--
       ``(A) In general.--The term `qualified rural investment 
     property' means property which is property described in the 
     table in paragraph (2) and which is--
       ``(i) used by the taxpayer predominantly in the active 
     conduct of a trade or business within a high out-migration 
     county,
       ``(ii) not used or located outside such county on a regular 
     basis,
       ``(iii) not acquired (directly or indirectly) by the 
     taxpayer from a person who is related to the taxpayer (within 
     the meaning of section 465(b)(3)(C)), and
       ``(iv) not property (or any portion thereof) placed in 
     service for purposes of operating any racetrack or other 
     facility used for gambling.
       ``(B) High out-migration county.--The term `high out-
     migration county' means any county which--
       ``(i) is outside a metropolitan statistical area (defined 
     as such by the Office of Management and Budget), and
       ``(ii) during the 5-year periods 1990 through 1994 and 1995 
     through 1999 had a net population loss.
       ``(4) Termination.--This subsection shall not apply to 
     property placed in service after March 31, 2008.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act, the original use of which begins 
     with the taxpayer after such date.

     SEC. 517. EXTENSION OF INCREASED EXPENSING FOR QUALIFIED 
                   SECTION 179 GULF OPPORTUNITY ZONE PROPERTY.

       Paragraph (2) of section 1400N(e) (relating to qualified 
     section 179 Gulf Opportunity Zone property) is amended--
       (1) by striking ``this subsection, the term'' and inserting 
     ``this subsection--
       ``(A) In general.--The term'', and
       (2) by adding at the end the following new subparagraph:
       ``(B) Extension for certain property.--In the case of 
     property substantially all of the use of which is in one or 
     more specified portions of the GO Zone (as defined by 
     subsection (d)(6)), such term shall include section 179 
     property (as so defined) which is described in subsection 
     (d)(2), determined--
       ``(i) without regard to subsection (d)(6), and
       ``(ii) by substituting `2008' for `2007' in subparagraph 
     (A)(v) thereof.''.

                   Subpart B--Subchapter S Provisions

     SEC. 521. CAPITAL GAIN OF S CORPORATION NOT TREATED AS 
                   PASSIVE INVESTMENT INCOME.

       (a) In General.--Section 1362(d)(3) is amended by striking 
     subparagraphs (B), (C), (D), (E), and (F) and inserting the 
     following new subparagraph:
       ``(B) Passive investment income defined.--
       ``(i) In general.--Except as otherwise provided in this 
     subparagraph, the term `passive investment income' means 
     gross receipts derived from royalties, rents, dividends, 
     interest, and annuities.
       ``(ii) Exception for interest on notes from sales of 
     inventory.--The term `passive investment income' shall not 
     include interest on any obligation acquired in the ordinary 
     course of the corporation's trade or business from its sale 
     of property described in section 1221(a)(1).
       ``(iii) Treatment of certain lending or finance 
     companies.--If the S corporation meets the requirements of 
     section 542(c)(6) for the taxable year, the term `passive 
     investment income' shall not include gross receipts for the 
     taxable year which are derived directly from the active and 
     regular conduct of a lending or finance business (as defined 
     in section 542(d)(1)).
       ``(iv) Treatment of certain dividends.--If an S corporation 
     holds stock in a C corporation meeting the requirements of 
     section 1504(a)(2), the term `passive investment income' 
     shall not include dividends from such C corporation to the 
     extent such dividends are attributable to the earnings and 
     profits of such C corporation derived from the active conduct 
     of a trade or business.
       ``(v) Exception for banks, etc.--In the case of a bank (as 
     defined in section 581) or a depository institution holding 
     company (as defined in section 3(w)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813(w)(1)), the term `passive 
     investment income' shall not include--

       ``(I) interest income earned by such bank or company, or
       ``(II) dividends on assets required to be held by such bank 
     or company, including stock in the Federal Reserve Bank, the 
     Federal Home Loan Bank, or the Federal Agricultural Mortgage 
     Bank or participation certificates issued by a Federal 
     Intermediate Credit Bank.''.

       (b) Conforming Amendment.--Clause (i) of section 
     1042(c)(4)(A) is amended by striking ``section 
     1362(d)(3)(C)'' and inserting ``section 1362(d)(3)(B)''.
       (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. 522. TREATMENT OF BANK DIRECTOR SHARES.

       (a) In General.--Section 1361 (defining S corporation) is 
     amended by adding at the end the following new subsection:
       ``(f) Restricted Bank Director Stock.--
       ``(1) In general.--Restricted bank director stock shall not 
     be taken into account as outstanding stock of the S 
     corporation in applying this subchapter (other than section 
     1368(f)).

       ``(2) Restricted bank director stock.--For purposes of this 
     subsection, the term `restricted bank director stock' means 
     stock in a bank (as defined in section 581) or a depository 
     institution holding company (as defined in section 3(w)(1) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1)), if 
     such stock--
       ``(A) is required to be held by an individual under 
     applicable Federal or State law in order to permit such 
     individual to serve as a director, and
       ``(B) is subject to an agreement with such bank or company 
     (or a corporation which controls (within the meaning of 
     section 368(c)) such bank or company) pursuant to which the 
     holder is required to sell back such stock (at the same price 
     as the individual acquired such stock) upon ceasing to hold 
     the office of director.
       ``(3) Cross reference.--

``For treatment of certain distributions with respect to restricted 
              bank director stock, see section 1368(f)''.

       (b) Distributions.--Section 1368 (relating to 
     distributions) is amended by adding at the end the following 
     new subsection:
       ``(f) Restricted Bank Director Stock.--If a director 
     receives a distribution (not in part or full payment in 
     exchange for stock) from an S corporation with respect to any 
     restricted bank director stock (as defined in section 
     1361(f)), the amount of such distribution--
       ``(1) shall be includible in gross income of the director, 
     and
       ``(2) shall be deductible by the corporation for the 
     taxable year of such corporation in which or with which ends 
     the taxable year in which such amount in included in the 
     gross income of the director.''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006.
       (2) Special rule for treatment as second class of stock.--
     In the case of any taxable year beginning after December 31, 
     1996, restricted bank director stock (as defined in section 
     1361(f) of the Internal Revenue Code of 1986, as added by 
     this section) shall not be taken into account in determining 
     whether an S corporation has more than 1 class of stock.

     SEC. 523. SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE 
                   RESERVE METHOD OF ACCOUNTING ON BECOMING S 
                   CORPORATION.

       (a) In General.--Section 1361, as amended by this Act, is 
     amended by adding at the end the following new subsection:
       ``(g) Special Rule for Bank Required To Change From the 
     Reserve Method of Accounting on Becoming S Corporation.--In

[[Page S3947]]

     the case of a bank which changes from the reserve method of 
     accounting for bad debts described in section 585 or 593 for 
     its first taxable year for which an election under section 
     1362(a) is in effect, the bank may elect to take into account 
     any adjustments under section 481 by reason of such change 
     for the taxable year immediately preceding such first taxable 
     year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 524. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED 
                   SUBCHAPTER S SUBSIDIARY.

       (a) In General.--Subparagraph (C) of section 1361(b)(3) 
     (relating to treatment of terminations of qualified 
     subchapter S subsidiary status) is amended--
       (1) by striking ``For purposes of this title,'' and 
     inserting the following:
       ``(i) In general.--For purposes of this title,'', and
       (2) by inserting at the end the following new clause:
       ``(ii) Termination by reason of sale of stock.--If the 
     failure to meet the requirements of subparagraph (B) is by 
     reason of the sale of stock of a corporation which is a 
     qualified subchapter S subsidiary, the sale of such stock 
     shall be treated as if--

       ``(I) the sale were a sale of an undivided interest in the 
     assets of such corporation (based on the percentage of the 
     corporation's stock sold), and
       ``(II) the sale were followed by an acquisition by such 
     corporation of all of its assets (and the assumption by such 
     corporation of all of its liabilities) in a transaction to 
     which section 351 applies.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006 .

     SEC. 525. ELIMINATION OF ALL EARNINGS AND PROFITS 
                   ATTRIBUTABLE TO PRE-1983 YEARS FOR CERTAIN 
                   CORPORATIONS.

       In the case of a corporation which is--
       (1) described in section 1311(a)(1) of the Small Business 
     Job Protection Act of 1996, and
       (2) not described in section 1311(a)(2) of such Act,
       the amount of such corporation's accumulated earnings and 
     profits (for the first taxable year beginning after the date 
     of the enactment of this Act) shall be reduced by an amount 
     equal to the portion (if any) of such accumulated earnings 
     and profits which were accumulated in any taxable year 
     beginning before January 1, 1983, for which such corporation 
     was an electing small business corporation under subchapter S 
     of the Internal Revenue Code of 1986.

     SEC. 526. EXPANSION OF QUALIFYING BENEFICIARIES OF AN 
                   ELECTING SMALL BUSINESS TRUST.

       (a) No Look Through for Eligibility Purposes.--Clause (v) 
     of section 1361(c)(2)(B) is amended by adding at the end the 
     following new sentence: ``This clause shall not apply for 
     purposes of subsection (b)(1)(C).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 527. DEDUCTIBILITY OF INTEREST EXPENSE ON INDEBTEDNESS 
                   INCURRED BY AN ELECTING SMALL BUSINESS TRUST TO 
                   ACQUIRE S CORPORATION STOCK.

       (a) In General.--Subparagraph (C) of section 641(c)(2) 
     (relating to modifications) is amended by inserting after 
     clause (iii) the following new clause:
       ``(iv) Any interest expense paid or accrued on indebtedness 
     incurred to acquire stock in an S corporation.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

                      PART II--REVENUE PROVISIONS

     SEC. 531. MODIFICATION OF EFFECTIVE DATE OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) Leases to Foreign Entities.--Section 849(b) of the 
     American Jobs Creation Act of 2004 is amended by adding at 
     the end the following new paragraph:
       ``(5) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2006, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.

     SEC. 532. APPLICATION OF RULES TREATING INVERTED CORPORATIONS 
                   AS DOMESTIC CORPORATIONS TO CERTAIN 
                   TRANSACTIONS OCCURRING AFTER MARCH 20, 2002.

       (a) In General.--Section 7874(b) (relating to inverted 
     corporations treated as domestic corporations) is amended to 
     read as follows:
       ``(b) Inverted Corporations Treated as Domestic 
     Corporations.--
       ``(1) In general.--Notwithstanding section 7701(a)(4), a 
     foreign corporation shall be treated for purposes of this 
     title as a domestic corporation if such corporation would be 
     a surrogate foreign corporation if subsection (a)(2) were 
     applied by substituting `80 percent' for `60 percent'.
       ``(2) Special rule for certain transactions occurring after 
     march 20, 2002.--
       ``(A) In general.--If--
       ``(i) paragraph (1) does not apply to a foreign 
     corporation, but
       ``(ii) paragraph (1) would apply to such corporation if, in 
     addition to the substitution under paragraph (1), subsection 
     (a)(2) were applied by substituting `March 20, 2002' for 
     `March 4, 2003' each place it appears,

     then paragraph (1) shall apply to such corporation but only 
     with respect to taxable years of such corporation beginning 
     after December 31, 2006.
       ``(B) Special rules.--Subject to such rules as the 
     Secretary may prescribe, in the case of a corporation to 
     which paragraph (1) applies by reason of this paragraph--
       ``(i) the corporation shall be treated, as of the close of 
     its last taxable year beginning before January 1, 2007, as 
     having transferred all of its assets, liabilities, and 
     earnings and profits to a domestic corporation in a 
     transaction with respect to which no tax is imposed under 
     this title,
       ``(ii) the bases of the assets transferred in the 
     transaction to the domestic corporation shall be the same as 
     the bases of the assets in the hands of the foreign 
     corporation, subject to any adjustments under this title for 
     built-in losses,
       ``(iii) the basis of the stock of any shareholder in the 
     domestic corporation shall be the same as the basis of the 
     stock of the shareholder in the foreign corporation for which 
     it is treated as exchanged, and
       ``(iv) the transfer of any earnings and profits by reason 
     of clause (i) shall be disregarded in determining any deemed 
     dividend or foreign tax creditable to the domestic 
     corporation with respect to such transfer.
       ``(C) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this paragraph, including regulations to prevent the 
     avoidance of the purposes of this paragraph.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 533. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.

       (a) Disallowance of Deduction.--
       (1) In general.--Section 162(g) (relating to treble damage 
     payments under the antitrust laws) is amended--
       (A) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively,
       (B) by striking ``If'' and inserting:
       ``(1) Treble damages.--If'', and
       (C) by adding at the end the following new paragraph:
       ``(2) Punitive damages.--No deduction shall be allowed 
     under this chapter for any amount paid or incurred for 
     punitive damages in connection with any judgment in, or 
     settlement of, any action. This paragraph shall not apply to 
     punitive damages described in section 104(c).''.
       (2) Conforming amendment.--The heading for section 162(g) 
     is amended by inserting ``Or Punitive Damages'' after 
     ``Laws''.
       (b) Inclusion in Income of Punitive Damages Paid by Insurer 
     or Otherwise.--
       (1) In general.--Part II of subchapter B of chapter 1 
     (relating to items specifically included in gross income) is 
     amended by adding at the end the following new section:

     ``SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR 
                   OTHERWISE.

       ``Gross income shall include any amount paid to or on 
     behalf of a taxpayer as insurance or otherwise by reason of 
     the taxpayer's liability (or agreement) to pay punitive 
     damages.''.
       (2) Reporting requirements.--Section 6041 (relating to 
     information at source) is amended by adding at the end the 
     following new subsection:
       ``(h) Section To Apply to Punitive Damages Compensation.--
     This section shall apply to payments by a person to or on 
     behalf of another person as insurance or otherwise by reason 
     of the other person's liability (or agreement) to pay 
     punitive damages.''.
       (3) Conforming amendment.--The table of sections for part 
     II of subchapter B of chapter 1 is amended by adding at the 
     end the following new item:

``Sec. 91. Punitive damages compensated by insurance or otherwise''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to damages paid or incurred on or after the date 
     of the enactment of this Act.

     SEC. 534. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, 
                   AND OTHER AMOUNTS.

       (a) In General.--Subsection (f) of section 162 (relating to 
     trade or business expenses) is amended to read as follows:
       ``(f) Fines, Penalties, and Other Amounts.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     deduction otherwise allowable shall be allowed under this 
     chapter for any amount paid or incurred (whether by suit, 
     agreement, or otherwise) to, or at the direction of, a 
     government or entity described in paragraph (4) in relation 
     to--
       ``(A) the violation of any law, or
       ``(B) an investigation or inquiry into the potential 
     violation of any law which is initiated by such government or 
     entity.
       ``(2) Exception for amounts constituting restitution or 
     paid to come into compliance with law.--Paragraph (1) shall 
     not apply to any amount which--
       ``(A) the taxpayer establishes--
       ``(i) constitutes restitution (or remediation of property) 
     for damage or harm caused by, or which may be caused by, the 
     violation of any law or the potential violation of any law, 
     or
       ``(ii) is paid to come into compliance with any law which 
     was violated or involved in the investigation or inquiry, and
       ``(B) is identified as an amount described in clause (i) or 
     (ii) of subparagraph (A), as the case may be, in the court 
     order or settlement

[[Page S3948]]

     agreement, except that the requirement of this subparagraph 
     shall not apply in the case of any settlement agreement which 
     requires the taxpayer to pay or incur an amount not greater 
     than $1,000,000.

     A taxpayer shall not meet the requirements of subparagraph 
     (A) solely by reason an identification under subparagraph 
     (B). This paragraph shall not apply to any amount paid or 
     incurred as reimbursement to the government or entity for the 
     costs of any investigation or litigation unless such amount 
     is paid or incurred for a cost or fee regularly charged for 
     any routine audit or other customary review performed by 
     the government or entity.
       ``(3) Exception for amounts paid or incurred as the result 
     of certain court orders.--Paragraph (1) shall not apply to 
     any amount paid or incurred by order of a court in a suit in 
     which no government or entity described in paragraph (4) is a 
     party.
       ``(4) Certain nongovernmental regulatory entities.--An 
     entity is described in this paragraph if it is--
       ``(A) a nongovernmental entity which exercises self-
     regulatory powers (including imposing sanctions) in 
     connection with a qualified board or exchange (as defined in 
     section 1256(g)(7)), or
       ``(B) to the extent provided in regulations, a 
     nongovernmental entity which exercises self-regulatory powers 
     (including imposing sanctions) as part of performing an 
     essential governmental function.
       ``(5) Exception for taxes due.--Paragraph (1) shall not 
     apply to any amount paid or incurred as taxes due.''.
       (b) Reporting of Deductible Amounts.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6050V the 
     following new section:

     ``SEC. 6050W. INFORMATION WITH RESPECT TO CERTAIN FINES, 
                   PENALTIES, AND OTHER AMOUNTS.

       ``(a) Requirement of Reporting.--
       ``(1) In general.--The appropriate official of any 
     government or entity which is described in section 162(f)(4) 
     which is involved in a suit or agreement described in 
     paragraph (2) shall make a return in such form as determined 
     by the Secretary setting forth--
       ``(A) the amount required to be paid as a result of the 
     suit or agreement to which paragraph (1) of section 162(f) 
     applies,
       ``(B) any amount required to be paid as a result of the 
     suit or agreement which constitutes restitution or 
     remediation of property, and
       ``(C) any amount required to be paid as a result of the 
     suit or agreement for the purpose of coming into compliance 
     with any law which was violated or involved in the 
     investigation or inquiry.
       ``(2) Suit or agreement described.--
       ``(A) In general.--A suit or agreement is described in this 
     paragraph if--
       ``(i) it is--

       ``(I) a suit with respect to a violation of any law over 
     which the government or entity has authority and with respect 
     to which there has been a court order, or
       ``(II) an agreement which is entered into with respect to a 
     violation of any law over which the government or entity has 
     authority, or with respect to an investigation or inquiry by 
     the government or entity into the potential violation of any 
     law over which such government or entity has authority, and

       ``(ii) the aggregate amount involved in all court orders 
     and agreements with respect to the violation, investigation, 
     or inquiry is $600 or more.
       ``(B) Adjustment of reporting threshold.--The Secretary may 
     adjust the $600 amount in subparagraph (A)(ii) as necessary 
     in order to ensure the efficient administration of the 
     internal revenue laws.
       ``(3) Time of filing.--The return required under this 
     subsection shall be filed not later than--
       ``(A) 30 days after the date on which a court order is 
     issued with respect to the suit or the date the agreement is 
     entered into, as the case may be, or
       ``(B) the date specified by the Secretary.
       ``(b) Statements To Be Furnished to Individuals Involved in 
     the Settlement.--Every person required to make a return under 
     subsection (a) shall furnish to each person who is a party to 
     the suit or agreement a written statement showing--
       ``(1) the name of the government or entity, and
       ``(2) the information supplied to the Secretary under 
     subsection (a)(1).
     The written statement required under the preceding sentence 
     shall be furnished to the person at the same time the 
     government or entity provides the Secretary with the 
     information required under subsection (a).
       ``(c) Appropriate Official Defined.--For purposes of this 
     section, the term `appropriate official' means the officer or 
     employee having control of the suit, investigation, or 
     inquiry or the person appropriately designated for purposes 
     of this section.''.
       (2) Conforming amendment.--The table of sections for 
     subpart B of part III of subchapter A of chapter 61 is 
     amended by inserting after the item relating to section 6050V 
     the following new item:

``Sec. 6050W. Information with respect to certain fines, penalties, and 
              other amounts''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred on or after the date 
     of the enactment of this Act, except that such amendments 
     shall not apply to amounts paid or incurred under any binding 
     order or agreement entered into before such date. Such 
     exception shall not apply to an order or agreement requiring 
     court approval unless the approval was obtained before such 
     date.

     SEC. 535. REVISION OF TAX RULES ON EXPATRIATION OF 
                   INDIVIDUALS.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 is amended by inserting after section 877 the 
     following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market.--Except as provided in subsections 
     (d) and (f), all property of a covered expatriate to whom 
     this section applies shall be treated as sold on the day 
     before the expatriation date for its fair market value.
       ``(2) Recognition of gain or loss.--In the case of any sale 
     under paragraph (1)--
       ``(A) notwithstanding any other provision of this title, 
     any gain arising from such sale shall be taken into account 
     for the taxable year of the sale, and
       ``(B) any loss arising from such sale shall be taken into 
     account for the taxable year of the sale to the extent 
     otherwise provided by this title, except that section 1091 
     shall not apply to any such loss.
     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence.
       ``(3) Exclusion for certain gain.--
       ``(A) In general.--The amount which, but for this 
     paragraph, would be includible in the gross income of any 
     individual by reason of this section shall be reduced (but 
     not below zero) by $600,000. For purposes of this paragraph, 
     allocable expatriation gain taken into account under 
     subsection (f)(2) shall be treated in the same manner as an 
     amount required to be includible in gross income.
       ``(B) Cost-of-living adjustment.--
       ``(i) In general.--In the case of an expatriation date 
     occurring in any calendar year after 2007, the $600,000 
     amount under subparagraph (A) shall be increased by an amount 
     equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, determined by 
     substituting `calendar year 2006' for `calendar year 1992' in 
     subparagraph (B) thereof.

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $1,000, such amount 
     shall be rounded to the next lower multiple of $1,000.
       ``(4) Election to continue to be taxed as united states 
     citizen.--
       ``(A) In general.--If a covered expatriate elects the 
     application of this paragraph--
       ``(i) this section (other than this paragraph and 
     subsection (i)) shall not apply to the expatriate, but
       ``(ii) in the case of property to which this section would 
     apply but for such election, the expatriate shall be subject 
     to tax under this title in the same manner as if the 
     individual were a United States citizen.
       ``(B) Requirements.--Subparagraph (A) shall not apply to an 
     individual unless the individual--
       ``(i) provides security for payment of tax in such form and 
     manner, and in such amount, as the Secretary may require,
       ``(ii) consents to the waiver of any right of the 
     individual under any treaty of the United States which would 
     preclude assessment or collection of any tax which may be 
     imposed by reason of this paragraph, and
       ``(iii) complies with such other requirements as the 
     Secretary may prescribe.
       ``(C) Election.--An election under subparagraph (A) shall 
     apply to all property to which this section would apply but 
     for the election and, once made, shall be irrevocable. Such 
     election shall also apply to property the basis of which is 
     determined in whole or in part by reference to the property 
     with respect to which the election was made.
       ``(b) Election To Defer Tax.--
       ``(1) In general.--If the taxpayer elects the application 
     of this subsection with respect to any property treated as 
     sold by reason of subsection (a), the payment of the 
     additional tax attributable to such property shall be 
     postponed until the due date of the return for the taxable 
     year in which such property is disposed of (or, in the case 
     of property disposed of in a transaction in which gain is not 
     recognized in whole or in part, until such other date as the 
     Secretary may prescribe).
       ``(2) Determination of tax with respect to property.--For 
     purposes of paragraph (1), the additional tax attributable to 
     any property is an amount which bears the same ratio to the 
     additional tax imposed by this chapter for the taxable year 
     solely by reason of subsection (a) as the gain taken into 
     account under subsection (a) with respect to such property 
     bears to the total gain taken into account under subsection 
     (a) with respect to all property to which subsection (a) 
     applies.
       ``(3) Termination of postponement.--No tax may be postponed 
     under this subsection later than the due date for the return 
     of tax imposed by this chapter for the taxable year which 
     includes the date of death of the expatriate (or, if earlier, 
     the time that the security provided with respect to the 
     property fails to meet the requirements of paragraph (4), 
     unless the taxpayer corrects such failure within the time 
     specified by the Secretary).
       ``(4) Security.--

[[Page S3949]]

       ``(A) In general.--No election may be made under paragraph 
     (1) with respect to any property unless adequate security is 
     provided to the Secretary with respect to such property.
       ``(B) Adequate security.--For purposes of subparagraph (A), 
     security with respect to any property shall be treated as 
     adequate security if--
       ``(i) it is a bond in an amount equal to the deferred tax 
     amount under paragraph (2) for the property, or
       ``(ii) the taxpayer otherwise establishes to the 
     satisfaction of the Secretary that the security is adequate.
       ``(5) Waiver of certain rights.--No election may be made 
     under paragraph (1) unless the taxpayer consents to the 
     waiver of any right under any treaty of the United States 
     which would preclude assessment or collection of any tax 
     imposed by reason of this section.
       ``(6) Elections.--An election under paragraph (1) shall 
     only apply to property described in the election and, once 
     made, is irrevocable. An election may be made under paragraph 
     (1) with respect to an interest in a trust with respect to 
     which gain is required to be recognized under subsection 
     (f)(1).
       ``(7) Interest.--For purposes of section 6601--
       ``(A) the last date for the payment of tax shall be 
     determined without regard to the election under this 
     subsection, and
       ``(B) section 6621(a)(2) shall be applied by substituting 
     `5 percentage points' for `3 percentage points' in 
     subparagraph (B) thereof.
       ``(c) Covered Expatriate.--For purposes of this section--
       ``(1) In general.--Except as provided in paragraph (2), the 
     term `covered expatriate' means an expatriate.
       ``(2) Exceptions.--An individual shall not be treated as a 
     covered expatriate if--
       ``(A) the individual--
       ``(i) became at birth a citizen of the United States and a 
     citizen of another country and, as of the expatriation date, 
     continues to be a citizen of, and is taxed as a resident of, 
     such other country, and
       ``(ii) has not been a resident of the United States (as 
     defined in section 7701(b)(1)(A)(ii)) during the 5 taxable 
     years ending with the taxable year during which the 
     expatriation date occurs, or
       ``(B)(i) the individual's relinquishment of United States 
     citizenship occurs before such individual attains age 18\1/
     2\, and
       ``(ii) the individual has been a resident of the United 
     States (as so defined) for not more than 5 taxable years 
     before the date of relinquishment.
       ``(d) Exempt Property; Special Rules for Pension Plans.--
       ``(1) Exempt property.--This section shall not apply to the 
     following:
       ``(A) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the day before the 
     expatriation date, meet the requirements of section 
     897(c)(2).
       ``(B) Specified property.--Any property or interest in 
     property not described in subparagraph (A) which the 
     Secretary specifies in regulations.
       ``(2) Special rules for certain retirement plans.--
       ``(A) In general.--If a covered expatriate holds on the day 
     before the expatriation date any interest in a retirement 
     plan to which this paragraph applies--
       ``(i) such interest shall not be treated as sold for 
     purposes of subsection (a)(1), but
       ``(ii) an amount equal to the present value of the 
     expatriate's nonforfeitable accrued benefit shall be treated 
     as having been received by such individual on such date as a 
     distribution under the plan.
       ``(B) Treatment of subsequent distributions.--In the case 
     of any distribution on or after the expatriation date to or 
     on behalf of the covered expatriate from a plan from which 
     the expatriate was treated as receiving a distribution under 
     subparagraph (A), the amount otherwise includible in gross 
     income by reason of the subsequent distribution shall be 
     reduced by the excess of the amount includible in gross 
     income under subparagraph (A) over any portion of such amount 
     to which this subparagraph previously applied.
       ``(C) Treatment of subsequent distributions by plan.--For 
     purposes of this title, a retirement plan to which this 
     paragraph applies, and any person acting on the plan's 
     behalf, shall treat any subsequent distribution described in 
     subparagraph (B) in the same manner as such distribution 
     would be treated without regard to this paragraph.
       ``(D) Applicable plans.--This paragraph shall apply to--
       ``(i) any qualified retirement plan (as defined in section 
     4974(c)),
       ``(ii) an eligible deferred compensation plan (as defined 
     in section 457(b)) of an eligible employer described in 
     section 457(e)(1)(A), and
       ``(iii) to the extent provided in regulations, any foreign 
     pension plan or similar retirement arrangements or programs.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes 
     citizenship, and
       ``(B) any long-term resident of the United States who--
       ``(i) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(ii) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.
       ``(2) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date of the event described in clause (i) or (ii) 
     of paragraph (1)(B).
       ``(3) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces such individual's 
     United States nationality before a diplomatic or consular 
     officer of the United States pursuant to paragraph (5) of 
     section 349(a) of the Immigration and Nationality Act (8 
     U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.
     Subparagraph (A) or (B) shall not apply to any individual 
     unless the renunciation or voluntary relinquishment is 
     subsequently approved by the issuance to the individual of a 
     certificate of loss of nationality by the United States 
     Department of State.
       ``(4) Long-term resident.--The term `long-term resident' 
     has the meaning given to such term by section 877(e)(2).
       ``(f) Special Rules Applicable to Beneficiaries' Interests 
     in Trust.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     an individual is determined under paragraph (3) to hold an 
     interest in a trust on the day before the expatriation date--
       ``(A) the individual shall not be treated as having sold 
     such interest,
       ``(B) such interest shall be treated as a separate share in 
     the trust, and
       ``(C)(i) such separate share shall be treated as a separate 
     trust consisting of the assets allocable to such share,
       ``(ii) the separate trust shall be treated as having sold 
     its assets on the day before the expatriation date for their 
     fair market value and as having distributed all of its assets 
     to the individual as of such time, and
       ``(iii) the individual shall be treated as having 
     recontributed the assets to the separate trust.
     Subsection (a)(2) shall apply to any income, gain, or loss of 
     the individual arising from a distribution described in 
     subparagraph (C)(ii). In determining the amount of such 
     distribution, proper adjustments shall be made for 
     liabilities of the trust allocable to an individual's share 
     in the trust.
       ``(2) Special rules for interests in qualified trusts.--
       ``(A) In general.--If the trust interest described in 
     paragraph (1) is an interest in a qualified trust--
       ``(i) paragraph (1) and subsection (a) shall not apply, and
       ``(ii) in addition to any other tax imposed by this title, 
     there is hereby imposed on each distribution with respect to 
     such interest a tax in the amount determined under 
     subparagraph (B).
       ``(B) Amount of tax.--The amount of tax under subparagraph 
     (A)(ii) shall be equal to the lesser of--
       ``(i) the highest rate of tax imposed by section 1(e) for 
     the taxable year which includes the day before the 
     expatriation date, multiplied by the amount of the 
     distribution, or
       ``(ii) the balance in the deferred tax account immediately 
     before the distribution determined without regard to any 
     increases under subparagraph (C)(ii) after the 30th day 
     preceding the distribution.
       ``(C) Deferred tax account.--For purposes of subparagraph 
     (B)(ii)--
       ``(i) Opening balance.--The opening balance in a deferred 
     tax account with respect to any trust interest is an amount 
     equal to the tax which would have been imposed on the 
     allocable expatriation gain with respect to the trust 
     interest if such gain had been included in gross income under 
     subsection (a).
       ``(ii) Increase for interest.--The balance in the deferred 
     tax account shall be increased by the amount of interest 
     determined (on the balance in the account at the time the 
     interest accrues), for periods after the 90th day after the 
     expatriation date, by using the rates and method applicable 
     under section 6621 for underpayments of tax for such periods, 
     except that section 6621(a)(2) shall be applied by 
     substituting `5 percentage points' for `3 percentage points' 
     in subparagraph (B) thereof.
       ``(iii) Decrease for taxes previously paid.--The balance in 
     the tax deferred account shall be reduced--

       ``(I) by the amount of taxes imposed by subparagraph (A) on 
     any distribution to the person holding the trust interest, 
     and
       ``(II) in the case of a person holding a nonvested 
     interest, to the extent provided in regulations, by the 
     amount of taxes imposed by subparagraph (A) on distributions 
     from

[[Page S3950]]

     the trust with respect to nonvested interests not held by 
     such person.

       ``(D) Allocable expatriation gain.--For purposes of this 
     paragraph, the allocable expatriation gain with respect to 
     any beneficiary's interest in a trust is the amount of gain 
     which would be allocable to such beneficiary's vested and 
     nonvested interests in the trust if the beneficiary held 
     directly all assets allocable to such interests.
       ``(E) Tax deducted and withheld.--
       ``(i) In general.--The tax imposed by subparagraph (A)(ii) 
     shall be deducted and withheld by the trustees from the 
     distribution to which it relates.
       ``(ii) Exception where failure to waive treaty rights.--If 
     an amount may not be deducted and withheld under clause (i) 
     by reason of the distributee failing to waive any treaty 
     right with respect to such distribution--

       ``(I) the tax imposed by subparagraph (A)(ii) shall be 
     imposed on the trust and each trustee shall be personally 
     liable for the amount of such tax, and
       ``(II) any other beneficiary of the trust shall be entitled 
     to recover from the distributee the amount of such tax 
     imposed on the other beneficiary.

       ``(F) Disposition.--If a trust ceases to be a qualified 
     trust at any time, a covered expatriate disposes of an 
     interest in a qualified trust, or a covered expatriate 
     holding an interest in a qualified trust dies, then, in lieu 
     of the tax imposed by subparagraph (A)(ii), there is hereby 
     imposed a tax equal to the lesser of--
       ``(i) the tax determined under paragraph (1) as if the day 
     before the expatriation date were the date of such cessation, 
     disposition, or death, whichever is applicable, or
       ``(ii) the balance in the tax deferred account immediately 
     before such date.
     Such tax shall be imposed on the trust and each trustee shall 
     be personally liable for the amount of such tax and any other 
     beneficiary of the trust shall be entitled to recover from 
     the covered expatriate or the estate the amount of such tax 
     imposed on the other beneficiary.
       ``(G) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Qualified trust.--The term `qualified trust' means a 
     trust which is described in section 7701(a)(30)(E).
       ``(ii) Vested interest.--The term `vested interest' means 
     any interest which, as of the day before the expatriation 
     date, is vested in the beneficiary.
       ``(iii) Nonvested interest.--The term `nonvested interest' 
     means, with respect to any beneficiary, any interest in a 
     trust which is not a vested interest. Such interest shall be 
     determined by assuming the maximum exercise of discretion in 
     favor of the beneficiary and the occurrence of all 
     contingencies in favor of the beneficiary.
       ``(iv) Adjustments.--The Secretary may provide for such 
     adjustments to the bases of assets in a trust or a deferred 
     tax account, and the timing of such adjustments, in order to 
     ensure that gain is taxed only once.
       ``(v) Coordination with retirement plan rules.--This 
     subsection shall not apply to an interest in a trust which is 
     part of a retirement plan to which subsection (d)(2) applies.
       ``(3) Determination of beneficiaries' interest in trust.--
       ``(A) Determinations under paragraph (1).--For purposes of 
     paragraph (1), a beneficiary's interest in a trust shall be 
     based upon all relevant facts and circumstances, including 
     the terms of the trust instrument and any letter of wishes or 
     similar document, historical patterns of trust distributions, 
     and the existence of and functions performed by a trust 
     protector or any similar adviser.
       ``(B) Other determinations.--For purposes of this section--
       ``(i) Constructive ownership.--If a beneficiary of a trust 
     is a corporation, partnership, trust, or estate, the 
     shareholders, partners, or beneficiaries shall be deemed to 
     be the trust beneficiaries for purposes of this section.
       ``(ii) Taxpayer return position.--A taxpayer shall clearly 
     indicate on its income tax return--

       ``(I) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(II) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.

       ``(g) Termination of Deferrals, Etc.--In the case of any 
     covered expatriate, notwithstanding any other provision of 
     this title--
       ``(1) any period during which recognition of income or gain 
     is deferred shall terminate on the day before the 
     expatriation date, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply on the day before the expatriation date and the 
     unpaid portion of such tax shall be due and payable at the 
     time and in the manner prescribed by the Secretary.
       ``(h) Imposition of Tentative Tax.--
       ``(1) In general.--If an individual is required to include 
     any amount in gross income under subsection (a) for any 
     taxable year, there is hereby imposed, immediately before the 
     expatriation date, a tax in an amount equal to the amount of 
     tax which would be imposed if the taxable year were a short 
     taxable year ending on the expatriation date.
       ``(2) Due date.--The due date for any tax imposed by 
     paragraph (1) shall be the 90th day after the expatriation 
     date.
       ``(3) Treatment of tax.--Any tax paid under paragraph (1) 
     shall be treated as a payment of the tax imposed by this 
     chapter for the taxable year to which subsection (a) applies.
       ``(4) Deferral of tax.--The provisions of subsection (b) 
     shall apply to the tax imposed by this subsection to the 
     extent attributable to gain includible in gross income by 
     reason of this section.
       ``(i) Special Liens for Deferred Tax Amounts.--
       ``(1) Imposition of lien.--
       ``(A) In general.--If a covered expatriate makes an 
     election under subsection (a)(4) or (b) which results in the 
     deferral of any tax imposed by reason of subsection (a), the 
     deferred amount (including any interest, additional amount, 
     addition to tax, assessable penalty, and costs attributable 
     to the deferred amount) shall be a lien in favor of the 
     United States on all property of the expatriate located in 
     the United States (without regard to whether this section 
     applies to the property).
       ``(B) Deferred amount.--For purposes of this subsection, 
     the deferred amount is the amount of the increase in the 
     covered expatriate's income tax which, but for the election 
     under subsection (a)(4) or (b), would have occurred by reason 
     of this section for the taxable year including the 
     expatriation date.
       ``(2) Period of lien.--The lien imposed by this subsection 
     shall arise on the expatriation date and continue until--
       ``(A) the liability for tax by reason of this section is 
     satisfied or has become unenforceable by reason of lapse of 
     time, or
       ``(B) it is established to the satisfaction of the 
     Secretary that no further tax liability may arise by reason 
     of this section.
       ``(3) Certain rules apply.--The rules set forth in 
     paragraphs (1), (3), and (4) of section 6324A(d) shall apply 
     with respect to the lien imposed by this subsection as if it 
     were a lien imposed by section 6324A.
       ``(j) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Inclusion in Income of Gifts and Bequests Received by 
     United States Citizens and Residents From Expatriates.--
     Section 102 (relating to gifts, etc. not included in gross 
     income) is amended by adding at the end the following new 
     subsection:
       ``(d) Gifts and Inheritances From Covered Expatriates.--
       ``(1) Treatment of gifts and inheritances.--
       ``(A) In general.--Subsection (a) shall not exclude from 
     gross income the value of any property acquired by gift, 
     bequest, devise, or inheritance from a covered expatriate 
     after the expatriation date.
       ``(B) Determination of basis.--Notwithstanding sections 
     1015 or 1022, the basis of any property described in 
     subparagraph (A) in the hands of the donee or the person 
     acquiring such property from the decedent shall be equal to 
     the fair market value of the property at the time of the 
     gift, bequest, devise, or inheritance.
       ``(2) Exceptions for transfers otherwise subject to estate 
     or gift tax.--Paragraph (1) shall not apply to any property 
     if either--
       ``(A) the gift, bequest, devise, or inheritance is--
       ``(i) shown on a timely filed return of tax imposed by 
     chapter 12 as a taxable gift by the covered expatriate, or
       ``(ii) included in the gross estate of the covered 
     expatriate for purposes of chapter 11 and shown on a timely 
     filed return of tax imposed by chapter 11 of the estate of 
     the covered expatriate, or
       ``(B) no such return was timely filed but no such return 
     would have been required to be filed even if the covered 
     expatriate were a citizen or long-term resident of the United 
     States.
       ``(3) Definitions.--For purposes of this subsection, any 
     term used in this subsection which is also used in section 
     877A shall have the same meaning as when used in section 
     877A.''.
       (c) Definition of Termination of United States 
     Citizenship.--Section 7701(a) is amended by adding at the end 
     the following new paragraph:
       ``(50) Termination of united states citizenship.--
       ``(A) In general.--An individual shall not cease to be 
     treated as a United States citizen before the date on which 
     the individual's citizenship is treated as relinquished under 
     section 877A(e)(3).
       ``(B) Dual citizens.--Under regulations prescribed by the 
     Secretary, subparagraph (A) shall not apply to an individual 
     who became at birth a citizen of the United States and a 
     citizen of another country.''.
       (d) Ineligibility for Visa or Admission to United States.--
       (1) In general.--Section 212(a)(10)(E) of the Immigration 
     and Nationality Act (8 U.S.C. 1182(a)(10)(E)) is amended to 
     read as follows:
       ``(E) Former citizens not in compliance with expatriation 
     revenue provisions.--Any alien who is a former citizen of the 
     United States who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3) of the Internal 
     Revenue Code of 1986) and who is not in compliance with 
     section 877A of such Code (relating to expatriation) is 
     inadmissible.''.
       (2) Availability of information.--

[[Page S3951]]

       (A) In general.--Section 6103(l) (relating to disclosure of 
     returns and return information for purposes other than tax 
     administration) is amended by adding at the end the following 
     new paragraph:
       ``(21) Disclosure to deny visa or admission to certain 
     expatriates.--Upon written request of the Attorney General or 
     the Attorney General's delegate, the Secretary shall disclose 
     whether an individual is in compliance with section 877A (and 
     if not in compliance, any items of noncompliance) to officers 
     and employees of the Federal agency responsible for 
     administering section 212(a)(10)(E) of the Immigration and 
     Nationality Act solely for the purpose of, and to the extent 
     necessary in, administering such section 212(a)(10)(E).''.
       (B) Safeguards.--Section 6103(p)(4) (relating to 
     safeguards) is amended by striking ``or (20)'' each place it 
     appears and inserting ``(20), or (21)''.
       (3) Effective dates.--The amendments made by this 
     subsection shall apply to individuals who relinquish United 
     States citizenship on or after the date of the enactment of 
     this Act.
       (e) Conforming Amendments.--
       (1) Section 877 is amended by adding at the end the 
     following new subsection:
       ``(h) Application.--This section shall not apply to an 
     expatriate (as defined in section 877A(e)) whose expatriation 
     date (as so defined) occurs on or after the date of the 
     enactment of this subsection.''.
       (2) Section 2107 is amended by adding at the end the 
     following new subsection:
       ``(f) Application.--This section shall not apply to any 
     expatriate subject to section 877A.''.
       (3) Section 2501(a)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Application.--This paragraph shall not apply to any 
     expatriate subject to section 877A.''.
       (4) Section 6039G(a) is amended by inserting ``or 877A'' 
     after ``section 877(b)''.
       (5) The second sentence of section 6039G(d) is amended by 
     inserting ``or who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3))'' after ``section 
     877(a))''.
       (f) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 is amended by 
     inserting after the item relating to section 877 the 
     following new item:

``Sec. 877A. Tax responsibilities of expatriation''.

       (g) Effective Date.--
       (1) In general.--Except as provided in this subsection, the 
     amendments made by this section shall apply to expatriates 
     (within the meaning of section 877A(e) of the Internal 
     Revenue Code of 1986, as added by this section) whose 
     expatriation date (as so defined) occurs on or after the date 
     of the enactment of this Act.
       (2) Gifts and bequests.--Section 102(d) of the Internal 
     Revenue Code of 1986 (as added by subsection (b)) shall apply 
     to gifts and bequests received on or after the date of the 
     enactment of this Act, from an individual or the estate of an 
     individual whose expatriation date (as so defined) occurs 
     after such date.
       (3) Due date for tentative tax.--The due date under section 
     877A(h)(2) of the Internal Revenue Code of 1986, as added by 
     this section, shall in no event occur before the 90th day 
     after the date of the enactment of this Act.

     SEC. 536. LIMITATION ON ANNUAL AMOUNTS WHICH MAY BE DEFERRED 
                   UNDER NONQUALIFIED DEFERRED COMPENSATION 
                   ARRANGEMENTS.

       (a) In General.--Section 409A(a) of the Internal Revenue 
     Code of 1986 (relating to inclusion of gross income under 
     nonqualified deferred compensation plans) is amended--
       (1) by striking ``and (4)'' in subclause (I) of paragraph 
     (1)(A)(i) and inserting ``(4), and (5)'', and
       (2) by adding at the end the following new paragraph:
       ``(5) Annual limitation on aggregate deferred amounts.--
       ``(A) Limitation.--The requirements of this paragraph are 
     met if the plan provides that the aggregate amount of 
     compensation which is deferred for any taxable year with 
     respect to a participant under the plan may not exceed the 
     applicable dollar amount for the taxable year.
       ``(B) Inclusion of future earnings.--If an amount is 
     includible under paragraph (1) in the gross income of a 
     participant for any taxable year by reason of any failure to 
     meet the requirements of this paragraph, any income (whether 
     actual or notional) for any subsequent taxable year shall be 
     included in gross income under paragraph (1)(A) in such 
     subsequent taxable year to the extent such income--
       ``(i) is attributable to compensation (or income 
     attributable to such compensation) required to be included in 
     gross income by reason of such failure (including by reason 
     of this subparagraph), and
       ``(ii) is not subject to a substantial risk of forfeiture 
     and has not been previously included in gross income.
       ``(C) Aggregation rule.--For purposes of this paragraph, 
     all nonqualified deferred compensation plans maintained by 
     all employers treated as a single employer under subsection 
     (d)(6) shall be treated as 1 plan.
       ``(D) Applicable dollar amount.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable dollar amount' 
     means, with respect to any participant, the lesser of--

       ``(I) the average annual compensation which was payable 
     during the base period to the participant by the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) and which was includible in 
     the participant's gross income for taxable years in the base 
     period, or
       ``(II) $1,000,000.

       ``(ii) Base period.--

       ``(I) In general.--The term `base period' means, with 
     respect to any computation year, the 5-taxable year period 
     ending with the taxable year preceding the computation year.
       ``(II) Elections made before computation year.--If, before 
     the beginning of the computation year, an election described 
     in paragraph (4)(B) is made by the participant to have 
     compensation for services performed in the computation year 
     deferred under a nonqualified deferred compensation plan, the 
     base period shall be the 5-taxable year period ending with 
     the taxable year preceding the taxable year in which the 
     election is made.
       ``(III) Computation year.--For purposes of this clause, the 
     term `computation year' means any taxable year of the 
     participant for which the limitation under subparagraph (A) 
     is being determined.
       ``(IV) Special rule for employees of less than 5 years.--If 
     a participant did not perform services for the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) during the entire 5-taxable 
     year period referred to in subparagraph (A) or (B), only the 
     portion of such period during which the participant performed 
     such services shall be taken into account.''.

       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006, 
     except that--
       (A) the amendments shall only apply to amounts deferred 
     after December 31, 2006 (and to earnings on such amounts), 
     and
       (B) taxable years beginning on or before December 31, 2006, 
     shall be taken into account in determining the average annual 
     compensation of a participant during any base period for 
     purposes of section 409A(a)(5)(D) of the Internal Revenue 
     Code of 1986 (as added by such amendments).
       (2) Guidance relating to certain existing arrangements.--
     Not later than 60 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall issue guidance 
     providing a limited period during which a nonqualified 
     deferred compensation plan adopted before December 31, 2006, 
     may, without violating the requirements of section 409A(a) of 
     such Code, be amended--
       (A) to provide that a participant may, no later than 
     December 31, 2007, cancel or modify an outstanding deferral 
     election with regard to all or a portion of amounts deferred 
     after December 31, 2006, to the extent necessary for the plan 
     to meet the requirements of section 409A(a)(5) of such Code 
     (as added by the amendments made by this section), but only 
     if amounts subject to the cancellation or modification are, 
     to the extent not previously included in gross income, 
     includible in income of the participant when no longer 
     subject to substantial risk of forfeiture, and
       (B) to conform to the requirements of section 409A(a)(5) of 
     such Code (as added by the amendments made by this section) 
     with regard to amounts deferred after December 31, 2006.

     SEC. 537. MODIFICATION OF CRIMINAL PENALTIES FOR WILLFUL 
                   FAILURES INVOLVING TAX PAYMENTS AND FILING 
                   REQUIREMENTS.

       (a) Increase in Penalty for Attempt to Evade or Defeat 
     Tax.--Section 7201 (relating to attempt to evade or defeat 
     tax) is amended--
       (1) by striking ``$100,000'' and inserting ``$500,000'',
       (2) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (3) by striking ``5 years'' and inserting ``10 years''.
       (b) Modification of Penalties for Willful Failure to File 
     Return, Supply Information, or Pay Tax.--
       (1) In general.--Section 7203 (relating to willful failure 
     to file return, supply information, or pay tax) is amended--
       (A) in the first sentence--
       (i) by striking ``Any person'' and inserting the following:
       ``(a) In General.--Any person'', and
       (ii) by striking ``$25,000'' and inserting ``$50,000'',
       (B) in the third sentence, by striking ``section'' and 
     inserting ``subsection'', and
       (C) by adding at the end the following new subsection:
       ``(b) Aggravated Failure to File.--
       ``(1) In general.--In the case of any failure described in 
     paragraph (2), the first sentence of subsection (a) shall be 
     applied by substituting--
       ``(A) `felony' for `misdemeanor',
       ``(B) `$250,000 ($500,000' for `$50,000 ($100,000', and
       ``(C) `5 years' for `1 year'.
       ``(2) Failure described.--A failure described in this 
     paragraph is--
       ``(A) a failure to make a return described in subsection 
     (a) for any 3 taxable years occurring during any period of 5 
     consecutive taxable years if the aggregate tax liability for 
     such period is not less than $50,000, or
       ``(B) a failure to make a return if the tax liability 
     giving rise to the requirement to

[[Page S3952]]

     make such return is attributable to an activity which is a 
     felony under any State or Federal law.''.
       (2) Penalty may be applied in addition to other 
     penalties.--Section 7204 (relating to fraudulent statement or 
     failure to make statement to employees) is amended by 
     striking ``the penalty provided in section 6674'' and 
     inserting ``the penalties provided in sections 6674 and 
     7203(b)''.
       (c) Fraud and False Statements.--Section 7206 (relating to 
     fraud and false statements) is amended--
       (1) by striking ``$100,000'' and inserting ``$500,000'',
       (2) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (3) by striking ``3 years'' and inserting ``5 years''.
       (d) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--Section 7206 (relating to 
     fraud and false statements), as amended by subsection (a)(3), 
     is amended--
       (1) by striking ``Any person who--'' and inserting ``(a) In 
     General.--Any person who--'', and
       (2) by adding at the end the following new subsection:
       ``(b) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--If any portion of any 
     underpayment (as defined in section 6664(a)) or overpayment 
     (as defined in section 6401(a)) of tax required to be shown 
     on a return is attributable to fraudulent action described in 
     subsection (a), the applicable dollar amount under subsection 
     (a) shall in no event be less than an amount equal to such 
     portion. A rule similar to the rule under section 6663(b) 
     shall apply for purposes of determining the portion so 
     attributable.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to actions, and failures to act, occurring after 
     the date of the enactment of this Act.

     SEC. 538. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST 
                   ON UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE 
                   FINANCIAL ARRANGEMENTS.

       (a) Determination of Penalty.--
       (1) In general.--Notwithstanding any other provision of 
     law, in the case of an applicable taxpayer--
       (A) the determination as to whether any interest or 
     applicable penalty is to be imposed with respect to any 
     arrangement described in paragraph (2), or to any 
     underpayment of Federal income tax attributable to items 
     arising in connection with any such arrangement, shall be 
     made without regard to the rules of subsections (b), (c), and 
     (d) of section 6664 of the Internal Revenue Code of 1986, and
       (B) if any such interest or applicable penalty is imposed, 
     the amount of such interest or penalty shall be equal to 
     twice that determined without regard to this section.
       (2) Applicable taxpayer.--For purposes of this subsection--
       (A) In general.--The term ``applicable taxpayer'' means a 
     taxpayer which--
       (i) has underreported its United States income tax 
     liability with respect to any item which directly or 
     indirectly involves--

       (I) any financial arrangement which in any manner relies on 
     the use of offshore payment mechanisms (including credit, 
     debit, or charge cards) issued by banks or other entities in 
     foreign jurisdictions, or
       (II) any offshore financial arrangement (including any 
     arrangement with foreign banks, financial institutions, 
     corporations, partnerships, trusts, or other entities), and

       (ii) has neither signed a closing agreement pursuant to the 
     Voluntary Offshore Compliance Initiative established by the 
     Department of the Treasury under Revenue Procedure 2003-11 
     nor voluntarily disclosed its participation in such 
     arrangement by notifying the Internal Revenue Service of such 
     arrangement prior to the issue being raised by the Internal 
     Revenue Service during an examination.
       (B) Authority to waive.--The Secretary of the Treasury or 
     the Secretary's delegate may waive the application of 
     paragraph (1) to any taxpayer if the Secretary or the 
     Secretary's delegate determines that the use of such offshore 
     payment mechanisms is incidental to the transaction and, in 
     addition, in the case of a trade or business, such use is 
     conducted in the ordinary course of the type of trade or 
     business of the taxpayer.
       (C) Issues raised.--For purposes of subparagraph (A)(ii), 
     an item shall be treated as an issue raised during an 
     examination if the individual examining the return--
       (i) communicates to the taxpayer knowledge about the 
     specific item, or
       (ii) has made a request to the taxpayer for information and 
     the taxpayer could not make a complete response to that 
     request without giving the examiner knowledge of the specific 
     item.
       (b) Applicable Penalty.--For purposes of this section, the 
     term ``applicable penalty'' means any penalty, addition to 
     tax, or fine imposed under chapter 68 of the Internal Revenue 
     Code of 1986.
       (c) Effective Date.--The provisions of this section shall 
     apply to interest, penalties, additions to tax, and fines 
     with respect to any taxable year if, as of the date of the 
     enactment of this Act, the assessment of any tax, penalty, or 
     interest with respect to such taxable year is not prevented 
     by the operation of any law or rule of law.

     SEC. 539. INCREASE IN PENALTY FOR BAD CHECKS AND MONEY 
                   ORDERS.

       (a) In General.--Section 6657 (relating to bad checks) is 
     amended--
       (1) by striking ``$750'' and inserting ``$1,250'', and
       (2) by striking ``$15'' and inserting ``$25''.
       (b) Effective Date.--The amendments made by this section 
     apply to checks or money orders received after the date of 
     the enactment of this Act.

     SEC. 540. TREATMENT OF CONTINGENT PAYMENT CONVERTIBLE DEBT 
                   INSTRUMENTS.

       (a) In General.--Section 1275(d) (relating to regulation 
     authority) is amended--
       (1) by striking ``The Secretary'' and inserting the 
     following:
       ``(1) In general.--The Secretary'', and
       (2) by adding at the end the following new paragraph:
       ``(2) Treatment of contingent payment convertible debt.--
       ``(A) In general.--In the case of a debt instrument which--
       ``(i) is convertible into stock of the issuing corporation, 
     into stock or debt of a related party (within the meaning of 
     section 267(b) or 707(b)(1)), or into cash or other property 
     in an amount equal to the approximate value of such stock or 
     debt, and
       ``(ii) provides for 1 or more contingent payments,
     any regulations which require original issue discount to be 
     determined by reference to the comparable yield of a fixed-
     rate debt instrument shall be applied as if the regulations 
     require that such comparable yield be determined by reference 
     to a fixed-rate debt instrument which is convertible into 
     stock.
       ``(B) Special rule.--For purposes of subparagraph (A), the 
     comparable yield shall be determined without taking into 
     account the yield resulting from the conversion of a debt 
     instrument into stock.''.
       (b) Cross Reference.--Section 163(e)(6) (relating to cross 
     references) is amended by adding at the end the following:
       ``For the treatment of contingent payment convertible debt, 
     see section 1275(d)(2).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to debt instruments issued on or after the date 
     of the enactment of this Act.

     SEC. 541. EXTENSION OF IRS USER FEES.

       Subsection (c) of section 7528 (relating to Internal 
     Revenue Service user fees) is amended by striking ``September 
     30, 2014'' and inserting ``September 30, 2016''.

     SEC. 542. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES 
                   FOR EMPLOYMENT TAX LIABILITIES.

       (a) In General.--Section 6330(f) (relating to jeopardy and 
     State refund collection) is amended--
       (1) by striking ``; or'' at the end of paragraph (1) and 
     inserting a comma,
       (2) by adding ``or'' at the end of paragraph (2), and
       (3) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) the Secretary has served a levy in connection with 
     the collection of taxes under chapter 21, 22, 23, or 24,''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to levies issued on or after the date that is 120 
     days after the date of the enactment of this Act.

     SEC. 543. MODIFICATIONS TO WHISTLEBLOWER REFORMS.

       (a) Modification of Tax Threshold for Awards.--Subparagraph 
     (B) of section 7623(b)(5), as added by the Tax Relief and 
     Health Care Act of 2006, is amended by striking 
     ``$2,000,000'' and inserting ``$20,000''.
       (b) Whistleblower Office.--
       (1) In general.--Section 7623 is amended by adding at the 
     end the following new subsections:
       ``(c) Whistleblower Office.--
       ``(1) In general.--There is established in the Internal 
     Revenue Service an office to be known as the `Whistleblower 
     Office' which--
       ``(A) shall at all times operate at the direction of the 
     Commissioner and coordinate and consult with other divisions 
     in the Internal Revenue Service as directed by the 
     Commissioner,
       ``(B) shall analyze information received from any 
     individual described in subsection (b) and either investigate 
     the matter itself or assign it to the appropriate Internal 
     Revenue Service office,
       ``(C) shall monitor any action taken with respect to such 
     matter,
       ``(D) shall inform such individual that it has accepted the 
     individual's information for further review,
       ``(E) may require such individual and any legal 
     representative of such individual to not disclose any 
     information so provided,
       ``(F) in its sole discretion, may ask for additional 
     assistance from such individual or any legal representative 
     of such individual, and
       ``(G) shall determine the amount to be awarded to such 
     individual under subsection (b).
       ``(2) Funding for office.--There is authorized to be 
     appropriated $10,000,000 for each fiscal year for the 
     Whistleblower Office. These funds shall be used to maintain 
     the Whistleblower Office and also to reimburse other Internal 
     Revenue Service offices for related costs, such as costs of 
     investigation and collection.
       ``(3) Request for assistance.--
       ``(A) In general.--Any assistance requested under paragraph 
     (1)(F) shall be under the direction and control of the 
     Whistleblower Office or the office assigned to investigate 
     the matter under subparagraph (A). No individual or legal 
     representative whose assistance is so requested may by reason 
     of such request represent himself or herself as an employee 
     of the Federal Government.

[[Page S3953]]

       ``(B) Funding of assistance.--From the amounts available 
     for expenditure under subsection (b), the Whistleblower 
     Office may, with the agreement of the individual described in 
     subsection (b), reimburse the costs incurred by any legal 
     representative of such individual in providing assistance 
     described in subparagraph (A).
       ``(d) Reports.--The Secretary shall each year conduct a 
     study and report to Congress on the use of this section, 
     including--
       ``(1) an analysis of the use of this section during the 
     preceding year and the results of such use, and
       ``(2) any legislative or administrative recommendations 
     regarding the provisions of this section and its 
     application.''.
       (2) Conforming amendment.--Section 406 of division A of the 
     Tax Relief and Health Care Act of 2006 is amended by striking 
     subsections (b) and (c).
       (3) Report on implementation.--Not later than 6 months 
     after the date of the enactment of this Act, the Secretary of 
     the Treasury shall submit to Congress a report on the 
     establishment and operation of the Whistleblower Office under 
     section 7623(c) of the Internal Revenue Code of 1986.
       (c) Publicity of Award Appeals.--Paragraph (4) of section 
     7623(b), as added by the Tax Relief and Health Care Act of 
     2006, is amended to read as follows:
       ``(4) Appeal of award determination.--
       ``(A) In general.--Any determination regarding an award 
     under paragraph (1), (2), or (3) may, within 30 days of such 
     determination, be appealed to the Tax Court (and the Tax 
     Court shall have jurisdiction with respect to such matter).
       ``(B) Publicity of appeals.--Notwithstanding sections 7458 
     and 7461, the Tax Court may, in order to preserve the 
     anonymity, privacy, or confidentiality of any person under 
     this subsection, provide by rules adopted under section 7453 
     that portions of filings, hearings, testimony, evidence, and 
     reports in connection with proceedings under this subsection 
     may be closed to the public or to inspection by the 
     public.''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to information 
     provided on or after the date of the enactment of this Act.
       (2) Publicity of award appeals.--The amendment made by 
     subsection (c) shall take effect as if included in the 
     amendments made by section 406 of the Tax Relief and Health 
     Care Act of 2006.

     SEC. 544. MODIFICATIONS OF DEFINITION OF EMPLOYEES COVERED BY 
                   DENIAL OF DEDUCTION FOR EXCESSIVE EMPLOYEE 
                   REMUNERATION.

       (a) In General.--Paragraph (3) of section 162(m) is amended 
     to read as follows:
       ``(3) Covered employee.--For purposes of this subsection, 
     the term `covered employee' means, with respect to any 
     taxpayer for any taxable year, an individual who--
       ``(A) was the chief executive officer of the taxpayer, or 
     an individual acting in such a capacity, at any time during 
     the taxable year,
       ``(B) is 1 of the 4 highest compensated officers of the 
     taxpayer for the taxable year (other than the individual 
     described in subparagraph (A)), or
       ``(C) was a covered employee of the taxpayer (or any 
     predecessor) for any preceding taxable year beginning after 
     December 31, 2006.
       ``In the case of an individual who was a covered employee 
     for any taxable year beginning after December 31, 2006, the 
     term `covered employee' shall include a beneficiary of such 
     employee with respect to any remuneration for services 
     performed by such employee as a covered employee (whether or 
     not such services are performed during the taxable year in 
     which the remuneration is paid).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 545. INCREASE IN AGE OF MINOR CHILDREN WHOSE UNEARNED 
                   INCOME IS TAXED AS IF PARENT'S INCOME.

       (a) In General.--Subparagraph (A) of section 1(g)(2) 
     (relating to child to whom subsection applies) is amended to 
     read as follows:
       ``(A) such child--
       ``(i) has not attained age 18 before the close of the 
     taxable year, or
       ``(ii)(I) has attained age 18 before the close of the 
     taxable year and meets the age requirements of section 
     152(c)(3) (determined without regard to subparagraph (B) 
     thereof), and
       ``(II) whose earned income (as defined in section 
     911(d)(2)) for such taxable year does not exceed one-half of 
     the amount of the individual's support (within the meaning of 
     section 152(c)(1)(D) after the application of section 
     152(f)(5) (without regard to subparagraph (A) thereof) for 
     such taxable year,''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 546. INCREASE IN INFORMATION RETURN PENALTIES.

       (a) Failure To File Correct Information Returns.--
       (1) In general.--Section 6721(a)(1) is amended--
       (A) by striking ``$50'' and inserting ``$250'', and
       (B) by striking ``$250,000'' and inserting ``$3,000,000''.
       (2) Reduction where correction in specified period.--
       (A) Correction within 30 days.--Section 6721(b)(1) is 
     amended--
       (i) by striking ``$15'' and inserting ``$50'',
       (ii) by striking ``$50'' and inserting ``$250'', and
       (iii) by striking ``$75,000'' and inserting ``$500,000''.
       (B) Failures corrected on or before august 1.--Section 
     6721(b)(2) is amended--
       (i) by striking ``$30'' and inserting ``$100'',
       (ii) by striking ``$50'' and inserting ``$250'', and
       (iii) by striking ``$150,000'' and inserting 
     ``$1,500,000''.
       (3) Lower limitation for persons with gross receipts of not 
     more than $5,000,000.--Section 6721(d)(1) is amended--
       (A) in subparagraph (A)--
       (i) by striking ``$100,000'' and inserting ``$1,000,000'', 
     and
       (ii) by striking ``$250,000'' and inserting ``$3,000,000'',
       (B) in subparagraph (B)--
       (i) by striking ``$25,000'' and inserting ``$175,000'', and
       (ii) by striking ``$75,000'' and inserting ``$500,000'', 
     and
       (C) in subparagraph (C)--
       (i) by striking ``$50,000'' and inserting ``$500,000'', and
       (ii) by striking ``$150,000'' and inserting ``$1,500,000''.
       (4) Penalty in case of intentional disregard.--Section 
     6721(e) is amended--
       (A) by striking ``$100'' in paragraph (2) and inserting 
     ``$500'',
       (B) by striking ``$250,000'' in paragraph (3)(A) and 
     inserting ``$3,000,000''.
       (b) Failure To Furnish Correct Payee Statements.--
       (1) In general.--Section 6722(a) is amended--
       (A) by striking ``$50'' and inserting ``$250'', and
       (B) by striking ``$100,000'' and inserting ``$1,000,000''.
       (2) Penalty in case of intentional disregard.--Section 
     6722(c) is amended--
       (A) by striking ``$100'' in paragraph (1) and inserting 
     ``$500'', and
       (B) by striking ``$100,000'' in paragraph (2)(A) and 
     inserting ``$1,000,000''.
       (c) Failure To Comply With Other Information Reporting 
     Requirements.--Section 6723 is amended--
       (1) by striking ``$50'' and inserting ``$250'', and
       (2) by striking ``$100,000'' and inserting ``$1,000,000''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to information returns required to 
     be filed on or after January 1, 2008.

     SEC. 547. E-FILING REQUIREMENT FOR CERTAIN LARGE 
                   ORGANIZATIONS.

       (a) In General.--The first sentence of section 6011(e)(2) 
     is amended to read as follows: ``In prescribing regulations 
     under paragraph (1), the Secretary shall take into account 
     (among other relevant factors) the ability of the taxpayer to 
     comply at reasonable cost with the requirements of such 
     regulations.''.
       (b) Conforming Amendment.--Section 6724 is amended by 
     striking subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending on or after December 31, 
     2008.

     SEC. 548. EXPANSION OF IRS ACCESS TO INFORMATION IN NATIONAL 
                   DIRECTORY OF NEW HIRES FOR TAX ADMINISTRATION 
                   PURPOSES.

       (a) In General.--Paragraph (3) of section 453(j) of the 
     Social Security Act (42 U.S.C. 653(j)) is amended to read as 
     follows:
       ``(3) Administration of federal tax laws.--The Secretary of 
     the Treasury shall have access to the information in the 
     National Directory of New Hires for purposes of administering 
     the Internal Revenue Code of 1986.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 549. DISCLOSURE OF PRISONER RETURN INFORMATION TO 
                   FEDERAL BUREAU OF PRISONS.

       (a) Disclosure.--
       (1) In general.--Subsection (l) of section 6103 (relating 
     to disclosure of returns and return information for purposes 
     other than tax administration) is amended by adding at the 
     end the following new paragraph:
       ``(22) Disclosure of return information of prisoners to 
     federal bureau of prisons.--
       ``(A) In general.--Under such procedures as the Secretary 
     may prescribe, the Secretary may disclose return information 
     with respect to persons incarcerated in Federal prisons whom 
     the Secretary believes filed or facilitated the filing of 
     false or fraudulent returns to the head of the Federal Bureau 
     of Prisons if the Secretary determines that such disclosure 
     is necessary to permit effective tax administration.
       ``(B) Disclosure by agency to employees.--The head of the 
     Federal Bureau of Prisons may redisclose information received 
     under subparagraph (A)--
       ``(i) only to those officers and employees of the Bureau 
     who are personally and directly engaged in taking 
     administrative actions to address violations of 
     administrative rules and regulations of the prison facility, 
     and
       ``(ii) solely for the purposes described in subparagraph 
     (C).
       ``(C) Restriction on use of disclosed information.--Return 
     information disclosed under this paragraph may be used only 
     for the purposes of--

[[Page S3954]]

       ``(i) preventing the filing of false or fraudulent returns; 
     and
       ``(ii) taking administrative actions against individuals 
     who have filed or attempted to file false or fraudulent 
     returns.''.
       (2) Procedures and record keeping related to disclosure.--
     Subsection (p)(4) of section 6103 is amended--
       (A) by striking ``(14), or (17)'' in the matter before 
     subparagraph (A) and inserting ``(14), (17), or (22)'', and
       (B) by striking ``(9), or (16)'' in subparagraph (F)(i) and 
     inserting ``(9), (16), or (22)''.
       (3) Evaluation by treasury inspector general for tax 
     administration.--Paragraph (3) of section 7803(d) is amended 
     by striking ``and'' at the end of subparagraph (A), by 
     striking the period at the end of subparagraph (B) and 
     inserting ``; and'', and by adding at the end the following 
     new subparagraph:
       ``(C) not later than 3 years after the date of the 
     enactment of section 6103(l)(22), submit a written report to 
     Congress on the implementation of such section.''.
       (b) Annual Reports.--
       (1) In general.--The Secretary of the Treasury shall submit 
     to Congress and make publicly available an annual report on 
     the filing of false and fraudulent returns by individuals 
     incarcerated in Federal and State prisons.
       (2) Contents of report.--The report submitted under 
     paragraph (1) shall contain statistics on the number of false 
     or fraudulent returns associated with each Federal and State 
     prison and such other information that the Secretary 
     determines is appropriate.
       (3) Exchange of information.--For the purpose of gathering 
     information necessary for the reports required under 
     paragraph (1), the Secretary of the Treasury shall enter into 
     agreements with the head of the Federal Bureau of Prisons and 
     the heads of State agencies charged with responsibility for 
     administration of State prisons under which the head of the 
     Bureau or Agency provides to the Secretary not less 
     frequently than annually the names and other identifying 
     information of prisoners incarcerated at each facility 
     administered by the Bureau or Agency.
       (c) Effective Date.--The amendments made by this section 
     shall apply to disclosures on or after January 1, 2008.

     SEC. 550. UNDERSTATEMENT OF TAXPAYER LIABILITY BY RETURN 
                   PREPARERS.

       (a) Application of Return Preparer Penalties to All Tax 
     Returns.--
       (1) Definition of tax return preparer.--Paragraph (36) of 
     section 7701(a) (relating to income tax preparer) is 
     amended--
       (A) by striking ``income'' each place it appears in the 
     heading and the text, and
       (B) in subparagraph (A), by striking ``subtitle A'' each 
     place it appears and inserting ``this title''.
       (2) Conforming amendments.--
       (A)(i) Section 6060 is amended by striking ``INCOME TAX 
     RETURN PREPARERS'' in the heading and inserting ``TAX RETURN 
     PREPARERS''.
       (ii) Section 6060(a) is amended--
       (I) by striking ``AN INCOME TAX RETURN PREPARER'' each 
     place it appears and inserting ``A TAX RETURN PREPARER'',
       (II) by striking ``each income tax return preparer'' and 
     inserting ``each tax return preparer'', and
       (III) by striking ``another income tax return preparer'' 
     and inserting ``another tax return preparer''.
       (iii) The item relating to section 6060 in the table of 
     sections for subpart F of part III of subchapter A of chapter 
     61 is amended by striking ``income tax return preparers'' and 
     inserting ``tax return preparers''.
       (iv) Subpart F of part III of subchapter A of chapter 61 is 
     amended by striking ``Income Tax Return Preparers'' in the 
     heading and inserting ``Tax Return Preparers''.
       (v) The item relating to subpart F in the table of subparts 
     for part III of subchapter A of chapter 61 is amended by 
     striking ``income tax return preparers'' and inserting ``tax 
     return preparers''.
       (B) Section 6103(k)(5) is amended--
       (i) by striking ``income tax return preparer'' each place 
     it appears and inserting ``tax return preparer'', and
       (ii) by striking ``income tax return preparers'' each place 
     it appears and inserting ``tax return preparers''.
       (C)(i) Section 6107 is amended--
       (I) by striking ``income tax return preparer'' in the 
     heading and inserting ``tax return preparer'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears in subsections (a) and (b) and inserting ``a 
     tax return preparer'',
       (III) by striking ``Income Tax Return Preparer'' in the 
     heading for subsection (b) and inserting ``Tax Return 
     Preparer'', and
       (IV) in subsection (c), by striking ``income tax return 
     preparers'' and inserting ``tax return preparers''.
       (ii) The item relating to section 6107 in the table of 
     sections for subchapter B of chapter 61 is amended by 
     striking ``Income tax return preparer'' and inserting ``Tax 
     return preparer''.
       (D) Section 6109(a)(4) is amended--
       (i) by striking ``an income tax return preparer'' and 
     inserting ``a tax return preparer'', and
       (ii) by striking ``income return preparer'' in the heading 
     and inserting ``tax return preparer''.
       (E) Section 6503(k)(4) is amended by striking ``Income tax 
     return preparers'' and inserting ``Tax return preparers''.
       (F)(i) Section 6694 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARER'' in the 
     heading and inserting ``TAX RETURN PREPARER'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (III) in subsection (c)(2), by striking ``the income tax 
     return preparer'' and inserting ``the tax return preparer'',
       (IV) in subsection (e), by striking ``subtitle A'' and 
     inserting ``this title'', and
       (V) in subsection (f), by striking ``income tax return 
     preparer'' and inserting ``tax return preparer''.
       (ii) The item relating to section 6694 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by striking ``income tax return preparer'' and inserting 
     ``tax return preparer''.
       (G)(i) Section 6695 is amended--
       (I) by striking ``INCOME'' in the heading, and
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer''.
       (ii) Section 6695(f) is amended--
       (I) by striking ``subtitle A'' and inserting ``this 
     title'', and
       (II) by striking ``the income tax return preparer'' and 
     inserting ``the tax return preparer''.
       (iii) The item relating to section 6695 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by striking ``income''.
       (H) Section 6696(e) is amended by striking ``subtitle A'' 
     each place it appears and inserting ``this title''.
       (I)(i) Section 7407 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARERS'' in the 
     heading and inserting ``TAX RETURN PREPARERS'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (III) by striking ``income tax preparer'' both places it 
     appears in subsection (a) and inserting ``tax return 
     preparer'', and
       (IV) by striking ``income tax return'' in subsection (a) 
     and inserting ``tax return''.
       (ii) The item relating to section 7407 in the table of 
     sections for subchapter A of chapter 76 is amended by 
     striking ``income tax return preparers'' and inserting ``tax 
     return preparers''.
       (J)(i) Section 7427 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARERS'' in the 
     heading and inserting ``TAX RETURN PREPARERS'', and
       (II) by striking ``an income tax return preparer'' and 
     inserting ``a tax return preparer''.
       (ii) The item relating to section 7427 in the table of 
     sections for subchapter B of chapter 76 is amended to read as 
     follows:

``Sec. 7427. Tax return preparers.''.

       (b) Modification of Penalty for Understatement of 
     Taxpayer's Liability by Tax Return Preparer.--Subsections (a) 
     and (b) of section 6694 are amended to read as follows:
       ``(a) Understatement Due to Unreasonable Positions.--
       ``(1) In general.--Any tax return preparer who prepares any 
     return or claim for refund with respect to which any part of 
     an understatement of liability is due to a position described 
     in paragraph (2) shall pay a penalty with respect to each 
     such return or claim in an amount equal to the greater of--
       ``(A) $1,000, or
       ``(B) 50 percent of the income derived (or to be derived) 
     by the tax return preparer with respect to the return or 
     claim.
       ``(2) Unreasonable position.--A position is described in 
     this paragraph if--
       ``(A) the tax return preparer knew (or reasonably should 
     have known) of the position,
       ``(B) there was not a reasonable belief that the position 
     would more likely than not be sustained on its merits, and
       ``(C)(i) the position was not disclosed as provided in 
     section 6662(d)(2)(B)(ii), or
       ``(ii) there was no reasonable basis for the position.
       ``(3) Reasonable cause exception.--No penalty shall be 
     imposed under this subsection if it is shown that there is 
     reasonable cause for the understatement and the tax return 
     preparer acted in good faith.
       ``(b) Understatement Due to Willful or Reckless Conduct.--
       ``(1) In general.--Any tax return preparer who prepares any 
     return or claim for refund with respect to which any part of 
     an understatement of liability is due to a conduct described 
     in paragraph (2) shall pay a penalty with respect to each 
     such return or claim in an amount equal to the greater of--
       ``(A) $5,000, or
       ``(B) 50 percent of the income derived (or to be derived) 
     by the tax return preparer with respect to the return or 
     claim.
       ``(2) Willful or reckless conduct.--Conduct described in 
     this paragraph is conduct by the tax return preparer which 
     is--
       ``(A) a willful attempt in any manner to understate the 
     liability for tax on the return or claim, or
       ``(B) a reckless or intentional disregard of rules or 
     regulations.
       ``(3) Reduction in penalty.--The amount of any penalty 
     payable by any person by reason of this subsection for any 
     return or claim for refund shall be reduced by the amount of 
     the penalty paid by such person by reason of subsection 
     (a).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns prepared after the date of the 
     enactment of this Act.

[[Page S3955]]

     SEC. 551. PENALTY FOR FILING ERRONEOUS REFUND CLAIMS.

       (a) In General.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6675 the following new section:

     ``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

       ``(a) Civil Penalty.--If a claim for refund or credit with 
     respect to income tax (other than a claim for a refund or 
     credit relating to the earned income credit under section 32) 
     is made for an excessive amount, unless it is shown that the 
     claim for such excessive amount has a reasonable basis, the 
     person making such claim shall be liable for a penalty in an 
     amount equal to 20 percent of the excessive amount.
       ``(b) Excessive Amount.--For purposes of this section, the 
     term `excessive amount' means in the case of any person the 
     amount by which the amount of the claim for refund or credit 
     for any taxable year exceeds the amount of such claim 
     allowable under this title for such taxable year.
       ``(c) Coordination With Other Penalties.--This section 
     shall not apply to any portion of the excessive amount of a 
     claim for refund or credit on which a penalty is imposed 
     under part II of subchapter A of chapter 68.''.
       (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 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any claim--
       (1) filed or submitted after the date of the enactment of 
     this Act, or
       (2) filed or submitted prior to such date but not withdrawn 
     before the date which is 30 days after such date of 
     enactment.

     SEC. 552. SUSPENSION OF CERTAIN PENALTIES AND INTEREST.

       (a) In General.--Paragraphs (1)(A) and (3)(A) of section 
     6404(g) are each amended by striking ``18-month period'' and 
     inserting ``36-month period''.
       (b) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to notices 
     provided by the Secretary of the Treasury, or his delegate 
     after the date which is 6 months after the date of the 
     enactment of this Act.
       (2) Exception for certain taxpayers.--The amendments made 
     by this section shall not apply to any taxpayer with respect 
     to whom a suspension of any interest, penalty, addition to 
     tax, or other amount is in effect on the date which is 6 
     months after the date of the enactment of this Act.

     SEC. 553. ADDITIONAL REASONS FOR SECRETARY TO TERMINATE 
                   INSTALLMENT AGREEMENTS.

       (a) In General.--Section 6159(b)(4) (relating to failure to 
     pay an installment or any other tax liability when due or to 
     provide requested financial information) is amended by 
     striking ``or'' at the end of subparagraph (B), by 
     redesignating subparagraph (C) as subparagraph (E), and by 
     inserting after subparagraph (B) the following new 
     subparagraphs:
       ``(C) to make a Federal tax deposit under section 6302 at 
     the time such deposit is required to be made,
       ``(D) to file a return of tax imposed under this title by 
     its due date (including extensions), or''.
       (b) Conforming Amendment.--The heading for paragraph (4) of 
     section 6159(b) is amended by striking ``Failure to pay an 
     installment or any other tax liability when due or to provide 
     requested financial information'' and inserting ``Failure to 
     make payments or deposits or file returns when due or to 
     provide requested financial information''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to failures occurring on or after the date of the 
     enactment of this Act.

     SEC. 554. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS-IN-
                   COMPROMISE.

       (a) In General.--Section 7122(b) (relating to record) is 
     amended by striking ``Whenever a compromise'' and all that 
     follows through ``his delegate, with his reasons therefor'' 
     and inserting ``If the Secretary determines that an opinion 
     of the General Counsel for the Department of the Treasury, or 
     the Counsel's delegate, is required with respect to a 
     compromise, there shall be placed on file in the office of 
     the Secretary such opinion, with the reasons therefor''.
       (b) Conforming Amendments.--Section 7122(b) is amended by 
     striking the second and third sentences.
       (c) Effective Date.--The amendments made by this section 
     shall apply to offers-in-compromise submitted or pending on 
     or after the date of the enactment of this Act.

     SEC. 555. AUTHORIZATION FOR FINANCIAL MANAGEMENT SERVICE 
                   RETENTION OF TRANSACTION FEES FROM LEVIED 
                   AMOUNTS.

       (a) In General.--Subsection (h) of section 6331 (relating 
     to continuing levy on certain payments) is amended by adding 
     at the end the following new paragraph:
       ``(4) Imposition of financial management services 
     transaction fees.--If the Secretary approves a levy under 
     this subsection, the Secretary may impose on the taxpayer a 
     transaction fee sufficient to cover the full cost of 
     implementing the levy under this subsection. Such fee--
       ``(A) shall be treated as an expense under section 6341,
       ``(B) may be collected through a levy under this 
     subsection, and
       ``(C) shall be in addition to the amount of tax liability 
     with respect to which such levy was approved.''.
       (b) Retention of Fees by Financial Management Service.--The 
     Financial Management Service may retain the amount of any 
     transaction fee imposed under section 6331(h)(4) of the 
     Internal Revenue Code of 1986. Any amount retained by the 
     Financial Management Service under that section shall be 
     deposited into the account of the Department of the Treasury 
     under section 3711(g)(7) of title 31, United States Code.
       (c) Effective Date.--The amendment made by this section 
     shall apply to amounts levied after the date of the enactment 
     of this Act.

     SEC. 556. AUTHORITY FOR UNDERCOVER OPERATIONS.

       Paragraph (6) of section 7608(c) (relating to application 
     of section) is amended by striking ``2007'' both places it 
     appears and inserting ``2008''.

     SEC. 557. INCREASE IN PENALTY EXCISE TAXES ON THE POLITICAL 
                   AND EXCESS LOBBYING ACTIVITIES OF SECTION 
                   501(C)(3) ORGANIZATIONS.

       (a) Taxes on Disqualifying Lobbying Expenditures of Certain 
     Organizations.--
       (1) In general.--Section 4912(a) (relating to tax on 
     organization) is amended by striking ``5 percent'' and 
     inserting ``10 percent''.
       (2) Tax on management.--Section 4912(b) is amended by 
     striking ``5 percent'' and inserting ``10 percent''.
       (b) Taxes on Political Expenditures of Section 501(c)(3) 
     Organizations.--
       (1) In general.--Section 4955(a) (relating to initial 
     taxes) is amended--
       (A) in paragraph (1), by striking ``10 percent'' and 
     inserting ``20 percent'', and
       (B) in paragraph (2), by striking ``2\1/2\ percent'' and 
     inserting ``5 percent''.
       (2) Increased limitation for managers.--Section 4955(c)(2) 
     is amended--
       (A) by striking ``$5,000'' and inserting ``$10,000'', and
       (B) by striking ``$10,000'' and inserting ``$20,000''.
       (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. 558. INCREASED PENALTY FOR FAILURE TO FILE FOR EXEMPT 
                   ORGANIZATIONS.

       (a) In General.--Subparagraph (A) of section 6652(c)(1) 
     (relating to annual returns under section 6033(a)(1) or 
     6012(a)(6)) is amended by adding at the end the following new 
     sentence: ``In the case of an organization having gross 
     receipts exceeding $25,000,000 for any year, with respect to 
     the return so required, the first sentence of this 
     subparagraph shall be applied by substituting `$250' for 
     `$20' and, in lieu of applying the second sentence of this 
     subparagraph, the maximum penalty under this subparagraph 
     shall not exceed $125,000.''.
       (b) Conforming Amendment.--The third sentence of section 
     6652(c)(1)(A) is amended by inserting ``but not exceeding 
     $25,000,000'' after ``$1,000,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed on or after 
     January 1, 2008.

     SEC. 559. PENALTIES FOR FAILURE TO FILE CERTAIN RETURNS 
                   ELECTRONICALLY.

       (a) In General.--Part I of subchapter A of chapter 68 
     (relating to additions to the tax, additional amounts, and 
     assessable penalties) is amended by inserting after section 
     6652 the following new section:

     ``SEC. 6652A. FAILURE TO FILE CERTAIN RETURNS ELECTRONICALLY.

       ``(a) In General.--If a person fails to file a return 
     described in section 6651 or 6652(c)(1) in electronic form as 
     required under section 6011(e)--
       ``(1) such failure shall be treated as a failure to file 
     such return (even if filed in a form other than electronic 
     form), and
       ``(2) the penalty imposed under section 6651 or 6652(c), 
     whichever is appropriate, shall be equal to the greater of--
       ``(A) the amount of the penalty under such section, 
     determined without regard to this section, or
       ``(B) the amount determined under subsection (b).
       ``(b) Amount of Penalty.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the penalty determined under this subsection is equal to 
     $40 for each day during which a failure described under 
     subsection (a) continues. The maximum penalty under this 
     paragraph on failures with respect to any 1 return shall not 
     exceed the lesser of $20,000 or 10 percent of the gross 
     receipts of the taxpayer for the year.
       ``(2) Increased penalties for taxpayers with gross receipts 
     between $1,000,000 and $100,000,000.--
       ``(A) Taxpayers with gross receipts between $1,000,000 and 
     $25,000,000.--In the case of a taxpayer having gross receipts 
     exceeding $1,000,000 but not exceeding $25,000,000 for any 
     year--
       ``(i) the first sentence of paragraph (1) shall be applied 
     by substituting `$200' for `$40', and
       ``(ii) in lieu of applying the second sentence of paragraph 
     (1), the maximum penalty under paragraph (1) shall not exceed 
     $100,000.
       ``(B) Taxpayers with gross receipts over $25,000,000.--
     Except as provided in paragraph (3), in the case of a 
     taxpayer having gross receipts exceeding $25,000,000 for any 
     year--

[[Page S3956]]

       ``(i) the first sentence of paragraph (1) shall be applied 
     by substituting `$500' for `$40', and
       ``(ii) in lieu of applying the second sentence of paragraph 
     (1), the maximum penalty under paragraph (1) shall not exceed 
     $250,000.
       ``(3) Increased penalties for certain taxpayers with gross 
     receipts exceeding $100,000,000.--In the case of a return 
     described in section 6651--
       ``(A) Taxpayers with gross receipts between $100,000,000 
     and $250,000,000.--In the case of a taxpayer having gross 
     receipts exceeding $100,000,000 but not exceeding 
     $250,000,000 for any year--
       ``(i) the amount of the penalty determined under this 
     subsection shall equal the sum of--

       ``(I) $50,000, plus
       ``(II) $1,000 for each day during which such failure 
     continues (twice such amount for each day such failure 
     continues after the first such 60 days), and

       ``(ii) the maximum amount under clause (i)(II) on failures 
     with respect to any 1 return shall not exceed $200,000.
       ``(B) Taxpayers with gross receipts over $250,000,000.--In 
     the case of a taxpayer having gross receipts exceeding 
     $250,000,000 for any year--
       ``(i) the amount of the penalty determined under this 
     subsection shall equal the sum of--

       ``(I) $250,000, plus
       ``(II) $2,500 for each day during which such failure 
     continues (twice such amount for each day such failure 
     continues after the first such 60 days), and

       ``(ii) the maximum amount under clause (i)(II) on failures 
     with respect to any 1 return shall not exceed $250,000.
       ``(C) Exception for certain returns.--Subparagraphs (A) and 
     (B) shall not apply to any return of tax imposed under 
     section 511.''.
       (b) Clerical Amendment.--The table of sections for part I 
     of subchapter A of chapter 68 is amended by inserting after 
     the item relating to section 6652 the following new item:

``Sec. 6652A. Failure to file certain returns electronically.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed on or after 
     January 1, 2008.

                      PART III--GENERAL PROVISIONS

     SEC. 561. ENHANCED COMPLIANCE ASSISTANCE FOR SMALL 
                   BUSINESSES.

       (a) In General.--Section 212 of the Small Business 
     Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 601 
     note) is amended by striking subsection (a) and inserting the 
     following:
       ``(a) Compliance Guide.--
       ``(1) In general.--For each rule or group of related rules 
     for which an agency is required to prepare a final regulatory 
     flexibility analysis under section 605(b) of title 5, United 
     States Code, the agency shall publish 1 or more guides to 
     assist small entities in complying with the rule and shall 
     entitle such publications `small entity compliance guides'.
       ``(2) Publication of guides.--The publication of each guide 
     under this subsection shall include--
       ``(A) the posting of the guide in an easily identified 
     location on the website of the agency; and
       ``(B) distribution of the guide to known industry contacts, 
     such as small entities, associations, or industry leaders 
     affected by the rule.
       ``(3) Publication date.--An agency shall publish each guide 
     (including the posting and distribution of the guide as 
     described under paragraph (2))--
       ``(A) on the same date as the date of publication of the 
     final rule (or as soon as possible after that date); and
       ``(B) not later than the date on which the requirements of 
     that rule become effective.
       ``(4) Compliance actions.--
       ``(A) In general.--Each guide shall explain the actions a 
     small entity is required to take to comply with a rule.
       ``(B) Explanation.--The explanation under subparagraph 
     (A)--
       ``(i) shall include a description of actions needed to meet 
     the requirements of a rule, to enable a small entity to know 
     when such requirements are met; and
       ``(ii) if determined appropriate by the agency, may include 
     a description of possible procedures, such as conducting 
     tests, that may assist a small entity in meeting such 
     requirements, except that, compliance with any procedures 
     described pursuant to this section does not establish 
     compliance with the rule, or establish a presumption or 
     inference of such compliance.
       ``(C) Procedures.--Procedures described under subparagraph 
     (B)(ii)--
       ``(i) shall be suggestions to assist small entities; and
       ``(ii) shall not be additional requirements, or diminish 
     requirements, relating to the rule.
       ``(5) Agency preparation of guides.--The agency shall, in 
     its sole discretion, taking into account the subject matter 
     of the rule and the language of relevant statutes, ensure 
     that the guide is written using sufficiently plain language 
     likely to be understood by affected small entities. Agencies 
     may prepare separate guides covering groups or classes of 
     similarly affected small entities and may cooperate with 
     associations of small entities to develop and distribute such 
     guides. An agency may prepare guides and apply this section 
     with respect to a rule or a group of related rules.
       ``(6) Reporting.--Not later than 1 year after the date of 
     enactment of the Fair Minimum Wage Act of 2007, and annually 
     thereafter, the head of each agency shall submit a report to 
     the Committee on Small Business and Entrepreneurship of the 
     Senate, the Committee on Small Business of the House of 
     Representatives, and any other committee of relevant 
     jurisdiction describing the status of the agency's compliance 
     with paragraphs (1) through (5).''.
       (b) Technical and Conforming Amendment.--Section 211(3) of 
     the Small Business Regulatory Enforcement Fairness Act of 
     1996 (5 U.S.C. 601 note) is amended by inserting ``and 
     entitled'' after ``designated''.

     SEC. 562. SMALL BUSINESS CHILD CARE GRANT PROGRAM.

       (a) Establishment.--The Secretary of Health and Human 
     Services (referred to in this section as the ``Secretary'') 
     shall establish a program to award grants to States, on a 
     competitive basis, to assist States in providing funds to 
     encourage the establishment and operation of employer-
     operated child care programs.
       (b) Application.--To be eligible to receive a grant under 
     this section, a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require, 
     including an assurance that the funds required under 
     subsection (e) will be provided.
       (c) Amount and Period of Grant.--The Secretary shall 
     determine the amount of a grant to a State under this section 
     based on the population of the State as compared to the 
     population of all States receiving grants under this section. 
     The Secretary shall make the grant for a period of 3 years.
       (d) Use of Funds.--
       (1) In general.--A State shall use amounts provided under a 
     grant awarded under this section to provide assistance to 
     small businesses (or consortia formed in accordance with 
     paragraph (3)) located in the State to enable the small 
     businesses (or consortia) to establish and operate child care 
     programs. Such assistance may include--
       (A) technical assistance in the establishment of a child 
     care program;
       (B) assistance for the startup costs related to a child 
     care program;
       (C) assistance for the training of child care providers;
       (D) scholarships for low-income wage earners;
       (E) the provision of services to care for sick children or 
     to provide care to school-aged children;
       (F) the entering into of contracts with local resource and 
     referral organizations or local health departments;
       (G) assistance for care for children with disabilities;
       (H) payment of expenses for renovation or operation of a 
     child care facility; or
       (I) assistance for any other activity determined 
     appropriate by the State.
       (2) Application.--In order for a small business or 
     consortium to be eligible to receive assistance from a State 
     under this section, the small business involved shall prepare 
     and submit to the State an application at such time, in such 
     manner, and containing such information as the State may 
     require.
       (3) Preference.--
       (A) In general.--In providing assistance under this 
     section, a State shall give priority to an applicant that 
     desires to form a consortium to provide child care in a 
     geographic area within the State where such care is not 
     generally available or accessible.
       (B) Consortium.--For purposes of subparagraph (A), a 
     consortium shall be made up of 2 or more entities that shall 
     include small businesses and that may include large 
     businesses, nonprofit agencies or organizations, local 
     governments, or other appropriate entities.
       (4) Limitations.--With respect to grant funds received 
     under this section, a State may not provide in excess of 
     $500,000 in assistance from such funds to any single 
     applicant.
       (e) Matching Requirement.--To be eligible to receive a 
     grant under this section, a State shall provide assurances to 
     the Secretary that, with respect to the costs to be incurred 
     by a covered entity receiving assistance in carrying out 
     activities under this section, the covered entity will make 
     available (directly or through donations from public or 
     private entities) non-Federal contributions to such costs in 
     an amount equal to--
       (1) for the first fiscal year in which the covered entity 
     receives such assistance, not less than 50 percent of such 
     costs ($1 for each $1 of assistance provided to the covered 
     entity under the grant);
       (2) for the second fiscal year in which the covered entity 
     receives such assistance, not less than 66\2/3\ percent of 
     such costs ($2 for each $1 of assistance provided to the 
     covered entity under the grant); and
       (3) for the third fiscal year in which the covered entity 
     receives such assistance, not less than 75 percent of such 
     costs ($3 for each $1 of assistance provided to the covered 
     entity under the grant).
       (f) Requirements of Providers.--To be eligible to receive 
     assistance under a grant awarded under this section, a child 
     care provider--
       (1) who receives assistance from a State shall comply with 
     all applicable State and local licensing and regulatory 
     requirements and all applicable health and safety standards 
     in effect in the State; and

[[Page S3957]]

       (2) who receives assistance from an Indian tribe or tribal 
     organization shall comply with all applicable regulatory 
     standards.
       (g) State-Level Activities.--A State may not retain more 
     than 3 percent of the amount described in subsection (c) for 
     State administration and other State-level activities.
       (h) Administration.--
       (1) State responsibility.--A State shall have 
     responsibility for administering a grant awarded for the 
     State under this section and for monitoring covered entities 
     that receive assistance under such grant.
       (2) Audits.--A State shall require each covered entity 
     receiving assistance under the grant awarded under this 
     section to conduct an annual audit with respect to the 
     activities of the covered entity. Such audits shall be 
     submitted to the State.
       (3) Misuse of funds.--
       (A) Repayment.--If the State determines, through an audit 
     or otherwise, that a covered entity receiving assistance 
     under a grant awarded under this section has misused the 
     assistance, the State shall notify the Secretary of the 
     misuse. The Secretary, upon such a notification, may seek 
     from such a covered entity the repayment of an amount equal 
     to the amount of any such misused assistance plus interest.
       (B) Appeals process.--The Secretary shall by regulation 
     provide for an appeals process with respect to repayments 
     under this paragraph.
       (i) Reporting Requirements.--
       (1) 2-year study.--
       (A) In general.--Not later than 2 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine--
       (i) the capacity of covered entities to meet the child care 
     needs of communities within States;
       (ii) the kinds of consortia that are being formed with 
     respect to child care at the local level to carry out 
     programs funded under this section; and
       (iii) who is using the programs funded under this section 
     and the income levels of such individuals.
       (B) Report.--Not later than 28 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on the results of the study 
     conducted in accordance with subparagraph (A).
       (2) 4-year study.--
       (A) In general.--Not later than 4 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine the number 
     of child care facilities that are funded through covered 
     entities that received assistance through a grant awarded 
     under this section and that remain in operation, and the 
     extent to which such facilities are meeting the child care 
     needs of the individuals served by such facilities.
       (B) Report.--Not later than 52 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on the results of the study 
     conducted in accordance with subparagraph (A).
       (j) Definitions.--In this section:
       (1) Covered entity.--The term ``covered entity'' means a 
     small business or a consortium formed in accordance with 
     subsection (d)(3).
       (2) Indian community.--The term ``Indian community'' means 
     a community served by an Indian tribe or tribal organization.
       (3) Indian tribe; tribal organization.--The terms ``Indian 
     tribe'' and ``tribal organization'' have the meanings given 
     the terms in section 658P of the Child Care and Development 
     Block Grant Act of 1990 (42 U.S.C. 9858n).
       (4) Small business.--The term ``small business'' means an 
     employer who employed an average of at least 2 but not more 
     than 50 employees on the business days during the preceding 
     calendar year.
       (5) State.--The term ``State'' has the meaning given the 
     term in section 658P of the Child Care and Development Block 
     Grant Act of 1990 (42 U.S.C. 9858n).
       (k) Application to Indian Tribes and Tribal 
     Organizations.--In this section:
       (1) In general.--Except as provided in subsection (f)(1), 
     and in paragraphs (2) and (3), the term ``State'' includes an 
     Indian tribe or tribal organization.
       (2) Geographic references.--The term ``State'' includes an 
     Indian community in subsections (c) (the second and third 
     place the term appears), (d)(1) (the second place the term 
     appears), (d)(3)(A) (the second place the term appears), and 
     (i)(1)(A)(i).
       (3) State-level activities.--The term ``State-level 
     activities'' includes activities at the tribal level.
       (l) Authorization of Appropriations.--
       (1) In general.--There is authorized to be appropriated to 
     carry out this section, $50,000,000 for the period of fiscal 
     years 2008 through 2012.
       (2) Studies and administration.--With respect to the total 
     amount appropriated for such period in accordance with this 
     subsection, not more than $2,500,000 of that amount may be 
     used for expenditures related to conducting studies required 
     under, and the administration of, this section.
       (m) Termination of Program.--The program established under 
     subsection (a) shall terminate on September 30, 2012.

     SEC. 563. STUDY OF UNIVERSAL USE OF ADVANCE PAYMENT OF EARNED 
                   INCOME CREDIT.

       Not later than 180 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall report to 
     Congress on a study of the benefits, costs, risks, and 
     barriers to workers and to businesses (with a special 
     emphasis on small businesses) if the advance earned income 
     tax credit program (under section 3507 of the Internal 
     Revenue Code of 1986) included all recipients of the earned 
     income tax credit (under section 32 of such Code) and what 
     steps would be necessary to implement such inclusion.

     SEC. 564. SENSE OF THE SENATE CONCERNING PERSONAL SAVINGS.

       (a) Findings.--The Senate finds that--
       (1) the personal saving rate in the United States is at its 
     lowest point since the Great Depression, with the rate having 
     fallen into negative territory;
       (2) the United States ranks at the bottom of the Group of 
     Twenty (G-20) nations in terms of net national saving rate;
       (3) approximately half of all the working people of the 
     United States work for an employer that does not offer any 
     kind of retirement plan;
       (4) existing savings policies enacted by Congress provide 
     limited incentives to save for low- and moderate-income 
     families; and
       (5) the Social Security program was enacted to serve as the 
     safest component of a retirement system that also includes 
     employer-sponsored retirement plans and personal savings.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) Congress should enact policies that promote savings 
     vehicles for retirement that are simple, easily accessible 
     and provide adequate financial security for all the people of 
     the United States;
       (2) it is important to begin retirement saving as early as 
     possible to take full advantage of the power of compound 
     interest; and
       (3) regularly contributing money to a financially-sound 
     investment account is one important method for helping to 
     achieve one's retirement goals.

     SEC. 565. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

       (a) In General.--Section 29 of the Small Business Act (15 
     U.S.C. 656) is amended by adding at the end the following:
       ``(m) Continued Funding for Centers.--
       ``(1) In general.--A nonprofit organization described in 
     paragraph (2) shall be eligible to receive, subject to 
     paragraph (3), a 3-year grant under this subsection.
       ``(2) Applicability.--A nonprofit organization described in 
     this paragraph is a nonprofit organization that has received 
     funding under subsection (b) or (l).
       ``(3) Application and approval criteria.--
       ``(A) Criteria.--Subject to subparagraph (B), the 
     Administrator shall develop and publish criteria for the 
     consideration and approval of applications by nonprofit 
     organizations under this subsection.
       ``(B) Contents.--Except as otherwise provided in this 
     subsection, the conditions for participation in the grant 
     program under this subsection shall be the same as the 
     conditions for participation in the program under subsection 
     (l), as in effect on the date of enactment of this Act.
       ``(C) Notification.--Not later than 60 days after the date 
     of the deadline to submit applications for each fiscal year, 
     the Administrator shall approve or deny any application under 
     this subsection and notify the applicant for each such 
     application.
       ``(4) Award of grants.--
       ``(A) In general.--Subject to the availability of 
     appropriations, the Administrator shall make a grant for the 
     Federal share of the cost of activities described in the 
     application to each applicant approved under this subsection.
       ``(B) Amount.--A grant under this subsection shall be for 
     not more than $150,000, for each year of that grant.
       ``(C) Federal share.--The Federal share under this 
     subsection shall be not more than 50 percent.
       ``(D) Priority.--In allocating funds made available for 
     grants under this section, the Administrator shall give 
     applications under this subsection or subsection (l) priority 
     over first-time applications under subsection (b).
       ``(5) Renewal.--
       ``(A) In general.--The Administrator may renew a grant 
     under this subsection for additional 3-year periods, if the 
     nonprofit organization submits an application for such 
     renewal at such time, in such manner, and accompanied by such 
     information as the Administrator may establish.
       ``(B) Unlimited renewals.--There shall be no limitation on 
     the number of times a grant may be renewed under subparagraph 
     (A).
       ``(n) Privacy Requirements.--
       ``(1) In general.--A women's business center may not 
     disclose the name, address, or telephone number of any 
     individual or small business concern receiving assistance 
     under this section without the consent of such individual or 
     small business concern, unless--
       ``(A) the Administrator is ordered to make such a 
     disclosure by a court in any civil or criminal enforcement 
     action initiated by a Federal or State agency; or
       ``(B) the Administrator considers such a disclosure to be 
     necessary for the purpose of conducting a financial audit of 
     a women's business center, but a disclosure under this 
     subparagraph shall be limited to the information necessary 
     for such audit.
       ``(2) Administration use of information.--This subsection 
     shall not--
       ``(A) restrict Administration access to program activity 
     data; or

[[Page S3958]]

       ``(B) prevent the Administration from using client 
     information (other than the information described in 
     subparagraph (A)) to conduct client surveys.
       ``(3) Regulations.--The Administrator shall issue 
     regulations to establish standards for requiring disclosures 
     during a financial audit under paragraph (1)(B).''.
       (b) Repeal.--Section 29(l) of the Small Business Act (15 
     U.S.C. 656(l)) is repealed effective October 1 of the first 
     full fiscal year after the date of enactment of this Act.
       (c) Transitional Rule.--Notwithstanding any other provision 
     of law, a grant or cooperative agreement that was awarded 
     under subsection (l) of section 29 of the Small Business Act 
     (15 U.S.C. 656), on or before the day before the date 
     described in subsection (b) of this section, shall remain in 
     full force and effect under the terms, and for the duration, 
     of such grant or agreement.

     SEC. 566. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND 
                   SUPPLIES MANUFACTURED OUTSIDE THE UNITED 
                   STATES.

       Section 2 of the Buy American Act (41 U.S.C. 10a) is 
     amended--
       (1) by striking ``Notwithstanding'' and inserting the 
     following:
       ``(a) In General.--Notwithstanding''; and
       (2) by adding at the end the following:
       ``(b) Reports.--
       ``(1) In general.--Not later than 180 days after the end of 
     each of fiscal years 2007 through 2011, the head of each 
     Federal agency shall submit to the Committee on Homeland 
     Security and Governmental Affairs of the Senate and the 
     Committee on Oversight and Government Reform of the House of 
     Representatives a report on the amount of the acquisitions 
     made by the agency in that fiscal year of articles, 
     materials, or supplies purchased from entities that 
     manufacture the articles, materials, or supplies outside of 
     the United States.
       ``(2) Contents of report.--The report required by paragraph 
     (1) shall separately include, for the fiscal year covered by 
     such report--
       ``(A) the dollar value of any articles, materials, or 
     supplies that were manufactured outside the United States;
       ``(B) an itemized list of all waivers granted with respect 
     to such articles, materials, or supplies under this Act, and 
     a citation to the treaty, international agreement, or other 
     law under which each waiver was granted;
       ``(C) if any articles, materials, or supplies were acquired 
     from entities that manufacture articles, materials, or 
     supplies outside the United States, the specific exception 
     under this section that was used to purchase such articles, 
     materials, or supplies; and
       ``(D) a summary of--
       ``(i) the total procurement funds expended on articles, 
     materials, and supplies manufactured inside the United 
     States; and
       ``(ii) the total procurement funds expended on articles, 
     materials, and supplies manufactured outside the United 
     States.
       ``(3) Public availability.--The head of each Federal agency 
     submitting a report under paragraph (1) shall make the report 
     publicly available to the maximum extent practicable.
       ``(4) Exception for intelligence community.--This 
     subsection shall not apply to acquisitions made by an agency, 
     or component thereof, that is an element of the intelligence 
     community as specified in, or designated under, section 3(4) 
     of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.

     SEC. 567. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME 
                   TAX INCREASE ON SOCIAL SECURITY BENEFITS.

       It is the sense of the Senate that Congress should repeal 
     the 1993 tax increase on Social Security benefits and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     repeal and avoid forcing taxpayers to pay substantially more 
     interest to foreign creditors.

     SEC. 568. SENSE OF THE SENATE REGARDING PERMANENT TAX 
                   INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE 
                   AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.

       It is the sense of the Senate that Congress should make 
     permanent the tax incentives to make education more 
     affordable and more accessible for American families and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     incentives and avoid forcing taxpayers to pay substantially 
     more interest to foreign creditors.

     SEC. 569. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

       Section 274A(e) of the Immigration and Nationality Act (8 
     U.S.C. 1324a(e)) is amended by adding at the end the 
     following new paragraph:
       ``(10) Prohibition on award of government contracts, 
     grants, and agreements.--
       ``(A) Employers with no contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subparagraph 
     (C), if an employer who does not hold a Federal contract, 
     grant, or cooperative agreement is determined to have 
     violated this section, the employer shall be debarred from 
     the receipt of a Federal contract, grant, or cooperative 
     agreement for a period of 7 years.
       ``(ii) Placement on excluded list.--The Secretary of 
     Homeland Security or the Attorney General shall advise the 
     Administrator of General Services of the debarment of an 
     employer under clause (i) and the Administrator of General 
     Services shall list the employer on the List of Parties 
     Excluded from Federal Procurement and Nonprocurement Programs 
     for a period of 7 years.
       ``(iii) Waiver.--

       ``(I) Authority.--The Administrator of General Services, in 
     consultation with the Secretary of Homeland Security and the 
     Attorney General, may waive operation of clause (i) or may 
     limit the duration or scope of a debarment under clause (i) 
     if such waiver or limitation is necessary to national defense 
     or in the interest of national security.
       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternative action under this clause 
     shall not be judicially reviewed.

       ``(B) Employers with contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subclause 
     (C), an employer who holds a Federal contract, grant, or 
     cooperative agreement and is determined to have violated this 
     section shall be debarred from the receipt of new Federal 
     contracts, grants, or cooperative agreements for a period of 
     10 years.
       ``(ii) Notice to agencies.--Prior to debarring the employer 
     under clause (i), the Secretary of Homeland Security, in 
     cooperation with the Administrator of General Services, shall 
     advise any agency or department holding a contract, grant, or 
     cooperative agreement with the employer of the Government's 
     intention to debar the employer from the receipt of new 
     Federal contracts, grants, or cooperative agreements for a 
     period of 10 years.
       ``(iii) Waiver.--

       ``(I) Authority.--After consideration of the views of any 
     agency or department that holds a contract, grant, or 
     cooperative agreement with the employer, the Administrator of 
     General Services, in consultation with the Secretary of 
     Homeland Security and the Attorney General, may waive 
     operation of clause (i) or may limit the duration or scope of 
     the debarment under clause (i) if such waiver or limitation 
     is necessary to the national defense or in the interest of 
     national security.
       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternate action under this clause 
     shall not be judicially reviewed.

       ``(C) Exemption from penalty for employers participating in 
     the basic pilot program.--In the case of imposition on an 
     employer of a debarment from the receipt of a Federal 
     contract, grant, or cooperative agreement under subparagraph 
     (A) or (B), that penalty shall be waived if the employer 
     establishes that the employer was voluntarily participating 
     in the basic pilot program under section 403(a) of the 
     Illegal Immigration Reform and Immigrant Responsibility Act 
     of 1996 (8 U.S.C. 1324a note) at the time of the violations 
     of this section that resulted in the debarment.''.

     SEC. 570. DISABILITY PREFERENCE PROGRAM FOR TAX COLLECTION 
                   CONTRACTS.

       (a) In General.--Section 6306 (relating to qualified tax 
     collection contracts) is amended--
       (1) by striking ``Nothing'' in subsection (a) and inserting 
     ``Except as provided in subsection (c), nothing'',
       (2) by redesignating subsections (c), (d), (e), and (f) as 
     subsections (d), (e), (f), and (g), respectively, and
       (3) by inserting after subsection (b) the following new 
     subsection:
       ``(c) Disability Preference Program for Tax Collection 
     Contracts.--
       ``(1) In general.--The Secretary shall provide a qualifying 
     disability preference to any program under which any 
     qualified tax collection contract is awarded on or after the 
     effective date of this subsection and shall ensure compliance 
     with the requirements of paragraph (3).
       ``(2) Qualifying disability preference.--
       ``(A) In general.--For purposes of this subsection, the 
     term `qualifying disability preference' means a preference 
     pursuant to which at least 10 percent (in both number and 
     aggregate dollar amount) of the accounts covered by qualified 
     tax collection contracts are awarded to persons satisfying 
     the following criteria:
       ``(i) Such person employs within the United States at least 
     50 severely disabled individuals.
       ``(ii) Such person shall agree as an enforceable condition 
     of its bid for a qualified tax collection contract that 
     within 90 days after the date such contract is awarded, not 
     less than 35 percent of the employees of such person employed 
     in connection with providing services under such contract 
     shall--

       ``(I) be hired after the date such contract is awarded, and
       ``(II) be severely disabled individuals.

       ``(B) Determination of satisfaction of criteria.--Within 60 
     days after the end of the period specified in subparagraph 
     (A)(ii), the Secretary shall determine whether such person 
     has met the 35 percent requirement

[[Page S3959]]

     specified in such subparagraph, and if such requirement has 
     not been met, shall terminate the contract for 
     nonperformance. For purposes of determining whether such 35 
     percent requirement has been satisfied, severely disabled 
     individuals providing services under such contract shall not 
     include any severely disabled individuals who were counted 
     toward satisfaction of the 50-employee requirement specified 
     in subparagraph (A)(i), unless such person replaced such 
     individuals by hiring additional severely disabled 
     individuals who do not perform services under such contract.
       ``(3) Program-wide employment of severely disabled 
     individuals.--Not less than 15 percent of all individuals 
     hired by all persons to whom tax collection contracts are 
     issued by the Secretary under this section, to perform work 
     under such tax collection contracts, shall qualify as 
     severely disabled individuals.
       ``(4) Severely disabled individual.--For purposes of this 
     subsection, the term `severely disabled individual' means any 
     one of the following:
       ``(A) Any veteran of the United States Armed Forces with--
       ``(i) a disability determined by the Secretary of Veterans 
     Affairs to be service-connected, or
       ``(ii) a disability deemed by statute to be service-
     connected.
       ``(B) Any individual who is a disabled beneficiary (as 
     defined in section 1148(k)(2) of the Social Security Act (42 
     U.S.C. 1320b-19(k)(2)) or who would be considered to be such 
     a disabled beneficiary but for having income or assets in 
     excess of the income or asset eligibility limits established 
     under title II or XVI of the Social Security Act, 
     respectively.''.
       (b) Report by Government Accountability Office.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study of the effectiveness and 
     efficiency of the use of private contractors for Internal 
     Revenue Service debt collection. The study required by this 
     paragraph shall be completed in time to be taken into account 
     by Congress before any new contracting is carried out under 
     section 6306 of the Internal Revenue Code of 1986 in years 
     following 2008.
       (2) Study of comparable efforts.--As part of the study 
     required under paragraph (1), the Comptroller General shall--
       (A) make every effort to determine the relative 
     effectiveness and efficiency of debt collection contracting 
     by Federal staff compared to private contractors, using a 
     cost calculation for both Federal staff and private 
     contractors which includes all benefits and overhead costs,
       (B) compare the cost effectiveness of the contracting 
     approach of the Department of the Treasury to that of the 
     Department of Education's Office of Student Financial 
     Assistance, and
       (C) survey State tax debt collection experiences for 
     lessons that may be applicable to the Internal Revenue 
     Service collection efforts.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any tax collection contract awarded on or 
     after the date of the enactment of ths Act.
                                 ______
                                 
  SA 798. Mr. GRASSLEY submitted an amendment intended to be proposed 
to amendment SA 680 submitted by Mr. Kennedy (for himself, Mr. Enzi, 
Mr. Baucus, and Mr. Grassley) to the bill H.R. 1591, making emergency 
supplemental appropriations for the fiscal year ending September 30, 
2007, and for other purposes; as follows:

       Strike all after the Page 3 line 12 and insert:

               Subtitle B--Small Business Tax Incentives

     SEC. 510. SHORT TITLE; AMENDMENT OF CODE.

       (a) Short Title.--This subtitle may be cited as the ``Small 
     Business and Work Opportunity Act of 2007''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this subtitle 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.

              PART I--SMALL BUSINESS TAX RELIEF PROVISIONS

                     Subpart A--General Provisions

     SEC. 511. EXTENSION OF INCREASED EXPENSING FOR SMALL 
                   BUSINESSES.

       Section 179 (relating to election to expense certain 
     depreciable business assets) is amended by striking ``2010'' 
     each place it appears and inserting ``2011''.

     SEC. 512. EXTENSION AND MODIFICATION OF 15-YEAR STRAIGHT-LINE 
                   COST RECOVERY FOR QUALIFIED LEASEHOLD 
                   IMPROVEMENTS AND QUALIFIED RESTAURANT 
                   IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST 
                   RECOVERY FOR CERTAIN IMPROVEMENTS TO RETAIL 
                   SPACE.

       (a) Extension of Leasehold and Restaurant Improvements.--
       (1) In general.--Clauses (iv) and (v) of section 
     168(e)(3)(E) (relating to 15-year property) are each amended 
     by striking ``January 1, 2008'' and inserting ``January 1, 
     2009''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to property placed in service after December 31, 
     2007.
       (b) Modification of Treatment of Qualified Restaurant 
     Property as 15-Year Property for Purposes of Depreciation 
     Deduction.--
       (1) Treatment to include new construction.--Paragraph (7) 
     of section 168(e) (relating to classification of property) is 
     amended to read as follows:
       ``(7) Qualified restaurant property.--The term `qualified 
     restaurant property' means any section 1250 property which is 
     a building (or its structural components) or an improvement 
     to such building if more than 50 percent of such building's 
     square footage is devoted to preparation of, and seating for 
     on-premises consumption of, prepared meals.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to any property placed in service after the date 
     of the enactment of this Act, the original use of which 
     begins with the taxpayer after such date.
       (c) Recovery Period for Depreciation of Certain 
     Improvements to Retail Space.--
       (1) 15-year recovery period.--Section 168(e)(3)(E) 
     (relating to 15-year property) is amended by striking ``and'' 
     at the end of clause (vii), by striking the period at the end 
     of clause (viii) and inserting ``, and'', and by adding at 
     the end the following new clause:
       ``(ix) any qualified retail improvement property placed in 
     service before January 1, 2009.''.
       (2) Qualified retail improvement property.--Section 168(e) 
     is amended by adding at the end the following new paragraph:
       ``(8) Qualified retail improvement property.--
       ``(A) In general.--The term `qualified retail improvement 
     property' means any improvement to an interior portion of a 
     building which is nonresidential real property if--
       ``(i) such portion is open to the general public and is 
     used in the retail trade or business of selling tangible 
     personal property to the general public, and
       ``(ii) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Improvements made by owner.--In the case of an 
     improvement made by the owner of such improvement, such 
     improvement shall be qualified retail improvement property 
     (if at all) only so long as such improvement is held by such 
     owner. Rules similar to the rules under paragraph (6)(B) 
     shall apply for purposes of the preceding sentence.
       ``(C) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefitting a common area, 
     or
       ``(iv) the internal structural framework of the 
     building.''.
       (3) Requirement to use straight line method.--Section 
     168(b)(3) is amended by adding at the end the following new 
     subparagraph:
       ``(I) Qualified retail improvement property described in 
     subsection (e)(8).''.
       (4) Alternative system.--The table contained in section 
     168(g)(3)(B) is amended by inserting after the item relating 
     to subparagraph (E)(viii) the following new item:

(E)(ix)...........................................................39''.

       (5) Effective date.--The amendments made by this subsection 
     shall apply to property placed in service after the date of 
     the enactment of this Act.

     SEC. 513. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL 
                   BUSINESS.

       (a) Cash Accounting Permitted.--
       (1) In general.--Section 446 (relating to general rule for 
     methods of accounting) is amended by adding at the end the 
     following new subsection:
       ``(g) Certain Small Business Taxpayers Permitted To Use 
     Cash Accounting Method Without Limitation.--
       ``(1) In general.--An eligible taxpayer shall not be 
     required to use an accrual method of accounting for any 
     taxable year.
       ``(2) Eligible taxpayer.--For purposes of this subsection, 
     a taxpayer is an eligible taxpayer with respect to any 
     taxable year if--
       ``(A) for each of the prior taxable years ending on or 
     after the date of the enactment of this subsection, the 
     taxpayer (or any predecessor) met the gross receipts test in 
     effect under section 448(c) for such taxable year, and
       ``(B) the taxpayer is not subject to section 447 or 448.''.
       (2) Expansion of gross receipts test.--
       (A) In general.--Paragraph (3) of section 448(b) (relating 
     to entities with gross receipts of not more than $5,000,000) 
     is amended to read as follows:
       ``(3) Entities meeting gross receipts test.--Paragraphs (1) 
     and (2) of subsection (a) shall not apply to any corporation 
     or partnership for any taxable year if, for each of the prior 
     taxable years ending on or after the date of the enactment of 
     the Small Business and Work Opportunity Act of 2007, the 
     entity (or any predecessor) met the gross receipts test in 
     effect under subsection (c) for such prior taxable year.''.
       (B) Conforming amendments.--Section 448(c) of such Code is 
     amended--
       (i) by striking ``$5,000,000'' in the heading thereof,
       (ii) by striking ``$5,000,000'' each place it appears in 
     paragraph (1) and inserting ``$10,000,000'', and

[[Page S3960]]

       (iii) by adding at the end the following new paragraph:
       ``(4) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2008, the dollar 
     amount contained in paragraph (1) shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2007' for 
     `calendar year 1992' in subparagraph (B) thereof.
       ``If any amount as adjusted under this subparagraph is not 
     a multiple of $100,000, such amount shall be rounded to the 
     nearest multiple of $100,000.''.
       (b) Clarification of Inventory Rules for Small Business.--
       (1) In general.--Section 471 (relating to general rule for 
     inventories) is amended by redesignating subsection (c) as 
     subsection (d) and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Small Business Taxpayers Not Required To Use 
     Inventories.--
       ``(1) In general.--A qualified taxpayer shall not be 
     required to use inventories under this section for a taxable 
     year.
       ``(2) Treatment of taxpayers not using inventories.--If a 
     qualified taxpayer does not use inventories with respect to 
     any property for any taxable year beginning after the date of 
     the enactment of this subsection, such property shall be 
     treated as a material or supply which is not incidental.
       ``(3) Qualified taxpayer.--For purposes of this subsection, 
     the term `qualified taxpayer' means--
       ``(A) any eligible taxpayer (as defined in section 
     446(g)(2)), and
       ``(B) any taxpayer described in section 448(b)(3).''.
       (2) Conforming amendments.--
       (A) Subpart D of part II of subchapter E of chapter 1 is 
     amended by striking section 474.
       (B) The table of sections for subpart D of part II of 
     subchapter E of chapter 1 is amended by striking the item 
     relating to section 474.
       (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. 514. EXTENSION AND MODIFICATION OF COMBINED WORK 
                   OPPORTUNITY TAX CREDIT AND WELFARE-TO-WORK 
                   CREDIT.

       (a) Extension.--Section 51(c)(4)(B) (relating to 
     termination) is amended by striking ``2007'' and inserting 
     ``2012''.
       (b) Increase in Maximum Age for Designated Community 
     Residents.--
       (1) In general.--Paragraph (5) of section 51(d) is amended 
     to read as follows:
       ``(5) Designated community residents.--
       ``(A) In general.--The term `designated community resident' 
     means any individual who is certified by the designated local 
     agency--
       ``(i) as having attained age 18 but not age 40 on the 
     hiring date, and
       ``(ii) as having his principal place of abode within an 
     empowerment zone, enterprise community, renewal community, or 
     rural renewal county.
       ``(B) Individual must continue to reside in zone, 
     community, or county.--In the case of a designated community 
     resident, the term `qualified wages' shall not include wages 
     paid or incurred for services performed while the 
     individual's principal place of abode is outside an 
     empowerment zone, enterprise community, renewal community, or 
     rural renewal county.
       ``(C) Rural renewal county.--For purposes of this 
     paragraph, the term `rural renewal county' means any county 
     which--
       ``(i) is outside a metropolitan statistical area (defined 
     as such by the Office of Management and Budget), and
       ``(ii) during the 5-year periods 1990 through 1994 and 1995 
     through 1999 had a net population loss.''.
       (2) Conforming amendment.--Subparagraph (D) of section 
     51(d)(1) is amended to read as follows:
       ``(D) a designated community resident,''.
       (c) Clarification of Treatment of Individuals Under 
     Individual Work Plans.--Subparagraph (B) of section 51(d)(6) 
     (relating to vocational rehabilitation referral) is amended 
     by striking ``or'' at the end of clause (i), by striking the 
     period at the end of clause (ii) and inserting ``, or'', and 
     by adding at the end the following new clause:
       ``(iii) an individual work plan developed and implemented 
     by an employment network pursuant to subsection (g) of 
     section 1148 of the Social Security Act with respect to which 
     the requirements of such subsection are met.''.
       (d) Treatment of Disabled Veterans Under the Work 
     Opportunity Tax Credit.--
       (1) Disabled veterans treated as members of targeted 
     group.--
       (A) In general.--Subparagraph (A) of section 51(d)(3) 
     (relating to qualified veteran) is amended by striking 
     ``agency as being a member of a family'' and all that follows 
     and inserting ``agency as--
       ``(i) being a member of a family receiving assistance under 
     a food stamp program under the Food Stamp Act of 1977 for at 
     least a 3-month period ending during the 12-month period 
     ending on the hiring date, or
       ``(ii) entitled to compensation for a service-connected 
     disability incurred after September 10, 2001.''.
       (B) Definitions.--Paragraph (3) of section 51(d) is amended 
     by adding at the end the following new subparagraph:
       ``(C) Other definitions.--For purposes of subparagraph (A), 
     the terms `compensation' and `service-connected' have the 
     meanings given such terms under section 101 of title 38, 
     United States Code.''.
       (2) Increase in amount of wages taken into account for 
     disabled veterans.--Paragraph (3) of section 51(b) is 
     amended--
       (A) by inserting ``($12,000 per year in the case of any 
     individual who is a qualified veteran by reason of subsection 
     (d)(3)(A)(ii))'' before the period at the end, and
       (B) by striking ``ONLY FIRST $6,000 OF'' in the heading and 
     inserting ``LIMITATION ON''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after the date of the enactment of this Act, in taxable years 
     ending after such date.

     SEC. 515. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       (a) Employment Taxes.--Chapter 25 (relating to general 
     provisions relating to employment taxes) is amended by adding 
     at the end the following new section:

     ``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

       ``(a) General Rules.--For purposes of the taxes, and other 
     obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer (and no other person shall be 
     treated as the employer) of any work site employee performing 
     services for any customer of such organization, but only with 
     respect to remuneration remitted by such organization to such 
     work site employee, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(b) Successor Employer Status.--For purposes of sections 
     3121(a)(1), 3231(e)(2)(C), and 3306(b)(1)--
       ``(1) a certified professional employer organization 
     entering into a service contract with a customer with respect 
     to a work site employee shall be treated as a successor 
     employer and the customer shall be treated as a predecessor 
     employer during the term of such service contract, and
       ``(2) a customer whose service contract with a certified 
     professional employer organization is terminated with respect 
     to a work site employee shall be treated as a successor 
     employer and the certified professional employer organization 
     shall be treated as a predecessor employer.
       ``(c) Liability of Certified Professional Employer 
     Organization.--Solely for purposes of its liability for the 
     taxes, and other obligations, imposed by this subtitle--
       ``(1) a certified professional employer organization shall 
     be treated as the employer of any individual (other than a 
     work site employee or a person described in subsection (f)) 
     who is performing services covered by a contract meeting the 
     requirements of section 7705(e)(2), but only with respect to 
     remuneration remitted by such organization to such 
     individual, and
       ``(2) exclusions, definitions, and other rules which are 
     based on the type of employer and which would (but for 
     paragraph (1)) apply shall apply with respect to such taxes 
     imposed on such remuneration.
       ``(d) Treatment of Credits.--
       ``(1) In general.--For purposes of any credit specified in 
     paragraph (2)--
       ``(A) such credit with respect to a work site employee 
     performing services for the customer applies to the customer, 
     not the certified professional employer organization,
       ``(B) the customer, and not the certified professional 
     employer organization, shall take into account wages and 
     employment taxes--
       ``(i) paid by the certified professional employer 
     organization with respect to the work site employee, and
       ``(ii) for which the certified professional employer 
     organization receives payment from the customer, and
       ``(C) the certified professional employer organization 
     shall furnish the customer with any information necessary for 
     the customer to claim such credit.
       ``(2) Credits specified.--A credit is specified in this 
     paragraph if such credit is allowed under--
       ``(A) section 41 (credit for increasing research activity),
       ``(B) section 45A (Indian employment credit),
       ``(C) section 45B (credit for portion of employer social 
     security taxes paid with respect to employee cash tips),
       ``(D) section 45C (clinical testing expenses for certain 
     drugs for rare diseases or conditions),
       ``(E) section 51 (work opportunity credit),
       ``(F) section 51A (temporary incentives for employing long-
     term family assistance recipients),
       ``(G) section 1396 (empowerment zone employment credit),
       ``(H) 1400(d) (DC Zone employment credit),
       ``(I) Section 1400H (renewal community employment credit), 
     and
       ``(J) any other section as provided by the Secretary.
       ``(e) Special Rule for Related Party.--This section shall 
     not apply in the case of a customer which bears a 
     relationship to a certified professional employer 
     organization described in section 267(b) or 707(b). For 
     purposes of the preceding sentence, such sections shall be 
     applied by substituting `10 percent' for `50 percent'.

[[Page S3961]]

       ``(f) Special Rule for Certain Individuals.--For purposes 
     of the taxes imposed under this subtitle, an individual with 
     net earnings from self-employment derived from the customer's 
     trade or business is not a work site employee with respect to 
     remuneration paid by a certified professional employer 
     organization.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Certified Professional Employer Organization Defined.--
     Chapter 79 (relating to definitions) is amended by adding at 
     the end the following new section:

     ``SEC. 7705. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS 
                   DEFINED.

       ``(a) In General.--For purposes of this title, the term 
     `certified professional employer organization' means a person 
     who has been certified by the Secretary for purposes of 
     section 3511 as meeting the requirements of subsection (b).
       ``(b) General Requirements.--A person meets the 
     requirements of this subsection if such person--
       ``(1) demonstrates that such person (and any owner, 
     officer, and such other persons as may be specified in 
     regulations) meets such requirements as the Secretary shall 
     establish with respect to tax status, background, experience, 
     business location, and annual financial audits,
       ``(2) computes its taxable income using an accrual method 
     of accounting unless the Secretary approves another method,
       ``(3) agrees that it will satisfy the bond and independent 
     financial review requirements of subsection (c) on an ongoing 
     basis,
       ``(4) agrees that it will satisfy such reporting 
     obligations as may be imposed by the Secretary,
       ``(5) agrees to verify on such periodic basis as the 
     Secretary may prescribe that it continues to meet the 
     requirements of this subsection, and
       ``(6) agrees to notify the Secretary in writing within such 
     time as the Secretary may prescribe of any change that 
     materially affects whether it continues to meet the 
     requirements of this subsection.
       ``(c) Bond and Independent Financial Review Requirements.--
       ``(1) In general.--An organization meets the requirements 
     of this paragraph if such organization--
       ``(A) meets the bond requirements of paragraph (2), and
       ``(B) meets the independent financial review requirements 
     of paragraph (3).
       ``(2) Bond.--
       ``(A) In general.--A certified professional employer 
     organization meets the requirements of this paragraph if the 
     organization has posted a bond for the payment of taxes under 
     subtitle C (in a form acceptable to the Secretary) in an 
     amount at least equal to the amount specified in subparagraph 
     (B).
       ``(B) Amount of bond.--For the period April 1 of any 
     calendar year through March 31 of the following calendar 
     year, the amount of the bond required is equal to the greater 
     of--
       ``(i) 5 percent of the organization's liability under 
     section 3511 for taxes imposed by subtitle C during the 
     preceding calendar year (but not to exceed $1,000,000), or
       ``(ii) $50,000.
       ``(3) Independent financial review requirements.--A 
     certified professional employer organization meets the 
     requirements of this paragraph if such organization--
       ``(A) has, as of the most recent review date, caused to be 
     prepared and provided to the Secretary (in such manner as the 
     Secretary may prescribe) an opinion of an independent 
     certified public accountant that the certified professional 
     employer organization's financial statements are presented 
     fairly in accordance with generally accepted accounting 
     principles, and
       ``(B) provides, not later than the last day of the second 
     month beginning after the end of each calendar quarter, to 
     the Secretary from an independent certified public accountant 
     an assertion regarding Federal employment tax payments and an 
     examination level attestation on such assertion.
     Such assertion shall state that the organization has withheld 
     and made deposits of all taxes imposed by chapters 21, 22, 
     and 24 of the Internal Revenue Code in accordance with 
     regulations imposed by the Secretary for such calendar 
     quarter and such examination level attestation shall state 
     that such assertion is fairly stated, in all material 
     respects.
       ``(4) Controlled group rules.--For purposes of the 
     requirements of paragraphs (2) and (3), all professional 
     employer organizations that are members of a controlled group 
     within the meaning of sections 414(b) and (c) shall be 
     treated as a single organization.
       ``(5) Failure to file assertion and attestation.--If the 
     certified professional employer organization fails to file 
     the assertion and attestation required by paragraph (3) with 
     respect to any calendar quarter, then the requirements of 
     paragraph (3) with respect to such failure shall be treated 
     as not satisfied for the period beginning on the due date for 
     such attestation.
       ``(6) Review date.--For purposes of paragraph (3)(A), the 
     review date shall be 6 months after the completion of the 
     organization's fiscal year.
       ``(d) Suspension and Revocation Authority.--The Secretary 
     may suspend or revoke a certification of any person under 
     subsection (b) for purposes of section 3511 if the Secretary 
     determines that such person is not satisfying the 
     representations or requirements of subsections (b) or (c), or 
     fails to satisfy applicable accounting, reporting, payment, 
     or deposit requirements.
       ``(e) Work Site Employee.--For purposes of this title--
       ``(1) In general.--The term `work site employee' means, 
     with respect to a certified professional employer 
     organization, an individual who--
       ``(A) performs services for a customer pursuant to a 
     contract which is between such customer and the certified 
     professional employer organization and which meets the 
     requirements of paragraph (2), and
       ``(B) performs services at a work site meeting the 
     requirements of paragraph (3).
       ``(2) Service contract requirements.--A contract meets the 
     requirements of this paragraph with respect to an individual 
     performing services for a customer if such contract is in 
     writing and provides that the certified professional employer 
     organization shall--
       ``(A) assume responsibility for payment of wages to such 
     individual, without regard to the receipt or adequacy of 
     payment from the customer for such services,
       ``(B) assume responsibility for reporting, withholding, and 
     paying any applicable taxes under subtitle C, with respect to 
     such individual's wages, without regard to the receipt or 
     adequacy of payment from the customer for such services,
       ``(C) assume responsibility for any employee benefits which 
     the service contract may require the organization to provide, 
     without regard to the receipt or adequacy of payment from the 
     customer for such services,
       ``(D) assume responsibility for hiring, firing, and 
     recruiting workers in addition to the customer's 
     responsibility for hiring, firing and recruiting workers,
       ``(E) maintain employee records relating to such 
     individual, and
       ``(F) agree to be treated as a certified professional 
     employer organization for purposes of section 3511 with 
     respect to such individual.
       ``(3) Work site coverage requirement.--The requirements of 
     this paragraph are met with respect to an individual if at 
     least 85 percent of the individuals performing services for 
     the customer at the work site where such individual performs 
     services are subject to 1 or more contracts with the 
     certified professional employer organization which meet the 
     requirements of paragraph (2) (but not taking into account 
     those individuals who are excluded employees within the 
     meaning of section 414(q)(5)).
       ``(f) Determination of Employment Status.--Except to the 
     extent necessary for purposes of section 3511, nothing in 
     this section shall be construed to affect the determination 
     of who is an employee or employer for purposes of this title.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (c) Conforming Amendments.--
       (1) Section 3302 is amended by adding at the end the 
     following new subsection:
       ``(h) Treatment of Certified Professional Employer 
     Organizations.--If a certified professional employer 
     organization (as defined in section 7705), or a customer of 
     such organization, makes a contribution to the State's 
     unemployment fund with respect to a work site employee, such 
     organization shall be eligible for the credits available 
     under this section with respect to such contribution.''.
       (2) Section 3303(a) is amended--
       (A) by striking the period at the end of paragraph (3) and 
     inserting ``; and'' and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) if the taxpayer is a certified professional employer 
     organization (as defined in section 7705) that is treated as 
     the employer under section 3511, such certified professional 
     employer organization is permitted to collect and remit, in 
     accordance with paragraphs (1), (2), and (3), contributions 
     during the taxable year to the State unemployment fund with 
     respect to a work site employee.'', and
       (B) in the last sentence--
       (i) by striking ``paragraphs (1), (2), and (3)'' and 
     inserting ``paragraphs (1), (2), (3), and (4)'', and
       (ii) by striking ``paragraph (1), (2), or (3)'' and 
     inserting ``paragraph (1), (2), (3), or (4)''.
       (3) Section 6053(c) (relating to reporting of tips) is 
     amended by adding at the end the following new paragraph:
       ``(8) Certified professional employer organizations.--For 
     purposes of any report required by this subsection, in the 
     case of a certified professional employer organization that 
     is treated under section 3511 as the employer of a work site 
     employee, the customer with respect to whom a work site 
     employee performs services shall be the employer for purposes 
     of reporting under this section and the certified 
     professional employer organization shall furnish to the 
     customer any information necessary to complete such reporting 
     no later than such time as the Secretary shall prescribe.''.
       (d) Clerical Amendments.--
       (1) The table of sections for chapter 25 is amended by 
     adding at the end the following new item:

``Sec. 3511. Certified professional employer organizations''.
       (2) The table of sections for chapter 79 is amended by 
     inserting after the item relating to section 7704 the 
     following new item:


[[Page S3962]]


``Sec. 7705. Certified professional employer organizations defined''.
       (e) Reporting Requirements and Obligations.--The Secretary 
     of the Treasury shall develop such reporting and 
     recordkeeping rules, regulations, and procedures as the 
     Secretary determines necessary or appropriate to ensure 
     compliance with the amendments made by this section with 
     respect to entities applying for certification as certified 
     professional employer organizations or entities that have 
     been so certified. Such rules shall be designed in a manner 
     which streamlines, to the extent possible, the application of 
     requirements of such amendments, the exchange of information 
     between a certified professional employer organization and 
     its customers, and the reporting and recordkeeping 
     obligations of the certified professional employer 
     organization.
       (f) User Fees.--Subsection (b) of section 7528 (relating to 
     Internal Revenue Service user fees) is amended by adding at 
     the end the following new paragraph:
       ``(4) Certified professional employer organizations.--The 
     fee charged under the program in connection with the 
     certification by the Secretary of a professional employer 
     organization under section 7705 shall not exceed $500.''.
       (g) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to wages for services performed on or 
     after January 1 of the first calendar year beginning more 
     than 12 months after the date of the enactment of this Act.
       (2) Certification program.--The Secretary of the Treasury 
     shall establish the certification program described in 
     section 7705(b) of the Internal Revenue Code of 1986, as 
     added by subsection (b), not later than 6 months before the 
     effective date determined under paragraph (1).
       (h) No Inference.--Nothing contained in this section or the 
     amendments made by this section shall be construed to create 
     any inference with respect to the determination of who is an 
     employee or employer--
       (1) for Federal tax purposes (other than the purposes set 
     forth in the amendments made by this section), or
       (2) for purposes of any other provision of law.

     SEC. 516. ACCELERATED DEPRECIATION FOR INVESTMENT IN HIGH 
                   OUT-MIGRATION COUNTIES.

       (a) In General.--Section 168 (relating to accelerated cost 
     recovery system) is amended by adding at the end the 
     following new subsection:
       ``(m) Rural Investment Property.--
       ``(1) In general.--For purposes of subsection (a), the 
     applicable recovery period for qualified rural investment 
     property shall be determined in accordance with the table 
     contained in paragraph (2) in lieu of the table contained in 
     subsection (c).
       ``(2) Applicable recovery period for rural investment 
     property.--For purposes of paragraph (1)--
                                                         The applicable
``  ``In the case of:                               recovery period is:
    3-year property...........................................2 years  
    5-year property...........................................3 years  
    7-year property...........................................4 years  
    10-year property..........................................6 years  
    15-year property..........................................9 years  
    20-year property.........................................12 years  
    Nonresidential real property..............................22 years.
       ``(3) Qualified rural investment property defined.--For 
     purposes of this subsection--
       ``(A) In general.--The term `qualified rural investment 
     property' means property which is property described in the 
     table in paragraph (2) and which is--
       ``(i) used by the taxpayer predominantly in the active 
     conduct of a trade or business within a high out-migration 
     county,
       ``(ii) not used or located outside such county on a regular 
     basis,
       ``(iii) not acquired (directly or indirectly) by the 
     taxpayer from a person who is related to the taxpayer (within 
     the meaning of section 465(b)(3)(C)), and
       ``(iv) not property (or any portion thereof) placed in 
     service for purposes of operating any racetrack or other 
     facility used for gambling.
       ``(B) High out-migration county.--The term `high out-
     migration county' means any county which--
       ``(i) is outside a metropolitan statistical area (defined 
     as such by the Office of Management and Budget), and
       ``(ii) during the 5-year periods 1990 through 1994 and 1995 
     through 1999 had a net population loss.
       ``(4) Termination.--This subsection shall not apply to 
     property placed in service after March 31, 2008.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act, the original use of which begins 
     with the taxpayer after such date.

     SEC. 517. EXTENSION OF INCREASED EXPENSING FOR QUALIFIED 
                   SECTION 179 GULF OPPORTUNITY ZONE PROPERTY.

       Paragraph (2) of section 1400N(e) (relating to qualified 
     section 179 Gulf Opportunity Zone property) is amended--
       (1) by striking ``this subsection, the term'' and inserting 
     ``this subsection--
       ``(A) In general.--The term'', and
       (2) by adding at the end the following new subparagraph:
       ``(B) Extension for certain property.--In the case of 
     property substantially all of the use of which is in one or 
     more specified portions of the GO Zone (as defined by 
     subsection (d)(6)), such term shall include section 179 
     property (as so defined) which is described in subsection 
     (d)(2), determined--
       ``(i) without regard to subsection (d)(6), and
       ``(ii) by substituting `2008' for `2007' in subparagraph 
     (A)(v) thereof.''.

                   Subpart B--Subchapter S Provisions

     SEC. 521. CAPITAL GAIN OF S CORPORATION NOT TREATED AS 
                   PASSIVE INVESTMENT INCOME.

       (a) In General.--Section 1362(d)(3) is amended by striking 
     subparagraphs (B), (C), (D), (E), and (F) and inserting the 
     following new subparagraph:
       ``(B) Passive investment income defined.--
       ``(i) In general.--Except as otherwise provided in this 
     subparagraph, the term `passive investment income' means 
     gross receipts derived from royalties, rents, dividends, 
     interest, and annuities.
       ``(ii) Exception for interest on notes from sales of 
     inventory.--The term `passive investment income' shall not 
     include interest on any obligation acquired in the ordinary 
     course of the corporation's trade or business from its sale 
     of property described in section 1221(a)(1).
       ``(iii) Treatment of certain lending or finance 
     companies.--If the S corporation meets the requirements of 
     section 542(c)(6) for the taxable year, the term `passive 
     investment income' shall not include gross receipts for the 
     taxable year which are derived directly from the active and 
     regular conduct of a lending or finance business (as defined 
     in section 542(d)(1)).
       ``(iv) Treatment of certain dividends.--If an S corporation 
     holds stock in a C corporation meeting the requirements of 
     section 1504(a)(2), the term `passive investment income' 
     shall not include dividends from such C corporation to the 
     extent such dividends are attributable to the earnings and 
     profits of such C corporation derived from the active conduct 
     of a trade or business.
       ``(v) Exception for banks, etc.--In the case of a bank (as 
     defined in section 581) or a depository institution holding 
     company (as defined in section 3(w)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1813(w)(1)), the term `passive 
     investment income' shall not include--

       ``(I) interest income earned by such bank or company, or
       ``(II) dividends on assets required to be held by such bank 
     or company, including stock in the Federal Reserve Bank, the 
     Federal Home Loan Bank, or the Federal Agricultural Mortgage 
     Bank or participation certificates issued by a Federal 
     Intermediate Credit Bank.''.

       (b) Conforming Amendment.--Clause (i) of section 
     1042(c)(4)(A) is amended by striking ``section 
     1362(d)(3)(C)'' and inserting ``section 1362(d)(3)(B)''.
       (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. 522. TREATMENT OF BANK DIRECTOR SHARES.

       (a) In General.--Section 1361 (defining S corporation) is 
     amended by adding at the end the following new subsection:
       ``(f) Restricted Bank Director Stock.--
       ``(1) In general.--Restricted bank director stock shall not 
     be taken into account as outstanding stock of the S 
     corporation in applying this subchapter (other than section 
     1368(f)).
       ``(2) Restricted bank director stock.--For purposes of this 
     subsection, the term `restricted bank director stock' means 
     stock in a bank (as defined in section 581) or a depository 
     institution holding company (as defined in section 3(w)(1) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1)), if 
     such stock--
       ``(A) is required to be held by an individual under 
     applicable Federal or State law in order to permit such 
     individual to serve as a director, and
       ``(B) is subject to an agreement with such bank or company 
     (or a corporation which controls (within the meaning of 
     section 368(c)) such bank or company) pursuant to which the 
     holder is required to sell back such stock (at the same price 
     as the individual acquired such stock) upon ceasing to hold 
     the office of director.
       ``(3) Cross reference.--

``For treatment of certain distributions with respect to restricted 
              bank director stock, see section 1368(f)''.
       (b) Distributions.--Section 1368 (relating to 
     distributions) is amended by adding at the end the following 
     new subsection:
       ``(f) Restricted Bank Director Stock.--If a director 
     receives a distribution (not in part or full payment in 
     exchange for stock) from an S corporation with respect to any 
     restricted bank director stock (as defined in section 
     1361(f)), the amount of such distribution--
       ``(1) shall be includible in gross income of the director, 
     and
       ``(2) shall be deductible by the corporation for the 
     taxable year of such corporation in which or with which ends 
     the taxable year in

[[Page S3963]]

     which such amount in included in the gross income of the 
     director.''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006.
       (2) Special rule for treatment as second class of stock.--
     In the case of any taxable year beginning after December 31, 
     1996, restricted bank director stock (as defined in section 
     1361(f) of the Internal Revenue Code of 1986, as added by 
     this section) shall not be taken into account in determining 
     whether an S corporation has more than 1 class of stock.

     SEC. 523. SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE 
                   RESERVE METHOD OF ACCOUNTING ON BECOMING S 
                   CORPORATION.

       (a) In General.--Section 1361, as amended by this Act, is 
     amended by adding at the end the following new subsection:
       ``(g) Special Rule for Bank Required To Change From the 
     Reserve Method of Accounting on Becoming S Corporation.--In 
     the case of a bank which changes from the reserve method of 
     accounting for bad debts described in section 585 or 593 for 
     its first taxable year for which an election under section 
     1362(a) is in effect, the bank may elect to take into account 
     any adjustments under section 481 by reason of such change 
     for the taxable year immediately preceding such first taxable 
     year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 524. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED 
                   SUBCHAPTER S SUBSIDIARY.

       (a) In General.--Subparagraph (C) of section 1361(b)(3) 
     (relating to treatment of terminations of qualified 
     subchapter S subsidiary status) is amended--
       (1) by striking ``For purposes of this title,'' and 
     inserting the following:
       ``(i) In general.--For purposes of this title,'', and
       (2) by inserting at the end the following new clause:
       ``(ii) Termination by reason of sale of stock.--If the 
     failure to meet the requirements of subparagraph (B) is by 
     reason of the sale of stock of a corporation which is a 
     qualified subchapter S subsidiary, the sale of such stock 
     shall be treated as if--

       ``(I) the sale were a sale of an undivided interest in the 
     assets of such corporation (based on the percentage of the 
     corporation's stock sold), and
       ``(II) the sale were followed by an acquisition by such 
     corporation of all of its assets (and the assumption by such 
     corporation of all of its liabilities) in a transaction to 
     which section 351 applies.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006 .

     SEC. 525. ELIMINATION OF ALL EARNINGS AND PROFITS 
                   ATTRIBUTABLE TO PRE-1983 YEARS FOR CERTAIN 
                   CORPORATIONS.

       In the case of a corporation which is--
       (1) described in section 1311(a)(1) of the Small Business 
     Job Protection Act of 1996, and
       (2) not described in section 1311(a)(2) of such Act,



       the amount of such corporation's accumulated earnings and 
     profits (for the first taxable year beginning after the date 
     of the enactment of this Act) shall be reduced by an amount 
     equal to the portion (if any) of such accumulated earnings 
     and profits which were accumulated in any taxable year 
     beginning before January 1, 1983, for which such corporation 
     was an electing small business corporation under subchapter S 
     of the Internal Revenue Code of 1986.

     SEC. 526. EXPANSION OF QUALIFYING BENEFICIARIES OF AN 
                   ELECTING SMALL BUSINESS TRUST.

       (a) No Look Through for Eligibility Purposes.--Clause (v) 
     of section 1361(c)(2)(B) is amended by adding at the end the 
     following new sentence: ``This clause shall not apply for 
     purposes of subsection (b)(1)(C).''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 527. DEDUCTIBILITY OF INTEREST EXPENSE ON INDEBTEDNESS 
                   INCURRED BY AN ELECTING SMALL BUSINESS TRUST TO 
                   ACQUIRE S CORPORATION STOCK.

       (a) In General.--Subparagraph (C) of section 641(c)(2) 
     (relating to modifications) is amended by inserting after 
     clause (iii) the following new clause:
       ``(iv) Any interest expense paid or accrued on indebtedness 
     incurred to acquire stock in an S corporation.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

                      PART II--REVENUE PROVISIONS

     SEC. 531. MODIFICATION OF EFFECTIVE DATE OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) Leases to Foreign Entities.--Section 849(b) of the 
     American Jobs Creation Act of 2004 is amended by adding at 
     the end the following new paragraph:
       ``(5) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2006, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.

     SEC. 532. APPLICATION OF RULES TREATING INVERTED CORPORATIONS 
                   AS DOMESTIC CORPORATIONS TO CERTAIN 
                   TRANSACTIONS OCCURRING AFTER MARCH 20, 2002.

       (a) In General.--Section 7874(b) (relating to inverted 
     corporations treated as domestic corporations) is amended to 
     read as follows:
       ``(b) Inverted Corporations Treated as Domestic 
     Corporations.--
       ``(1) In general.--Notwithstanding section 7701(a)(4), a 
     foreign corporation shall be treated for purposes of this 
     title as a domestic corporation if such corporation would be 
     a surrogate foreign corporation if subsection (a)(2) were 
     applied by substituting `80 percent' for `60 percent'.
       ``(2) Special rule for certain transactions occurring after 
     march 20, 2002.--
       ``(A) In general.--If--
       ``(i) paragraph (1) does not apply to a foreign 
     corporation, but
       ``(ii) paragraph (1) would apply to such corporation if, in 
     addition to the substitution under paragraph (1), subsection 
     (a)(2) were applied by substituting `March 20, 2002' for 
     `March 4, 2003' each place it appears,
     then paragraph (1) shall apply to such corporation but only 
     with respect to taxable years of such corporation beginning 
     after December 31, 2006.
       ``(B) Special rules.--Subject to such rules as the 
     Secretary may prescribe, in the case of a corporation to 
     which paragraph (1) applies by reason of this paragraph--
       ``(i) the corporation shall be treated, as of the close of 
     its last taxable year beginning before January 1, 2007, as 
     having transferred all of its assets, liabilities, and 
     earnings and profits to a domestic corporation in a 
     transaction with respect to which no tax is imposed under 
     this title,
       ``(ii) the bases of the assets transferred in the 
     transaction to the domestic corporation shall be the same as 
     the bases of the assets in the hands of the foreign 
     corporation, subject to any adjustments under this title for 
     built-in losses,
       ``(iii) the basis of the stock of any shareholder in the 
     domestic corporation shall be the same as the basis of the 
     stock of the shareholder in the foreign corporation for which 
     it is treated as exchanged, and
       ``(iv) the transfer of any earnings and profits by reason 
     of clause (i) shall be disregarded in determining any deemed 
     dividend or foreign tax creditable to the domestic 
     corporation with respect to such transfer.
       ``(C) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this paragraph, including regulations to prevent the 
     avoidance of the purposes of this paragraph.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 533. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.

       (a) Disallowance of Deduction.--
       (1) In general.--Section 162(g) (relating to treble damage 
     payments under the antitrust laws) is amended--
       (A) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively,
       (B) by striking ``If'' and inserting:
       ``(1) Treble damages.--If'', and
       (C) by adding at the end the following new paragraph:
       ``(2) Punitive damages.--No deduction shall be allowed 
     under this chapter for any amount paid or incurred for 
     punitive damages in connection with any judgment in, or 
     settlement of, any action. This paragraph shall not apply to 
     punitive damages described in section 104(c).''.
       (2) Conforming amendment.--The heading for section 162(g) 
     is amended by inserting ``Or Punitive Damages'' after 
     ``Laws''.
       (b) Inclusion in Income of Punitive Damages Paid by Insurer 
     or Otherwise.--
       (1) In general.--Part II of subchapter B of chapter 1 
     (relating to items specifically included in gross income) is 
     amended by adding at the end the following new section:

     ``SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSURANCE OR 
                   OTHERWISE.

       ``Gross income shall include any amount paid to or on 
     behalf of a taxpayer as insurance or otherwise by reason of 
     the taxpayer's liability (or agreement) to pay punitive 
     damages.''.
       (2) Reporting requirements.--Section 6041 (relating to 
     information at source) is amended by adding at the end the 
     following new subsection:
       ``(h) Section To Apply to Punitive Damages Compensation.--
     This section shall apply to payments by a person to or on 
     behalf of another person as insurance or otherwise by reason 
     of the other person's liability (or agreement) to pay 
     punitive damages.''.
       (3) Conforming amendment.--The table of sections for part 
     II of subchapter B of chapter 1 is amended by adding at the 
     end the following new item:

``Sec. 91. Punitive damages compensated by insurance or otherwise''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to damages paid or incurred on or after the date 
     of the enactment of this Act.

     SEC. 534. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, 
                   AND OTHER AMOUNTS.

       (a) In General.--Subsection (f) of section 162 (relating to 
     trade or business expenses) is amended to read as follows:
       ``(f) Fines, Penalties, and Other Amounts.--

[[Page S3964]]

       ``(1) In general.--Except as provided in paragraph (2), no 
     deduction otherwise allowable shall be allowed under this 
     chapter for any amount paid or incurred (whether by suit, 
     agreement, or otherwise) to, or at the direction of, a 
     government or entity described in paragraph (4) in relation 
     to--
       ``(A) the violation of any law, or
       ``(B) an investigation or inquiry into the potential 
     violation of any law which is initiated by such government or 
     entity.
       ``(2) Exception for amounts constituting restitution or 
     paid to come into compliance with law.--Paragraph (1) shall 
     not apply to any amount which--
       ``(A) the taxpayer establishes--
       ``(i) constitutes restitution (or remediation of property) 
     for damage or harm caused by, or which may be caused by, the 
     violation of any law or the potential violation of any law, 
     or
       ``(ii) is paid to come into compliance with any law which 
     was violated or involved in the investigation or inquiry, and
       ``(B) is identified as an amount described in clause (i) or 
     (ii) of subparagraph (A), as the case may be, in the court 
     order or settlement agreement, except that the requirement of 
     this subparagraph shall not apply in the case of any 
     settlement agreement which requires the taxpayer to pay or 
     incur an amount not greater than $1,000,000.
     A taxpayer shall not meet the requirements of subparagraph 
     (A) solely by reason an identification under subparagraph 
     (B). This paragraph shall not apply to any amount paid or 
     incurred as reimbursement to the government or entity for the 
     costs of any investigation or litigation unless such amount 
     is paid or incurred for a cost or fee regularly charged for 
     any routine audit or other customary review performed by the 
     government or entity.
       ``(3) Exception for amounts paid or incurred as the result 
     of certain court orders.--Paragraph (1) shall not apply to 
     any amount paid or incurred by order of a court in a suit in 
     which no government or entity described in paragraph (4) is a 
     party.
       ``(4) Certain nongovernmental regulatory entities.--An 
     entity is described in this paragraph if it is--
       ``(A) a nongovernmental entity which exercises self-
     regulatory powers (including imposing sanctions) in 
     connection with a qualified board or exchange (as defined in 
     section 1256(g)(7)), or
       ``(B) to the extent provided in regulations, a 
     nongovernmental entity which exercises self-regulatory powers 
     (including imposing sanctions) as part of performing an 
     essential governmental function.
       ``(5) Exception for taxes due.--Paragraph (1) shall not 
     apply to any amount paid or incurred as taxes due.''.
       (b) Reporting of Deductible Amounts.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6050V the 
     following new section:

     ``SEC. 6050W. INFORMATION WITH RESPECT TO CERTAIN FINES, 
                   PENALTIES, AND OTHER AMOUNTS.

       ``(a) Requirement of Reporting.--
       ``(1) In general.--The appropriate official of any 
     government or entity which is described in section 162(f)(4) 
     which is involved in a suit or agreement described in 
     paragraph (2) shall make a return in such form as determined 
     by the Secretary setting forth--
       ``(A) the amount required to be paid as a result of the 
     suit or agreement to which paragraph (1) of section 162(f) 
     applies,
       ``(B) any amount required to be paid as a result of the 
     suit or agreement which constitutes restitution or 
     remediation of property, and
       ``(C) any amount required to be paid as a result of the 
     suit or agreement for the purpose of coming into compliance 
     with any law which was violated or involved in the 
     investigation or inquiry.
       ``(2) Suit or agreement described.--
       ``(A) In general.--A suit or agreement is described in this 
     paragraph if--
       ``(i) it is--

       ``(I) a suit with respect to a violation of any law over 
     which the government or entity has authority and with respect 
     to which there has been a court order, or
       ``(II) an agreement which is entered into with respect to a 
     violation of any law over which the government or entity has 
     authority, or with respect to an investigation or inquiry by 
     the government or entity into the potential violation of any 
     law over which such government or entity has authority, and

       ``(ii) the aggregate amount involved in all court orders 
     and agreements with respect to the violation, investigation, 
     or inquiry is $600 or more.
       ``(B) Adjustment of reporting threshold.--The Secretary may 
     adjust the $600 amount in subparagraph (A)(ii) as necessary 
     in order to ensure the efficient administration of the 
     internal revenue laws.
       ``(3) Time of filing.--The return required under this 
     subsection shall be filed not later than--
       ``(A) 30 days after the date on which a court order is 
     issued with respect to the suit or the date the agreement is 
     entered into, as the case may be, or
       ``(B) the date specified by the Secretary.
       ``(b) Statements To Be Furnished to Individuals Involved in 
     the Settlement.--Every person required to make a return under 
     subsection (a) shall furnish to each person who is a party to 
     the suit or agreement a written statement showing--
       ``(1) the name of the government or entity, and
       ``(2) the information supplied to the Secretary under 
     subsection (a)(1).
     The written statement required under the preceding sentence 
     shall be furnished to the person at the same time the 
     government or entity provides the Secretary with the 
     information required under subsection (a).
       ``(c) Appropriate Official Defined.--For purposes of this 
     section, the term `appropriate official' means the officer or 
     employee having control of the suit, investigation, or 
     inquiry or the person appropriately designated for purposes 
     of this section.''.
       (2) Conforming amendment.--The table of sections for 
     subpart B of part III of subchapter A of chapter 61 is 
     amended by inserting after the item relating to section 6050V 
     the following new item:

``Sec. 6050W. Information with respect to certain fines, penalties, and 
              other amounts''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred on or after the date 
     of the enactment of this Act, except that such amendments 
     shall not apply to amounts paid or incurred under any binding 
     order or agreement entered into before such date. Such 
     exception shall not apply to an order or agreement requiring 
     court approval unless the approval was obtained before such 
     date.

     SEC. 535. REVISION OF TAX RULES ON EXPATRIATION OF 
                   INDIVIDUALS.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 is amended by inserting after section 877 the 
     following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rules.--For purposes of this subtitle--
       ``(1) Mark to market.--Except as provided in subsections 
     (d) and (f), all property of a covered expatriate to whom 
     this section applies shall be treated as sold on the day 
     before the expatriation date for its fair market value.
       ``(2) Recognition of gain or loss.--In the case of any sale 
     under paragraph (1)--
       ``(A) notwithstanding any other provision of this title, 
     any gain arising from such sale shall be taken into account 
     for the taxable year of the sale, and
       ``(B) any loss arising from such sale shall be taken into 
     account for the taxable year of the sale to the extent 
     otherwise provided by this title, except that section 1091 
     shall not apply to any such loss.
     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence.
       ``(3) Exclusion for certain gain.--
       ``(A) In general.--The amount which, but for this 
     paragraph, would be includible in the gross income of any 
     individual by reason of this section shall be reduced (but 
     not below zero) by $600,000. For purposes of this paragraph, 
     allocable expatriation gain taken into account under 
     subsection (f)(2) shall be treated in the same manner as an 
     amount required to be includible in gross income.
       ``(B) Cost-of-living adjustment.--
       ``(i) In general.--In the case of an expatriation date 
     occurring in any calendar year after 2007, the $600,000 
     amount under subparagraph (A) shall be increased by an amount 
     equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, determined by 
     substituting `calendar year 2006' for `calendar year 1992' in 
     subparagraph (B) thereof.

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $1,000, such amount 
     shall be rounded to the next lower multiple of $1,000.
       ``(4) Election to continue to be taxed as united states 
     citizen.--
       ``(A) In general.--If a covered expatriate elects the 
     application of this paragraph--
       ``(i) this section (other than this paragraph and 
     subsection (i)) shall not apply to the expatriate, but
       ``(ii) in the case of property to which this section would 
     apply but for such election, the expatriate shall be subject 
     to tax under this title in the same manner as if the 
     individual were a United States citizen.
       ``(B) Requirements.--Subparagraph (A) shall not apply to an 
     individual unless the individual--
       ``(i) provides security for payment of tax in such form and 
     manner, and in such amount, as the Secretary may require,
       ``(ii) consents to the waiver of any right of the 
     individual under any treaty of the United States which would 
     preclude assessment or collection of any tax which may be 
     imposed by reason of this paragraph, and
       ``(iii) complies with such other requirements as the 
     Secretary may prescribe.
       ``(C) Election.--An election under subparagraph (A) shall 
     apply to all property to which this section would apply but 
     for the election and, once made, shall be irrevocable. Such 
     election shall also apply to property the basis of which is 
     determined in whole or in part by reference to the property 
     with respect to which the election was made.
       ``(b) Election To Defer Tax.--
       ``(1) In general.--If the taxpayer elects the application 
     of this subsection with respect to any property treated as 
     sold by reason of subsection (a), the payment of the 
     additional tax attributable to such property shall be 
     postponed until the due date of the return for the taxable 
     year in which such property

[[Page S3965]]

     is disposed of (or, in the case of property disposed of in a 
     transaction in which gain is not recognized in whole or in 
     part, until such other date as the Secretary may prescribe).
       ``(2) Determination of tax with respect to property.--For 
     purposes of paragraph (1), the additional tax attributable to 
     any property is an amount which bears the same ratio to the 
     additional tax imposed by this chapter for the taxable year 
     solely by reason of subsection (a) as the gain taken into 
     account under subsection (a) with respect to such property 
     bears to the total gain taken into account under subsection 
     (a) with respect to all property to which subsection (a) 
     applies.
       ``(3) Termination of postponement.--No tax may be postponed 
     under this subsection later than the due date for the return 
     of tax imposed by this chapter for the taxable year which 
     includes the date of death of the expatriate (or, if earlier, 
     the time that the security provided with respect to the 
     property fails to meet the requirements of paragraph (4), 
     unless the taxpayer corrects such failure within the time 
     specified by the Secretary).
       ``(4) Security.--
       ``(A) In general.--No election may be made under paragraph 
     (1) with respect to any property unless adequate security is 
     provided to the Secretary with respect to such property.
       ``(B) Adequate security.--For purposes of subparagraph (A), 
     security with respect to any property shall be treated as 
     adequate security if--
       ``(i) it is a bond in an amount equal to the deferred tax 
     amount under paragraph (2) for the property, or
       ``(ii) the taxpayer otherwise establishes to the 
     satisfaction of the Secretary that the security is adequate.
       ``(5) Waiver of certain rights.--No election may be made 
     under paragraph (1) unless the taxpayer consents to the 
     waiver of any right under any treaty of the United States 
     which would preclude assessment or collection of any tax 
     imposed by reason of this section.
       ``(6) Elections.--An election under paragraph (1) shall 
     only apply to property described in the election and, once 
     made, is irrevocable. An election may be made under paragraph 
     (1) with respect to an interest in a trust with respect to 
     which gain is required to be recognized under subsection 
     (f)(1).
       ``(7) Interest.--For purposes of section 6601--
       ``(A) the last date for the payment of tax shall be 
     determined without regard to the election under this 
     subsection, and
       ``(B) section 6621(a)(2) shall be applied by substituting 
     `5 percentage points' for `3 percentage points' in 
     subparagraph (B) thereof.
       ``(c) Covered Expatriate.--For purposes of this section--
       ``(1) In general.--Except as provided in paragraph (2), the 
     term `covered expatriate' means an expatriate.
       ``(2) Exceptions.--An individual shall not be treated as a 
     covered expatriate if--
       ``(A) the individual--
       ``(i) became at birth a citizen of the United States and a 
     citizen of another country and, as of the expatriation date, 
     continues to be a citizen of, and is taxed as a resident of, 
     such other country, and
       ``(ii) has not been a resident of the United States (as 
     defined in section 7701(b)(1)(A)(ii)) during the 5 taxable 
     years ending with the taxable year during which the 
     expatriation date occurs, or
       ``(B)(i) the individual's relinquishment of United States 
     citizenship occurs before such individual attains age 18\1/
     2\, and
       ``(ii) the individual has been a resident of the United 
     States (as so defined) for not more than 5 taxable years 
     before the date of relinquishment.
       ``(d) Exempt Property; Special Rules for Pension Plans.--
       ``(1) Exempt property.--This section shall not apply to the 
     following:
       ``(A) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the day before the 
     expatriation date, meet the requirements of section 
     897(c)(2).
       ``(B) Specified property.--Any property or interest in 
     property not described in subparagraph (A) which the 
     Secretary specifies in regulations.
       ``(2) Special rules for certain retirement plans.--
       ``(A) In general.--If a covered expatriate holds on the day 
     before the expatriation date any interest in a retirement 
     plan to which this paragraph applies--
       ``(i) such interest shall not be treated as sold for 
     purposes of subsection (a)(1), but
       ``(ii) an amount equal to the present value of the 
     expatriate's nonforfeitable accrued benefit shall be treated 
     as having been received by such individual on such date as a 
     distribution under the plan.
       ``(B) Treatment of subsequent distributions.--In the case 
     of any distribution on or after the expatriation date to or 
     on behalf of the covered expatriate from a plan from which 
     the expatriate was treated as receiving a distribution under 
     subparagraph (A), the amount otherwise includible in gross 
     income by reason of the subsequent distribution shall be 
     reduced by the excess of the amount includible in gross 
     income under subparagraph (A) over any portion of such amount 
     to which this subparagraph previously applied.
       ``(C) Treatment of subsequent distributions by plan.--For 
     purposes of this title, a retirement plan to which this 
     paragraph applies, and any person acting on the plan's 
     behalf, shall treat any subsequent distribution described in 
     subparagraph (B) in the same manner as such distribution 
     would be treated without regard to this paragraph.
       ``(D) Applicable plans.--This paragraph shall apply to--
       ``(i) any qualified retirement plan (as defined in section 
     4974(c)),
       ``(ii) an eligible deferred compensation plan (as defined 
     in section 457(b)) of an eligible employer described in 
     section 457(e)(1)(A), and
       ``(iii) to the extent provided in regulations, any foreign 
     pension plan or similar retirement arrangements or programs.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes 
     citizenship, and
       ``(B) any long-term resident of the United States who--
       ``(i) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(ii) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.
       ``(2) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date of the event described in clause (i) or (ii) 
     of paragraph (1)(B).
       ``(3) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces such individual's 
     United States nationality before a diplomatic or consular 
     officer of the United States pursuant to paragraph (5) of 
     section 349(a) of the Immigration and Nationality Act (8 
     U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.
     Subparagraph (A) or (B) shall not apply to any individual 
     unless the renunciation or voluntary relinquishment is 
     subsequently approved by the issuance to the individual of a 
     certificate of loss of nationality by the United States 
     Department of State.
       ``(4) Long-term resident.--The term `long-term resident' 
     has the meaning given to such term by section 877(e)(2).
       ``(f) Special Rules Applicable to Beneficiaries' Interests 
     in Trust.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     an individual is determined under paragraph (3) to hold an 
     interest in a trust on the day before the expatriation date--
       ``(A) the individual shall not be treated as having sold 
     such interest,
       ``(B) such interest shall be treated as a separate share in 
     the trust, and
       ``(C)(i) such separate share shall be treated as a separate 
     trust consisting of the assets allocable to such share,
       ``(ii) the separate trust shall be treated as having sold 
     its assets on the day before the expatriation date for their 
     fair market value and as having distributed all of its assets 
     to the individual as of such time, and
       ``(iii) the individual shall be treated as having 
     recontributed the assets to the separate trust.
     Subsection (a)(2) shall apply to any income, gain, or loss of 
     the individual arising from a distribution described in 
     subparagraph (C)(ii). In determining the amount of such 
     distribution, proper adjustments shall be made for 
     liabilities of the trust allocable to an individual's share 
     in the trust.
       ``(2) Special rules for interests in qualified trusts.--
       ``(A) In general.--If the trust interest described in 
     paragraph (1) is an interest in a qualified trust--
       ``(i) paragraph (1) and subsection (a) shall not apply, and
       ``(ii) in addition to any other tax imposed by this title, 
     there is hereby imposed on each distribution with respect to 
     such interest a tax in the amount determined under 
     subparagraph (B).
       ``(B) Amount of tax.--The amount of tax under subparagraph 
     (A)(ii) shall be equal to the lesser of--
       ``(i) the highest rate of tax imposed by section 1(e) for 
     the taxable year which includes the day before the 
     expatriation date, multiplied by the amount of the 
     distribution, or
       ``(ii) the balance in the deferred tax account immediately 
     before the distribution determined without regard to any 
     increases under subparagraph (C)(ii) after the 30th day 
     preceding the distribution.
       ``(C) Deferred tax account.--For purposes of subparagraph 
     (B)(ii)--

[[Page S3966]]

       ``(i) Opening balance.--The opening balance in a deferred 
     tax account with respect to any trust interest is an amount 
     equal to the tax which would have been imposed on the 
     allocable expatriation gain with respect to the trust 
     interest if such gain had been included in gross income under 
     subsection (a).
       ``(ii) Increase for interest.--The balance in the deferred 
     tax account shall be increased by the amount of interest 
     determined (on the balance in the account at the time the 
     interest accrues), for periods after the 90th day after the 
     expatriation date, by using the rates and method applicable 
     under section 6621 for underpayments of tax for such periods, 
     except that section 6621(a)(2) shall be applied by 
     substituting `5 percentage points' for `3 percentage points' 
     in subparagraph (B) thereof.
       ``(iii) Decrease for taxes previously paid.--The balance in 
     the tax deferred account shall be reduced--

       ``(I) by the amount of taxes imposed by subparagraph (A) on 
     any distribution to the person holding the trust interest, 
     and
       ``(II) in the case of a person holding a nonvested 
     interest, to the extent provided in regulations, by the 
     amount of taxes imposed by subparagraph (A) on distributions 
     from the trust with respect to nonvested interests not held 
     by such person.

       ``(D) Allocable expatriation gain.--For purposes of this 
     paragraph, the allocable expatriation gain with respect to 
     any beneficiary's interest in a trust is the amount of gain 
     which would be allocable to such beneficiary's vested and 
     nonvested interests in the trust if the beneficiary held 
     directly all assets allocable to such interests.
       ``(E) Tax deducted and withheld.--
       ``(i) In general.--The tax imposed by subparagraph (A)(ii) 
     shall be deducted and withheld by the trustees from the 
     distribution to which it relates.
       ``(ii) Exception where failure to waive treaty rights.--If 
     an amount may not be deducted and withheld under clause (i) 
     by reason of the distributee failing to waive any treaty 
     right with respect to such distribution--

       ``(I) the tax imposed by subparagraph (A)(ii) shall be 
     imposed on the trust and each trustee shall be personally 
     liable for the amount of such tax, and
       ``(II) any other beneficiary of the trust shall be entitled 
     to recover from the distributee the amount of such tax 
     imposed on the other beneficiary.

       ``(F) Disposition.--If a trust ceases to be a qualified 
     trust at any time, a covered expatriate disposes of an 
     interest in a qualified trust, or a covered expatriate 
     holding an interest in a qualified trust dies, then, in lieu 
     of the tax imposed by subparagraph (A)(ii), there is hereby 
     imposed a tax equal to the lesser of--
       ``(i) the tax determined under paragraph (1) as if the day 
     before the expatriation date were the date of such cessation, 
     disposition, or death, whichever is applicable, or
       ``(ii) the balance in the tax deferred account immediately 
     before such date.
     Such tax shall be imposed on the trust and each trustee shall 
     be personally liable for the amount of such tax and any other 
     beneficiary of the trust shall be entitled to recover from 
     the covered expatriate or the estate the amount of such tax 
     imposed on the other beneficiary.
       ``(G) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Qualified trust.--The term `qualified trust' means a 
     trust which is described in section 7701(a)(30)(E).
       ``(ii) Vested interest.--The term `vested interest' means 
     any interest which, as of the day before the expatriation 
     date, is vested in the beneficiary.
       ``(iii) Nonvested interest.--The term `nonvested interest' 
     means, with respect to any beneficiary, any interest in a 
     trust which is not a vested interest. Such interest shall be 
     determined by assuming the maximum exercise of discretion in 
     favor of the beneficiary and the occurrence of all 
     contingencies in favor of the beneficiary.
       ``(iv) Adjustments.--The Secretary may provide for such 
     adjustments to the bases of assets in a trust or a deferred 
     tax account, and the timing of such adjustments, in order to 
     ensure that gain is taxed only once.
       ``(v) Coordination with retirement plan rules.--This 
     subsection shall not apply to an interest in a trust which is 
     part of a retirement plan to which subsection (d)(2) applies.
       ``(3) Determination of beneficiaries' interest in trust.--
       ``(A) Determinations under paragraph (1).--For purposes of 
     paragraph (1), a beneficiary's interest in a trust shall be 
     based upon all relevant facts and circumstances, including 
     the terms of the trust instrument and any letter of wishes or 
     similar document, historical patterns of trust distributions, 
     and the existence of and functions performed by a trust 
     protector or any similar adviser.
       ``(B) Other determinations.--For purposes of this section--
       ``(i) Constructive ownership.--If a beneficiary of a trust 
     is a corporation, partnership, trust, or estate, the 
     shareholders, partners, or beneficiaries shall be deemed to 
     be the trust beneficiaries for purposes of this section.
       ``(ii) Taxpayer return position.--A taxpayer shall clearly 
     indicate on its income tax return--

       ``(I) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(II) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.

       ``(g) Termination of Deferrals, Etc.--In the case of any 
     covered expatriate, notwithstanding any other provision of 
     this title--
       ``(1) any period during which recognition of income or gain 
     is deferred shall terminate on the day before the 
     expatriation date, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply on the day before the expatriation date and the 
     unpaid portion of such tax shall be due and payable at the 
     time and in the manner prescribed by the Secretary.
       ``(h) Imposition of Tentative Tax.--
       ``(1) In general.--If an individual is required to include 
     any amount in gross income under subsection (a) for any 
     taxable year, there is hereby imposed, immediately before the 
     expatriation date, a tax in an amount equal to the amount of 
     tax which would be imposed if the taxable year were a short 
     taxable year ending on the expatriation date.
       ``(2) Due date.--The due date for any tax imposed by 
     paragraph (1) shall be the 90th day after the expatriation 
     date.
       ``(3) Treatment of tax.--Any tax paid under paragraph (1) 
     shall be treated as a payment of the tax imposed by this 
     chapter for the taxable year to which subsection (a) applies.
       ``(4) Deferral of tax.--The provisions of subsection (b) 
     shall apply to the tax imposed by this subsection to the 
     extent attributable to gain includible in gross income by 
     reason of this section.
       ``(i) Special Liens for Deferred Tax Amounts.--
       ``(1) Imposition of lien.--
       ``(A) In general.--If a covered expatriate makes an 
     election under subsection (a)(4) or (b) which results in the 
     deferral of any tax imposed by reason of subsection (a), the 
     deferred amount (including any interest, additional amount, 
     addition to tax, assessable penalty, and costs attributable 
     to the deferred amount) shall be a lien in favor of the 
     United States on all property of the expatriate located in 
     the United States (without regard to whether this section 
     applies to the property).
       ``(B) Deferred amount.--For purposes of this subsection, 
     the deferred amount is the amount of the increase in the 
     covered expatriate's income tax which, but for the election 
     under subsection (a)(4) or (b), would have occurred by reason 
     of this section for the taxable year including the 
     expatriation date.
       ``(2) Period of lien.--The lien imposed by this subsection 
     shall arise on the expatriation date and continue until--
       ``(A) the liability for tax by reason of this section is 
     satisfied or has become unenforceable by reason of lapse of 
     time, or
       ``(B) it is established to the satisfaction of the 
     Secretary that no further tax liability may arise by reason 
     of this section.
       ``(3) Certain rules apply.--The rules set forth in 
     paragraphs (1), (3), and (4) of section 6324A(d) shall apply 
     with respect to the lien imposed by this subsection as if it 
     were a lien imposed by section 6324A.
       ``(j) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Inclusion in Income of Gifts and Bequests Received by 
     United States Citizens and Residents From Expatriates.--
     Section 102 (relating to gifts, etc. not included in gross 
     income) is amended by adding at the end the following new 
     subsection:
       ``(d) Gifts and Inheritances From Covered Expatriates.--
       ``(1) Treatment of gifts and inheritances.--
       ``(A) In general.--Subsection (a) shall not exclude from 
     gross income the value of any property acquired by gift, 
     bequest, devise, or inheritance from a covered expatriate 
     after the expatriation date.
       ``(B) Determination of basis.--Notwithstanding sections 
     1015 or 1022, the basis of any property described in 
     subparagraph (A) in the hands of the donee or the person 
     acquiring such property from the decedent shall be equal to 
     the fair market value of the property at the time of the 
     gift, bequest, devise, or inheritance.
       ``(2) Exceptions for transfers otherwise subject to estate 
     or gift tax.--Paragraph (1) shall not apply to any property 
     if either--
       ``(A) the gift, bequest, devise, or inheritance is--
       ``(i) shown on a timely filed return of tax imposed by 
     chapter 12 as a taxable gift by the covered expatriate, or
       ``(ii) included in the gross estate of the covered 
     expatriate for purposes of chapter 11 and shown on a timely 
     filed return of tax imposed by chapter 11 of the estate of 
     the covered expatriate, or
       ``(B) no such return was timely filed but no such return 
     would have been required to be filed even if the covered 
     expatriate were a citizen or long-term resident of the United 
     States.
       ``(3) Definitions.--For purposes of this subsection, any 
     term used in this subsection which is also used in section 
     877A shall have the same meaning as when used in section 
     877A.''.
       (c) Definition of Termination of United States 
     Citizenship.--Section 7701(a) is amended by adding at the end 
     the following new paragraph:

[[Page S3967]]

       ``(50) Termination of united states citizenship.--
       ``(A) In general.--An individual shall not cease to be 
     treated as a United States citizen before the date on which 
     the individual's citizenship is treated as relinquished under 
     section 877A(e)(3).
       ``(B) Dual citizens.--Under regulations prescribed by the 
     Secretary, subparagraph (A) shall not apply to an individual 
     who became at birth a citizen of the United States and a 
     citizen of another country.''.
       (d) Ineligibility for Visa or Admission to United States.--
       (1) In general.--Section 212(a)(10)(E) of the Immigration 
     and Nationality Act (8 U.S.C. 1182(a)(10)(E)) is amended to 
     read as follows:
       ``(E) Former citizens not in compliance with expatriation 
     revenue provisions.--Any alien who is a former citizen of the 
     United States who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3) of the Internal 
     Revenue Code of 1986) and who is not in compliance with 
     section 877A of such Code (relating to expatriation) is 
     inadmissible.''.
       (2) Availability of information.--
       (A) In general.--Section 6103(l) (relating to disclosure of 
     returns and return information for purposes other than tax 
     administration) is amended by adding at the end the following 
     new paragraph:
       ``(21) Disclosure to deny visa or admission to certain 
     expatriates.--Upon written request of the Attorney General or 
     the Attorney General's delegate, the Secretary shall disclose 
     whether an individual is in compliance with section 877A (and 
     if not in compliance, any items of noncompliance) to officers 
     and employees of the Federal agency responsible for 
     administering section 212(a)(10)(E) of the Immigration and 
     Nationality Act solely for the purpose of, and to the extent 
     necessary in, administering such section 212(a)(10)(E).''.
       (B) Safeguards.--Section 6103(p)(4) (relating to 
     safeguards) is amended by striking ``or (20)'' each place it 
     appears and inserting ``(20), or (21)''.
       (3) Effective dates.--The amendments made by this 
     subsection shall apply to individuals who relinquish United 
     States citizenship on or after the date of the enactment of 
     this Act.
       (e) Conforming Amendments.--
       (1) Section 877 is amended by adding at the end the 
     following new subsection:
       ``(h) Application.--This section shall not apply to an 
     expatriate (as defined in section 877A(e)) whose expatriation 
     date (as so defined) occurs on or after the date of the 
     enactment of this subsection.''.
       (2) Section 2107 is amended by adding at the end the 
     following new subsection:
       ``(f) Application.--This section shall not apply to any 
     expatriate subject to section 877A.''.
       (3) Section 2501(a)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Application.--This paragraph shall not apply to any 
     expatriate subject to section 877A.''.
       (4) Section 6039G(a) is amended by inserting ``or 877A'' 
     after ``section 877(b)''.
       (5) The second sentence of section 6039G(d) is amended by 
     inserting ``or who relinquishes United States citizenship 
     (within the meaning of section 877A(e)(3))'' after ``section 
     877(a))''.
       (f) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 is amended by 
     inserting after the item relating to section 877 the 
     following new item:

``Sec. 877A. Tax responsibilities of expatriation''.
       (g) Effective Date.--
       (1) In general.--Except as provided in this subsection, the 
     amendments made by this section shall apply to expatriates 
     (within the meaning of section 877A(e) of the Internal 
     Revenue Code of 1986, as added by this section) whose 
     expatriation date (as so defined) occurs on or after the date 
     of the enactment of this Act.
       (2) Gifts and bequests.--Section 102(d) of the Internal 
     Revenue Code of 1986 (as added by subsection (b)) shall apply 
     to gifts and bequests received on or after the date of the 
     enactment of this Act, from an individual or the estate of an 
     individual whose expatriation date (as so defined) occurs 
     after such date.
       (3) Due date for tentative tax.--The due date under section 
     877A(h)(2) of the Internal Revenue Code of 1986, as added by 
     this section, shall in no event occur before the 90th day 
     after the date of the enactment of this Act.

     SEC. 536. LIMITATION ON ANNUAL AMOUNTS WHICH MAY BE DEFERRED 
                   UNDER NONQUALIFIED DEFERRED COMPENSATION 
                   ARRANGEMENTS.

       (a) In General.--Section 409A(a) of the Internal Revenue 
     Code of 1986 (relating to inclusion of gross income under 
     nonqualified deferred compensation plans) is amended--
       (1) by striking ``and (4)'' in subclause (I) of paragraph 
     (1)(A)(i) and inserting ``(4), and (5)'', and
       (2) by adding at the end the following new paragraph:
       ``(5) Annual limitation on aggregate deferred amounts.--
       ``(A) Limitation.--The requirements of this paragraph are 
     met if the plan provides that the aggregate amount of 
     compensation which is deferred for any taxable year with 
     respect to a participant under the plan may not exceed the 
     applicable dollar amount for the taxable year.
       ``(B) Inclusion of future earnings.--If an amount is 
     includible under paragraph (1) in the gross income of a 
     participant for any taxable year by reason of any failure to 
     meet the requirements of this paragraph, any income (whether 
     actual or notional) for any subsequent taxable year shall be 
     included in gross income under paragraph (1)(A) in such 
     subsequent taxable year to the extent such income--
       ``(i) is attributable to compensation (or income 
     attributable to such compensation) required to be included in 
     gross income by reason of such failure (including by reason 
     of this subparagraph), and
       ``(ii) is not subject to a substantial risk of forfeiture 
     and has not been previously included in gross income.
       ``(C) Aggregation rule.--For purposes of this paragraph, 
     all nonqualified deferred compensation plans maintained by 
     all employers treated as a single employer under subsection 
     (d)(6) shall be treated as 1 plan.
       ``(D) Applicable dollar amount.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable dollar amount' 
     means, with respect to any participant, the lesser of--

       ``(I) the average annual compensation which was payable 
     during the base period to the participant by the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) and which was includible in 
     the participant's gross income for taxable years in the base 
     period, or
       ``(II) $1,000,000.

       ``(ii) Base period.--

       ``(I) In general.--The term `base period' means, with 
     respect to any computation year, the 5-taxable year period 
     ending with the taxable year preceding the computation year.
       ``(II) Elections made before computation year.--If, before 
     the beginning of the computation year, an election described 
     in paragraph (4)(B) is made by the participant to have 
     compensation for services performed in the computation year 
     deferred under a nonqualified deferred compensation plan, the 
     base period shall be the 5-taxable year period ending with 
     the taxable year preceding the taxable year in which the 
     election is made.
       ``(III) Computation year.--For purposes of this clause, the 
     term `computation year' means any taxable year of the 
     participant for which the limitation under subparagraph (A) 
     is being determined.
       ``(IV) Special rule for employees of less than 5 years.--If 
     a participant did not perform services for the employer 
     maintaining the nonqualified deferred compensation plan (or 
     any predecessor of the employer) during the entire 5-taxable 
     year period referred to in subparagraph (A) or (B), only the 
     portion of such period during which the participant performed 
     such services shall be taken into account.''.

       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2006, 
     except that--
       (A) the amendments shall only apply to amounts deferred 
     after December 31, 2006 (and to earnings on such amounts), 
     and
       (B) taxable years beginning on or before December 31, 2006, 
     shall be taken into account in determining the average annual 
     compensation of a participant during any base period for 
     purposes of section 409A(a)(5)(D) of the Internal Revenue 
     Code of 1986 (as added by such amendments).
       (2) Guidance relating to certain existing arrangements.--
     Not later than 60 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall issue guidance 
     providing a limited period during which a nonqualified 
     deferred compensation plan adopted before December 31, 2006, 
     may, without violating the requirements of section 409A(a) of 
     such Code, be amended--
       (A) to provide that a participant may, no later than 
     December 31, 2007, cancel or modify an outstanding deferral 
     election with regard to all or a portion of amounts deferred 
     after December 31, 2006, to the extent necessary for the plan 
     to meet the requirements of section 409A(a)(5) of such Code 
     (as added by the amendments made by this section), but only 
     if amounts subject to the cancellation or modification are, 
     to the extent not previously included in gross income, 
     includible in income of the participant when no longer 
     subject to substantial risk of forfeiture, and
       (B) to conform to the requirements of section 409A(a)(5) of 
     such Code (as added by the amendments made by this section) 
     with regard to amounts deferred after December 31, 2006.

     SEC. 537. MODIFICATION OF CRIMINAL PENALTIES FOR WILLFUL 
                   FAILURES INVOLVING TAX PAYMENTS AND FILING 
                   REQUIREMENTS.

       (a) Increase in Penalty for Attempt to Evade or Defeat 
     Tax.--Section 7201 (relating to attempt to evade or defeat 
     tax) is amended--
       (1) by striking ``$100,000'' and inserting ``$500,000'',
       (2) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (3) by striking ``5 years'' and inserting ``10 years''.
       (b) Modification of Penalties for Willful Failure to File 
     Return, Supply Information, or Pay Tax.--
       (1) In general.--Section 7203 (relating to willful failure 
     to file return, supply information, or pay tax) is amended--

[[Page S3968]]

       (A) in the first sentence--
       (i) by striking ``Any person'' and inserting the following:
       ``(a) In General.--Any person'', and
       (ii) by striking ``$25,000'' and inserting ``$50,000'',
       (B) in the third sentence, by striking ``section'' and 
     inserting ``subsection'', and
       (C) by adding at the end the following new subsection:
       ``(b) Aggravated Failure to File.--
       ``(1) In general.--In the case of any failure described in 
     paragraph (2), the first sentence of subsection (a) shall be 
     applied by substituting--
       ``(A) `felony' for `misdemeanor',
       ``(B) `$250,000 ($500,000' for `$50,000 ($100,000', and
       ``(C) `5 years' for `1 year'.
       ``(2) Failure described.--A failure described in this 
     paragraph is--
       ``(A) a failure to make a return described in subsection 
     (a) for any 3 taxable years occurring during any period of 5 
     consecutive taxable years if the aggregate tax liability for 
     such period is not less than $50,000, or
       ``(B) a failure to make a return if the tax liability 
     giving rise to the requirement to make such return is 
     attributable to an activity which is a felony under any State 
     or Federal law.''.
       (2) Penalty may be applied in addition to other 
     penalties.--Section 7204 (relating to fraudulent statement or 
     failure to make statement to employees) is amended by 
     striking ``the penalty provided in section 6674'' and 
     inserting ``the penalties provided in sections 6674 and 
     7203(b)''.
       (c) Fraud and False Statements.--Section 7206 (relating to 
     fraud and false statements) is amended--
       (1) by striking ``$100,000'' and inserting ``$500,000'',
       (2) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (3) by striking ``3 years'' and inserting ``5 years''.
       (d) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--Section 7206 (relating to 
     fraud and false statements), as amended by subsection (a)(3), 
     is amended--
       (1) by striking ``Any person who--'' and inserting ``(a) In 
     General.--Any person who--'', and
       (2) by adding at the end the following new subsection:
       ``(b) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--If any portion of any 
     underpayment (as defined in section 6664(a)) or overpayment 
     (as defined in section 6401(a)) of tax required to be shown 
     on a return is attributable to fraudulent action described in 
     subsection (a), the applicable dollar amount under subsection 
     (a) shall in no event be less than an amount equal to such 
     portion. A rule similar to the rule under section 6663(b) 
     shall apply for purposes of determining the portion so 
     attributable.''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to actions, and failures to act, occurring after 
     the date of the enactment of this Act.

     SEC. 538. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST 
                   ON UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE 
                   FINANCIAL ARRANGEMENTS.

       (a) Determination of Penalty.--
       (1) In general.--Notwithstanding any other provision of 
     law, in the case of an applicable taxpayer--
       (A) the determination as to whether any interest or 
     applicable penalty is to be imposed with respect to any 
     arrangement described in paragraph (2), or to any 
     underpayment of Federal income tax attributable to items 
     arising in connection with any such arrangement, shall be 
     made without regard to the rules of subsections (b), (c), and 
     (d) of section 6664 of the Internal Revenue Code of 1986, and
       (B) if any such interest or applicable penalty is imposed, 
     the amount of such interest or penalty shall be equal to 
     twice that determined without regard to this section.
       (2) Applicable taxpayer.--For purposes of this subsection--
       (A) In general.--The term ``applicable taxpayer'' means a 
     taxpayer which--
       (i) has underreported its United States income tax 
     liability with respect to any item which directly or 
     indirectly involves--

       (I) any financial arrangement which in any manner relies on 
     the use of offshore payment mechanisms (including credit, 
     debit, or charge cards) issued by banks or other entities in 
     foreign jurisdictions, or
       (II) any offshore financial arrangement (including any 
     arrangement with foreign banks, financial institutions, 
     corporations, partnerships, trusts, or other entities), and

       (ii) has neither signed a closing agreement pursuant to the 
     Voluntary Offshore Compliance Initiative established by the 
     Department of the Treasury under Revenue Procedure 2003-11 
     nor voluntarily disclosed its participation in such 
     arrangement by notifying the Internal Revenue Service of such 
     arrangement prior to the issue being raised by the Internal 
     Revenue Service during an examination.
       (B) Authority to waive.--The Secretary of the Treasury or 
     the Secretary's delegate may waive the application of 
     paragraph (1) to any taxpayer if the Secretary or the 
     Secretary's delegate determines that the use of such offshore 
     payment mechanisms is incidental to the transaction and, in 
     addition, in the case of a trade or business, such use is 
     conducted in the ordinary course of the type of trade or 
     business of the taxpayer.
       (C) Issues raised.--For purposes of subparagraph (A)(ii), 
     an item shall be treated as an issue raised during an 
     examination if the individual examining the return--
       (i) communicates to the taxpayer knowledge about the 
     specific item, or
       (ii) has made a request to the taxpayer for information and 
     the taxpayer could not make a complete response to that 
     request without giving the examiner knowledge of the specific 
     item.
       (b) Applicable Penalty.--For purposes of this section, the 
     term ``applicable penalty'' means any penalty, addition to 
     tax, or fine imposed under chapter 68 of the Internal Revenue 
     Code of 1986.
       (c) Effective Date.--The provisions of this section shall 
     apply to interest, penalties, additions to tax, and fines 
     with respect to any taxable year if, as of the date of the 
     enactment of this Act, the assessment of any tax, penalty, or 
     interest with respect to such taxable year is not prevented 
     by the operation of any law or rule of law.

     SEC. 539. INCREASE IN PENALTY FOR BAD CHECKS AND MONEY 
                   ORDERS.

       (a) In General.--Section 6657 (relating to bad checks) is 
     amended--
       (1) by striking ``$750'' and inserting ``$1,250'', and
       (2) by striking ``$15'' and inserting ``$25''.
       (b) Effective Date.--The amendments made by this section 
     apply to checks or money orders received after the date of 
     the enactment of this Act.

     SEC. 540. TREATMENT OF CONTINGENT PAYMENT CONVERTIBLE DEBT 
                   INSTRUMENTS.

       (a) In General.--Section 1275(d) (relating to regulation 
     authority) is amended--
       (1) by striking ``The Secretary'' and inserting the 
     following:
       ``(1) In general.--The Secretary'', and
       (2) by adding at the end the following new paragraph:
       ``(2) Treatment of contingent payment convertible debt.--
       ``(A) In general.--In the case of a debt instrument which--
       ``(i) is convertible into stock of the issuing corporation, 
     into stock or debt of a related party (within the meaning of 
     section 267(b) or 707(b)(1)), or into cash or other property 
     in an amount equal to the approximate value of such stock or 
     debt, and
       ``(ii) provides for 1 or more contingent payments,
     any regulations which require original issue discount to be 
     determined by reference to the comparable yield of a fixed-
     rate debt instrument shall be applied as if the regulations 
     require that such comparable yield be determined by reference 
     to a fixed-rate debt instrument which is convertible into 
     stock.
       ``(B) Special rule.--For purposes of subparagraph (A), the 
     comparable yield shall be determined without taking into 
     account the yield resulting from the conversion of a debt 
     instrument into stock.''.
       (b) Cross Reference.--Section 163(e)(6) (relating to cross 
     references) is amended by adding at the end the following:
       ``For the treatment of contingent payment convertible debt, 
     see section 1275(d)(2).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to debt instruments issued on or after the date 
     of the enactment of this Act.

     SEC. 541. EXTENSION OF IRS USER FEES.

       Subsection (c) of section 7528 (relating to Internal 
     Revenue Service user fees) is amended by striking ``September 
     30, 2014'' and inserting ``September 30, 2016''.

     SEC. 542. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES 
                   FOR EMPLOYMENT TAX LIABILITIES.

       (a) In General.--Section 6330(f) (relating to jeopardy and 
     State refund collection) is amended--
       (1) by striking ``; or'' at the end of paragraph (1) and 
     inserting a comma,
       (2) by adding ``or'' at the end of paragraph (2), and
       (3) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) the Secretary has served a levy in connection with 
     the collection of taxes under chapter 21, 22, 23, or 24,''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to levies issued on or after the date that is 120 
     days after the date of the enactment of this Act.

     SEC. 543. MODIFICATIONS TO WHISTLEBLOWER REFORMS.

       (a) Modification of Tax Threshold for Awards.--Subparagraph 
     (B) of section 7623(b)(5), as added by the Tax Relief and 
     Health Care Act of 2006, is amended by striking 
     ``$2,000,000'' and inserting ``$20,000''.
       (b) Whistleblower Office.--
       (1) In general.--Section 7623 is amended by adding at the 
     end the following new subsections:
       ``(c) Whistleblower Office.--
       ``(1) In general.--There is established in the Internal 
     Revenue Service an office to be known as the `Whistleblower 
     Office' which--
       ``(A) shall at all times operate at the direction of the 
     Commissioner and coordinate and consult with other divisions 
     in the Internal Revenue Service as directed by the 
     Commissioner,
       ``(B) shall analyze information received from any 
     individual described in subsection (b) and either investigate 
     the matter itself or assign it to the appropriate Internal 
     Revenue Service office,
       ``(C) shall monitor any action taken with respect to such 
     matter,
       ``(D) shall inform such individual that it has accepted the 
     individual's information for further review,

[[Page S3969]]

       ``(E) may require such individual and any legal 
     representative of such individual to not disclose any 
     information so provided,
       ``(F) in its sole discretion, may ask for additional 
     assistance from such individual or any legal representative 
     of such individual, and
       ``(G) shall determine the amount to be awarded to such 
     individual under subsection (b).
       ``(2) Funding for office.--There is authorized to be 
     appropriated $10,000,000 for each fiscal year for the 
     Whistleblower Office. These funds shall be used to maintain 
     the Whistleblower Office and also to reimburse other Internal 
     Revenue Service offices for related costs, such as costs of 
     investigation and collection.
       ``(3) Request for assistance.--
       ``(A) In general.--Any assistance requested under paragraph 
     (1)(F) shall be under the direction and control of the 
     Whistleblower Office or the office assigned to investigate 
     the matter under subparagraph (A). No individual or legal 
     representative whose assistance is so requested may by reason 
     of such request represent himself or herself as an employee 
     of the Federal Government.
       ``(B) Funding of assistance.--From the amounts available 
     for expenditure under subsection (b), the Whistleblower 
     Office may, with the agreement of the individual described in 
     subsection (b), reimburse the costs incurred by any legal 
     representative of such individual in providing assistance 
     described in subparagraph (A).
       ``(d) Reports.--The Secretary shall each year conduct a 
     study and report to Congress on the use of this section, 
     including--
       ``(1) an analysis of the use of this section during the 
     preceding year and the results of such use, and
       ``(2) any legislative or administrative recommendations 
     regarding the provisions of this section and its 
     application.''.
       (2) Conforming amendment.--Section 406 of division A of the 
     Tax Relief and Health Care Act of 2006 is amended by striking 
     subsections (b) and (c).
       (3) Report on implementation.--Not later than 6 months 
     after the date of the enactment of this Act, the Secretary of 
     the Treasury shall submit to Congress a report on the 
     establishment and operation of the Whistleblower Office under 
     section 7623(c) of the Internal Revenue Code of 1986.
       (c) Publicity of Award Appeals.--Paragraph (4) of section 
     7623(b), as added by the Tax Relief and Health Care Act of 
     2006, is amended to read as follows:
       ``(4) Appeal of award determination.--
       ``(A) In general.--Any determination regarding an award 
     under paragraph (1), (2), or (3) may, within 30 days of such 
     determination, be appealed to the Tax Court (and the Tax 
     Court shall have jurisdiction with respect to such matter).
       ``(B) Publicity of appeals.--Notwithstanding sections 7458 
     and 7461, the Tax Court may, in order to preserve the 
     anonymity, privacy, or confidentiality of any person under 
     this subsection, provide by rules adopted under section 7453 
     that portions of filings, hearings, testimony, evidence, and 
     reports in connection with proceedings under this subsection 
     may be closed to the public or to inspection by the 
     public.''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to information 
     provided on or after the date of the enactment of this Act.
       (2) Publicity of award appeals.--The amendment made by 
     subsection (c) shall take effect as if included in the 
     amendments made by section 406 of the Tax Relief and Health 
     Care Act of 2006.

     SEC. 544. MODIFICATIONS OF DEFINITION OF EMPLOYEES COVERED BY 
                   DENIAL OF DEDUCTION FOR EXCESSIVE EMPLOYEE 
                   REMUNERATION.

       (a) In General.--Paragraph (3) of section 162(m) is amended 
     to read as follows:
       ``(3) Covered employee.--For purposes of this subsection, 
     the term `covered employee' means, with respect to any 
     taxpayer for any taxable year, an individual who--
       ``(A) was the chief executive officer of the taxpayer, or 
     an individual acting in such a capacity, at any time during 
     the taxable year,
       ``(B) is 1 of the 4 highest compensated officers of the 
     taxpayer for the taxable year (other than the individual 
     described in subparagraph (A)), or
       ``(C) was a covered employee of the taxpayer (or any 
     predecessor) for any preceding taxable year beginning after 
     December 31, 2006.
       ``In the case of an individual who was a covered employee 
     for any taxable year beginning after December 31, 2006, the 
     term `covered employee' shall include a beneficiary of such 
     employee with respect to any remuneration for services 
     performed by such employee as a covered employee (whether or 
     not such services are performed during the taxable year in 
     which the remuneration is paid).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 545. INCREASE IN AGE OF MINOR CHILDREN WHOSE UNEARNED 
                   INCOME IS TAXED AS IF PARENT'S INCOME.

       (a) In General.--Subparagraph (A) of section 1(g)(2) 
     (relating to child to whom subsection applies) is amended to 
     read as follows:
       ``(A) such child--
       ``(i) has not attained age 18 before the close of the 
     taxable year, or
       ``(ii)(I) has attained age 18 before the close of the 
     taxable year and meets the age requirements of section 
     152(c)(3) (determined without regard to subparagraph (B) 
     thereof), and
       ``(II) whose earned income (as defined in section 
     911(d)(2)) for such taxable year does not exceed one-half of 
     the amount of the individual's support (within the meaning of 
     section 152(c)(1)(D) after the application of section 
     152(f)(5) (without regard to subparagraph (A) thereof) for 
     such taxable year,''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 546. INCREASE IN INFORMATION RETURN PENALTIES.

       (a) Failure to File Correct Information Returns.--
       (1) In general.--Section 6721(a)(1) is amended--
       (A) by striking ``$50'' and inserting ``$250'', and
       (B) by striking ``$250,000'' and inserting ``$3,000,000''.
       (2) Reduction where correction in specified period.--
       (A) Correction within 30 days.--Section 6721(b)(1) is 
     amended--
       (i) by striking ``$15'' and inserting ``$50'',
       (ii) by striking ``$50'' and inserting ``$250'', and
       (iii) by striking ``$75,000'' and inserting ``$500,000''.
       (B) Failures corrected on or before august 1.--Section 
     6721(b)(2) is amended--
       (i) by striking ``$30'' and inserting ``$100'',
       (ii) by striking ``$50'' and inserting ``$250'', and
       (iii) by striking ``$150,000'' and inserting 
     ``$1,500,000''.
       (3) Lower limitation for persons with gross receipts of not 
     more than $5,000,000.--Section 6721(d)(1) is amended--
       (A) in subparagraph (A)--
       (i) by striking ``$100,000'' and inserting ``$1,000,000'', 
     and
       (ii) by striking ``$250,000'' and inserting ``$3,000,000'',
       (B) in subparagraph (B)--
       (i) by striking ``$25,000'' and inserting ``$175,000'', and
       (ii) by striking ``$75,000'' and inserting ``$500,000'', 
     and
       (C) in subparagraph (C)--
       (i) by striking ``$50,000'' and inserting ``$500,000'', and
       (ii) by striking ``$150,000'' and inserting ``$1,500,000''.
       (4) Penalty in case of intentional disregard.--Section 
     6721(e) is amended--
       (A) by striking ``$100'' in paragraph (2) and inserting 
     ``$500'',
       (B) by striking ``$250,000'' in paragraph (3)(A) and 
     inserting ``$3,000,000''.
       (b) Failure to Furnish Correct Payee Statements.--
       (1) In general.--Section 6722(a) is amended--
       (A) by striking ``$50'' and inserting ``$250'', and
       (B) by striking ``$100,000'' and inserting ``$1,000,000''.
       (2) Penalty in case of intentional disregard.--Section 
     6722(c) is amended--
       (A) by striking ``$100'' in paragraph (1) and inserting 
     ``$500'', and
       (B) by striking ``$100,000'' in paragraph (2)(A) and 
     inserting ``$1,000,000''.
       (c) Failure to Comply With Other Information Reporting 
     Requirements.--Section 6723 is amended--
       (1) by striking ``$50'' and inserting ``$250'', and
       (2) by striking ``$100,000'' and inserting ``$1,000,000''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to information returns required to 
     be filed on or after January 1, 2008.

     SEC. 547. E-FILING REQUIREMENT FOR CERTAIN LARGE 
                   ORGANIZATIONS.

       (a) In General.--The first sentence of section 6011(e)(2) 
     is amended to read as follows: ``In prescribing regulations 
     under paragraph (1), the Secretary shall take into account 
     (among other relevant factors) the ability of the taxpayer to 
     comply at reasonable cost with the requirements of such 
     regulations.''.
       (b) Conforming Amendment.--Section 6724 is amended by 
     striking subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending on or after December 31, 
     2008.

     SEC. 548. EXPANSION OF IRS ACCESS TO INFORMATION IN NATIONAL 
                   DIRECTORY OF NEW HIRES FOR TAX ADMINISTRATION 
                   PURPOSES.

       (a) In General.--Paragraph (3) of section 453(j) of the 
     Social Security Act (42 U.S.C. 653(j)) is amended to read as 
     follows:
       ``(3) Administration of federal tax laws.--The Secretary of 
     the Treasury shall have access to the information in the 
     National Directory of New Hires for purposes of administering 
     the Internal Revenue Code of 1986.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 549. DISCLOSURE OF PRISONER RETURN INFORMATION TO 
                   FEDERAL BUREAU OF PRISONS.

       (a) Disclosure.--
       (1) In general.--Subsection (l) of section 6103 (relating 
     to disclosure of returns and return information for purposes 
     other than tax administration) is amended by adding at the 
     end the following new paragraph:

[[Page S3970]]

       ``(22) Disclosure of return information of prisoners to 
     federal bureau of prisons.--
       ``(A) In general.--Under such procedures as the Secretary 
     may prescribe, the Secretary may disclose return information 
     with respect to persons incarcerated in Federal prisons whom 
     the Secretary believes filed or facilitated the filing of 
     false or fraudulent returns to the head of the Federal Bureau 
     of Prisons if the Secretary determines that such disclosure 
     is necessary to permit effective tax administration.
       ``(B) Disclosure by agency to employees.--The head of the 
     Federal Bureau of Prisons may redisclose information received 
     under subparagraph (A)--
       ``(i) only to those officers and employees of the Bureau 
     who are personally and directly engaged in taking 
     administrative actions to address violations of 
     administrative rules and regulations of the prison facility, 
     and
       ``(ii) solely for the purposes described in subparagraph 
     (C).
       ``(C) Restriction on use of disclosed information.--Return 
     information disclosed under this paragraph may be used only 
     for the purposes of--
       ``(i) preventing the filing of false or fraudulent returns; 
     and
       ``(ii) taking administrative actions against individuals 
     who have filed or attempted to file false or fraudulent 
     returns.''.
       (2) Procedures and record keeping related to disclosure.--
     Subsection (p)(4) of section 6103 is amended--
       (A) by striking ``(14), or (17)'' in the matter before 
     subparagraph (A) and inserting ``(14), (17), or (22)'', and
       (B) by striking ``(9), or (16)'' in subparagraph (F)(i) and 
     inserting ``(9), (16), or (22)''.
       (3) Evaluation by treasury inspector general for tax 
     administration.--Paragraph (3) of section 7803(d) is amended 
     by striking ``and'' at the end of subparagraph (A), by 
     striking the period at the end of subparagraph (B) and 
     inserting ``; and'', and by adding at the end the following 
     new subparagraph:
       ``(C) not later than 3 years after the date of the 
     enactment of section 6103(l)(22), submit a written report to 
     Congress on the implementation of such section.''.
       (b) Annual Reports.--
       (1) In general.--The Secretary of the Treasury shall submit 
     to Congress and make publicly available an annual report on 
     the filing of false and fraudulent returns by individuals 
     incarcerated in Federal and State prisons.
       (2) Contents of report.--The report submitted under 
     paragraph (1) shall contain statistics on the number of false 
     or fraudulent returns associated with each Federal and State 
     prison and such other information that the Secretary 
     determines is appropriate.
       (3) Exchange of information.--For the purpose of gathering 
     information necessary for the reports required under 
     paragraph (1), the Secretary of the Treasury shall enter into 
     agreements with the head of the Federal Bureau of Prisons and 
     the heads of State agencies charged with responsibility for 
     administration of State prisons under which the head of the 
     Bureau or Agency provides to the Secretary not less 
     frequently than annually the names and other identifying 
     information of prisoners incarcerated at each facility 
     administered by the Bureau or Agency.
       (c) Effective Date.--The amendments made by this section 
     shall apply to disclosures on or after January 1, 2008.

     SEC. 550. UNDERSTATEMENT OF TAXPAYER LIABILITY BY RETURN 
                   PREPARERS.

       (a) Application of Return Preparer Penalties to All Tax 
     Returns.--
       (1) Definition of tax return preparer.--Paragraph (36) of 
     section 7701(a) (relating to income tax preparer) is 
     amended--
       (A) by striking ``income'' each place it appears in the 
     heading and the text, and
       (B) in subparagraph (A), by striking ``subtitle A'' each 
     place it appears and inserting ``this title''.
       (2) Conforming amendments.--
       (A)(i) Section 6060 is amended by striking ``INCOME TAX 
     RETURN PREPARERS'' in the heading and inserting ``TAX RETURN 
     PREPARERS''.
       (ii) Section 6060(a) is amended--
       (I) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (II) by striking ``each income tax return preparer'' and 
     inserting ``each tax return preparer'', and
       (III) by striking ``another income tax return preparer'' 
     and inserting ``another tax return preparer''.
       (iii) The item relating to section 6060 in the table of 
     sections for subpart F of part III of subchapter A of chapter 
     61 is amended by striking ``income tax return preparers'' and 
     inserting ``tax return preparers''.
       (iv) Subpart F of part III of subchapter A of chapter 61 is 
     amended by striking ``INCOME TAX RETURN PREPARERS'' in the 
     heading and inserting ``TAX RETURN PREPARERS''.
       (v) The item relating to subpart F in the table of subparts 
     for part III of subchapter A of chapter 61 is amended by 
     striking ``income tax return preparers'' and inserting ``tax 
     return preparers''.
       (B) Section 6103(k)(5) is amended--
       (i) by striking ``income tax return preparer'' each place 
     it appears and inserting ``tax return preparer'', and
       (ii) by striking ``income tax return preparers'' each place 
     it appears and inserting ``tax return preparers''.
       (C)(i) Section 6107 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARER'' in the 
     heading and inserting ``TAX RETURN PREPARER'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears in subsections (a) and (b) and inserting ``a 
     tax return preparer'',
       (III) by striking ``Income Tax Return Preparer'' in the 
     heading for subsection (b) and inserting ``Tax Return 
     Preparer'', and
       (IV) in subsection (c), by striking ``income tax return 
     preparers'' and inserting ``tax return preparers''.
       (ii) The item relating to section 6107 in the table of 
     sections for subchapter B of chapter 61 is amended by 
     striking ``Income tax return preparer'' and inserting ``Tax 
     return preparer''.
       (D) Section 6109(a)(4) is amended--
       (i) by striking ``an income tax return preparer'' and 
     inserting ``a tax return preparer'', and
       (ii) by striking ``income return preparer'' in the heading 
     and inserting ``tax return preparer''.
       (E) Section 6503(k)(4) is amended by striking ``Income tax 
     return preparers'' and inserting ``Tax return preparers''.
       (F)(i) Section 6694 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARER'' in the 
     heading and inserting ``TAX RETURN PREPARER'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (III) in subsection (c)(2), by striking ``the income tax 
     return preparer'' and inserting ``the tax return preparer'',
       (IV) in subsection (e), by striking ``subtitle A'' and 
     inserting ``this title'', and
       (V) in subsection (f), by striking ``income tax return 
     preparer'' and inserting ``tax return preparer''.
       (ii) The item relating to section 6694 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by striking ``income tax return preparer'' and inserting 
     ``tax return preparer''.
       (G)(i) Section 6695 is amended--
       (I) by striking ``INCOME'' in the heading, and
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer''.
       (ii) Section 6695(f) is amended--
       (I) by striking ``subtitle A'' and inserting ``this 
     title'', and
       (II) by striking ``the income tax return preparer'' and 
     inserting ``the tax return preparer''.
       (iii) The item relating to section 6695 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by striking ``income''.
       (H) Section 6696(e) is amended by striking ``subtitle A'' 
     each place it appears and inserting ``this title''.
       (I)(i) Section 7407 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARERS'' in the 
     heading and inserting ``TAX RETURN PREPARERS'',
       (II) by striking ``an income tax return preparer'' each 
     place it appears and inserting ``a tax return preparer'',
       (III) by striking ``income tax preparer'' both places it 
     appears in subsection (a) and inserting ``tax return 
     preparer'', and
       (IV) by striking ``income tax return'' in subsection (a) 
     and inserting ``tax return''.
       (ii) The item relating to section 7407 in the table of 
     sections for subchapter A of chapter 76 is amended by 
     striking ``income tax return preparers'' and inserting ``tax 
     return preparers''.
       (J)(i) Section 7427 is amended--
       (I) by striking ``INCOME TAX RETURN PREPARERS'' in the 
     heading and inserting ``TAX RETURN PREPARERS'', and
       (II) by striking ``an income tax return preparer'' and 
     inserting ``a tax return preparer''.
       (ii) The item relating to section 7427 in the table of 
     sections for subchapter B of chapter 76 is amended to read as 
     follows:

``Sec. 7427. Tax return preparers.''.
       (b) Modification of Penalty for Understatement of 
     Taxpayer's Liability by Tax Return Preparer.--Subsections (a) 
     and (b) of section 6694 are amended to read as follows:
       ``(a) Understatement Due to Unreasonable Positions.--
       ``(1) In general.--Any tax return preparer who prepares any 
     return or claim for refund with respect to which any part of 
     an understatement of liability is due to a position described 
     in paragraph (2) shall pay a penalty with respect to each 
     such return or claim in an amount equal to the greater of--
       ``(A) $1,000, or
       ``(B) 50 percent of the income derived (or to be derived) 
     by the tax return preparer with respect to the return or 
     claim.
       ``(2) Unreasonable position.--A position is described in 
     this paragraph if--
       ``(A) the tax return preparer knew (or reasonably should 
     have known) of the position,
       ``(B) there was not a reasonable belief that the position 
     would more likely than not be sustained on its merits, and
       ``(C)(i) the position was not disclosed as provided in 
     section 6662(d)(2)(B)(ii), or
       ``(ii) there was no reasonable basis for the position.
       ``(3) Reasonable cause exception.--No penalty shall be 
     imposed under this subsection if it is shown that there is 
     reasonable cause for the understatement and the tax return 
     preparer acted in good faith.
       ``(b) Understatement Due to Willful or Reckless Conduct.--

[[Page S3971]]

       ``(1) In general.--Any tax return preparer who prepares any 
     return or claim for refund with respect to which any part of 
     an understatement of liability is due to a conduct described 
     in paragraph (2) shall pay a penalty with respect to each 
     such return or claim in an amount equal to the greater of--
       ``(A) $5,000, or
       ``(B) 50 percent of the income derived (or to be derived) 
     by the tax return preparer with respect to the return or 
     claim.
       ``(2) Willful or reckless conduct.--Conduct described in 
     this paragraph is conduct by the tax return preparer which 
     is--
       ``(A) a willful attempt in any manner to understate the 
     liability for tax on the return or claim, or
       ``(B) a reckless or intentional disregard of rules or 
     regulations.
       ``(3) Reduction in penalty.--The amount of any penalty 
     payable by any person by reason of this subsection for any 
     return or claim for refund shall be reduced by the amount of 
     the penalty paid by such person by reason of subsection 
     (a).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns prepared after the date of the 
     enactment of this Act.

     SEC. 551. PENALTY FOR FILING ERRONEOUS REFUND CLAIMS.

       (a) In General.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6675 the following new section:

     ``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

       ``(a) Civil Penalty.--If a claim for refund or credit with 
     respect to income tax (other than a claim for a refund or 
     credit relating to the earned income credit under section 32) 
     is made for an excessive amount, unless it is shown that the 
     claim for such excessive amount has a reasonable basis, the 
     person making such claim shall be liable for a penalty in an 
     amount equal to 20 percent of the excessive amount.
       ``(b) Excessive Amount.--For purposes of this section, the 
     term `excessive amount' means in the case of any person the 
     amount by which the amount of the claim for refund or credit 
     for any taxable year exceeds the amount of such claim 
     allowable under this title for such taxable year.
       ``(c) Coordination With Other Penalties.--This section 
     shall not apply to any portion of the excessive amount of a 
     claim for refund or credit on which a penalty is imposed 
     under part II of subchapter A of chapter 68.''.
       (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 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any claim--
       (1) filed or submitted after the date of the enactment of 
     this Act, or
       (2) filed or submitted prior to such date but not withdrawn 
     before the date which is 30 days after such date of 
     enactment.

     SEC. 552. SUSPENSION OF CERTAIN PENALTIES AND INTEREST.

       (a) In General.--Paragraphs (1)(A) and (3)(A) of section 
     6404(g) are each amended by striking ``18-month period'' and 
     inserting ``36-month period''.
       (b) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to notices 
     provided by the Secretary of the Treasury, or his delegate 
     after the date which is 6 months after the date of the 
     enactment of this Act.
       (2) Exception for certain taxpayers.--The amendments made 
     by this section shall not apply to any taxpayer with respect 
     to whom a suspension of any interest, penalty, addition to 
     tax, or other amount is in effect on the date which is 6 
     months after the date of the enactment of this Act.

     SEC. 553. ADDITIONAL REASONS FOR SECRETARY TO TERMINATE 
                   INSTALLMENT AGREEMENTS.

       (a) In General.--Section 6159(b)(4) (relating to failure to 
     pay an installment or any other tax liability when due or to 
     provide requested financial information) is amended by 
     striking ``or'' at the end of subparagraph (B), by 
     redesignating subparagraph (C) as subparagraph (E), and by 
     inserting after subparagraph (B) the following new 
     subparagraphs:
       ``(C) to make a Federal tax deposit under section 6302 at 
     the time such deposit is required to be made,
       ``(D) to file a return of tax imposed under this title by 
     its due date (including extensions), or''.
       (b) Conforming Amendment.--The heading for paragraph (4) of 
     section 6159(b) is amended by striking ``Failure to pay an 
     installment or any other tax liability when due or to provide 
     requested financial information'' and inserting ``Failure to 
     make payments or deposits or file returns when due or to 
     provide requested financial information''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to failures occurring on or after the date of the 
     enactment of this Act.

     SEC. 554. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS-IN-
                   COMPROMISE.

       (a) In General.--Section 7122(b) (relating to record) is 
     amended by striking ``Whenever a compromise'' and all that 
     follows through ``his delegate, with his reasons therefor'' 
     and inserting ``If the Secretary determines that an opinion 
     of the General Counsel for the Department of the Treasury, or 
     the Counsel's delegate, is required with respect to a 
     compromise, there shall be placed on file in the office of 
     the Secretary such opinion, with the reasons therefor''.
       (b) Conforming Amendments.--Section 7122(b) is amended by 
     striking the second and third sentences.
       (c) Effective Date.--The amendments made by this section 
     shall apply to offers-in-compromise submitted or pending on 
     or after the date of the enactment of this Act.

     SEC. 555. AUTHORIZATION FOR FINANCIAL MANAGEMENT SERVICE 
                   RETENTION OF TRANSACTION FEES FROM LEVIED 
                   AMOUNTS.

       (a) In General.--Subsection (h) of section 6331 (relating 
     to continuing levy on certain payments) is amended by adding 
     at the end the following new paragraph:
       ``(4) Imposition of financial management services 
     transaction fees.--If the Secretary approves a levy under 
     this subsection, the Secretary may impose on the taxpayer a 
     transaction fee sufficient to cover the full cost of 
     implementing the levy under this subsection. Such fee--
       ``(A) shall be treated as an expense under section 6341,
       ``(B) may be collected through a levy under this 
     subsection, and
       ``(C) shall be in addition to the amount of tax liability 
     with respect to which such levy was approved.''.
       (b) Retention of Fees by Financial Management Service.--The 
     Financial Management Service may retain the amount of any 
     transaction fee imposed under section 6331(h)(4) of the 
     Internal Revenue Code of 1986. Any amount retained by the 
     Financial Management Service under that section shall be 
     deposited into the account of the Department of the Treasury 
     under section 3711(g)(7) of title 31, United States Code.
       (c) Effective Date.--The amendment made by this section 
     shall apply to amounts levied after the date of the enactment 
     of this Act.

     SEC. 556. AUTHORITY FOR UNDERCOVER OPERATIONS.

       Paragraph (6) of section 7608(c) (relating to application 
     of section) is amended by striking ``2007'' both places it 
     appears and inserting ``2008''.

     SEC. 557. INCREASE IN PENALTY EXCISE TAXES ON THE POLITICAL 
                   AND EXCESS LOBBYING ACTIVITIES OF SECTION 
                   501(C)(3) ORGANIZATIONS.

       (a) Taxes on Disqualifying Lobbying Expenditures of Certain 
     Organizations.--
       (1) In general.--Section 4912(a) (relating to tax on 
     organization) is amended by striking ``5 percent'' and 
     inserting ``10 percent''.
       (2) Tax on management.--Section 4912(b) is amended by 
     striking ``5 percent'' and inserting ``10 percent''.
       (b) Taxes on Political Expenditures of Section 501(c)(3) 
     Organizations.--
       (1) In general.--Section 4955(a) (relating to initial 
     taxes) is amended--
       (A) in paragraph (1), by striking ``10 percent'' and 
     inserting ``20 percent'', and
       (B) in paragraph (2), by striking ``2\1/2\ percent'' and 
     inserting ``5 percent''.
       (2) Increased limitation for managers.--Section 4955(c)(2) 
     is amended--
       (A) by striking ``$5,000'' and inserting ``$10,000'', and
       (B) by striking ``$10,000'' and inserting ``$20,000''.
       (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. 558. INCREASED PENALTY FOR FAILURE TO FILE FOR EXEMPT 
                   ORGANIZATIONS.

       (a) In General.--Subparagraph (A) of section 6652(c)(1) 
     (relating to annual returns under section 6033(a)(1) or 
     6012(a)(6)) is amended by adding at the end the following new 
     sentence: ``In the case of an organization having gross 
     receipts exceeding $25,000,000 for any year, with respect to 
     the return so required, the first sentence of this 
     subparagraph shall be applied by substituting `$250' for 
     `$20' and, in lieu of applying the second sentence of this 
     subparagraph, the maximum penalty under this subparagraph 
     shall not exceed $125,000.''.
       (b) Conforming Amendment.--The third sentence of section 
     6652(c)(1)(A) is amended by inserting ``but not exceeding 
     $25,000,000'' after ``$1,000,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed on or after 
     January 1, 2008.

     SEC. 559. PENALTIES FOR FAILURE TO FILE CERTAIN RETURNS 
                   ELECTRONICALLY.

       (a) In General.--Part I of subchapter A of chapter 68 
     (relating to additions to the tax, additional amounts, and 
     assessable penalties) is amended by inserting after section 
     6652 the following new section:

     ``SEC. 6652A. FAILURE TO FILE CERTAIN RETURNS ELECTRONICALLY.

       ``(a) In General.--If a person fails to file a return 
     described in section 6651 or 6652(c)(1) in electronic form as 
     required under section 6011(e)--
       ``(1) such failure shall be treated as a failure to file 
     such return (even if filed in a form other than electronic 
     form), and
       ``(2) the penalty imposed under section 6651 or 6652(c), 
     whichever is appropriate, shall be equal to the greater of--
       ``(A) the amount of the penalty under such section, 
     determined without regard to this section, or

[[Page S3972]]

       ``(B) the amount determined under subsection (b).
       ``(b) Amount of Penalty.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (3), the penalty determined under this subsection is equal to 
     $40 for each day during which a failure described under 
     subsection (a) continues. The maximum penalty under this 
     paragraph on failures with respect to any 1 return shall not 
     exceed the lesser of $20,000 or 10 percent of the gross 
     receipts of the taxpayer for the year.
       ``(2) Increased penalties for taxpayers with gross receipts 
     between $1,000,000 and $100,000,000.--
       ``(A) Taxpayers with gross receipts between $1,000,000 and 
     $25,000,000.--In the case of a taxpayer having gross receipts 
     exceeding $1,000,000 but not exceeding $25,000,000 for any 
     year--
       ``(i) the first sentence of paragraph (1) shall be applied 
     by substituting `$200' for `$40', and
       ``(ii) in lieu of applying the second sentence of paragraph 
     (1), the maximum penalty under paragraph (1) shall not exceed 
     $100,000.
       ``(B) Taxpayers with gross receipts over $25,000,000.--
     Except as provided in paragraph (3), in the case of a 
     taxpayer having gross receipts exceeding $25,000,000 for any 
     year--
       ``(i) the first sentence of paragraph (1) shall be applied 
     by substituting `$500' for `$40', and
       ``(ii) in lieu of applying the second sentence of paragraph 
     (1), the maximum penalty under paragraph (1) shall not exceed 
     $250,000.
       ``(3) Increased penalties for certain taxpayers with gross 
     receipts exceeding $100,000,000.--In the case of a return 
     described in section 6651--
       ``(A) Taxpayers with gross receipts between $100,000,000 
     and $250,000,000.--In the case of a taxpayer having gross 
     receipts exceeding $100,000,000 but not exceeding 
     $250,000,000 for any year--
       ``(i) the amount of the penalty determined under this 
     subsection shall equal the sum of--

       ``(I) $50,000, plus
       ``(II) $1,000 for each day during which such failure 
     continues (twice such amount for each day such failure 
     continues after the first such 60 days), and

       ``(ii) the maximum amount under clause (i)(II) on failures 
     with respect to any 1 return shall not exceed $200,000.
       ``(B) Taxpayers with gross receipts over $250,000,000.--In 
     the case of a taxpayer having gross receipts exceeding 
     $250,000,000 for any year--
       ``(i) the amount of the penalty determined under this 
     subsection shall equal the sum of--

       ``(I) $250,000, plus
       ``(II) $2,500 for each day during which such failure 
     continues (twice such amount for each day such failure 
     continues after the first such 60 days), and

       ``(ii) the maximum amount under clause (i)(II) on failures 
     with respect to any 1 return shall not exceed $250,000.
       ``(C) Exception for certain returns.--Subparagraphs (A) and 
     (B) shall not apply to any return of tax imposed under 
     section 511.''.
       (b) Clerical Amendment.--The table of sections for part I 
     of subchapter A of chapter 68 is amended by inserting after 
     the item relating to section 6652 the following new item:

``Sec. 6652A. Failure to file certain returns electronically.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed on or after 
     January 1, 2008.

                      PART III--GENERAL PROVISIONS

     SEC. 561. ENHANCED COMPLIANCE ASSISTANCE FOR SMALL 
                   BUSINESSES.

       (a) In General.--Section 212 of the Small Business 
     Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 601 
     note) is amended by striking subsection (a) and inserting the 
     following:
       ``(a) Compliance Guide.--
       ``(1) In general.--For each rule or group of related rules 
     for which an agency is required to prepare a final regulatory 
     flexibility analysis under section 605(b) of title 5, United 
     States Code, the agency shall publish 1 or more guides to 
     assist small entities in complying with the rule and shall 
     entitle such publications `small entity compliance guides'.
       ``(2) Publication of guides.--The publication of each guide 
     under this subsection shall include--
       ``(A) the posting of the guide in an easily identified 
     location on the website of the agency; and
       ``(B) distribution of the guide to known industry contacts, 
     such as small entities, associations, or industry leaders 
     affected by the rule.
       ``(3) Publication date.--An agency shall publish each guide 
     (including the posting and distribution of the guide as 
     described under paragraph (2))--
       ``(A) on the same date as the date of publication of the 
     final rule (or as soon as possible after that date); and
       ``(B) not later than the date on which the requirements of 
     that rule become effective.
       ``(4) Compliance actions.--
       ``(A) In general.--Each guide shall explain the actions a 
     small entity is required to take to comply with a rule.
       ``(B) Explanation.--The explanation under subparagraph 
     (A)--
       ``(i) shall include a description of actions needed to meet 
     the requirements of a rule, to enable a small entity to know 
     when such requirements are met; and
       ``(ii) if determined appropriate by the agency, may include 
     a description of possible procedures, such as conducting 
     tests, that may assist a small entity in meeting such 
     requirements, except that, compliance with any procedures 
     described pursuant to this section does not establish 
     compliance with the rule, or establish a presumption or 
     inference of such compliance.
       ``(C) Procedures.--Procedures described under subparagraph 
     (B)(ii)--
       ``(i) shall be suggestions to assist small entities; and
       ``(ii) shall not be additional requirements, or diminish 
     requirements, relating to the rule.
       ``(5) Agency preparation of guides.--The agency shall, in 
     its sole discretion, taking into account the subject matter 
     of the rule and the language of relevant statutes, ensure 
     that the guide is written using sufficiently plain language 
     likely to be understood by affected small entities. Agencies 
     may prepare separate guides covering groups or classes of 
     similarly affected small entities and may cooperate with 
     associations of small entities to develop and distribute such 
     guides. An agency may prepare guides and apply this section 
     with respect to a rule or a group of related rules.
       ``(6) Reporting.--Not later than 1 year after the date of 
     enactment of the Fair Minimum Wage Act of 2007, and annually 
     thereafter, the head of each agency shall submit a report to 
     the Committee on Small Business and Entrepreneurship of the 
     Senate, the Committee on Small Business of the House of 
     Representatives, and any other committee of relevant 
     jurisdiction describing the status of the agency's compliance 
     with paragraphs (1) through (5).''.
       (b) Technical and Conforming Amendment.--Section 211(3) of 
     the Small Business Regulatory Enforcement Fairness Act of 
     1996 (5 U.S.C. 601 note) is amended by inserting ``and 
     entitled'' after ``designated''.

     SEC. 562. SMALL BUSINESS CHILD CARE GRANT PROGRAM.

       (a) Establishment.--The Secretary of Health and Human 
     Services (referred to in this section as the ``Secretary'') 
     shall establish a program to award grants to States, on a 
     competitive basis, to assist States in providing funds to 
     encourage the establishment and operation of employer-
     operated child care programs.
       (b) Application.--To be eligible to receive a grant under 
     this section, a State shall prepare and submit to the 
     Secretary an application at such time, in such manner, and 
     containing such information as the Secretary may require, 
     including an assurance that the funds required under 
     subsection (e) will be provided.
       (c) Amount and Period of Grant.--The Secretary shall 
     determine the amount of a grant to a State under this section 
     based on the population of the State as compared to the 
     population of all States receiving grants under this section. 
     The Secretary shall make the grant for a period of 3 years.
       (d) Use of Funds.--
       (1) In general.--A State shall use amounts provided under a 
     grant awarded under this section to provide assistance to 
     small businesses (or consortia formed in accordance with 
     paragraph (3)) located in the State to enable the small 
     businesses (or consortia) to establish and operate child care 
     programs. Such assistance may include--
       (A) technical assistance in the establishment of a child 
     care program;
       (B) assistance for the startup costs related to a child 
     care program;
       (C) assistance for the training of child care providers;
       (D) scholarships for low-income wage earners;
       (E) the provision of services to care for sick children or 
     to provide care to school-aged children;
       (F) the entering into of contracts with local resource and 
     referral organizations or local health departments;
       (G) assistance for care for children with disabilities;
       (H) payment of expenses for renovation or operation of a 
     child care facility; or
       (I) assistance for any other activity determined 
     appropriate by the State.
       (2) Application.--In order for a small business or 
     consortium to be eligible to receive assistance from a State 
     under this section, the small business involved shall prepare 
     and submit to the State an application at such time, in such 
     manner, and containing such information as the State may 
     require.
       (3) Preference.--
       (A) In general.--In providing assistance under this 
     section, a State shall give priority to an applicant that 
     desires to form a consortium to provide child care in a 
     geographic area within the State where such care is not 
     generally available or accessible.
       (B) Consortium.--For purposes of subparagraph (A), a 
     consortium shall be made up of 2 or more entities that shall 
     include small businesses and that may include large 
     businesses, nonprofit agencies or organizations, local 
     governments, or other appropriate entities.
       (4) Limitations.--With respect to grant funds received 
     under this section, a State may not provide in excess of 
     $500,000 in assistance from such funds to any single 
     applicant.
       (e) Matching Requirement.--To be eligible to receive a 
     grant under this section, a State shall provide assurances to 
     the Secretary

[[Page S3973]]

     that, with respect to the costs to be incurred by a covered 
     entity receiving assistance in carrying out activities under 
     this section, the covered entity will make available 
     (directly or through donations from public or private 
     entities) non-Federal contributions to such costs in an 
     amount equal to--
       (1) for the first fiscal year in which the covered entity 
     receives such assistance, not less than 50 percent of such 
     costs ($1 for each $1 of assistance provided to the covered 
     entity under the grant);
       (2) for the second fiscal year in which the covered entity 
     receives such assistance, not less than 66\2/3\ percent of 
     such costs ($2 for each $1 of assistance provided to the 
     covered entity under the grant); and
       (3) for the third fiscal year in which the covered entity 
     receives such assistance, not less than 75 percent of such 
     costs ($3 for each $1 of assistance provided to the covered 
     entity under the grant).
       (f) Requirements of Providers.--To be eligible to receive 
     assistance under a grant awarded under this section, a child 
     care provider--
       (1) who receives assistance from a State shall comply with 
     all applicable State and local licensing and regulatory 
     requirements and all applicable health and safety standards 
     in effect in the State; and
       (2) who receives assistance from an Indian tribe or tribal 
     organization shall comply with all applicable regulatory 
     standards.
       (g) State-Level Activities.--A State may not retain more 
     than 3 percent of the amount described in subsection (c) for 
     State administration and other State-level activities.
       (h) Administration.--
       (1) State responsibility.--A State shall have 
     responsibility for administering a grant awarded for the 
     State under this section and for monitoring covered entities 
     that receive assistance under such grant.
       (2) Audits.--A State shall require each covered entity 
     receiving assistance under the grant awarded under this 
     section to conduct an annual audit with respect to the 
     activities of the covered entity. Such audits shall be 
     submitted to the State.
       (3) Misuse of funds.--
       (A) Repayment.--If the State determines, through an audit 
     or otherwise, that a covered entity receiving assistance 
     under a grant awarded under this section has misused the 
     assistance, the State shall notify the Secretary of the 
     misuse. The Secretary, upon such a notification, may seek 
     from such a covered entity the repayment of an amount equal 
     to the amount of any such misused assistance plus interest.
       (B) Appeals process.--The Secretary shall by regulation 
     provide for an appeals process with respect to repayments 
     under this paragraph.
       (i) Reporting Requirements.--
       (1) 2-year study.--
       (A) In general.--Not later than 2 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine--
       (i) the capacity of covered entities to meet the child care 
     needs of communities within States;
       (ii) the kinds of consortia that are being formed with 
     respect to child care at the local level to carry out 
     programs funded under this section; and
       (iii) who is using the programs funded under this section 
     and the income levels of such individuals.
       (B) Report.--Not later than 28 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on the results of the study 
     conducted in accordance with subparagraph (A).
       (2) 4-year study.--
       (A) In general.--Not later than 4 years after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall conduct a study to determine the number 
     of child care facilities that are funded through covered 
     entities that received assistance through a grant awarded 
     under this section and that remain in operation, and the 
     extent to which such facilities are meeting the child care 
     needs of the individuals served by such facilities.
       (B) Report.--Not later than 52 months after the date on 
     which the Secretary first awards grants under this section, 
     the Secretary shall prepare and submit to the appropriate 
     committees of Congress a report on the results of the study 
     conducted in accordance with subparagraph (A).
       (j) Definitions.--In this section:
       (1) Covered entity.--The term ``covered entity'' means a 
     small business or a consortium formed in accordance with 
     subsection (d)(3).
       (2) Indian community.--The term ``Indian community'' means 
     a community served by an Indian tribe or tribal organization.
       (3) Indian tribe; tribal organization.--The terms ``Indian 
     tribe'' and ``tribal organization'' have the meanings given 
     the terms in section 658P of the Child Care and Development 
     Block Grant Act of 1990 (42 U.S.C. 9858n).
       (4) Small business.--The term ``small business'' means an 
     employer who employed an average of at least 2 but not more 
     than 50 employees on the business days during the preceding 
     calendar year.
       (5) State.--The term ``State'' has the meaning given the 
     term in section 658P of the Child Care and Development Block 
     Grant Act of 1990 (42 U.S.C. 9858n).
       (k) Application to Indian Tribes and Tribal 
     Organizations.--In this section:
       (1) In general.--Except as provided in subsection (f)(1), 
     and in paragraphs (2) and (3), the term ``State'' includes an 
     Indian tribe or tribal organization.
       (2) Geographic references.--The term ``State'' includes an 
     Indian community in subsections (c) (the second and third 
     place the term appears), (d)(1) (the second place the term 
     appears), (d)(3)(A) (the second place the term appears), and 
     (i)(1)(A)(i).
       (3) State-level activities.--The term ``State-level 
     activities'' includes activities at the tribal level.
       (l) Authorization of Appropriations.--
       (1) In general.--There is authorized to be appropriated to 
     carry out this section, $50,000,000 for the period of fiscal 
     years 2008 through 2012.
       (2) Studies and administration.--With respect to the total 
     amount appropriated for such period in accordance with this 
     subsection, not more than $2,500,000 of that amount may be 
     used for expenditures related to conducting studies required 
     under, and the administration of, this section.
       (m) Termination of Program.--The program established under 
     subsection (a) shall terminate on September 30, 2012.

     SEC. 563. STUDY OF UNIVERSAL USE OF ADVANCE PAYMENT OF EARNED 
                   INCOME CREDIT.

       Not later than 180 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall report to 
     Congress on a study of the benefits, costs, risks, and 
     barriers to workers and to businesses (with a special 
     emphasis on small businesses) if the advance earned income 
     tax credit program (under section 3507 of the Internal 
     Revenue Code of 1986) included all recipients of the earned 
     income tax credit (under section 32 of such Code) and what 
     steps would be necessary to implement such inclusion.

     SEC. 564. SENSE OF THE SENATE CONCERNING PERSONAL SAVINGS.

       (a) Findings.--The Senate finds that--
       (1) the personal saving rate in the United States is at its 
     lowest point since the Great Depression, with the rate having 
     fallen into negative territory;
       (2) the United States ranks at the bottom of the Group of 
     Twenty (G-20) nations in terms of net national saving rate;
       (3) approximately half of all the working people of the 
     United States work for an employer that does not offer any 
     kind of retirement plan;
       (4) existing savings policies enacted by Congress provide 
     limited incentives to save for low- and moderate-income 
     families; and
       (5) the Social Security program was enacted to serve as the 
     safest component of a retirement system that also includes 
     employer-sponsored retirement plans and personal savings.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) Congress should enact policies that promote savings 
     vehicles for retirement that are simple, easily accessible 
     and provide adequate financial security for all the people of 
     the United States;
       (2) it is important to begin retirement saving as early as 
     possible to take full advantage of the power of compound 
     interest; and
       (3) regularly contributing money to a financially-sound 
     investment account is one important method for helping to 
     achieve one's retirement goals.

     SEC. 565. RENEWAL GRANTS FOR WOMEN'S BUSINESS CENTERS.

       (a) In General.--Section 29 of the Small Business Act (15 
     U.S.C. 656) is amended by adding at the end the following:
       ``(m) Continued Funding for Centers.--
       ``(1) In general.--A nonprofit organization described in 
     paragraph (2) shall be eligible to receive, subject to 
     paragraph (3), a 3-year grant under this subsection.
       ``(2) Applicability.--A nonprofit organization described in 
     this paragraph is a nonprofit organization that has received 
     funding under subsection (b) or (l).
       ``(3) Application and approval criteria.--
       ``(A) Criteria.--Subject to subparagraph (B), the 
     Administrator shall develop and publish criteria for the 
     consideration and approval of applications by nonprofit 
     organizations under this subsection.
       ``(B) Contents.--Except as otherwise provided in this 
     subsection, the conditions for participation in the grant 
     program under this subsection shall be the same as the 
     conditions for participation in the program under subsection 
     (l), as in effect on the date of enactment of this Act.
       ``(C) Notification.--Not later than 60 days after the date 
     of the deadline to submit applications for each fiscal year, 
     the Administrator shall approve or deny any application under 
     this subsection and notify the applicant for each such 
     application.
       ``(4) Award of grants.--
       ``(A) In general.--Subject to the availability of 
     appropriations, the Administrator shall make a grant for the 
     Federal share of the cost of activities described in the 
     application to each applicant approved under this subsection.
       ``(B) Amount.--A grant under this subsection shall be for 
     not more than $150,000, for each year of that grant.
       ``(C) Federal share.--The Federal share under this 
     subsection shall be not more than 50 percent.
       ``(D) Priority.--In allocating funds made available for 
     grants under this section, the Administrator shall give 
     applications under this subsection or subsection (l) priority 
     over first-time applications under subsection (b).
       ``(5) Renewal.--

[[Page S3974]]

       ``(A) In general.--The Administrator may renew a grant 
     under this subsection for additional 3-year periods, if the 
     nonprofit organization submits an application for such 
     renewal at such time, in such manner, and accompanied by such 
     information as the Administrator may establish.
       ``(B) Unlimited renewals.--There shall be no limitation on 
     the number of times a grant may be renewed under subparagraph 
     (A).
       ``(n) Privacy Requirements.--
       ``(1) In general.--A women's business center may not 
     disclose the name, address, or telephone number of any 
     individual or small business concern receiving assistance 
     under this section without the consent of such individual or 
     small business concern, unless--
       ``(A) the Administrator is ordered to make such a 
     disclosure by a court in any civil or criminal enforcement 
     action initiated by a Federal or State agency; or
       ``(B) the Administrator considers such a disclosure to be 
     necessary for the purpose of conducting a financial audit of 
     a women's business center, but a disclosure under this 
     subparagraph shall be limited to the information necessary 
     for such audit.
       ``(2) Administration use of information.--This subsection 
     shall not--
       ``(A) restrict Administration access to program activity 
     data; or
       ``(B) prevent the Administration from using client 
     information (other than the information described in 
     subparagraph (A)) to conduct client surveys.
       ``(3) Regulations.--The Administrator shall issue 
     regulations to establish standards for requiring disclosures 
     during a financial audit under paragraph (1)(B).''.
       (b) Repeal.--Section 29(l) of the Small Business Act (15 
     U.S.C. 656(l)) is repealed effective October 1 of the first 
     full fiscal year after the date of enactment of this Act.
       (c) Transitional Rule.--Notwithstanding any other provision 
     of law, a grant or cooperative agreement that was awarded 
     under subsection (l) of section 29 of the Small Business Act 
     (15 U.S.C. 656), on or before the day before the date 
     described in subsection (b) of this section, shall remain in 
     full force and effect under the terms, and for the duration, 
     of such grant or agreement.

     SEC. 566. REPORTS ON ACQUISITIONS OF ARTICLES, MATERIALS, AND 
                   SUPPLIES MANUFACTURED OUTSIDE THE UNITED 
                   STATES.

       Section 2 of the Buy American Act (41 U.S.C. 10a) is 
     amended--
       (1) by striking ``Notwithstanding'' and inserting the 
     following:
       ``(a) In General.--Notwithstanding''; and
       (2) by adding at the end the following:
       ``(b) Reports.--
       ``(1) In general.--Not later than 180 days after the end of 
     each of fiscal years 2007 through 2011, the head of each 
     Federal agency shall submit to the Committee on Homeland 
     Security and Governmental Affairs of the Senate and the 
     Committee on Oversight and Government Reform of the House of 
     Representatives a report on the amount of the acquisitions 
     made by the agency in that fiscal year of articles, 
     materials, or supplies purchased from entities that 
     manufacture the articles, materials, or supplies outside of 
     the United States.
       ``(2) Contents of report.--The report required by paragraph 
     (1) shall separately include, for the fiscal year covered by 
     such report--
       ``(A) the dollar value of any articles, materials, or 
     supplies that were manufactured outside the United States;
       ``(B) an itemized list of all waivers granted with respect 
     to such articles, materials, or supplies under this Act, and 
     a citation to the treaty, international agreement, or other 
     law under which each waiver was granted;
       ``(C) if any articles, materials, or supplies were acquired 
     from entities that manufacture articles, materials, or 
     supplies outside the United States, the specific exception 
     under this section that was used to purchase such articles, 
     materials, or supplies; and
       ``(D) a summary of--
       ``(i) the total procurement funds expended on articles, 
     materials, and supplies manufactured inside the United 
     States; and
       ``(ii) the total procurement funds expended on articles, 
     materials, and supplies manufactured outside the United 
     States.
       ``(3) Public availability.--The head of each Federal agency 
     submitting a report under paragraph (1) shall make the report 
     publicly available to the maximum extent practicable.
       ``(4) Exception for intelligence community.--This 
     subsection shall not apply to acquisitions made by an agency, 
     or component thereof, that is an element of the intelligence 
     community as specified in, or designated under, section 3(4) 
     of the National Security Act of 1947 (50 U.S.C. 401a(4)).''.

     SEC. 567. SENSE OF THE SENATE REGARDING REPEAL OF 1993 INCOME 
                   TAX INCREASE ON SOCIAL SECURITY BENEFITS.

       It is the sense of the Senate that Congress should repeal 
     the 1993 tax increase on Social Security benefits and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     repeal and avoid forcing taxpayers to pay substantially more 
     interest to foreign creditors.

     SEC. 568. SENSE OF THE SENATE REGARDING PERMANENT TAX 
                   INCENTIVES TO MAKE EDUCATION MORE AFFORDABLE 
                   AND MORE ACCESSIBLE FOR AMERICAN FAMILIES.

       It is the sense of the Senate that Congress should make 
     permanent the tax incentives to make education more 
     affordable and more accessible for American families and 
     eliminate wasteful spending, such as spending on unnecessary 
     tax loopholes, in order to fully offset the cost of such 
     incentives and avoid forcing taxpayers to pay substantially 
     more interest to foreign creditors.

     SEC. 569. RESPONSIBLE GOVERNMENT CONTRACTOR REQUIREMENTS.

       Section 274A(e) of the Immigration and Nationality Act (8 
     U.S.C. 1324a(e)) is amended by adding at the end the 
     following new paragraph:
       ``(10) Prohibition on award of government contracts, 
     grants, and agreements.--
       ``(A) Employers with no contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subparagraph 
     (C), if an employer who does not hold a Federal contract, 
     grant, or cooperative agreement is determined to have 
     violated this section, the employer shall be debarred from 
     the receipt of a Federal contract, grant, or cooperative 
     agreement for a period of 7 years.
       ``(ii) Placement on excluded list.--The Secretary of 
     Homeland Security or the Attorney General shall advise the 
     Administrator of General Services of the debarment of an 
     employer under clause (i) and the Administrator of General 
     Services shall list the employer on the List of Parties 
     Excluded from Federal Procurement and Nonprocurement Programs 
     for a period of 7 years.
       ``(iii) Waiver.--

       ``(I) Authority.--The Administrator of General Services, in 
     consultation with the Secretary of Homeland Security and the 
     Attorney General, may waive operation of clause (i) or may 
     limit the duration or scope of a debarment under clause (i) 
     if such waiver or limitation is necessary to national defense 
     or in the interest of national security.
       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternative action under this clause 
     shall not be judicially reviewed.

       ``(B) Employers with contracts, grants, or agreements.--
       ``(i) In general.--Subject to clause (iii) and subclause 
     (C), an employer who holds a Federal contract, grant, or 
     cooperative agreement and is determined to have violated this 
     section shall be debarred from the receipt of new Federal 
     contracts, grants, or cooperative agreements for a period of 
     10 years.
       ``(ii) Notice to agencies.--Prior to debarring the employer 
     under clause (i), the Secretary of Homeland Security, in 
     cooperation with the Administrator of General Services, shall 
     advise any agency or department holding a contract, grant, or 
     cooperative agreement with the employer of the Government's 
     intention to debar the employer from the receipt of new 
     Federal contracts, grants, or cooperative agreements for a 
     period of 10 years.
       ``(iii) Waiver.--

       ``(I) Authority.--After consideration of the views of any 
     agency or department that holds a contract, grant, or 
     cooperative agreement with the employer, the Administrator of 
     General Services, in consultation with the Secretary of 
     Homeland Security and the Attorney General, may waive 
     operation of clause (i) or may limit the duration or scope of 
     the debarment under clause (i) if such waiver or limitation 
     is necessary to the national defense or in the interest of 
     national security.
       ``(II) Notification to congress.--If the Administrator 
     grants a waiver or limitation described in subclause (I), the 
     Administrator shall submit to each member of the Committee on 
     the Judiciary of the Senate and of the Committee on the 
     Judiciary of the House of Representatives immediate notice of 
     such waiver or limitation.
       ``(III) Prohibition on judicial review.--The decision of 
     whether to debar or take alternate action under this clause 
     shall not be judicially reviewed.

       ``(C) Exemption from penalty for employers participating in 
     the basic pilot program.--In the case of imposition on an 
     employer of a debarment from the receipt of a Federal 
     contract, grant, or cooperative agreement under subparagraph 
     (A) or (B), that penalty shall be waived if the employer 
     establishes that the employer was voluntarily participating 
     in the basic pilot program under section 403(a) of the 
     Illegal Immigration Reform and Immigrant Responsibility Act 
     of 1996 (8 U.S.C. 1324a note) at the time of the violations 
     of this section that resulted in the debarment.''.

     SEC. 570. DISABILITY PREFERENCE PROGRAM FOR TAX COLLECTION 
                   CONTRACTS.

       (a) In General.--Section 6306 (relating to qualified tax 
     collection contracts) is amended--
       (1) by striking ``Nothing'' in subsection (a) and inserting 
     ``Except as provided in subsection (c), nothing'',
       (2) by redesignating subsections (c), (d), (e), and (f) as 
     subsections (d), (e), (f), and (g), respectively, and
       (3) by inserting after subsection (b) the following new 
     subsection:
       ``(c) Disability Preference Program for Tax Collection 
     Contracts.--
       ``(1) In general.--The Secretary shall provide a qualifying 
     disability preference to any

[[Page S3975]]

     program under which any qualified tax collection contract is 
     awarded on or after the effective date of this subsection and 
     shall ensure compliance with the requirements of paragraph 
     (3).
       ``(2) Qualifying disability preference.--
       ``(A) In general.--For purposes of this subsection, the 
     term `qualifying disability preference' means a preference 
     pursuant to which at least 10 percent (in both number and 
     aggregate dollar amount) of the accounts covered by qualified 
     tax collection contracts are awarded to persons satisfying 
     the following criteria:
       ``(i) Such person employs within the United States at least 
     50 severely disabled individuals.
       ``(ii) Such person shall agree as an enforceable condition 
     of its bid for a qualified tax collection contract that 
     within 90 days after the date such contract is awarded, not 
     less than 35 percent of the employees of such person employed 
     in connection with providing services under such contract 
     shall--

       ``(I) be hired after the date such contract is awarded, and
       ``(II) be severely disabled individuals.

       ``(B) Determination of satisfaction of criteria.--Within 60 
     days after the end of the period specified in subparagraph 
     (A)(ii), the Secretary shall determine whether such person 
     has met the 35 percent requirement specified in such 
     subparagraph, and if such requirement has not been met, shall 
     terminate the contract for nonperformance. For purposes of 
     determining whether such 35 percent requirement has been 
     satisfied, severely disabled individuals providing services 
     under such contract shall not include any severely disabled 
     individuals who were counted toward satisfaction of the 50-
     employee requirement specified in subparagraph (A)(i), unless 
     such person replaced such individuals by hiring additional 
     severely disabled individuals who do not perform services 
     under such contract.
       ``(3) Program-wide employment of severely disabled 
     individuals.--Not less than 15 percent of all individuals 
     hired by all persons to whom tax collection contracts are 
     issued by the Secretary under this section, to perform work 
     under such tax collection contracts, shall qualify as 
     severely disabled individuals.
       ``(4) Severely disabled individual.--For purposes of this 
     subsection, the term `severely disabled individual' means any 
     one of the following:
       ``(A) Any veteran of the United States Armed Forces with--
       ``(i) a disability determined by the Secretary of Veterans 
     Affairs to be service-connected, or
       ``(ii) a disability deemed by statute to be service-
     connected.
       ``(B) Any individual who is a disabled beneficiary (as 
     defined in section 1148(k)(2) of the Social Security Act (42 
     U.S.C. 1320b-19(k)(2)) or who would be considered to be such 
     a disabled beneficiary but for having income or assets in 
     excess of the income or asset eligibility limits established 
     under title II or XVI of the Social Security Act, 
     respectively.''.
       (b) Report by Government Accountability Office.--
       (1) In general.--The Comptroller General of the United 
     States shall conduct a study of the effectiveness and 
     efficiency of the use of private contractors for Internal 
     Revenue Service debt collection. The study required by this 
     paragraph shall be completed in time to be taken into account 
     by Congress before any new contracting is carried out under 
     section 6306 of the Internal Revenue Code of 1986 in years 
     following 2008.
       (2) Study of comparable efforts.--As part of the study 
     required under paragraph (1), the Comptroller General shall--
       (A) make every effort to determine the relative 
     effectiveness and efficiency of debt collection contracting 
     by Federal staff compared to private contractors, using a 
     cost calculation for both Federal staff and private 
     contractors which includes all benefits and overhead costs,
       (B) compare the cost effectiveness of the contracting 
     approach of the Department of the Treasury to that of the 
     Department of Education's Office of Student Financial 
     Assistance, and
       (C) survey State tax debt collection experiences for 
     lessons that may be applicable to the Internal Revenue 
     Service collection efforts.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any tax collection contract awarded on or 
     after the date of the enactment of ths Act.
                                 ______
                                 
  SA 799. Mr. LUGAR (for himself, Mr. Bond, and Mr. Coleman) submitted 
an amendment intended to be proposed by him to the bill H.R. 1591, 
making emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. SPECIAL IMMIGRANT STATUS FOR CERTAIN ALIENS SERVING 
                   AS TRANSLATORS OR INTERPRETERS WITH FEDERAL 
                   AGENCIES.

       (a) Increase in Numbers Admitted.--Section 1059 of the 
     National Defense Authorization Act for Fiscal Year 2006 (8 
     U.S.C. 1101 note) is amended--
       (1) in subsection (b)(1)--
       (A) in subparagraph (B), by striking ``as a translator'' 
     and inserting ``, or under Chief of Mission authority, as a 
     translator or interpreter'';
       (B) in subparagraph (C), by inserting ``the Chief of 
     Mission or'' after ``recommendation from''; and
       (C) in subparagraph (D), by inserting ``the Chief of 
     Mission or'' after ``as determined by''; and
       (2) in subsection (c)(1), by striking ``50'' and inserting 
     ``300''.
       (b) Exclusion From Numerical Limitation.--Section 
     1059(c)(2) of such Act is amended--
       (1) in the subsection header, by striking ``Counting 
     against'' and inserting ``Exclusion from''; and
       (2) by striking ``.'' at the end and inserting ``and shall 
     not be counted against the numerical limitations under 
     sections 201(d), 202(a) and 203(b)(4) of the Immigration and 
     Nationality Act (8 U.S.C. 1151(d), 1152(a) and 
     1153(b)(4)).''.
       (c) Adjustment of Status.--Section 1059 of such Act is 
     further amended--
       (1) by redesignating subsection (d) as subsection (e); and
       (2) by inserting after subsection (c) the following:
       ``(d) Adjustment of Status.--Notwithstanding paragraphs 
     (2), (7) and (8) of section 245(c) of the Immigration and 
     Nationality Act (8 U.S.C. 1255(c)), the Secretary of Homeland 
     Security may adjust the status of an alien to that of a 
     lawful permanent resident under section 245(a) of such Act if 
     the alien--
       ``(1) was paroled or admitted as a nonimmigrant into the 
     United States; and
       ``(2) is otherwise eligible for special immigrant status 
     under this section and under the Immigration and Nationality 
     Act.''.
       (d) Sunset Provision.--Section 1059 of such Act is further 
     amended by adding at the end the following:
       ``(f) Sunset Provision.--
       ``(1) In general.--This section is repealed on the date 
     that is 3 years after the date of the enactment of this 
     subsection.
       ``(2) Applicability.--Notwithstanding paragraph (1), the 
     Secretary of Homeland Security may provide an alien with the 
     status of a special immigrant under this section if--
       ``(A) the alien's petition for such status was pending 
     before the date described in paragraph (1); and
       ``(B) the alien was eligible for such status at the time 
     the petition was filed.''.

                                 ______
                                 
  SA 800. Mrs. LINCOLN (for himself, Mr. Smith, and Ms. Cantwell) 
submitted an amendment intended to be proposed to amendment SA 680 
submitted by Mr. Kennedy (for himself, Mr. Enzi, Mr. Baucus, and Mr. 
Grassley) to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of title V, add the following:

     SEC. ___. DEDUCTION FOR QUALIFIED TIMBER GAIN.

       (a) In General.--Part I of subchapter P of chapter 1 is 
     amended by adding at the end the following new section:

     ``SEC. 1203. DEDUCTION FOR QUALIFIED TIMBER GAIN.

       ``(a) In General.--In the case of a taxpayer which elects 
     the application of this section for a taxable year, there 
     shall be allowed a deduction against gross income equal to 60 
     percent of the lesser of--
       ``(1) the taxpayer's qualified timber gain for such year, 
     or
       ``(2) the taxpayer's net capital gain for such year.
       ``(b) Qualified Timber Gain.--For purposes of this section, 
     the term `qualified timber gain' means, with respect to any 
     taxpayer for any taxable year, the excess (if any) of--
       ``(1) the sum of the taxpayer's gains described in 
     subsections (a) and (b) of section 631 for such year, over
       ``(2) the sum of the taxpayer's losses described in such 
     subsections for such year.
       ``(c) Special Rules for Pass-Thru Entities.--In the case of 
     any qualified timber gain of a pass-thru entity (as defined 
     in section 1(h)(10)), the election under this section shall 
     be made separately by each taxpayer subject to tax on such 
     gain.''.
       (b) Coordination With Maximum Capital Gains Rates.--
       (1) Taxpayers other than corporations.--Paragraph (2) of 
     section 1(h) is amended to read as follows:
       ``(2) Reduction of net capital gain.--For purposes of this 
     subsection, the net capital gain for any taxable year shall 
     be reduced (but not below zero) by the sum of--
       ``(A) the amount which the taxpayer takes into account as 
     investment income under section 163(d)(4)(B)(iii), and
       ``(B) the lesser of--
       ``(i) the amount described in paragraph (1) of section 
     1203(a), or
       ``(ii) the amount described in paragraph (2) of such 
     section.''.
       (2) Corporations.--Section 1201 is amended by redesignating 
     subsection (b) as subsection (c) and inserting after 
     subsection (a) the following new subsection:
       ``(b) Qualified Timber Gain Not Taken Into Account.--For 
     purposes of this section, in the case of a corporation with 
     respect to which an election is in effect under section 1203, 
     the net capital gain for any taxable year shall be reduced 
     (but not below zero) by the corporation's qualified timber 
     gain (as defined in section 1203(b)).''.
       (c) Deduction Allowed Whether or Not Individual Itemizes 
     Other Deductions.--

[[Page S3976]]

     Subsection (a) of section 62 is amended by inserting before 
     the last sentence the following new paragraph:
       ``(21) Qualified timber gains.--The deduction allowed by 
     section 1203.''.
       (d) Deduction Allowed in Computing Adjusted Current 
     Earnings.--Subparagraph (C) of section 56(g)(4) is amended by 
     adding at the end the following new clause:
       ``(vii) Deduction for qualified timber gain.--Clause (i) 
     shall not apply to any deduction allowed under section 
     1203.''.
       (e) Deduction Allowed in Computing Taxable Income of 
     Electing Small Business Trusts.--Subparagraph (C) of section 
     641(c)(2) is amended by inserting after clause (iii) the 
     following new clause:
       ``(iv) The deduction allowed under section 1203.''.
       (f) Conforming Amendments.--
       (1) Subparagraph (B) of section 172(d)(2) is amended to 
     read as follows:
       ``(B) the exclusion under section 1202 and the deduction 
     under section 1203 shall not be allowed.''.
       (2) Paragraph (4) of section 642(c) is amended by striking 
     the first sentence and inserting the following: ``To the 
     extent that the amount otherwise allowable as a deduction 
     under this subsection consists of gain described in section 
     1202(a) or qualified timber gain (as defined in section 
     1203(b)), proper adjustment shall be made for any exclusion 
     allowable to the estate or trust under section 1202 and for 
     any deduction allowable to the estate or trust under section 
     1203.''
       (3) Paragraph (3) of section 643(a) is amended by striking 
     the last sentence and inserting the following: ``The 
     exclusion under section 1202 and the deduction under section 
     1203 shall not be taken into account.''
       (4) Subparagraph (C) of section 643(a)(6) is amended to 
     read as follows:
       ``(C) Paragraph (3) shall not apply to a foreign trust. In 
     the case of such a trust--
       ``(i) there shall be included gains from the sale or 
     exchange of capital assets, reduced by losses from such sales 
     or exchanges to the extent such losses do not exceed gains 
     from such sales or exchanges, and
       ``(ii) the deduction under section 1203 shall not be taken 
     into account.''.
       (5) Paragraph (4) of section 691(c) is amended by inserting 
     ``1203,'' after ``1202,''.
       (6) Paragraph (2) of section 871(a) is amended by inserting 
     ``and 1203'' after ``section 1202''.
       (7) The table of sections for part I of subchapter P of 
     chapter 1 is amended by adding at the end the following new 
     item:

``Sec. 1203. Deduction for qualified timber gain.''.

       (g) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years ending after the date of the enactment 
     of this Act and before January 1, 2009.
       (2) Taxable years which include date of enactment.--In the 
     case of any taxable year which includes the date of the 
     enactment of this Act, for purposes of the Internal Revenue 
     Code of 1986, the taxpayer's qualified timber gain shall not 
     exceed the excess that would be described in section 1203(b) 
     of such Code, as added by this section, if only dispositions 
     of timber after such date were taken into account.
                                 ______
                                 
  SA 801. Mrs. LINCOLN (for herself, Mr. Smith, and Ms. Cantwell) 
submitted an amendment intended to be proposed to amendment SA 658 
submitted by Mr. Grassley (for himself and Mr. Baucus) and intended to 
be proposed to the bill H.R. 1591, making emergency supplemental 
appropriations for the fiscal year ending September 30, 2007, and for 
other purposes; which was ordered to lie on the table; as follows:

       At the end of title V, add the following:

     SEC. ___. DEDUCTION FOR QUALIFIED TIMBER GAIN.

       (a) In General.--Part I of subchapter P of chapter 1 is 
     amended by adding at the end the following new section:

     ``SEC. 1203. DEDUCTION FOR QUALIFIED TIMBER GAIN.

       ``(a) In General.--In the case of a taxpayer which elects 
     the application of this section for a taxable year, there 
     shall be allowed a deduction against gross income equal to 60 
     percent of the lesser of--
       ``(1) the taxpayer's qualified timber gain for such year, 
     or
       ``(2) the taxpayer's net capital gain for such year.
       ``(b) Qualified Timber Gain.--For purposes of this section, 
     the term `qualified timber gain' means, with respect to any 
     taxpayer for any taxable year, the excess (if any) of--
       ``(1) the sum of the taxpayer's gains described in 
     subsections (a) and (b) of section 631 for such year, over
       ``(2) the sum of the taxpayer's losses described in such 
     subsections for such year.
       ``(c) Special Rules for Pass-Thru Entities.--In the case of 
     any qualified timber gain of a pass-thru entity (as defined 
     in section 1(h)(10)), the election under this section shall 
     be made separately by each taxpayer subject to tax on such 
     gain.''.
       (b) Coordination With Maximum Capital Gains Rates.--
       (1) Taxpayers other than corporations.--Paragraph (2) of 
     section 1(h) is amended to read as follows:
       ``(2) Reduction of net capital gain.--For purposes of this 
     subsection, the net capital gain for any taxable year shall 
     be reduced (but not below zero) by the sum of--
       ``(A) the amount which the taxpayer takes into account as 
     investment income under section 163(d)(4)(B)(iii), and
       ``(B) the lesser of--
       ``(i) the amount described in paragraph (1) of section 
     1203(a), or
       ``(ii) the amount described in paragraph (2) of such 
     section.''.
       (2) Corporations.--Section 1201 is amended by redesignating 
     subsection (b) as subsection (c) and inserting after 
     subsection (a) the following new subsection:
       ``(b) Qualified Timber Gain Not Taken Into Account.--For 
     purposes of this section, in the case of a corporation with 
     respect to which an election is in effect under section 1203, 
     the net capital gain for any taxable year shall be reduced 
     (but not below zero) by the corporation's qualified timber 
     gain (as defined in section 1203(b)).''.
       (c) Deduction Allowed Whether or Not Individual Itemizes 
     Other Deductions.--Subsection (a) of section 62 is amended by 
     inserting before the last sentence the following new 
     paragraph:
       ``(21) Qualified timber gains.--The deduction allowed by 
     section 1203.''.
       (d) Deduction Allowed in Computing Adjusted Current 
     Earnings.--Subparagraph (C) of section 56(g)(4) is amended by 
     adding at the end the following new clause:
       ``(vii) Deduction for qualified timber gain.--Clause (i) 
     shall not apply to any deduction allowed under section 
     1203.''.
       (e) Deduction Allowed in Computing Taxable Income of 
     Electing Small Business Trusts.--Subparagraph (C) of section 
     641(c)(2) is amended by inserting after clause (iii) the 
     following new clause:
       ``(iv) The deduction allowed under section 1203.''.
       (f) Conforming Amendments.--
       (1) Subparagraph (B) of section 172(d)(2) is amended to 
     read as follows:
       ``(B) the exclusion under section 1202 and the deduction 
     under section 1203 shall not be allowed.''.
       (2) Paragraph (4) of section 642(c) is amended by striking 
     the first sentence and inserting the following: ``To the 
     extent that the amount otherwise allowable as a deduction 
     under this subsection consists of gain described in section 
     1202(a) or qualified timber gain (as defined in section 
     1203(b)), proper adjustment shall be made for any exclusion 
     allowable to the estate or trust under section 1202 and for 
     any deduction allowable to the estate or trust under section 
     1203.''
       (3) Paragraph (3) of section 643(a) is amended by striking 
     the last sentence and inserting the following: ``The 
     exclusion under section 1202 and the deduction under section 
     1203 shall not be taken into account.''
       (4) Subparagraph (C) of section 643(a)(6) is amended to 
     read as follows:
       ``(C) Paragraph (3) shall not apply to a foreign trust. In 
     the case of such a trust--
       ``(i) there shall be included gains from the sale or 
     exchange of capital assets, reduced by losses from such sales 
     or exchanges to the extent such losses do not exceed gains 
     from such sales or exchanges, and
       ``(ii) the deduction under section 1203 shall not be taken 
     into account.''.
       (5) Paragraph (4) of section 691(c) is amended by inserting 
     ``1203,'' after ``1202,''.
       (6) Paragraph (2) of section 871(a) is amended by inserting 
     ``and 1203'' after ``section 1202''.
       (7) The table of sections for part I of subchapter P of 
     chapter 1 is amended by adding at the end the following new 
     item:

``Sec. 1203. Deduction for qualified timber gain.''.

       (g) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years ending after the date of the enactment 
     of this Act and before January 1, 2009.
       (2) Taxable years which include date of enactment.--In the 
     case of any taxable year which includes the date of the 
     enactment of this Act, for purposes of the Internal Revenue 
     Code of 1986, the taxpayer's qualified timber gain shall not 
     exceed the excess that would be described in section 1203(b) 
     of such Code, as added by this section, if only dispositions 
     of timber after such date were taken into account.
                                 ______
                                 
  SA 802. Mrs. LINCOLN submitted an amendment intended to be proposed 
to amendment SA 658 submitted by Mr. Grassley (for himself and Mr. 
Baucus) and intended to be proposed to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of title V, add the following:

     SEC. ___. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED 
                   SERVICES RETIRED PAY IS REDUCED AS A RESULT OF 
                   AWARD OF DISABILITY COMPENSATION.

       (a) In General.--Subsection (d) of section 6511 (relating 
     to special rules applicable to income taxes) is amended by 
     adding at the end the following new paragraph:
       ``(8) Special rules when uniformed services retired pay is 
     reduced as a result of award of disability compensation.--
       ``(A) Period of limitation on filing claim.--If the claim 
     for credit or refund relates to an overpayment of tax imposed 
     by subtitle A on account of--
       ``(i) the reduction of uniformed services retired pay 
     computed under section 1406 or 1407 of title 10, United 
     States Code, or

[[Page S3977]]

       ``(ii) the waiver of such pay under section 5305 of title 
     38 of such Code,
     as a result of an award of compensation under title 38 of 
     such Code pursuant to a determination by the Secretary of 
     Veterans Affairs, the 3-year period of limitation prescribed 
     in subsection (a) shall be extended, for purposes of 
     permitting a credit or refund based upon the amount of such 
     reduction or waiver, until the end of the 1-year period 
     beginning on the date of such determination.
       ``(B) Limitation to 5 taxable years.--Subparagraph (A) 
     shall not apply with respect to any taxable year which began 
     more than 5 years before the date of such determination.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to claims for credit or refund filed after the 
     date of the enactment of this Act.
       (c) Transition Rules.--In the case of a determination 
     described in paragraph (8) of section 6511(d) of the Internal 
     Revenue Code of 1986 (as added by this section) which is made 
     by the Secretary of Veterans Affairs after December 31, 2000, 
     and before the date of the enactment of this Act, such 
     paragraph--
       (1) shall not apply with respect to any taxable year which 
     began before January 1, 2001, and
       (2) shall be applied by substituting ``the date of the 
     enactment of this paragraph'' for ``the date of such 
     determination'' in subparagraph (A) thereof.
       (d) Penalty for Filing Erroneous Refund Claims.--
       (1) In general.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6675 the following new section:

     ``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

       ``(a) Civil Penalty.--If a claim for refund or credit with 
     respect to income tax (other than a claim for a refund or 
     credit relating to the earned income credit under section 32) 
     is made for an excessive amount, unless it is shown that the 
     claim for such excessive amount has a reasonable basis, the 
     person making such claim shall be liable for a penalty in an 
     amount equal to 20 percent of the excessive amount.
       ``(b) Excessive Amount.--For purposes of this section, the 
     term `excessive amount' means in the case of any person the 
     amount by which the amount of the claim for refund or credit 
     for any taxable year exceeds the amount of such claim 
     allowable under this title for such taxable year.
       ``(c) Coordination With Other Penalties.--This section 
     shall not apply to any portion of the excessive amount of a 
     claim for refund or credit on which a penalty is imposed 
     under part II of subchapter A of chapter 68.''.
       (2) 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 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.

       (3) Effective date.--The amendments made by this subsection 
     shall apply to any return filed on or after January 1, 2008.

                                 ______
                                 
  SA 803. Mrs. LINCOLN submitted an amendment intended to be proposed 
to amendment SA 680 submitted by Mr. Kennedy (for himself, Mr. Enzi, 
Mr. Baucus, and Mr. Grassley) to the bill H.R. 1591, making emergency 
supplemental appropriations for the fiscal year ending September 30, 
2007, and for other purposes; which was ordered to lie on the table; as 
follows:

       At the end of title V, add the following:

     SEC. ___. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED 
                   SERVICES RETIRED PAY IS REDUCED AS A RESULT OF 
                   AWARD OF DISABILITY COMPENSATION.

       (a) In General.--Subsection (d) of section 6511 (relating 
     to special rules applicable to income taxes) is amended by 
     adding at the end the following new paragraph:
       ``(8) Special rules when uniformed services retired pay is 
     reduced as a result of award of disability compensation.--
       ``(A) Period of limitation on filing claim.--If the claim 
     for credit or refund relates to an overpayment of tax imposed 
     by subtitle A on account of--
       ``(i) the reduction of uniformed services retired pay 
     computed under section 1406 or 1407 of title 10, United 
     States Code, or
       ``(ii) the waiver of such pay under section 5305 of title 
     38 of such Code,
     as a result of an award of compensation under title 38 of 
     such Code pursuant to a determination by the Secretary of 
     Veterans Affairs, the 3-year period of limitation prescribed 
     in subsection (a) shall be extended, for purposes of 
     permitting a credit or refund based upon the amount of such 
     reduction or waiver, until the end of the 1-year period 
     beginning on the date of such determination.
       ``(B) Limitation to 5 taxable years.--Subparagraph (A) 
     shall not apply with respect to any taxable year which began 
     more than 5 years before the date of such determination.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to claims for credit or refund filed after the 
     date of the enactment of this Act.
       (c) Transition Rules.--In the case of a determination 
     described in paragraph (8) of section 6511(d) of the Internal 
     Revenue Code of 1986 (as added by this section) which is made 
     by the Secretary of Veterans Affairs after December 31, 2000, 
     and before the date of the enactment of this Act, such 
     paragraph--
       (1) shall not apply with respect to any taxable year which 
     began before January 1, 2001, and
       (2) shall be applied by substituting ``the date of the 
     enactment of this paragraph'' for ``the date of such 
     determination'' in subparagraph (A) thereof.
       (d) Penalty for Filing Erroneous Refund Claims.--
       (1) In general.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6675 the following new section:

     ``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

       ``(a) Civil Penalty.--If a claim for refund or credit with 
     respect to income tax (other than a claim for a refund or 
     credit relating to the earned income credit under section 32) 
     is made for an excessive amount, unless it is shown that the 
     claim for such excessive amount has a reasonable basis, the 
     person making such claim shall be liable for a penalty in an 
     amount equal to 20 percent of the excessive amount.
       ``(b) Excessive Amount.--For purposes of this section, the 
     term `excessive amount' means in the case of any person the 
     amount by which the amount of the claim for refund or credit 
     for any taxable year exceeds the amount of such claim 
     allowable under this title for such taxable year.
       ``(c) Coordination With Other Penalties.--This section 
     shall not apply to any portion of the excessive amount of a 
     claim for refund or credit on which a penalty is imposed 
     under part II of subchapter A of chapter 68.''.
       (2) 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 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to any return filed on or after January 1, 2008.

                                 ______
                                 
  SA 804. Mrs. LINCOLN submitted an amendment intended to be proposed 
to amendment SA 780 submitted by Mr. Grassley (for himself and Mr. 
Baucus) and intended to be proposed to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of title V, add the following:

     SEC. ___. SPECIAL PERIOD OF LIMITATION WHEN UNIFORMED 
                   SERVICES RETIRED PAY IS REDUCED AS A RESULT OF 
                   AWARD OF DISABILITY COMPENSATION.

       (a) In General.--Subsection (d) of section 6511 (relating 
     to special rules applicable to income taxes) is amended by 
     adding at the end the following new paragraph:
       ``(8) Special rules when uniformed services retired pay is 
     reduced as a result of award of disability compensation.--
       ``(A) Period of limitation on filing claim.--If the claim 
     for credit or refund relates to an overpayment of tax imposed 
     by subtitle A on account of--
       ``(i) the reduction of uniformed services retired pay 
     computed under section 1406 or 1407 of title 10, United 
     States Code, or
       ``(ii) the waiver of such pay under section 5305 of title 
     38 of such Code,
     as a result of an award of compensation under title 38 of 
     such Code pursuant to a determination by the Secretary of 
     Veterans Affairs, the 3-year period of limitation prescribed 
     in subsection (a) shall be extended, for purposes of 
     permitting a credit or refund based upon the amount of such 
     reduction or waiver, until the end of the 1-year period 
     beginning on the date of such determination.
       ``(B) Limitation to 5 taxable years.--Subparagraph (A) 
     shall not apply with respect to any taxable year which began 
     more than 5 years before the date of such determination.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to claims for credit or refund filed after the 
     date of the enactment of this Act.
       (c) Transition Rules.--In the case of a determination 
     described in paragraph (8) of section 6511(d) of the Internal 
     Revenue Code of 1986 (as added by this section) which is made 
     by the Secretary of Veterans Affairs after December 31, 2000, 
     and before the date of the enactment of this Act, such 
     paragraph--
       (1) shall not apply with respect to any taxable year which 
     began before January 1, 2001, and
       (2) shall be applied by substituting ``the date of the 
     enactment of this paragraph'' for ``the date of such 
     determination'' in subparagraph (A) thereof.
       (d) Penalty for Filing Erroneous Refund Claims.--
       (1) In general.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6675 the following new section:

     ``SEC. 6676. ERRONEOUS CLAIM FOR REFUND OR CREDIT.

       ``(a) Civil Penalty.--If a claim for refund or credit with 
     respect to income tax (other than a claim for a refund or 
     credit relating to the earned income credit under section 32) 
     is made for an excessive amount, unless it is

[[Page S3978]]

     shown that the claim for such excessive amount has a 
     reasonable basis, the person making such claim shall be 
     liable for a penalty in an amount equal to 20 percent of the 
     excessive amount.
       ``(b) Excessive Amount.--For purposes of this section, the 
     term `excessive amount' means in the case of any person the 
     amount by which the amount of the claim for refund or credit 
     for any taxable year exceeds the amount of such claim 
     allowable under this title for such taxable year.
       ``(c) Coordination With Other Penalties.--This section 
     shall not apply to any portion of the excessive amount of a 
     claim for refund or credit on which a penalty is imposed 
     under part II of subchapter A of chapter 68.''.
       (2) 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 6675 the following new item:

``Sec. 6676. Erroneous claim for refund or credit.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to any return filed on or after January 1, 2008.

                                 ______
                                 
  SA 805. Mrs. LINCOLN submitted an amendment intended to be proposed 
to amendment SA 78D submitted by Mr. Grassley (for himself and Mr. 
Baucus) and intended to be proposed to the bill H.R. 1591, making 
emergency supplemental appropriations for the fiscal year ending 
September 30, 2007, and for other purposes; which was ordered to lie on 
the table; as follows:

       At the end of title V, add the following:

     SEC. ___. DEDUCTION FOR QUALIFIED TIMBER GAIN.

       (a) In General.--Part I of subchapter P of chapter 1 is 
     amended by adding at the end the following new section:

     ``SEC. 1203. DEDUCTION FOR QUALIFIED TIMBER GAIN.

       ``(a) In General.--In the case of a taxpayer which elects 
     the application of this section for a taxable year, there 
     shall be allowed a deduction against gross income equal to 60 
     percent of the lesser of--
       ``(1) the taxpayer's qualified timber gain for such year, 
     or
       ``(2) the taxpayer's net capital gain for such year.
       ``(b) Qualified Timber Gain.--For purposes of this section, 
     the term `qualified timber gain' means, with respect to any 
     taxpayer for any taxable year, the excess (if any) of--
       ``(1) the sum of the taxpayer's gains described in 
     subsections (a) and (b) of section 631 for such year, over
       ``(2) the sum of the taxpayer's losses described in such 
     subsections for such year.
       ``(c) Special Rules for Pass-Thru Entities.--In the case of 
     any qualified timber gain of a pass-thru entity (as defined 
     in section 1(h)(10)), the election under this section shall 
     be made separately by each taxpayer subject to tax on such 
     gain.''.
       (b) Coordination With Maximum Capital Gains Rates.--
       (1) Taxpayers other than corporations.--Paragraph (2) of 
     section 1(h) is amended to read as follows:
       ``(2) Reduction of net capital gain.--For purposes of this 
     subsection, the net capital gain for any taxable year shall 
     be reduced (but not below zero) by the sum of--
       ``(A) the amount which the taxpayer takes into account as 
     investment income under section 163(d)(4)(B)(iii), and
       ``(B) the lesser of--
       ``(i) the amount described in paragraph (1) of section 
     1203(a), or
       ``(ii) the amount described in paragraph (2) of such 
     section.''.
       (2) Corporations.--Section 1201 is amended by redesignating 
     subsection (b) as subsection (c) and inserting after 
     subsection (a) the following new subsection:
       ``(b) Qualified Timber Gain Not Taken Into Account.--For 
     purposes of this section, in the case of a corporation with 
     respect to which an election is in effect under section 1203, 
     the net capital gain for any taxable year shall be reduced 
     (but not below zero) by the corporation's qualified timber 
     gain (as defined in section 1203(b)).''.
       (c) Deduction Allowed Whether or Not Individual Itemizes 
     Other Deductions.--Subsection (a) of section 62 is amended by 
     inserting before the last sentence the following new 
     paragraph:
       ``(21) Qualified timber gains.--The deduction allowed by 
     section 1203.''.
       (d) Deduction Allowed in Computing Adjusted Current 
     Earnings.--Subparagraph (C) of section 56(g)(4) is amended by 
     adding at the end the following new clause:
       ``(vii) Deduction for qualified timber gain.--Clause (i) 
     shall not apply to any deduction allowed under section 
     1203.''.
       (e) Deduction Allowed in Computing Taxable Income of 
     Electing Small Business Trusts.--Subparagraph (C) of section 
     641(c)(2) is amended by inserting after clause (iii) the 
     following new clause:
       ``(iv) The deduction allowed under section 1203.''.
       (f) Conforming Amendments.--
       (1) Subparagraph (B) of section 172(d)(2) is amended to 
     read as follows:
       ``(B) the exclusion under section 1202 and the deduction 
     under section 1203 shall not be allowed.''.
       (2) Paragraph (4) of section 642(c) is amended by striking 
     the first sentence and inserting the following: ``To the 
     extent that the amount otherwise allowable as a deduction 
     under this subsection consists of gain described in section 
     1202(a) or qualified timber gain (as defined in section 
     1203(b)), proper adjustment shall be made for any exclusion 
     allowable to the estate or trust under section 1202 and for 
     any deduction allowable to the estate or trust under section 
     1203.''
       (3) Paragraph (3) of section 643(a) is amended by striking 
     the last sentence and inserting the following: ``The 
     exclusion under section 1202 and the deduction under section 
     1203 shall not be taken into account.''
       (4) Subparagraph (C) of section 643(a)(6) is amended to 
     read as follows:
       ``(C) Paragraph (3) shall not apply to a foreign trust. In 
     the case of such a trust--
       ``(i) there shall be included gains from the sale or 
     exchange of capital assets, reduced by losses from such sales 
     or exchanges to the extent such losses do not exceed gains 
     from such sales or exchanges, and
       ``(ii) the deduction under section 1203 shall not be taken 
     into account.''.
       (5) Paragraph (4) of section 691(c) is amended by inserting 
     ``1203,'' after ``1202,''.
       (6) Paragraph (2) of section 871(a) is amended by inserting 
     ``and 1203'' after ``section 1202''.
       (7) The table of sections for part I of subchapter P of 
     chapter 1 is amended by adding at the end the following new 
     item:

``Sec. 1203. Deduction for qualified timber gain.''.

       (g) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years ending after the date of the enactment 
     of this Act and before January 1, 2009.
       (2) Taxable years which include date of enactment.--In the 
     case of any taxable year which includes the date of the 
     enactment of this Act, for purposes of the Internal Revenue 
     Code of 1986, the taxpayer's qualified timber gain shall not 
     exceed the excess that would be described in section 1203(b) 
     of such Code, as added by this section, if only dispositions 
     of timber after such date were taken into account.

                                 ______
                                 
  SA 806. Mr. THOMAS submitted an amendment intended to be proposed to 
amendment SA 675 submitted by Mr. Thomas and intended to be proposed to 
the bill H.R. 1591, making emergency supplemental appropriations for 
the fiscal year ending September 30, 2007, and for other purposes; 
which was ordered to lie on the table; as follows:

       On page 1, line 2, strike ``any other provision'' and all 
     that follows and insert the following: ``any other provision 
     of this Act, the following amounts provided in this Act are 
     rescinded and shall be null and void:
       ``(1) $24,000,000 for funding sugar beets.
       ``(2) $3,000,000 for funding for sugar cane.
       ``(3) $20,000,000 for insect infestation damage 
     reimbursements in Nevada, Idaho, and Utah.
       ``(4) $2,100,000,000 for crop production losses.
       ``(5) $1,500,000,000 for livestock production losses.
       ``(6) $100,000,000 for Dairy Production losses.
       ``(7) $13,000,000 for Ewe Lamb Replacement and Retention 
     program.
       ``(8) $32,000,000 for Livestock Indemnity program.
       ``(9) $40,000,000 for the Tree Assistance program.
       ``(10) $100,000,000 million for Small Agricultural 
     Dependent Businesses.
       ``(11) $6,000,000 for North Dakota flooded crop land.
       ``(12) $35,000,000 for emergency conservation program.
       ``(13) $50,000,000 for the emergency watershed program.
       ``(14) $115,000,000 for the conservation security program.
       ``(15) $18,000,000 for drought assistance in upper Great 
     Plains/South West.
       ``(16) Provisions that extend the availability by a year 
     $3,500,000 in funding for guided tours of the Capitol. Also a 
     provision allows transfer of funds from holiday ornament 
     sales in the Senate gift shop.
       ``(17) $165,900,000 for fisheries disaster relief, funded 
     through NOAA.
       ``(18) $12,000,000 for forest service money (requested by 
     the President in the non-emergency fiscal year 2008 budget).
       ``(19) $425,000,000 for education grants for rural areas-
     (Secure Rural Schools program).
       ``(20) $640,000,000 for LIHEAP.
       ``(21) $25,000,000 for asbestos abatement at the Capitol 
     Power Plant.
       ``(22) $388,900,000 for funding for backlog of old 
     Department of Transportation projects.
       ``(23) $22,800,000 for geothermal research and development.
       ``(24) $500,000,000 for wildland fire management.
       ``(25) $13,000,000 for mine safety technology research.
       ``(26) $31,000,000 for 1 month extension of Milk Income 
     Loss Contract program (MILC).
       ``(27) $50,000,000 for fisheries disaster mitigation fund.
       ``(28) Subsections (a) and (b) of section 1315 (Iraq 
     withdraw).
       ``(29) Any provision relating to Hurricane Katrina, 
     Hurricane Rita, Hurricane Wilma, or Hurricane Dennis 
     emergency assistance.
       ``(30) $100,000,000 for the 2008 Presidential Candidate 
     Nominating Conventions.
       ``(31) $660,000,000 for Aviation Security for procurement 
     and installation related to baggage systems and air cargo 
     security.

[[Page S3979]]

       ``(32) $850,000,000 for State and Local Programs for 
     regional grants and technical assistance.
       ``(33) $15,000,000 for Research, Development, Acquisition, 
     and Operations for air cargo research.
       ``(34) $39,000,000 for Research, Development, and 
     Operations for non-container, rail, aviation and intermodal 
     radiation detection activities.
       ``(35) $820,000,000 for Public Health and Social Services 
     Emergency Fund for influenza pandemic.
       ``(36) $170,000,000 for State and Local Law Enforcement 
     Assistance for discretionary grants.
       ``(b) Notwithstanding any other provision of this Act, the 
     following provisions of this Act shall be null and void:
       ``(1) Any provision relating to the Federal minimum wage 
     and any related changes to the Internal Revenue Code of 1986.
       ``(2) Sections 2704, 2705, and 2706, relating to SCHIP 
     funding.''.

     

                          ____________________