[Congressional Record (Bound Edition), Volume 145 (1999), Part 13]
[Senate]
[Pages 18488-18599]
[From the U.S. Government Publishing Office, www.gpo.gov]



                      TAXPAYER REFUND ACT OF 1999

                                 ______
                                 

                    SHELBY AMENDMENTS NOS. 1409-1410

  (Ordered to lie on the table.)
  Mr. SHELBY submitted two amendments intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

                           Amendment No. 1409

       On page 245, between lines 3 and 4, insert the following:
                  Subtitle E--Miscellaneous Provisions

     SECTION 741. EXTENSION OF TIME FOR PAYMENT OF ESTATE TAX ON 
                   CERTAIN TIMBER STANDS.

       (a) In General.--Subchapter B of chapter 62 (relating to 
     extensions of time for payment) is amended by adding at the 
     end the following:

     ``SEC. 6168. EXTENSION OF TIME FOR PAYMENT OF ESTATE TAX ON 
                   CERTAIN TIMBER STANDS.

       ``(a) In General.--In the case of an interest in a 
     qualified timber property which is included in determining 
     the gross estate of a decedent who was (at the date of his 
     death) a citizen or resident of the United States, the 
     executor may elect to pay part or all of the tax imposed by 
     section 2001 on or before the date which is the earliest of--
       ``(1) the date the property is no longer qualified timber 
     property,
       ``(2) the date the individual who inherited the interest in 
     the qualified timber property either transfers the interest 
     or dies, or
       ``(3) the date which is 25 years after the date of death of 
     the decedent.
       ``(b) Limitation.--The maximum amount of tax which may be 
     paid under this subsection shall be an amount which bears the 
     same ratio to the tax imposed by section 2001 (reduced by the 
     credits against such tax) as--
       ``(1) the fair market value of the interest in the 
     qualified timber property, bears to
       ``(2) the adjusted gross estate of the decedent.
       ``(c) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Qualified timber property.--The term `qualified 
     timber property' means trees and any real property on which 
     such trees are growing which is--
       ``(A) located in the United States, and
       ``(B) used in timber operations (as defined in section 
     2032A(e)(13)(C)).
       ``(2) Adjusted gross estate.--The term, `adjusted gross 
     estate' means the value of the gross estate reduced by the 
     sum of the amounts allowable as a deduction under section 
     2053 or 2054. Such sum shall be determined on the basis of 
     the facts and circumstances in existence on the date 
     (including extensions) for filing the return of tax imposed 
     by section 2001 (or, if earlier, the date on which such 
     return is filed).
       ``(3) Certain transfers at death of heir disregarded.--
     Subsection (a)(2) shall not apply to any transfer by reason 
     of death so long as such transfer is to a member of the 
     family (within the meaning of section 267(c)(4)) of the 
     transferor in such transfer.
       ``(d) Election.--Any election under subsection (a) shall be 
     made not later than the time prescribed by section 6075(a) 
     for filing the return of tax imposed by section 2001 
     (including extensions thereof), and shall be made in such 
     manner as the Secretary shall by regulations prescribe. If an 
     election under subsection (a) is made, the provisions of this 
     subtitle shall apply as though the Secretary were extending 
     the time for payment of the tax.
       ``(e) Time for Payment of Interest.--If the time for 
     payment of any amount of tax has been extended under this 
     section, interest payable under section 6601 on any unpaid 
     portion of such amount shall be paid at the time of the 
     payment of the tax.

[[Page 18489]]

       ``(f) Special Rule for Certain Direct Skips.--To the extent 
     that an interest in a qualified timber property is the 
     subject of a direct skip (within the meaning of section 
     2612(c)) occurring at the same time as and as a result of the 
     decedent's death, then for purposes of this section any tax 
     imposed by section 2601 on the transfer of such interest 
     shall be treated as if it were additional tax imposed by 
     section 2001.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to the application of this 
     section.
       ``(h) Cross References.--
       ``(1) Security.--For authority of the Secretary to require 
     security in the case of an extension under this section, see 
     section 6165.
       ``(2) Lien.--For special lien (in lieu of bond) in the case 
     of an extension under this section, see section 6324A.
       ``(3) Period of limitation.--For extension of the period of 
     limitation in the case of an extension under this section, 
     see section 6503(d).
       ``(4) Interest.--For provisions relating to interest on tax 
     payable under this section, see subsection (j) of section 
     6601.''.
       (b) Conforming Amendments.--
       (1) Section 163(k) is amended by striking ``6166'' in the 
     heading and the text and inserting ``6166 or 6168''.
       (2) Section 2053(c)(1)(D) is amended--
       (A) by striking ``6166'' and inserting ``6166 or 6168'', 
     and
       (B) by striking ``6166'' in the heading and inserting 
     ``6166 or 6168''.
       (3) The following provisions are amended by striking ``or 
     6166'' each place it appears and inserting ``6166, or 6168'':
       (A) Section 2056A(b)(10)(A).
       (B) Section 2204(a).
       (C) Section 2204(b).
       (D) Section 6503(d).
       (4) Section 2011(c)(2) is amended by striking ``or 6166'' 
     and inserting ``, 6166, or 6168'':
       (5) The following provisions are amended by inserting ``or 
     6168'' after ``6166'' each place it appears:
       (A) Section 2204(c).
       (B) Section 6601(j) (except the second sentence of 
     paragraph (1)).
       (C) Section 7481(d).
       (6) Section 6161(a)(2) is amended--
       (A) in subparagraph (A), by striking ``or'' at the end,
       (B) in subparagraph (B), by adding ``or'' at the end,
       (C) in the matter following subparagraph (B)--
       (i) by striking ``subparagraph (B)'' and inserting 
     ``subparagraph (B) or (C)'', and
       (ii) by inserting ``or payment'' after ``installment'', and
       (D) by inserting after subparagraph (B) the following:
       ``(C) any part of the payment determined under section 
     6168,''.
       (7) Section 6324A is amended--
       (A) by adding at the end the following:
       ``(f) Application of Section to Deferred Tax Under Section 
     6168.--Rules similar to the rules of this section shall apply 
     to the amount of tax and interest deferred under section 6168 
     (determined as of the date prescribed by section 6151(a) for 
     payment of the tax imposed by chapter 11).'', and
       (B) in the title, by striking ``ESTATE TAX DEFERRED UNDER 
     SECTION 6166'' and inserting ``DEFERRED ESTATE TAX''.
       (8) The table of sections for subchapter B of chapter 62 is 
     amended by adding at the end the following:

``Sec. 6168. Extension of time for payment of estate tax on certain 
              timber stands.''.
       (9) The item relating to section 6324A in the table of 
     sections for subchapter C of chapter 64 is amended by 
     striking ``estate tax deferred under section 6166'' and 
     inserting ``deferred estate tax''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after the date of 
     enactment of this Act.

                           Amendment No. 1410

       On page 371, between lines 16 and 17, insert the following:

     SEC. 1122. CONGRESSIONAL REVIEW OF INTERNAL REVENUE SERVICE 
                   RULES THAT INCREASE REVENUE.

       Section 804(2) of title 5, United States Code, is amended 
     to read as follows:
       ``(2) The term `major rule'--
       ``(A) means any rule that--
       ``(i) the Administrator of the Office of Information and 
     Regulatory Affairs of the Office of Management and Budget 
     finds has resulted in or is likely to result in--

       ``(I) an annual effect on the economy of $100,000,000 or 
     more;
       ``(II) a major increase in costs or prices for consumers, 
     individual industries, Federal, State, or local government 
     agencies, or geographic regions; or
       ``(III) significant adverse effects on competition, 
     employment, investment, productivity, innovation, or on the 
     ability of United States-based enterprises to compete with 
     foreign-based enterprises in domestic and export markets; or

       ``(ii)(I) is promulgated by the Internal Revenue Service; 
     and
       ``(II) the Administrator of the Office of Information and 
     Regulatory Affairs of the Office of Management and Budget 
     finds that the implementation and enforcement of the rule has 
     resulted in or is likely to result in any net increase in 
     Federal revenues over current practices in tax collection or 
     revenues anticipated from the rule on the date of the 
     enactment of the statute under which the rule is promulgated; 
     and
       ``(B) does not include any rule promulgated under the 
     Telecommunications Act of 1996 and the amendments made by 
     that Act.''.
                                 ______
                                 

                ABRAHAM (AND OTHERS) AMENDMENT NO. 1411

  Mr. ROTH (for Mr. Abraham (for himself, Mr. Fitzgerald, Mr. Moynihan, 
and Mr. Schumer)) proposed an amendment to the bill, S. 1429, supra; as 
follows:

       At the end of title XI, insert the following:

     SEC. __. NO FEDERAL INCOME TAX ON AMOUNTS AND LANDS RECEIVED 
                   BY HOLOCAUST VICTIMS OR THEIR HEIRS.

       (a) In General.--For purposes of the Internal Revenue Code 
     of 1986, gross income shall not include--
       (1) any amount received by an individual (or any heir of 
     the individual)--
       (A) from the Swiss Humanitarian Fund established by the 
     Government of Switzerland or from any similar fund 
     established by any foreign country, or
       (B) as a result of the settlement of the action entitled 
     ``In re Holocaust Victims' Asset Litigation'', (E.D. NY), 
     C.A. No. 96-4849, or as a result of any similar action; and
       (2) the value of any land (including structures thereon) 
     recovered by an individual (or any heir of the individual) 
     from a government of a foreign country as a result of a 
     settlement of a claim arising out of the confiscation of such 
     land in connection with the Holocaust.
       (b) Effective Date.--This section shall apply to any amount 
     received before, on, or after the date of the enactment of 
     this Act.
                                 ______
                                 

                      SESSIONS AMENDMENT NO. 1412

  Mr. ROTH (for Mr. Sessions) proposed an amendment to the bill, S. 
1429, supra; as follows:

       On page 193, after line 23, add:
       (h) Short Title.--This section may be cited as the 
     ``Collegiate Learning and Student Savings (CLASS) Act''.
                                 ______
                                 

                      LANDRIEU AMENDMENT NO. 1413

  (Ordered to lie on the table.)
  Ms. LANDRIEU submitted an amendment intended to be proposed by her to 
the bill, S. 1429, supra; as follows:

       At the end of title II, insert the following:

     SEC. __. EXPANSION OF ADOPTION CREDIT.

       (a) In General.--Section 23(a) (relating to allowance of 
     credit) is amended to read as follows:
       ``(a) Allowance of Credit.--
       ``(1) In general.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     chapter--
       ``(A) in the case of an eligible adoption, $5,000, or
       ``(B) in the case of an eligible special needs adoption, 
     $10,000.
       ``(2) Year credit allowed.--The credit allowed under 
     paragraph (1) shall be allowed for the taxable year in which 
     the adoption becomes final.''
       (b) Income Limitation.--Section 23(b) is amended to read as 
     follows:
       ``(b) Income Limitation.--
       ``(1) In general.--The amount allowable as a credit under 
     subsection (a) for any taxable year (determined without 
     regard to subsection (c)) shall be reduced (but not below 
     zero) by an amount which bears the same ratio to the amount 
     so allowable (determined without regard to this paragraph) 
     as--
       ``(A) the amount (if any) by which the taxpayer's adjusted 
     gross income exceeds $90,000, bears to
       ``(B) $45,000.
       ``(2) Determination of adjusted gross income.--For purposes 
     of paragraph (1), adjusted gross income shall be determined 
     without regard to sections 911, 931, and 933.''
       (c) Definition of Eligible Adoption; Eligible Special Needs 
     Adoption.--Section 23(d) is amended by redesignating 
     paragraphs (2) and (3) as paragraphs (3) and (4) and amending 
     paragraph (1) to read as follows:
       ``(1) Eligible adoption.--The term `eligible adoption' 
     means the final adoption of an individual during the taxable 
     year who is an eligible child and is not a child with special 
     needs.
       ``(2) Eligible special needs adoption.--The term `eligible 
     special needs adoption' means the final adoption of an 
     individual during the taxable year who is an eligible child 
     and who is a child with special needs.''
       (d) Definition of Child With Special Needs.--Section 
     23(d)(4) (defining child with special needs), as redesignated 
     by subsection (c), is amended to read as follows:
       ``(4) Child with special needs.--The term `child with 
     special needs means any child if a State has determined that 
     the child's ethnic background, age, membership in a minority 
     or sibling groups, medical condition or

[[Page 18490]]

     physical impairment, or emotional handicap makes some form of 
     adoption assistance necessary.''
       (e) Conforming Amendments.--
       (1) Subclauses (A) and (B) of section 23(d)(3), as 
     redesignated by subsection (c), are amended to read as 
     follows:
       ``(A) who has not attained age 18, or
       ``(B) who is physically or mentally incapable of caring for 
     himself.''
       (2) Section 23 is amended by striking subsections (e) and 
     (g) and redesignating subsections (f) and (h) as subsections 
     (e) and (f), respectively.
       (3) Section 23(f), as redesignated by paragraph (2), is 
     amended to read as follows:
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out this 
     section.''
       (4) Section 137(d) is amended by inserting ``(as in effect 
     on the date before the date of the enactment of the Taxpayer 
     Refund Act of 1999)'' after ``23(d)''.
       (5) Section 137(e) is amended by inserting ``(as in effect 
     on the date before the date of the enactment of the Taxpayer 
     Refund Act of 1999)'' after ``23''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.
                                 ______
                                 

                       KENNEDY AMENDMENT NO. 1414

  (Ordered to lie on the table.)
  Mr. KENNEDY submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:
       In lieu of the matter proposed to be inserted, insert the 
     following:

     SEC. __. FAIR MINIMUM WAGE.

       (a) Short Title.--This section may be cited as the ``Fair 
     Minimum Wage Act of 1999''.
       (b) Minimum Wage Increase.--
       (1) Wage.--Paragraph (1) of section 6(a) 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) $5.65 an hour during the year beginning on September 
     1, 1999; and
       ``(B) $6.15 an hour beginning on September 1, 2000;''.
       (2) Effective date.--The amendment made by paragraph (1) 
     takes effect on September 1, 1999.
       (c) Applicability of Minimum Wage to the Commonwealth of 
     the Northern Mariana Islands.--The provisions of 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.
                                 ______
                                 

                       SCHUMER AMENDMENT NO. 1415

  (Ordered to lie on the table.)
  Mr. SCHUMER submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       On page 303, strike lines 17 through 19, and insert the 
     following:
       (d) Effective Date.--The amendments made by this section 
     shall apply to expenses paid or incurred in taxable years 
     beginning after December 31, 2000.

     SEC. 1012. FIRST-TIME HOMEBUYER CREDIT FOR EMPOWERMENT ZONES 
                   AND ENTERPRISE COMMUNITIES.

       (a) In General.--Subchapter U of chapter 1 (relating to 
     designation and treatment of empowerment zones, enterprise 
     communities, and rural development investment areas) is 
     amended by redesignating part V as part VI, by redesignating 
     section 1397F as section 1397G, and by inserting after part 
     IV the following new part:

                 ``PART V--FIRST-TIME HOMEBUYER CREDIT

``Sec. 1397F. First-time homebuyer credit.

     ``SEC. 1397F. FIRST-TIME HOMEBUYER CREDIT.

       ``(a) Allowance of Credit.--In the case of an individual 
     who is a first-time homebuyer of a principal residence in an 
     empowerment zone or an enterprise community during any 
     taxable year, there shall be allowed as a credit against the 
     tax imposed by this chapter for the taxable year an amount 
     equal to so much of the purchase price of the residence as 
     does not exceed $2,000.
       ``(b) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--The amount allowable as a credit under 
     subsection (a) (determined without regard to this subsection) 
     for the taxable year shall be reduced (but not below zero) by 
     the amount which bears the same ratio to the credit so 
     allowable as--
       ``(A) the excess (if any) of--
       ``(i) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(ii) $70,000 ($110,000 in the case of a joint return), 
     bears to
       ``(B) $20,000.
       ``(2) Modified adjusted gross income.--For purposes of 
     paragraph (1), the term `modified adjusted gross income' 
     means the adjusted gross income of the taxpayer for the 
     taxable year increased by any amount excluded from gross 
     income under section 911, 931, or 933.
       ``(c) First-Time Homebuyer.--For purposes of this section--
       ``(1) In general.--The term `first-time homebuyer' means 
     any individual if such individual (and if married, such 
     individual's spouse) had no present ownership interest in a 
     principal residence in either an empowerment zone or an 
     enterprise community during the 1-year period ending on the 
     date of the purchase of the principal residence to which this 
     section applies.
       ``(2) One-time only.--If an individual is treated as a 
     first-time homebuyer with respect to any principal residence, 
     such individual may not be treated as a first-time homebuyer 
     with respect to any other principal residence.
       ``(3) Principal residence.--The term `principal residence' 
     has the same meaning as when used in section 121.
       ``(d) Carryover of Credit.--If the credit allowable under 
     subsection (a) exceeds the limitation imposed by section 
     26(a) for such taxable year reduced by the sum of the credits 
     allowable under subpart A of part IV of subchapter A (other 
     than this section), such excess shall be carried to the 
     succeeding taxable year and added to the credit allowable 
     under subsection (a) for such taxable year.
       ``(e) Special Rules.--For purposes of this section, rules 
     similar to the rules of subsections (e), (f), (g), and (h) of 
     section 1400C shall apply.
       ``(f) Application of Section.--This section shall apply to 
     property purchased after December 31, 1999, and before 
     January 1, 2005.''
       (b) Conforming Amendments.--
       (1) Subsection (a) of section 1016 is amended by striking 
     ``and'' at the end of paragraph (26), by striking the period 
     at the end of paragraph (27) and inserting ``, and'', and by 
     adding at the end thereof the following new paragraph:
       ``(28) in the case of a residence with respect to which a 
     credit was allowed under section 1397F, to the extent 
     provided under such section 1397F.''
       (2) The table of parts for subchapter U of chapter 1 is 
     amended by striking the last item and inserting the following 
     new items:

``Part V. First-time homebuyer credit.
``Part VI. Regulations.''

       (3) The table of sections for part VI, as so redesignated, 
     is amended to read as follows:

``Sec. 1397G. Regulations.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.
                                 ______
                                 

                SCHUMER (AND OTHERS) AMENDMENT NO. 1416

  (Ordered to lie on the table.)
  Mr. SCHUMER (for himself, Ms. Snowe, Mr. Bayh, Mr. Smith of Oregon, 
Mr. Wyden, and Mr. Kohl) submitted an amendment intended to be proposed 
by them to the bill, S. 1429, supra; as follows:

       On page 32, strike lines 1 through 14, and insert:
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     1999.
       (b) Personal Exemptions Allowed in Computing Minimum Tax.--
       (1) In general.--Subparagraph (E) of section 56(b)(1) is 
     amended by striking ``, the deduction for personal exemptions 
     under section 151,''.
       (2) Conforming amendment.--The heading to section 
     56(b)(1)(E) is amended by striking ``and deduction for 
     personal exemptions''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. __. DEDUCTION FOR HIGHER EDUCATION EXPENSES.

       (a) Deduction Allowed.--Part VII of subchapter B of chapter 
     1 of the Internal Revenue Code of 1986 (relating to 
     additional itemized deductions for individuals) is amended by 
     redesignating section 222 as section 223 and by inserting 
     after section 221 the following:

     ``SEC. 222. HIGHER EDUCATION EXPENSES.

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

                                                             Applicable
``Taxable year:                                          dollar amount:
  2003......................................................$4,000 ....

  2004......................................................$8,000 ....

  2005 and thereafter......................................$12,000.....

       ``(b) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--The amount which would (but for this 
     subsection) be taken into account under subsection (a) shall 
     be reduced (but not below zero) by the amount determined 
     under paragraph (2).
       ``(2) Amount of reduction.--The amount determined under 
     this paragraph equals the amount which bears the same ratio 
     to the amount which would be so taken into account as--
       ``(A) the excess of--
       ``(i) the taxpayer's modified adjusted gross income for 
     such taxable year, over

[[Page 18491]]

       ``(ii) $62,450 ($104,050 in the case of a joint return, 
     $89,150 in the case of a return filed by a head of household, 
     and $52,025 in the case of a return by a married individual 
     filing separately), bears to
       ``(B) $15,000.
       ``(3) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means 
     the adjusted gross income of the taxpayer for the taxable 
     year determined--
       ``(A) without regard to this section and sections 911, 931, 
     and 933, and
       ``(B) after the application of sections 86, 135, 219, 220, 
     and 469.

     For purposes of the sections referred to in subparagraph (B), 
     adjusted gross income shall be determined without regard to 
     the deduction allowed under this section.
       ``(c) Qualified Higher Education Expenses.--For purposes of 
     this section--
       ``(1) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' means tuition and fees charged by an educational 
     institution and required for the enrollment or attendance 
     of--
       ``(i) the taxpayer,
       ``(ii) the taxpayer's spouse,
       ``(iii) any dependent of the taxpayer with respect to whom 
     the taxpayer is allowed a deduction under section 151, or
       ``(iv) any grandchild of the taxpayer,

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

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

       (d) Effective Date.--The amendments made by this section 
     shall apply to payments made in taxable years beginning after 
     December 31, 2002.

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

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

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

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year an amount equal to the 
     interest paid by the taxpayer during the taxable year on any 
     qualified education loan.
       ``(b) Maximum Credit.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     credit allowed by subsection (a) for the taxable year shall 
     not exceed $1,500.
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--If the modified adjusted gross income of 
     the taxpayer for the taxable year exceeds $50,000 ($80,000 in 
     the case of a joint return), the amount which would (but for 
     this paragraph) be allowable as a credit under this section 
     shall be reduced (but not below zero) by the amount which 
     bears the same ratio to the amount which would be so 
     allowable as such excess bears to $20,000.
       ``(B) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income determined 
     without regard to sections 911, 931, and 933.
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning after 2005, the $50,000 and $80,000 amounts 
     referred to in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `2004' for `1992'.
       ``(D) Rounding.--If any amount as adjusted under 
     subparagraph (C) is not a multiple of $50, such amount shall 
     be rounded to the nearest multiple of $50.
       ``(c) Dependents Not Eligible for Credit.--No credit shall 
     be allowed by this section to an individual for the taxable 
     year if a deduction under section 151 with respect to such 
     individual is allowed to another taxpayer for the taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins.
       ``(d) Limit on Period Credit Allowed.--A credit shall be 
     allowed under this section only with respect to interest paid 
     on any qualified education loan during the first 60 months 
     (whether or not consecutive) in which interest payments are 
     required. For purposes of this paragraph, any loan and all 
     refinancings of such loan shall be treated as 1 loan.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Qualified education loan.--The term `qualified 
     education loan' means any indebtedness incurred to pay 
     qualified higher education expenses--

[[Page 18492]]

       ``(A) which are incurred on behalf of the taxpayer, the 
     taxpayer's spouse, or any dependent of the taxpayer as of the 
     time the indebtedness was incurred,
       ``(B) which are paid or incurred within a reasonable period 
     of time before or after the indebtedness is incurred, and
       ``(C) which are attributable to education furnished during 
     a period during which the recipient was at least a half-time 
     student.

     Such term includes indebtedness used to refinance 
     indebtedness which qualifies as a qualified education loan. 
     The term `qualified education loan' shall not include any 
     indebtedness owed to a person who is related (within the 
     meaning of section 267(b) or 707(b)(1)) to the taxpayer.
       ``(2) Qualified higher education expenses.--The term 
     `qualified higher education expenses' means the cost of 
     attendance (as defined in section 472 of the Higher Education 
     Act of 1965, 20 U.S.C. 1087ll, as in effect on the day before 
     the date of the enactment of this Act) of the taxpayer, the 
     taxpayer's spouse, or a dependent of the taxpayer at an 
     eligible educational institution, reduced by the sum of--
       ``(A) the amount excluded from gross income under section 
     135 by reason of such expenses, and
       ``(B) the amount of the reduction described in section 
     135(d)(1).

     For purposes of the preceding sentence, the term `eligible 
     educational institution' has the same meaning given such term 
     by section 135(c)(3), except that such term shall also 
     include an institution conducting an internship or residency 
     program leading to a degree or certificate awarded by an 
     institution of higher education, a hospital, or a health care 
     facility which offers postgraduate training.
       ``(3) Half-time student.--The term `half-time student' 
     means any individual who would be a student as defined in 
     section 151(c)(4) if `half-time' were substituted for `full-
     time' each place it appears in such section.
       ``(4) Dependent.--The term `dependent' has the meaning 
     given such term by section 152.
       ``(f) Special Rules.--
       ``(1) Denial of double benefit.--No credit shall be allowed 
     under this section for any amount for which a deduction is 
     allowable under any other provision of this chapter.
       ``(2) Married couples must file joint return.--If the 
     taxpayer is married at the close of the taxable year, the 
     credit shall be allowed under subsection (a) only if the 
     taxpayer and the taxpayer's spouse file a joint return for 
     the taxable year.
       ``(3) Marital status.--Marital status shall be determined 
     in accordance with section 7703.''
       (b) Reporting Requirement.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 (relating to information concerning transactions 
     with other persons) is amended by inserting after section 
     6050S the following new section:

     ``SEC. 6050T. RETURNS RELATING TO EDUCATION LOAN INTEREST 
                   RECEIVED IN TRADE OR BUSINESS FROM INDIVIDUALS.

       ``(a) Education Loan Interest of $600 or More.--Any 
     person--
       ``(1) who is engaged in a trade or business, and
       ``(2) who, in the course of such trade or business, 
     receives from any individual interest aggregating $600 or 
     more for any calendar year on 1 or more qualified education 
     loans,
     shall make the return described in subsection (b) with 
     respect to each individual from whom such interest was 
     received at such time as the Secretary may by regulations 
     prescribe.
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe, and
       ``(2) contains--
       ``(A) the name, address, and TIN of the individual from 
     whom the interest described in subsection (a)(2) was 
     received,
       ``(B) the amount of such interest received for the calendar 
     year, and
       ``(C) such other information as the Secretary may 
     prescribe.
       ``(c) Application to Governmental Units.--For purposes of 
     subsection (a)--
       ``(1) Treated as persons.--The term `person' includes any 
     governmental unit (and any agency or instrumentality 
     thereof).
       ``(2) Special rules.--In the case of a governmental unit or 
     any agency or instrumentality thereof--
       ``(A) subsection (a) shall be applied without regard to the 
     trade or business requirement contained therein, and
       ``(B) any return required under subsection (a) shall be 
     made by the officer or employee appropriately designated for 
     the purpose of making such return.
       ``(d) Statements To Be Furnished to Individuals With 
     Respect to Whom Information Is Required.--Every person 
     required to make a return under subsection (a) shall furnish 
     to each individual whose name is required to be set forth in 
     such return a written statement showing--
       ``(1) the name and address of the person required to make 
     such return, and
       ``(2) the aggregate amount of interest described in 
     subsection (a)(2) received by the person required to make 
     such return from the individual to whom the statement is 
     required to be furnished.

     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the calendar year for which the return under 
     subsection (a) was required to be made.
       ``(e) Qualified Education Loan Defined.--For purposes of 
     this section, except as provided in regulations prescribed by 
     the Secretary, the term `qualified education loan' has the 
     meaning given such term by section 25B(e)(1).
       ``(f) Returns Which Would Be Required To Be Made by 2 or 
     More Persons.--Except to the extent provided in regulations 
     prescribed by the Secretary, in the case of interest received 
     by any person on behalf of another person, only the person 
     first receiving such interest shall be required to make the 
     return under subsection (a).''
       (2) Assessable penalties.--Section 6724(d) (relating to 
     definitions) is amended--
       (A) in paragraph (1)(B), by redesignating clauses (xi) 
     through (xvii) as clauses (xii) through (xviii), 
     respectively, and by inserting after clause (ix) the 
     following new clause:
       ``(xi) section 6050T (relating to returns relating to 
     education loan interest received in trade or business from 
     individuals),'', and
       (B) in paragraph (2), by striking ``or'' at the end of the 
     next to last subparagraph, by striking the period at the end 
     of the last subparagraph and inserting ``, or'', and by 
     adding at the end the following new subparagraph:
       ``(BB) section 6050S(d) (relating to returns relating to 
     education loan interest received in trade or business from 
     individuals).''
       (c) Conforming Amendments.--
       (1) The table of sections for subpart A of part IV of 
     subchapter A of chapter 1 is amended by inserting after the 
     item relating to section 25A the following new item:

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

       (2) 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 6050S the following new section:

``Sec. 6050T. Returns relating to education loan interest received in 
              trade or business from individuals.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to any qualified education loan (as defined in 
     section 25B(e)(1) of the Internal Revenue Code of 1986, as 
     added by this section) incurred on, before, or after the date 
     of the enactment of this Act, but only with respect to any 
     loan interest payment due after December 31, 2004.
                                 ______
                                 

                      FEINGOLD AMENDMENT NO. 1417

  (Ordered to lie on the table.)
  Mr. FEINGOLD submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. REPEAL OF PERCENTAGE DEPLETION ALLOWANCE FOR CERTAIN 
                   HARDROCK MINES.

       (a) In General.--Section 613(a) (relating to percentage 
     depletion) is amended by inserting ``(other than hardrock 
     mines located on lands subject to the general mining laws or 
     on land patented under the general mining laws)'' after ``In 
     the case of the mines''.
       (b) General Mining Laws Defined.--Section 613 is amended by 
     adding at the end the following:
       ``(f) General Mining Laws.--For purposes of subsection (a), 
     the term `general mining laws' means those Acts which 
     generally comprise chapters 2, 12A, and 16, and sections 161 
     and 162 of title 30 of the United States Code.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.
                                 ______
                                 

                        LEAHY AMENDMENT NO. 1418

  (Ordered to lie on the table.)
  Mr. LEAHY submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       At the appropriate place, insert the following:
       Subsection (g)(3) of section 3121 of the Internal Revenue 
     Code of 1986 is amended by inserting at the end thereof: ``or 
     in connection with the harvesting of maple syrup.''
                                 ______
                                 

                        BOXER AMENDMENT NO. 1419

  (Ordered to lie on the table.)
  Mrs. BOXER submitted an amendment intended to be proposed by her to 
the bill, S. 1429, supra; as follows:

       On page 202, beginning with line 12, strike through page 
     207, line 22, and insert the following:

     SEC. __ . FIRST $2,000 OF HEALTH INSURANCE PREMIUMS FULLY 
                   DEDUCTIBLE.

       (a) In General.--Section 213 (relating to medical, dental, 
     etc., expenses) is amended by adding at the end the 
     following:
       ``(f) Deduction for First $2,000 of Health Insurance 
     Premiums.--There shall also be

[[Page 18493]]

     allowed as a deduction under subsection (a) an amount equal 
     to so much of the expenses paid during the taxable year for 
     insurance which constitutes medical care under subsection 
     (d)(1)(D) (other than for a qualified long-term care 
     insurance contract) for such taxpayer, spouse, and dependents 
     as does not exceed $2,000. Such expenses shall not be taken 
     into account in determining the amount of any other deduction 
     allowable under subsection (a).''
       (b) Deduction Allowed Whether or Not Taxpayer Itemizes 
     Deduction.--Section 62(a) (defining adjusted gross income) is 
     amended by inserting after paragraph (17) the following new 
     paragraph:
       ``(18) Health insurance premiums.--The deduction allowed by 
     section 213(a)(2).''
       (c) Conforming Amendments.--
       (1) Section 162(l)(1) (relating to special rules for health 
     insurance costs of self-employed individuals), as amended by 
     section 601, is amended to read as follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to the sum of--
       ``(A) so much of the amount paid during the taxable year 
     for insurance which constitutes medical care for the 
     taxpayer, his spouse, and dependents as does not exceed 
     $2,000, plus
       ``(B) subject to paragraph (2), the amount so paid in 
     excess of $2,000.
     Subparagraph (A) shall not apply to amounts paid for coverage 
     under a qualified long-term care insurance contract.''
       (2) Section 162(l)(2) is amended--
       (A) by striking ``paragraph (1)'' each place it appears and 
     inserting ``paragraph (1)(B)'', and
       (B) by striking ``Paragraph (1)'' and inserting ``Paragraph 
     (1)(B)''.
       (d) Revenue Offset.--Sections 301, 302, 304, 312, 901 
     through 908, and 1103 of this Act are null and void and the 
     Internal Revenue Code of 1986 shall be applied and 
     administered as if such sections had not been enacted.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.
                                 ______
                                 

                    DURBIN AMENDMENTS NOS. 1420-1423

  (Ordered to lie on the table.)
  Mr. DURBIN submitted four amendments intended to be proposed by him 
to the bill, S. 1429, supra; as follows:

                           Amendment No. 1420

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. EXCLUSION FROM GROSS INCOME FOR AMOUNTS RECEIVED ON 
                   ACCOUNT OF CERTAIN UNLAWFUL DISCRIMINATION.

       (a) In General.--Part III of subchapter B of chapter 1 
     (relating to items specifically excluded from gross income) 
     is amended by redesignating section 139 as section 140) and 
     by inserting after section 138 the following new section:

     ``SEC. 139. AMOUNTS RECEIVED ON ACCOUNT OF CERTAIN UNLAWFUL 
                   DISCRIMINATION.

       ``(a) In General.--
       ``(1) Exclusion.--Gross income does not include amounts 
     received by a claimant (whether by suit or agreement and 
     whether as lump sums or periodic payments) on account of a 
     claim of unlawful discrimination.
       ``(2) Amounts Covered.--For purposes of paragraph (1), the 
     term `amounts' does not include--
       ``(A) backpay or frontpay, as defined in section 1302(b), 
     or
       ``(B) punitive damages.
       ``(b) Unlawful Discrimination Defined.--For purposes of 
     this section, the term `unlawful discrimination' means an act 
     that is unlawful under any of the following:
       ``(1) Section 302 of the Civil Rights Act of 1991 (2 U.S.C. 
     1202).
       ``(2) Section 201, 202, 203, 204, 205, 206, or 207 of the 
     Congressional Accountability Act of 1995 (2 U.S.C. 1311, 
     1312, 1313, 1314, 1315, 1316, or 1317)
       ``(3) The Fair Labor Standards Act of 1938 (29 U.S.C. 201 
     et seq.).
       ``(4) Section 4 or 15 of the Age Discrimination in 
     Employment Act of 1967 (29 U.S.C. 623 or 633a).
       ``(5) Section 501 or 504 of the Rehabilitation Act of 1973 
     (29 U.S.C. 791 or 794).
       ``(6) Section 510 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1140).
       ``(7) Title IX of the Education Amendments of 1972 (29 
     U.S.C. 1681 et seq.).
       ``(8) The Employee Polygraph Protection Act of 1988 (29 
     U.S.C. 201 et seq.).
       ``(9) The Worker Adjustment and Retraining Notification Act 
     (29 U.S.C. 2102 et seq.).
       ``(10) Section 105 of the Family and Medical Leave Act of 
     1993 (29 U.S.C. 2615).
       ``(11) Chapter 43 of title 38, United States Code (relating 
     to employment and reemployment rights of members of the 
     uniformed services).
       ``(12) Section 1977, 1979, or 1980 of the Revised Statutes 
     (42 U.S.C. 1981, 1983, or 1985).
       ``(13) Section 703, 704, or 717 of the Civil Rights Act of 
     1964 (42 U.S.C. 2000e-2, 2000e-3, or 2000e-16).
       ``(14) Section 804 or 805 of the Fair Housing Act (42 
     U.S.C. 3604 or 3605).
       ``(15) Section 102, 202, 302, or 503 of the Americans with 
     Disabilities Act of 1990 (42 U.S.C. 12112, 12132, 12182, or 
     12203).
       ``(16) Section 40302 of the Violence Against Women Act of 
     1994 (42 U.S.C. 13981).
       ``(17) Any provision of Federal law (popularly known as 
     whistleblower protection provisions) prohibiting the 
     discharge of an employee, the discrimination against an 
     employee, or any other form of retaliation or reprisal 
     against an employee for asserting rights or taking other 
     actions permitted under Federal law.
       ``(18) Any provision of State or local law, or common law 
     claims permitted under Federal, State, or local law, 
     providing for the enforcement of civil rights, regulating any 
     aspect of the employment relationship, or prohibiting the 
     discharge of an employee, the discrimination against an 
     employee, or any other form of retaliation or reprisal 
     against an employee for asserting rights or taking other 
     actions permitted by law.''.
       (b) Limitation on Tax Based on Income Averaging for Backpay 
     and Frontpay Received on Account of Certain Unlawful 
     Employment Discrimination.--Part I of subchapter Q of chapter 
     1 (relating to income averaging) is amended by adding at the 
     end the following new section:

     ``SEC. 1302. INCOME FROM BACKPAY AND FRONTPAY RECEIVED ON 
                   ACCOUNT OF CERTAIN UNLAWFUL EMPLOYMENT 
                   DISCRIMINATION.

       ``(a) General Rule.--If employment discrimination backpay 
     or frontpay is received by a taxpayer during a taxable year, 
     the tax imposed by this chapter for such taxable year shall 
     not exceed the sum of--
       ``(1) the tax which would be so imposed if--
       ``(A) no amount of such backpay or frontpay were included 
     in gross income for such year, and
       ``(B) no deduction were allowed for such year for expenses 
     (otherwise allowable as a deduction to the taxpayer for such 
     year) in connection with making or prosecuting any claim of 
     unlawful employment discrimination by or on behalf of the 
     taxpayer, plus
       ``(2) the product of--
       ``(A) the number of years in the backpay period and 
     frontpay period, and
       ``(B) the amount of tax that would be imposed on the 
     average annual net backpay and frontpay amount, determined as 
     if such average amount were the only income of the taxpayer 
     for the taxable year and the taxpayer had no deductions for 
     such year.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Employment discrimination backpay or frontpay.--The 
     term `employment discrimination backpay or frontpay' means 
     backpay or frontpay receivable (whether as lump sums or 
     periodic payments) on account of a claim of unlawful 
     employment discrimination.
       ``(2) Unlawful employment discrimination.--The term 
     `unlawful employment discrimination' has the meaning provided 
     the term `unlawful discrimination' in section 139(b).
       ``(3) Backpay and frontpay.--The terms `backpay' and 
     `frontpay' mean amounts includible in gross income in the 
     taxable year--
       ``(A) as compensation which is attributable--
       ``(i) in the case of backpay, to services performed, or 
     that would have been performed but for a claimed violation of 
     law, as an employee, former employee, or prospective employee 
     before such taxable year for the taxpayer's employer, former 
     employer, or prospective employer; and
       ``(ii) in the case of frontpay, to employment that would 
     have been performed but for a claimed violation of law, in a 
     taxable year or taxable years following the taxable year; and
       ``(B) which are--
       ``(i) ordered, recommended, or approved by any governmental 
     entity to satisfy a claim for a violation of law, or
       ``(ii) received from the settlement of such a claim.
       ``(4) Backpay period.--The term `backpay period' means the 
     period during which services are performed (or would have 
     been performed) to which backpay is attributable. If such 
     period is not equal to a whole number of taxable years, such 
     period shall be increased to the next highest number of whole 
     taxable years.
       ``(5) Frontpay period.--The term `frontpay period' means 
     the period of foregone employment to which frontpay is 
     attributable. If such period is not equal to a whole number 
     of taxable years, such period shall be increased to the next 
     highest number of whole taxable years.
       ``(6) Average annual net backpay and frontpay amount.--The 
     term `average annual net backpay and frontpay amount' means 
     the amount equal to--
       ``(A) the excess of--
       ``(i) employment discrimination backpay and frontpay, over
       ``(ii) the amount of deductions that would have been 
     allowable but for subsection (a)(1)(B), divided by
       ``(B) the number of years in the backpay period and 
     frontpay period.''.
       (c) Income Averaging for Backpay and Frontpay Received on 
     Account of Certain Unlawful Employment Discrimination not to 
     Increase Alternative Minimum Tax Liability.--Section 55(c) 
     (defining regular tax)

[[Page 18494]]

     is amended by redesignating paragraph (2) as paragraph (3) 
     and by inserting after paragraph (1) the following:
       ``(2) Coordination with income averaging for amounts 
     received on account of employment discrimination.--Solely for 
     purposes of this section, section 1302 (relating to averaging 
     of income from backpay or frontpay received on account of 
     certain unlawful employment discrimination) shall not apply 
     in computing the regular tax.''.
       (d) Clerical Amendments.--
       (1) The table of sections for part III of subchapter B of 
     chapter 1 is amended by inserting after the item relating to 
     section 138 the following new item:

``Sec. 139. Amounts received on account of certain unlawful 
              discrimination.''

       (2) The table of sections for part I of subchapter Q of 
     chapter 1 is amended by inserting after section 1301 the 
     following new item:

``Sec. 1302. Income from backpay or frontpay received on account of 
              certain unlawful employment discrimination.''

       (e) Effective Dates.--
       (1) The amendment made by subsection (a) shall apply to 
     damages received in taxable years beginning after December 
     31, 2000.
       (2) The amendments made by subsection (b) shall apply to 
     amounts received in taxable years beginning after December 
     31, 2000.
       (3) The amendment made by subsection (c) shall apply to 
     taxable years beginning after December 31, 2000.
       (d) Revenue Offset.--Section 302(a) of this Act is null and 
     void and the Internal Revenue Code of 1986 shall be applied 
     and administered as if such section had not been enacted.
                                  ____


                           Amendment No. 1421

       On page 184, between lines 6 and 7, insert the following:
       (c) Increase in Maximum Deduction.--
       (1) In general.--The table contained in section 221(b)(1) 
     (relating to maximum deduction) is amended by striking 
     ``$2,500'' and inserting ``$5,000''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2000.
       (3) Revenue offset.--Section 302(a) of this Act is null and 
     void and the Internal Revenue Code of 1986 shall be applied 
     and administered as if such section had not been enacted.
                                  ____


                           Amendment No. 1422

       On page 255, strike lines 3 through 25 and insert:
       ``(i) which is made on or after the date that the 
     individual for whose benefit the account is maintained has 
     attained age 59\1/2\, and
       ``(ii) which is a charitable contribution (as defined in 
     section 170(c)) made directly from the account to--

       ``(I) an organization described in section 170(c), or
       ``(II) a trust, fund, or annuity described in subparagraph 
     (B).

       ``(D) Denial of deduction.--The amount allowable as a 
     deduction to the taxpayer for the taxable year under section 
     170 for qualified charitable distributions shall be reduced 
     (but not below zero) by the sum of the amounts of the 
     qualified charitable distributions during such year which 
     (but for this paragraph) would have been includible in the 
     gross income of the taxpayer for such year.''
       (b) Revenue Offset.--
       (1) In general.--Section 408A(c)(3), as amended by section 
     302, is amended to read as follows:
       ``(3) Limits based on modified adjusted gross income.--
       ``(A) Dollar limit.--The amount determined under paragraph 
     (2) for any taxable year shall not exceed an amount equal to 
     the amount determined under paragraph (2)(A) for such taxable 
     year, reduced (but not below zero) by the amount which bears 
     the same ratio to such amount as--
       ``(i) the excess of--

       ``(I) the taxpayer's adjusted gross income for such taxable 
     year, over
       ``(II) the applicable dollar amount, bears to

       ``(ii) $15,000 ($10,000 in the case of a joint return or a 
     married individual filing a separate return).

     The rules of subparagraphs (B) and (C) of section 219(g)(2) 
     shall apply to any reduction under this subparagraph.
       ``(B) Rollover from ira.--A taxpayer shall not be allowed 
     to make a qualified rollover contribution to a Roth IRA from 
     an individual retirement plan other than a Roth IRA during 
     any taxable year if, for the taxable year of the distribution 
     to which such contribution relates--
       ``(i) the taxpayer's adjusted gross income exceeds 
     $1,000,000, or
       ``(ii) the taxpayer is a married individual filing a 
     separate return.
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) adjusted gross income shall be determined in the same 
     manner as under section 219(g)(3), except that any amount 
     included in gross income under subsection (d)(3) shall not be 
     taken into account, and
       ``(ii) the applicable dollar amount is--

       ``(I) in the case of a taxpayer filing a joint return, 
     $150,000,
       ``(II) in the case of any other taxpayer (other than a 
     married individual filing a separate return), $95,000, and
       ``(III) in the case of a married individual filing a 
     separate return, zero.

       ``(D) Marital status.--Section 219(g)(4) shall apply for 
     purposes of this paragraph.''
       (2) Required distribution.--Section 408A(c)(3)(C)(i), as 
     amended by paragraph (1), is amended by inserting ``and any 
     amount included in gross income by reason of a required 
     distribution under a provision described in paragraph (5) 
     shall not be taken into account for purposes of subparagraph 
     (B)(i),'' after ``account,''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2000.
       (2) Required distributions.--The amendment made by 
     subsection (b)(2) shall apply to taxable years beginning 
     after December 31, 2004.
                                  ____


                           Amendment No. 1423

       At the end of title VI, insert:

     SEC. __. INCREASE IN ESTATE TAX DEDUCTION FOR FAMILY-OWNED 
                   BUSINESS INTEREST.

       (a) In General.--Section 2057(a)(2) (relating to maximum 
     deduction) is amended by striking ``$675,000'' and inserting 
     ``$1,975,000''.
       (b) Conforming Amendments.--Section 2057(a)(3)(B) (relating 
     to coordination with unified credit) is amended by striking 
     ``$675,000'' each place it appears in the text and heading 
     and inserting ``$1,975,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     2000.

     SEC. __. CREDIT FOR EMPLOYEE HEALTH INSURANCE EXPENSES.

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

     ``SEC. 45D. EMPLOYEE HEALTH INSURANCE EXPENSES.

       ``(a) General Rule.--For purposes of section 38, in the 
     case of a small employer, the employee health insurance 
     expenses credit determined under this section is an amount 
     equal to the applicable percentage of the amount paid by the 
     taxpayer during the taxable year for qualified employee 
     health insurance expenses.
       ``(b) Applicable Percentage.--For purposes of subsection 
     (a), the applicable percentage is equal to--
       ``(1) 60 percent in the case of self-only coverage, and
       ``(2) 70 percent in the case of family coverage (as defined 
     in section 220(c)(5)).
       ``(c) Per Employee Dollar Limitation.--The amount of 
     qualified employee health insurance expenses taken into 
     account under subsection (a) with respect to any qualified 
     employee for any taxable year shall not exceed--
       ``(1) $1,000 in the case of self-only coverage, and
       ``(2) $1,715 in the case of family coverage (as so 
     defined).
       ``(d) Definitions.--For purposes of this section--
       ``(1) Small employer.--
       ``(A) In general.--The term `small employer' means, with 
     respect to any calendar year, any employer if such employer 
     employed an average of 9 or fewer employees on business days 
     during either of the 2 preceding calendar years. For purposes 
     of the preceding sentence, a preceding calendar year may be 
     taken into account only if the employer was in existence 
     throughout such year.
       ``(B) Employers not in existence in preceding year.--In the 
     case of an employer which was not in existence throughout the 
     1st preceding calendar year, the determination under 
     subparagraph (A) shall be based on the average number of 
     employees that it is reasonably expected such employer will 
     employ on business days in the current calendar year.
       ``(2) Qualified employee health insurance expenses.--
       ``(A) In general.--The term `qualified employee health 
     insurance expenses' means any amount paid by an employer for 
     health insurance coverage to the extent such amount is 
     attributable to coverage provided to any employee while such 
     employee is a qualified employee.
       ``(B) Exception for amounts paid under salary reduction 
     arrangements.--No amount paid or incurred for health 
     insurance coverage pursuant to a salary reduction arrangement 
     shall be taken into account under subparagraph (A).
       ``(C) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning given such term by 
     section 9832(b)(1).
       ``(3) Qualified employee.--
       ``(A) In general.--The term `qualified employee' means, 
     with respect to any period, an employee of an employer if the 
     total amount of wages paid or incurred by such employer to 
     such employee at an annual rate during the taxable year 
     exceeds $5,000 but does not exceed $16,000.
       ``(B) Treatment of certain employees.--For purposes of 
     subparagraph (A), the term `employee'--

[[Page 18495]]

       ``(i) shall not include an employee within the meaning of 
     section 401(c)(1), but
       ``(ii) shall include a leased employee within the meaning 
     of section 414(n).
       ``(C) Wages.--The term `wages' has the meaning given such 
     term by section 3121(a) (determined without regard to any 
     dollar limitation contained in such section).
       ``(D) Inflation adjustment.--
       ``(i) In general.--In the case of any taxable year 
     beginning in a calendar year after 2001, the $16,000 amount 
     contained in subparagraph (A) shall be increased by an amount 
     equal to--

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

       ``(ii) Rounding.--If any increase determined under clause 
     (i) is not a multiple of $100, such amount shall be rounded 
     to the nearest multiple of $100.
       ``(e) Certain rules made applicable.--For purposes of this 
     section, rules similar to the rules of section 52 shall 
     apply.
       ``(f) Denial of Double Benefit.--No deduction or credit 
     under any other provision of this chapter shall be allowed 
     with respect to qualified employee health insurance expenses 
     taken into account under subsection (a).''
       (b) Credit To Be Part of General Business Credit.--Section 
     38(b) (relating to current year business credit) is amended 
     by striking ``plus'' at the end of paragraph (11), by 
     striking the period at the end of paragraph (12) and 
     inserting ``, plus'', and by adding at the end the following:
       ``(13) the employee health insurance expenses credit 
     determined under section 45D.''
       (c) No Carrybacks.--Subsection (d) of section 39 (relating 
     to carryback and carryforward of unused credits) is amended 
     by adding at the end the following:
       ``(9) No carryback of section 45D credit before effective 
     date.--No portion of the unused business credit for any 
     taxable year which is attributable to the employee health 
     insurance expenses credit determined under section 45D may be 
     carried back to a taxable year ending before January 1, 
     2001.''
       (d) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 is amended by 
     adding at the end the following:

``Sec. 45D. Employee health insurance expenses.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2000.

     SEC. __. MODIFICATION OF INDIVIDUAL RETIREMENT CONTRIBUTION 
                   LIMITS.

       (a) Deduction Limit.--Section 219(b)(5), as added by 
     section 301(a)(2), is amended to read as follows:
       ``(5) Deductible amount.--For purposes of paragraph 
     (1)(A)--
       ``(A) In general.--The deductible amount shall be 
     determined in accordance with the following table:

``For taxable years                                      The deductible
beginning in:                                                amount is:
  2001, 2002, and 2003......................................$3,000 ....

  2004, 2005, and 2006......................................$4,000 ....

  2007 and thereafter.......................................$5,000.....

       ``(B) Cost-of-living adjustment.--
       ``(i) In general.--In the case of any taxable year 
     beginning in a calendar year after 2009, the $5,000 amount 
     under subparagraph (A) shall be increased by an amount equal 
     to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2008' 
     for `calendar year 1992' in subparagraph (B) thereof.''

       (b) Income Limits.--The amendments made by section 302 are 
     null and void and the Internal Revenue Code of 1986 shall be 
     applied as if they had not been enacted.
       (c) Effective Date.--The amendments made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2000.
                                 ______
                                 

                 KERREY (AND OTHERS) AMENDMENT NO. 1424

  (Ordered to lie on the table.)
  Mr. KERREY (for himself, Mr. Gregg, Mr. Breaux, Mr. Grassley, Mr. 
Robb, Mr. Thompson, and Mr. Thomas) submitted an amendment intended to 
be proposed by them to the bill, S. 1429, supra; as follows:

       At the end, add the following:
             DIVISION B--BIPARTISAN SOCIAL SECURITY REFORM

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This division may be cited as the 
     ``Bipartisan Social Security Reform Act of 1999''.
       (b) Table of Contents.--The table of contents of this 
     division is as follows:

Sec. 1. Short title; table of contents.

                  TITLE I--INDIVIDUAL SAVINGS ACCOUNTS

Sec. 101. Individual savings accounts.
Sec. 102. Social security KidSave Accounts.
Sec. 103. Adjustments to primary insurance amounts under part A of 
              title II of the Social Security Act.

              TITLE II--SOCIAL SECURITY SYSTEM ADJUSTMENTS

Sec. 201. Adjustments to bend points in determining primary insurance 
              amounts.
Sec. 202. Adjustment of widows' and widowers' insurance benefits.
Sec. 203. Elimination of earnings test for individuals who have 
              attained early retirement age.
Sec. 204. Gradual increase in number of benefit computation years; use 
              of all years in computation.
Sec. 205. Maintenance of benefit and contribution base.
Sec. 206. Reduction in the amount of certain transfers to Medicare 
              Trust Fund.
Sec. 207. Actuarial adjustment for retirement.
Sec. 208. Improvements in process for cost-of-living adjustments.
Sec. 209. Modification of increase in normal retirement age.
Sec. 210. Modification of PIA factors to reflect changes in life 
              expectancy.
Sec. 211. Mechanism for remedying unforeseen deterioration in social 
              security solvency.
                  TITLE I--INDIVIDUAL SAVINGS ACCOUNTS

     SEC. 101. INDIVIDUAL SAVINGS ACCOUNTS.

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

                    ``Part A--Insurance Benefits'';

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

                 ``Part B--Individual Savings Accounts


                     ``individual savings accounts

       ``Sec. 251. (a) Establishment.--
       ``(1) In general.--
       ``(A) Establishment in absence of kidsave account.--Except 
     as provided in subparagraph (B), the Commissioner of Social 
     Security, within 30 days of the receipt of the first 
     contribution received pursuant to subsection (b) with respect 
     to an eligible individual, shall establish in the name of 
     such individual an individual savings account. The individual 
     savings account shall be identified to the account holder by 
     means of the account holder's Social Security account number.
       ``(B) Use of kidsave account.--If a KidSave Account has 
     been established in the name of an eligible individual under 
     section 262(a) before the date of the first contribution 
     received by the Commissioner pursuant to subsection (b) with 
     respect to such individual, the Commissioner shall 
     redesignate the KidSave Account as an individual savings 
     account for such individual.
       ``(2) Definition of eligible individual.--In this part, the 
     term `eligible individual' means any individual born after 
     December 31, 1937.
       ``(b) Contributions.--
       ``(1) Amounts transferred from the trust fund.--The 
     Secretary of the Treasury shall transfer from the Federal 
     Old-Age and Survivors Insurance Trust Fund, for crediting by 
     the Commissioner of Social Security to an individual savings 
     account of an eligible individual, an amount equal to the sum 
     of any amount received by such Secretary on behalf of such 
     individual under section 3101(a)(2) or 1401(a)(2) of the 
     Internal Revenue Code of 1986.
       ``(2) Other contributions.--For provisions relating to 
     additional contributions credited to individual savings 
     accounts, see sections 531(c)(2) and 6402(l) of the Internal 
     Revenue Code of 1986.
       ``(c) Designation of Investment Type of Individual Savings 
     Account.--
       ``(1) Designation.--Each eligible individual who is 
     employed or self-employed shall designate the investment type 
     of individual savings account to which the contributions 
     described in subsection (b) on behalf of such individual are 
     to be credited.
       ``(2) Form of designation.--The designation described in 
     paragraph (1) shall be made in such manner and at such 
     intervals as the Commissioner of Social Security may 
     prescribe in order to ensure ease of administration and 
     reductions in burdens on employers.
       ``(3) Special rule for 2000.--Not later than January 1, 
     2000, any eligible individual that is employed or self-
     employed as of such date shall execute the designation 
     required under paragraph (1).
       ``(4) Designation in absence of designation by eligible 
     individual.--In any case in which no designation of the 
     individual savings account is made, the Commissioner of 
     Social Security shall make the designation of the individual 
     savings account in accordance with regulations that take into 
     account the competing objectives of maximizing returns on 
     investments and minimizing the risk involved with such 
     investments.
       ``(d) Treatment of Incompetent Individuals.--Any 
     designation under subsection (c)(1) to be made by an 
     individual mentally incompetent or under other legal 
     disability may be made by the person who is constituted 
     guardian or other fiduciary by the law of the State of 
     residence of the individual or is otherwise legally vested 
     with the

[[Page 18496]]

     care of the individual or his estate. Payment under this part 
     due an individual mentally incompetent or under other legal 
     disability may be made to the person who is constituted 
     guardian or other fiduciary by the law of the State of 
     residence of the claimant or is otherwise legally vested with 
     the care of the claimant or his estate. In any case in which 
     a guardian or other fiduciary of the individual under legal 
     disability has not been appointed under the law of the State 
     of residence of the individual, if any other person, in the 
     judgment of the Commissioner, is responsible for the care of 
     such individual, any designation under subsection (c)(1) 
     which may otherwise be made by such individual may be made by 
     such person, any payment under this part which is otherwise 
     payable to such individual may be made to such person, and 
     the payment of an annuity payment under this part to such 
     person bars recovery by any other person.


   ``definition of individual savings account; treatment of accounts

       ``Sec. 252. (a) Individual Savings Account.--In this part, 
     the term `individual savings account' means any individual 
     savings account in the Individual Savings Fund (established 
     under section 254) which is administered by the Individual 
     Savings Fund Board.
       ``(b) Treatment of Account.--Except as otherwise provided 
     in this part and in section 531 of the Internal Revenue Code 
     of 1986, any individual savings account described in 
     subsection (a) shall be treated in the same manner as an 
     individual account in the Thrift Savings Fund under 
     subchapter III of chapter 84 of title 5, United States Code.


               ``individual savings account distributions

       ``Sec. 253. (a) Date of Initial Distribution.--Except as 
     provided in subsection (c), distributions may only be made 
     from an individual savings account of an eligible individual 
     on and after the earliest of--
       ``(1) the date the eligible individual attains normal 
     retirement age, as determined under section 216 (or early 
     retirement age (as so determined) if elected by such 
     individual), or
       ``(2) the date on which funds in the eligible individual's 
     individual savings account are sufficient to provide a 
     monthly payment over the life expectancy of the eligible 
     individual (determined under reasonable actuarial 
     assumptions) which, when added to the eligible individual's 
     monthly benefit under part A (if any), is at least equal to 
     an amount equal to \1/12\ of the poverty line (as defined in 
     section 673(2) of the Community Services Block Grant Act (42 
     U.S.C. 9902(2) and determined on such date for a family of 
     the size involved) and adjusted annually thereafter by the 
     adjustment determined under section 215(i).
       ``(b) Forms of Distribution.--
       ``(1) Required monthly payments.--Except as provided in 
     paragraph (2), beginning with the date determined under 
     subsection (a), the balance in an individual savings account 
     available to provide monthly payments not in excess of the 
     amount described in subsection (a)(2) shall be paid, as 
     elected by the account holder (in such form and manner as 
     shall be prescribed in regulations of the Individual Savings 
     Fund Board), by means of the purchase of annuities or equal 
     monthly payments over the life expectancy of the eligible 
     individual (determined under reasonable actuarial 
     assumptions) in accordance with requirements (which shall be 
     provided in regulations of the Board) similar to the 
     requirements applicable to payments of benefits under 
     subchapter III of chapter 84 of title 5, United States Code, 
     and providing for indexing for inflation.
       ``(2) Payment of excess funds.--To the extent funds remain 
     in an eligible individual's individual savings account after 
     the application of paragraph (1), such funds shall be payable 
     to the eligible individual in such manner and in such amounts 
     as determined by the eligible individual, subject to the 
     provisions of subchapter III of chapter 84 of title 5, United 
     States Code.
       ``(c) Distribution in the Event of Death Before the Date of 
     Initial Distribution.--If the eligible individual dies before 
     the date determined under subsection (a), the balance in such 
     individual's individual savings account shall be distributed 
     in a lump sum, under rules established by the Individual 
     Savings Fund Board, to the individual's heirs.


                       ``individual savings fund

       ``Sec. 254. (a) Establishment.--There is established and 
     maintained in the Treasury of the United States an Individual 
     Savings Fund in the same manner as the Thrift Savings Fund 
     under sections 8437, 8438, and 8439 (but not section 8440) of 
     title 5, United States Code.
       ``(b) Individual Savings Fund Board.--
       ``(1) In general.--There is established and operated in the 
     Social Security Administration an Individual Savings Fund 
     Board in the same manner as the Federal Retirement Thrift 
     Investment Board under subchapter VII of chapter 84 of title 
     5, United States Code.
       ``(2) Specific investment and reporting duties.--
       ``(A) In general.--The Individual Savings Fund Board shall 
     manage and report on the activities of the Individual Savings 
     Fund and the individual savings accounts of such Fund in the 
     same manner as the Federal Retirement Thrift Investment Board 
     manages and reports on the Thrift Savings Fund and the 
     individual accounts of such Fund under subchapter VII of 
     chapter 84 of title 5, United States Code.
       ``(B) Study and report on increased investment options.--
       ``(i) Study.--The Individual Savings Fund Board shall 
     conduct a study regarding ways to increase an eligible 
     individual's investment options with respect to such 
     individual's individual savings account and with respect to 
     rollovers or distributions from such account.
       ``(ii) Report.--Not later than 2 years after the date of 
     enactment of the Bipartisan Social Security Reform Act of 
     1999, the Individual Savings Fund Board shall submit a report 
     to the President and Congress that contains a detailed 
     statement of the results of the study conducted pursuant to 
     clause (i), together with the Board's recommendations for 
     such legislative actions as the Board considers appropriate.


     ``budgetary treatment of individual savings fund and accounts

       ``Sec. 255. The receipts and disbursements of the 
     Individual Savings Fund and any accounts within such fund 
     shall not be included in the totals of the budget of the 
     United States Government as submitted by the President or of 
     the congressional budget and shall be exempt from any general 
     budget limitation imposed by statute on expenditures and net 
     lending (budget outlays) of the United States Government.''.
       (b) Modification of FICA Rates.--
       (1) Employees.--Section 3101(a) of the Internal Revenue 
     Code of 1986 (relating to tax on employees) is amended to 
     read as follows:
       ``(a) Old-Age, Survivors, and Disability Insurance.--
       ``(1) In general.--
       ``(A) Individuals covered under part a of title ii of the 
     social security act.--In addition to other taxes, there is 
     hereby imposed on the income of every individual who is not a 
     part B eligible individual a tax equal to 6.2 percent of the 
     wages (as defined in section 3121(a)) received by him with 
     respect to employment (as defined in section 3121(b)).
       ``(B) Individuals covered under part b of title ii of the 
     social security act.--In addition to other taxes, there is 
     hereby imposed on the income of every part B eligible 
     individual a tax equal to 4.2 percent of the wages (as 
     defined in section 3121(a)) received by such individual with 
     respect to employment (as defined in section 3121(b)).
       ``(2) Contribution of oasdi tax reduction to individual 
     savings accounts.--
       ``(A) In general.--In addition to other taxes, there is 
     hereby imposed on the income of every part B eligible 
     individual an individual savings account contribution equal 
     to the sum of--
       ``(i) 2 percent of the wages (as so defined) received by 
     such individual with respect to employment (as so defined), 
     plus
       ``(ii) so much of such wages (not to exceed $2,000) as 
     designated by the individual in the same manner as described 
     in section 251(c) of the Social Security Act.
       ``(B) Inflation adjustment.--
       ``(i) In general.--In the case of any calendar year 
     beginning after 2000, the dollar amount in subparagraph 
     (A)(ii) shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year, determined by 
     substituting `calendar year 1999' for `calendar year 1992' in 
     subparagraph (B) thereof.

       ``(ii) Rounding.--If any dollar amount after being 
     increased under clause (i) is not a multiple of $10, such 
     dollar amount shall be rounded to the nearest multiple of 
     $10.''.
       (2) Self-employed.--Section 1401(a) of the Internal Revenue 
     Code of 1986 (relating to tax on self-employment income) is 
     amended to read as follows:
       ``(a) Old-Age, Survivors, and Disability Insurance.--
       ``(1) In general.--
       ``(A) Individuals covered under part a of the social 
     security act.--In addition to other taxes, there shall be 
     imposed for each taxable year, on the self-employment income 
     of every individual who is not a part B eligible individual 
     for the calendar year ending with or during such taxable 
     year, a tax equal to 12.40 percent of the amount of the self-
     employment income for such taxable year.
       ``(B) Individuals covered under part b of title ii of the 
     social security act.--In addition to other taxes, there is 
     hereby imposed for each taxable year, on the self-employment 
     income of every part B eligible individual, a tax equal to 
     10.4 percent of the amount of the self-employment income for 
     such taxable year.
       ``(2) Contribution of oasdi tax reduction to individual 
     savings accounts.--
       ``(A) In general.--In addition to other taxes, there is 
     hereby imposed for each taxable year, on the self-employment 
     income of every individual, an individual savings account 
     contribution equal to the sum of--
       ``(i) 2 percent of the amount of the self-employment income 
     for each individual for such taxable year, and
       ``(ii) so much of such self-employment income (not to 
     exceed $2,000) as designated by

[[Page 18497]]

     the individual in the same manner as described in section 
     251(c) of the Social Security Act.
       ``(B) Inflation adjustment.--
       ``(i) In general.--In the case of any taxable year 
     beginning after 2000, the dollar amount in subparagraph 
     (A)(ii) shall be increased by an amount equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1999' 
     for `calendar year 1992' in subparagraph (B) thereof.

       ``(ii) Rounding.--If any dollar amount after being 
     increased under clause (i) is not a multiple of $10, such 
     dollar amount shall be rounded to the nearest multiple of 
     $10.''.
       (3) Part b eligible individual.--
       (A) Taxes on employees.--Section 3121 of such Code 
     (relating to definitions) is amended by inserting after 
     subsection (s) the following:
       ``(t) Part B Eligible Individual.--For purposes of this 
     chapter, the term `part B eligible individual' means, for any 
     calendar year, an individual who is an eligible individual 
     (as defined in section 251(a)(2) of the Social Security Act) 
     for such calendar year.''.
       (B) Self-employment tax.--Section 1402 of such Code 
     (relating to definitions) is amended by adding at the end the 
     following:
       ``(k) Part B Eligible Individual.--The term `part B 
     eligible individual' means, for any calendar year, an 
     individual who is an eligible individual (as defined in 
     section 251(a)(2) of the Social Security Act) for such 
     calendar year.''.
       (4) Effective dates.--
       (A) Employees.--The amendments made by paragraphs (1) and 
     (3)(A) apply to remuneration paid after December 31, 1999.
       (B) Self-employed individuals.--The amendments made by 
     paragraphs (2) and (3)(B) apply to taxable years beginning 
     after December 31, 1999.
       (c) Matching Contributions.--
       (1) In general.--Part IV of subchapter A of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to credits 
     against tax) is amended by adding at the end the following:

            ``Subpart H--Individual Savings Account Credits

``Sec. 54. Individual savings account credit.''.

     ``SEC. 54. INDIVIDUAL SAVINGS ACCOUNT CREDIT.

       ``(a) Allowance of Credit.--Each part B eligible individual 
     is entitled to a credit for the taxable year in an amount 
     equal to the sum of--
       ``(1) $100, plus
       ``(2) 100 percent of the designated wages of such 
     individual for the taxable year, plus
       ``(3) 100 percent of the designated self-employment income 
     of such individual for the taxable year.
       ``(b) Limitations.--
       ``(1) Amount.--The amount determined under subsection (a) 
     with respect to such individual for any taxable year may not 
     exceed the excess (if any) of--
       ``(A) an amount equal to 1 percent of the contribution and 
     benefit base for such taxable year (as determined under 
     section 230 of the Social Security Act), over
       ``(B) the sum of the amounts received by the Secretary on 
     behalf of such individual under sections 3101(a)(2)(A)(i) and 
     1401(a)(2)(A)(i) for such taxable year.
       ``(2) Failure to make voluntary contributions.--In the case 
     of a part B eligible individual with respect to whom the 
     amount of wages designated under section 3101(a)(2)(A)(ii) 
     plus the amount self-employment income designated under 
     section 1401(a)(2)(A)(ii) for the taxable year is less that 
     $1, the credit to which such individual is entitled under 
     this section shall be equal to zero.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Part b eligible individual.--The term `part B 
     eligible individual' means, for any calendar year, an 
     individual who--
       ``(A) is an eligible individual (as defined in section 
     251(a)(2) of the Social Security Act) for such calendar year, 
     and
       ``(B) is not an individual with respect to whom another 
     taxpayer is entitled to a deduction under section 151(c).
       ``(2) Designated wages.--The term `designated wages' means 
     with respect to any taxable year the amount designated under 
     section 3101(a)(2)(A)(ii).
       ``(3) Designated self-employment income.--The term 
     `designated self-employment income' means with respect to any 
     taxable year the amount designated under section 
     1401(a)(2)(A)(ii) for such taxable year.
       ``(d) Credit Used Only for Individual Savings Account.--For 
     purposes of this title, the credit allowed under this section 
     with respect to any part B eligible individual--
       ``(1) shall not be treated as a credit allowed under this 
     part, but
       ``(2) shall be treated as an overpayment of tax under 
     section 6401(b)(3) which may, in accordance with section 
     6402(l), only be transferred to an individual savings account 
     established under part B of title II of the Social Security 
     Act with respect to such individual.''.
       (2) Contribution of credited amounts to individual savings 
     account.--
       (A) Credited amounts treated as overpayment of tax.--
     Subsection (b) of section 6401 of such Code (relating to 
     excessive credits) is amended by adding at the end the 
     following:
       ``(3) Special rule for credit under section 54.--Subject to 
     the provisions of section 6402(l), the amount of any credit 
     allowed under section 54 for any taxable year shall be 
     considered an overpayment.''.
       (B) Transfer of credit amount to individual savings 
     account.--Section 6402 of such Code (relating to authority to 
     make credits or refunds) is amended by adding at the end the 
     following:
       ``(l) Overpayments Attributable to Individual Savings 
     Account Credit.--In the case of any overpayment described in 
     section 6401(b)(3) with respect to any individual, the 
     Secretary shall transfer for crediting by the Commissioner of 
     Social Security to the individual savings account of such 
     individual, an amount equal to the amount of such 
     overpayment.''.
       (4) Conforming amendments.--
       (A) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting before the period at the end ``, or 
     enacted by the Bipartisan Social Security Reform Act of 
     1999''.
       (B) The table of subparts for part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following:

``Subpart H. Individual Savings Account Credits.''.
       (5) Effective date.--The amendments made by this subsection 
     shall apply to refunds payable after December 31, 1999.
       (d) Tax Treatment of Individual Savings Accounts.--
       (1) In general.--Subchapter F of chapter 1 of the Internal 
     Revenue Code of 1986 (relating to exempt organizations) is 
     amended by adding at the end the following:

            ``PART IX--INDIVIDUAL SAVINGS FUND AND ACCOUNTS

``Sec. 531. Individual Savings Fund and Accounts.

     ``SEC. 531. INDIVIDUAL SAVINGS FUND AND ACCOUNTS.

       ``(a) General Rule.--The Individual Savings Fund and 
     individual savings accounts shall be exempt from taxation 
     under this subtitle.
       ``(b) Individual Savings Fund and Accounts Defined.--For 
     purposes of this section, the terms `Individual Savings Fund' 
     and `individual savings account' means the fund and account 
     established under sections 254 and 251, respectively, of part 
     B of title II of the Social Security Act.
       ``(c) Contributions.--
       ``(1) In general.--No deduction shall be allowed for 
     contributions credited to an individual savings account under 
     section 251 of the Social Security Act or section 6402(l).
       ``(2) Rollover of inheritance.--Any portion of a 
     distribution to an heir from an individual savings account 
     made by reason of the death of the beneficiary of such 
     account may be rolled over to the individual savings account 
     of the heir after such death.
       ``(d) Distributions.--
       ``(1) In general.--Any distribution from an individual 
     savings account under section 253 of the Social Security Act 
     shall be included in gross income under section 72.
       ``(2) Period in which distributions must be made from 
     account of decedent.--In the case of amounts remaining in an 
     individual savings account from which distributions began 
     before the death of the beneficiary, rules similar to the 
     rules of section 401(a)(9)(B) shall apply to distributions of 
     such remaining amounts.
       ``(3) Rollovers.--Paragraph (1) shall not apply to amounts 
     rolled over under subsection (c)(2) in a direct transfer by 
     the Commissioner of Social Security, under regulations which 
     the Commissioner shall prescribe.''.
       (2) Clerical amendment.--The table of parts for subchapter 
     F of chapter 1 of such Code is amended by adding after the 
     item relating to part VIII the following:

``Part IX. Individual savings fund and accounts.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 102. SOCIAL SECURITY KIDSAVE ACCOUNTS.

       Title II of the Social Security Act (42 U.S.C. 401 et 
     seq.), as amended by section 101(a), is amended by adding at 
     the end the following:

                       ``Part C--KidSave Accounts


                           ``kidsave accounts

       ``Sec. 261. (a) Establishment.--The Commissioner of Social 
     Security shall establish in the name of each individual born 
     on or after January 1, 1995, a KidSave Account upon the later 
     of--
       ``(1) the date of enactment of this part, or
       ``(2) the date of the issuance of a Social Security account 
     number under section 205(c)(2) to such individual.
     The KidSave Account shall be identified to the account holder 
     by means of the account holder's Social Security account 
     number.
       ``(b) Contributions.--
       ``(1) In general.--There are authorized to be appropriated 
     and are appropriated such

[[Page 18498]]

     sums as are necessary in order for the Secretary of the 
     Treasury to transfer from the general fund of the Treasury 
     for crediting by the Commissioner to each account holder's 
     KidSave Account under subsection (a), an amount equal to the 
     sum of--
       ``(A) in the case of any individual born on or after 
     January 1, 2000, $1,000, on the date of the establishment of 
     such individual's KidSave Account, and
       ``(B) in the case of any individual born on or after 
     January 1, 1995, $500, on the 1st, 2nd, 3rd, 4th, and 5th 
     birthdays of such individual occurring on or after January 1, 
     2000.
       ``(2) Adjustment for inflation.--For any calendar year 
     after 2009, each of the dollar amounts under paragraph (1) 
     shall be increased by the cost-of-living adjustment 
     determined under section 215(i) for the calendar year.
       ``(c) Designations Regarding KidSave Accounts.--
       ``(1) Initial designations of investment vehicle.--A person 
     described in subsection (d) shall, on behalf of the 
     individual described in subsection (a), designate the 
     investment vehicle for the KidSave Account to which 
     contributions on behalf of such individual are to be 
     deposited. Such designation shall be made on the application 
     for such individual's Social Security account number.
       ``(2) Changes in investment vehicles.--The Commissioner 
     shall by regulation provide the time and manner by which an 
     individual or a person described in subsection (d) on behalf 
     of such individual may change 1 or more investment vehicles 
     for a KidSave Account.
       ``(d) Treatment of Minors and Incompetent Individuals.--Any 
     designation under subsection (c) to be made by a minor, or an 
     individual mentally incompetent or under other legal 
     disability, may be made by the person who is constituted 
     guardian or other fiduciary by the law of the State of 
     residence of the individual or is otherwise legally vested 
     with the care of the individual or his estate. Payment under 
     this part due a minor, or an individual mentally incompetent 
     or under other legal disability, may be made to the person 
     who is constituted guardian or other fiduciary by the law of 
     the State of residence of the claimant or is otherwise 
     legally vested with the care of the claimant or his estate. 
     In any case in which a guardian or other fiduciary of the 
     individual under legal disability has not been appointed 
     under the law of the State of residence of the individual, if 
     any other person, in the judgment of the Commissioner, is 
     responsible for the care of such individual, any designation 
     under subsection (c) which may otherwise be made by such 
     individual may be made by such person, any payment under this 
     part which is otherwise payable to such individual may be 
     made to such person, and the payment of an annuity payment 
     under this part to such person bars recovery by any other 
     person.


                    ``definitions and special rules

       ``Sec. 262. (a) Kidsave Accounts.--In this part, the term 
     `KidSave Account' means any KidSave Account in the Individual 
     Savings Fund (established under section 254) which is 
     administered by the Individual Savings Fund Board.
       ``(b) Treatment of Accounts.--
       ``(1) In general.--Except as provided in paragraph (2), any 
     KidSave Account described in subsection (a) shall be treated 
     in the same manner as an individual savings account under 
     part B.
       ``(2) Distributions.--Notwithstanding any other provision 
     of law, distributions may only be made from a KidSave Account 
     of an individual on or after the earlier of--
       ``(A) the date on which the individual begins receiving 
     benefits under this title, or
       ``(B) the date of the individual's death.''.

     SEC. 103. ADJUSTMENTS TO PRIMARY INSURANCE AMOUNTS UNDER PART 
                   A OF TITLE II OF THE SOCIAL SECURITY ACT.

       (a) In General.--Section 215 of the Social Security Act (42 
     U.S.C. 415) is amended by adding at the end the following:

 ``Adjustment of Primary Insurance Amount in Relation to Deposits Made 
          to Individual Savings Accounts and KidSave Accounts

       ``(j)(1) Except as provided in paragraph (2), an 
     individual's primary insurance amount as determined in 
     accordance with this section (before adjustments made under 
     subsection (i)) shall be equal to the excess (if any) of--
       ``(A) the amount which would be so determined without the 
     application of this subsection, over
       ``(B) the monthly amount of an immediate life annuity, 
     determined on the basis of the sum of--
       ``(A) the total of all amounts which have been credited 
     pursuant to section 251(b) (indexed in the same manner as is 
     applicable with respect to average indexed monthly earnings 
     under subsection (b)) to the individual savings account held 
     by such individual, plus
       ``(B) 50 percent of the accumulated value of the KidSave 
     Account (established on behalf of such individual under 
     section 261(a)) determined on the date such KidSave Account 
     is redesignated as an individual savings account held by such 
     individual under section 251(a)(1)(B), plus
       ``(C) accrued interest on such amounts compounded 
     annually--
       ``(i) assuming an interest rate equal to the projected 
     interest rate of the Federal Old-Age and Survivors Trust 
     Fund, and
       ``(ii) using the mortality table used under 
     412(l)(7)(C)(ii) of the Internal Revenue Code of 1986.
       ``(2) In the case of an individual who becomes entitled to 
     disability insurance benefits under section 223, such 
     individual's primary insurance amount shall be determined 
     without regard to paragraph (1).
       ``(3) For purposes of this subsection, the term `immediate 
     life annuity' means an annuity--
       ``(A) the annuity starting date (as defined in section 
     72(c)(4) of the Internal Revenue Code of 1986) of which 
     commences with the first month following the date of the 
     determination, and
       ``(B) which provides for a series of substantially equal 
     monthly payments over the life expectancy of the 
     individual.''.
       (b) Conforming Amendment to Railroad Retirement Act of 
     1974.--Section 1 of the Railroad Retirement Act of 1974 (45 
     U.S.C. 231) is amended by adding at the end the following:
       ``(s) In applying applicable provisions of the Social 
     Security Act for purposes of determining the amount of the 
     annuity to which an individual is entitled under this Act, 
     section 215(j) of the Social Security Act and part B of title 
     II of such Act shall be disregarded.''
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to computations and recomputations 
     of primary insurance amounts occurring after December 31, 
     1999.
              TITLE II--SOCIAL SECURITY SYSTEM ADJUSTMENTS

     SEC. 201. ADJUSTMENTS TO BEND POINTS IN DETERMINING PRIMARY 
                   INSURANCE AMOUNTS.

       (a) Additional Bend Point.--Section 215(a)(1)(A) of the 
     Social Security Act (42 U.S.C. 415(a)(1)(A)) is amended--
       (1) in clause (ii), by striking ``and'' at the end;
       (2) in clause (iii)--
       (A) by striking ``15 percent'' and inserting ``32 
     percent'';
       (B) by striking ``clause (ii),'' and inserting the 
     following: ``clause (ii) but do not exceed the amount 
     established for purposes of this clause by subparagraph (B), 
     and''; and
       (3) by inserting after clause (iii) the following:
       ``(iv) 15 percent of the individual's average indexed 
     monthly earnings to the extent that such earnings exceed the 
     amount established for purposes of clause (iii),''.
       (b) Initial Level of Additional Bend Point.--Section 
     215(a)(1)(B)(i) of such Act (42 U.S.C. 415(a)(1)(B)(i)) is 
     amended--
       (1) by striking ``clause (i) and (ii)'' and inserting 
     ``clauses (i) and (iii)''; and
       (2) by adding at the end the following: ``For individuals 
     who initially become eligible for old-age or disability 
     insurance benefits, or who die (before becoming eligible for 
     such benefit), in the calendar year 2000, the amount 
     established for purposes of clause (ii) of subparagraph (A) 
     shall be equal to 197.5 percent of the amount established for 
     purposes of clause (i).''.
       (c) Adjustments to PIA Formula Factors.--Section 
     215(a)(1)(B) of such Act (42 U.S.C. 415(a)(1)(B)) is amended 
     further--
       (1) by redesignating clause (iii) as clause (iv);
       (2) by inserting after clause (ii) the following:
       ``(iii) For individuals who initially become eligible for 
     old-age or disability insurance benefits, or who die (before 
     becoming eligible for such benefits), in any calendar year 
     after 2005, effective for such calendar year--
       ``(I) the percentage in effect under clause (ii) of 
     subparagraph (A) shall be equal to the percentage in effect 
     under such clause for calendar year 2005 increased the 
     applicable number of times by 3.8 percentage points,
       ``(II) the percentage in effect under clause (iii) of 
     subparagraph (A) shall be equal to the percentage in effect 
     under such clause for calendar year 2005 decreased the 
     applicable number of times by 1.2 percentage points, and
       ``(III) the percentage in effect under clause (iv) of 
     subparagraph (A) shall be equal to the percentage in effect 
     under such clause for calendar year 2005 decreased the 
     applicable number of times by 0.5 percentage points.
     For purposes of the preceding sentence, the term `applicable 
     number of times' means a number equal to the lesser of 10 or 
     the number of years beginning with 2006 and ending with the 
     year of initial eligibility or death.''; and
       (3) in clause (iv) (as redesignated), by striking 
     ``amount'' and inserting ``dollar amount''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to primary insurance amounts of 
     individuals attaining early retirement age (as defined in 
     section 216(l) of the Social Security Act), or dying, after 
     December 31, 1999.

     SEC. 202. ADJUSTMENT OF WIDOWS' AND WIDOWERS' INSURANCE 
                   BENEFITS.

       (a) Widow's Benefit.--Section 202(e)(2)(A) of the Social 
     Security Act (42 U.S.C.

[[Page 18499]]

     402(e)(2)(A)) is amended by striking ``equal to'' and all 
     that follows and inserting ``equal to the greater of--
       ``(i) the primary insurance amount (as determined for 
     purposes of this subsection after application of 
     subparagraphs (B) and (C)) of such deceased individual, or
       ``(ii) the applicable percentage of the joint benefit which 
     would have been received by the widow or surviving divorced 
     wife and the deceased individual for such month if such 
     individual had not died.
     For purposes of clause (ii), the applicable percentage is 
     equal to 50 percent in 2000, increased (but not above 75 
     percent) by 1 percentage point in every second year 
     thereafter.''.
       (b) Widower's Benefit.--Section 202(f)(3)(A) of the Social 
     Security Act (42 U.S.C. 402(b)(3)(A)) is amended by striking 
     ``equal to'' and all that follows and inserting ``equal to 
     the greater of--
       ``(i) the primary insurance amount (as determined for 
     purposes of this subsection after application of 
     subparagraphs (B) and (C)) of such deceased individual, or
       ``(ii) the applicable percentage of the joint benefit which 
     would have been received by the widow or surviving divorced 
     husband and the deceased individual for such month if such 
     individual had not died.
     For purposes of clause (ii), the applicable percentage is 
     equal to 50 percent in 2000, increased (but not above 75 
     percent) by 1 percentage point in every second year 
     thereafter.''.

     SEC. 203. ELIMINATION OF EARNINGS TEST FOR INDIVIDUALS WHO 
                   HAVE ATTAINED EARLY RETIREMENT AGE.

       (a) In General.--Section 203 of the Social Security Act (42 
     U.S.C. 403) is amended--
       (1) in subsection (c)(1), by striking ``the age of 
     seventy'' and inserting ``early retirement age (as defined in 
     section 216(l))'';
       (2) in paragraphs (1)(A) and (2) of subsection (d), by 
     striking ``the age of seventy'' each place it appears and 
     inserting ``early retirement age (as defined in section 
     216(l))'';
       (3) in subsection (f)(1)(B), by striking ``was age seventy 
     or over'' and inserting ``was at or above early retirement 
     age (as defined in section 216(l))'';
       (4) in subsection (f)(3)--
       (A) by striking ``33\1/3\ percent'' and all that follows 
     through ``any other individual,'' and inserting ``50 percent 
     of such individual's earnings for such year in excess of the 
     product of the exempt amount as determined under paragraph 
     (8),''; and
       (B) by striking ``age 70'' and inserting ``early retirement 
     age (as defined in section 216(l))'';
       (5) in subsection (h)(1)(A), by striking ``age 70'' each 
     place it appears and inserting ``early retirement age (as 
     defined in section 216(l))''; and
       (6) in subsection (j)--
       (A) in the heading, by striking ``Age Seventy'' and 
     inserting ``Early Retirement Age''; and
       (B) by striking ``seventy years of age'' and inserting 
     ``having attained early retirement age (as defined in section 
     216(l))''.
       (b) Conforming Amendments Eliminating the Special Exempt 
     Amount for Individuals Who Have Attained Age 62.--
       (1) Uniform exempt amount.--Section 203(f)(8)(A) of the 
     Social Security Act (42 U.S.C. 403(f)(8)(A)) is amended by 
     striking ``the new exempt amounts (separately stated for 
     individuals described in subparagraph (D) and for other 
     individuals) which are to be applicable'' and inserting ``a 
     new exempt amount which shall be applicable''.
       (2) Conforming amendments.--Section 203(f)(8)(B) of the 
     Social Security Act (42 U.S.C. 403(f)(8)(B)) is amended--
       (A) in the matter preceding clause (i), by striking 
     ``Except'' and all that follows through ``whichever'' and 
     inserting ``The exempt amount which is applicable for each 
     month of a particular taxable year shall be whichever'';
       (B) in clauses (i) and (ii), by striking ``corresponding'' 
     each place it appears; and
       (C) in the last sentence, by striking ``an exempt amount'' 
     and inserting ``the exempt amount''.
       (3) Repeal of basis for computation of special exempt 
     amount.--Section 203(f)(8)(D) of the Social Security Act (42 
     U.S.C. 403(f)(8)(D)) is repealed.
       (c) Additional Conforming Amendments.--
       (1) Elimination of redundant references to retirement 
     age.--Section 203 of the Social Security Act (42 U.S.C. 403) 
     is amended--
       (A) in subsection (c), in the last sentence, by striking 
     ``nor shall any deduction'' and all that follows and 
     inserting ``nor shall any deduction be made under this 
     subsection from any widow's or widower's insurance benefit if 
     the widow, surviving divorced wife, widower, or surviving 
     divorced husband involved became entitled to such benefit 
     prior to attaining age 60.''; and
       (B) in subsection (f)(1), by striking clause (D) and 
     inserting the following: ``(D) for which such individual is 
     entitled to widow's or widower's insurance benefits if such 
     individual became so entitled prior to attaining age 60,''.
       (2) Conforming amendment to provisions for determining 
     amount of increase on account of delayed retirement.--Section 
     202(w)(2)(B)(ii) of the Social Security Act (42 U.S.C. 
     402(w)(2)(B)(ii)) is amended--
       (A) by striking ``either''; and
       (B) by striking ``or suffered deductions under section 
     203(b) or 203(c) in amounts equal to the amount of such 
     benefit''.
       (3) Provisions relating to earnings taken into account in 
     determining substantial gainful activity of blind 
     individuals.--The second sentence of section 223(d)(4) of 
     such Act (42 U.S.C. 423(d)(4)) is amended by striking ``if 
     section 102 of the Senior Citizens' Right to Work Act of 1996 
     had not been enacted'' and inserting the following: ``if the 
     amendments to section 203 made by section 102 of the Senior 
     Citizens' Right to Work Act of 1996 and by the Bipartisan 
     Social Security Reform Act of 1999 had not been enacted''.
       (d) Study of the Effect of Taking Earnings Into Account in 
     Determining Substantial Gainful Activity of Disabled 
     Individuals.--
       (1) In general.--Not later than February 15, 2001, the 
     Commissioner of Social Security shall conduct a study on the 
     effect that taking earnings into account in determining 
     substantial gainful activity of individuals receiving 
     disability insurance benefits has on the incentive for such 
     individuals to work and submit to Congress a report on the 
     study.
       (2) Contents of study.--The study conducted under paragraph 
     (1) shall include the evaluation of--
       (A) the effect of the current limit on earnings on the 
     incentive for individuals receiving disability insurance 
     benefits to work;
       (B) the effect of increasing the earnings limit or changing 
     the manner in which disability insurance benefits are reduced 
     or terminated as a result of substantial gainful activity 
     (including reducing the benefits gradually when the earnings 
     limit is exceeded) on--
       (i) the incentive to work; and
       (ii) the financial status of the Federal Disability 
     Insurance Trust Fund;
       (C) the effect of extending eligibility for the Medicare 
     program to individuals during the period in which disability 
     insurance benefits of the individual are gradually reduced as 
     a result of substantial gainful activity and extending such 
     eligibility for a fixed period of time after the benefits are 
     terminated on--
       (i) the incentive to work; and
       (ii) the financial status of the Federal Hospital Insurance 
     Trust Fund and the Federal Supplementary Medical Insurance 
     Trust Fund; and
       (D) the relationship between the effect of substantial 
     gainful activity limits on blind individuals receiving 
     disability insurance benefits and other individuals receiving 
     disability insurance benefits.
       (3) Consultation.--The analysis under paragraph (2)(C) 
     shall be done in consultation with the Administrator of the 
     Health Care Financing Administration.
       (e) Effective Date.--The amendments and repeals made by 
     subsections (a), (b), and (c) shall apply with respect to 
     taxable years ending after December 31, 2002.

     SEC. 204. GRADUAL INCREASE IN NUMBER OF BENEFIT COMPUTATION 
                   YEARS; USE OF ALL YEARS IN COMPUTATION.

       (a) In General.--Section 215(b)(2)(A) of the Social 
     Security Act (42 U.S.C. 415(b)(2)(A)) is amended--
       (1) in clause (i), by striking ``5 years'' and inserting 
     ``the applicable number of years for purposes of this 
     clause''; and
       (2) by striking ``Clause (ii),'' in the matter following 
     clause (ii) and inserting the following:
     ``For purposes of clause (i), the applicable number of years 
     is the number of years specified in connection with the year 
     in which such individual reaches early retirement age (as 
     defined in section 216(l)(2)), or, if earlier, the calendar 
     year in which such individual dies, as set forth in the 
     following table:

                                                  The applicable number
``If such calendar year is:                                of years is:
  2002...............................................................4.
  2003...............................................................4.
  2004...............................................................3.
  2005...............................................................3.
  2006...............................................................2.
  2007...............................................................2.
  2008...............................................................1.
  2009...............................................................1.
  After 2009.........................................................0.

     Notwithstanding the preceding sentence, the applicable number 
     of years is 5, in the case of any individual who is entitled 
     to old-age insurance benefits, and has a spouse who is also 
     so entitled (or who died without having become so entitled) 
     who has greater total wages and self-employment income 
     credited to benefit computation years than the individual. 
     Clause (ii),''.
       (b) Use of All Years in Computation.--
       (1) In general.--Section 215(b)(2)(B) of the Social 
     Security Act (42 U.S.C. 415(b)(2)(B)) is amended by striking 
     clauses (i) and (ii) and inserting the following:
       ``(i)(I) for calendar years after 2001 and before 2010, the 
     term `benefit computation years' means those computation base 
     years equal in number to the number determined under 
     subparagraph (A) plus the applicable number of years 
     determined under subclause (III), for which the total of such 
     individual's

[[Page 18500]]

     wages and self-employment income, after adjustment under 
     paragraph (3), is the largest;
       ``(II) for calendar years after 2009, the term `benefit 
     computation years' means all of the computation base years; 
     and
       ``(III) for purposes of subclause (I), the applicable 
     number of years is the number of years specified in 
     connection with the year in which such individual reaches 
     early retirement age (as defined in section 216(l)(2)), or, 
     if earlier, the calendar year in which such individual dies, 
     as set forth in the following table:

                                                  The applicable number
``If such calendar year is:                                of years is:
  Before 2002........................................................0.
  2002...............................................................1.
  2003...............................................................1.
  2004...............................................................2.
  2005...............................................................2.
  2006...............................................................3.
  2007...............................................................3.
  2008...............................................................4.
  2009...............................................................4.

       ``(ii) the term `computation base years' means the calendar 
     years after 1950, except that such term excludes any calendar 
     year entirely included in a period of disability; and''.
       (2) Conforming amendment.--Section 215(b)(1)(B) of the 
     Social Security Act (42 U.S.C. 415(b)(1)(B)) is amended by 
     striking ``in those years'' and inserting ``in an 
     individual's computation base years determined under 
     paragraph (2)(A)''.
       (c) Effective Date.--
       (1) Subsection (a).--The amendments made by subsection (a) 
     shall apply with respect to individuals attaining early 
     retirement age (as defined in section 216(l)(2) of the Social 
     Security Act) after December 31, 2001.
       (2) Subsection (b).--The amendment made by subsection (b) 
     shall apply to benefit computation years beginning after 
     December 31, 1999.

     SEC. 205. MAINTENANCE OF BENEFIT AND CONTRIBUTION BASE.

       (a) In General.--Section 230 of the Social Security Act (42 
     U.S.C. 430) is amended to read as follows:


           ``maintenance of the contribution and benefit base

       ``Sec. 230. (a) The Commissioner of Social Security shall 
     determine and publish in the Federal Register on or before 
     November 1 of each calendar year the contribution and benefit 
     base determined under subsection (b) which shall be effective 
     with respect to remuneration paid after such calendar year 
     and taxable years beginning after such year.
       ``(b) For purposes of this section, for purposes of 
     determining wages and self-employment income under sections 
     209, 211, 213, and 215 of this Act and sections 54, 1402, 
     3121, 3122, 3125, 6413, and 6654 of the Internal Revenue Code 
     of 1986, and for purposes of section 4022(b)(3)(B) of Public 
     Law 93-406, the contribution and benefit base with respect to 
     remuneration paid in (and taxable years beginning in) any 
     calendar year is an amount equal to 86 percent of the total 
     wages for the preceding calendar year (within the meaning of 
     section 209).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to remuneration paid in (and taxable years 
     beginning in) any calendar year after 1999.

     SEC. 206. REDUCTION IN THE AMOUNT OF CERTAIN TRANSFERS TO 
                   MEDICARE TRUST FUND.

       Subparagraph (A) of section 121(e)(1) of the Social 
     Security Amendments of 1983 (42 U.S.C. 401 note), as amended 
     by section 13215(c)(1) of the Omnibus Budget Reconciliation 
     Act of 1993, is amended--
       (1) in clause (ii), by striking ``the amounts'' and 
     inserting ``the applicable percentage of the amounts''; and
       (2) by adding at the end the following: ``For purposes of 
     clause (ii), the applicable percentage for a year is equal to 
     100 percent, reduced (but not below zero) by 10 percentage 
     points for each year after 2004.''.

     SEC. 207. ACTUARIAL ADJUSTMENT FOR RETIREMENT.

       (a) Early Retirement.--
       (1) In general.--Section 202(q) of the Social Security Act 
     (42 U.S.C. 402(q)) is amended--
       (A) in paragraph (1)(A), by striking ``\5/9\'' and 
     inserting ``the applicable fraction (determined under 
     paragraph (12))''; and
       (B) by adding at the end the following:
       ``(12) For purposes of paragraph (1)(A), the `applicable 
     fraction' for an individual who attains the age of 62 in--
       ``(A) any year before 2001, is \5/9\;
       ``(B) 2001, is \7/12\;
       ``(C) 2002, is \11/18\;
       ``(D) 2003, is \23/36\;
       ``(E) 2004, is \2/3\; and
       ``(F) 2005 or any succeeding year, is \25/36\.''.
       (2) Months beyond first 36 months.--Section 202(q) of such 
     Act (42 U.S.C. 402(q)(9)) (as amended by paragraph (1)) is 
     amended--
       (A) in paragraph (9)(A), by striking ``five-twelfths'' and 
     inserting ``the applicable fraction (determined under 
     paragraph (13))''; and
       (B) by adding at the end the following:
       ``(13) For purposes of paragraph (9)(A), the `applicable 
     fraction' for an individual who attains the age of 62 in--
       ``(A) any year before 2001, is \5/12\;
       ``(B) 2001, is \16/36\;
       ``(C) 2002, is \16/36\;
       ``(D) 2003, is \17/36\;
       ``(E) 2004, is \17/36\; and
       ``(F) 2005 or any succeeding year, is \1/2\.''.
       (3) Effective date.--The amendments made by paragraphs (1) 
     and (2) shall apply to individuals who attain the age of 62 
     in years after 1999.
       (b) Delayed Retirement.--Section 202(w)(6) of the Social 
     Security Act (42 U.S.C. 402(w)(6)) is amended--
       (1) in subparagraph (C), by striking ``and'' at the end;
       (2) in subparagraph (D), by striking ``2004.'' and 
     inserting ``2004 and before 2007;''; and
       (3) by adding at the end the following:
       ``(E) \17/24\ of 1 percent in the case of an individual who 
     attains the age of 62 in a calendar year after 2006 and 
     before 2009;
       ``(F) \3/4\ of 1 percent in the case of an individual who 
     attains the age of 62 in a calendar year after 2008 and 
     before 2011;
       ``(G) \19/24\ of 1 percent in the case of an individual who 
     attains the age of 62 in a calendar year after 2010 and 
     before 2013; and
       ``(H) \5/6\ of 1 percent in the case of an individual who 
     attains the age of 62 in a calendar year after 2012.''.

     SEC. 208. IMPROVEMENTS IN PROCESS FOR COST-OF-LIVING 
                   ADJUSTMENTS.

       (a) Annual Declarations of Persisting Upper Level 
     Substitution Bias, Quality-Change Bias, and New-Product 
     Bias.--Not later than December 1, 1999, and annually 
     thereafter, the Commissioner of the Bureau of Labor 
     Statistics shall publish in the Federal Register an estimate 
     of the upper level substitution bias, quality-change bias, 
     and new-product bias retained in the Consumer Price Index, 
     expressed in terms of a percentage point effect on the annual 
     rate of change in the Consumer Price Index determined through 
     the use of a superlative index that accounts for changes that 
     consumers make in the quantities of goods and services 
     consumed.
       (b) Modification of Cost-of-Living Adjustment.--
     Notwithstanding any other provision of law, for each calendar 
     year after 1999 any cost-of-living adjustment described in 
     subsection (f) shall be further adjusted by the greater of--
       (1) 0.5 percentage point, or
       (2) the correction for the upper level substitution bias, 
     quality-change bias, and new-product bias (as last published 
     by the Commissioner of the Bureau of Labor Statistics 
     pursuant to subsection (a)).
       (c) Funding for CPI Improvements.--
       (1) In general.--There is hereby appropriated to the Bureau 
     of Labor Statistics in the Department of Labor, for each of 
     fiscal years 2000, 2001, and 2002, $60,000,000 for use by the 
     Bureau for the following purposes:
       (A) Research, evaluation, and implementation of a 
     superlative index to estimate upper level substitution bias, 
     quality-change bias, and new-product bias in the Consumer 
     Price Index.
       (B) Expansion of the Consumer Expenditure Survey and the 
     Point of Purchase Survey.
       (2) Reports.--The Commissioner of the Bureau of Labor 
     Statistics shall submit reports regarding the use of 
     appropriations made under paragraph (1) to the Committee on 
     Appropriations of the House of Representative and the 
     Committee on Appropriations of the Senate upon the request of 
     each Committee.
       (d) Information Sharing.--The Commissioner of the Bureau of 
     Labor Statistics may secure directly from the Secretary of 
     Commerce information necessary for purposes of calculating 
     the Consumer Price Index. Upon request of the Commissioner of 
     the Bureau of Labor Statistics, the Secretary of Commerce 
     shall furnish that information to the Commissioner.
       (e) Administrative Advisory Committee.--The Bureau of Labor 
     Statistics shall, in consultation with the National Bureau of 
     Economic Research, the American Economic Association, and the 
     National Academy of Statisticians, establish an 
     administrative advisory committee. The advisory committee 
     shall periodically advise the Bureau of Labor Statistics 
     regarding revisions of the Consumer Price Index and conduct 
     research and experimentation with alternative data collection 
     and estimating approaches.
       (f) Cost-of-Living Adjustment Described.--A cost-of-living 
     adjustment described in this subsection is any cost-of-living 
     adjustment for a calendar year after 1999 determined by 
     reference to a percentage change in a consumer price index or 
     any component thereof (as published by the Bureau of Labor 
     Statistics of the Department of Labor and determined without 
     regard to this section) and used in any of the following:
       (1) The Internal Revenue Code of 1986.
       (2) The provisions of this Act (other than programs under 
     title XVI and any adjustment in the case of an individual who 
     attains early retirement age before January 1, 2000).
       (3) Any other Federal program.
       (g) Recapture of CPI Reform Revenues Deposited Into the 
     Federal Old-Age and Survivors Insurance Trust Fund.--Section 
     201 of the Social Security Act (42 U.S.C. 401) is amended by 
     adding at the end the following:
       ``(n) On July 1 of each calendar year specified in the 
     following table, the Secretary of

[[Page 18501]]

     the Treasury shall transfer, from the general fund of the 
     Treasury to the Federal Old-Age and Survivors Insurance Trust 
     Fund, an amount equal to the applicable percentage for such 
     year, specified in such table, of the total wages paid in and 
     self-employment income credited to such year.

The applicable percentage for the year is--
0.6 percent.nd before 2020.............................................
0.8 percent.nd before 2040.............................................
1.0 percent.nd before 2060.............................................
1.2 percent.''.........................................................

     SEC. 209. MODIFICATION OF INCREASE IN NORMAL RETIREMENT AGE.

       (a) In General.--Section 216(l)(1) of the Social Security 
     Act (42 U.S.C. 416(l)(1)) is amended--
       (1) in subparagraph (B)--
       (A) by striking ``2005'' and inserting ``2011''; and
       (B) by adding ``and'' at the end; and
       (2) by striking subparagraphs (C), (D), and (E) and 
     inserting the following:
       ``(C) With respect to an individual who attains early 
     retirement age after December 31, 2010, 67 years of age.''.
       (b) Conforming Amendment.--Paragraph (3) of section 216(l) 
     of the Social Security Act (42 U.S.C. 416(l)) is amended to 
     read as follows:
       ``(3) The age increase factor for any individual who 
     attains early retirement age in the period consisting of the 
     calendar years 2000 through 2010, the age increase factor 
     shall be equal to two-twelfths of the number of months in the 
     period beginning with January 2000 and ending with December 
     of the year in which the individual attains early retirement 
     age.''.

     SEC. 210. MODIFICATION OF PIA FACTORS TO REFLECT CHANGES IN 
                   LIFE EXPECTANCY.

       (a) Modification of PIA Factors.--Section 215(a)(1) of the 
     Social Security Act (42 U.S.C. 415(a)(1)(B)) is amended by 
     redesignating subparagraph (D) as subparagraph (F) and by 
     inserting after subparagraph (C) the following:
       ``(D)(i) For individuals who initially become eligible for 
     old-age insurance benefits in any calendar year after 2011, 
     each of the percentages under clauses (i), (ii), (iii), and 
     (iv) of subparagraph (A) shall be multiplied the applicable 
     number of times by the applicable factor.
       ``(ii) For purposes of clause (i)--
       ``(I) the term `applicable number of times' means a number 
     equal to the lesser of 54 or the number of years beginning 
     with 2012 and ending with the year of initial eligibility; 
     and
       ``(II) the term `applicable factor' means .988 with respect 
     to the first 6 applicable number of times and .997 with 
     respect to the applicable number of times in excess of 6.
       ``(E) For any individual who initially becomes eligible for 
     disability insurance benefits in any calendar year after 
     2011, the primary insurance amount for such individual shall 
     be equal to the greater of--
       ``(i) such amount as determined under this paragraph, or
       ``(ii) such amount as determined under this paragraph 
     without regard to subparagraph (D) thereof.''.
       (b) Study of the Effect of Increases in Life Expectancy.--
       (1) Study plan.--Not later than February 15, 2001, the 
     Commissioner of Social Security shall submit to Congress a 
     detailed study plan for evaluating the effects of increases 
     in life expectancy on the expected level of retirement income 
     from social security, pensions, and other sources. The study 
     plan shall include a description of the methodology, data, 
     and funding that will be required in order to provide to 
     Congress not later than February 15, 2006--
       (A) an evaluation of trends in mortality and their 
     relationship to trends in health status, among individuals 
     approaching eligibility for social security retirement 
     benefits;
       (B) an evaluation of trends in labor force participation 
     among individuals approaching eligibility for social security 
     retirement benefits and among individuals receiving 
     retirement benefits, and of the factors that influence the 
     choice between retirement and participation in the labor 
     force;
       (C) an evaluation of changes, if any, in the social 
     security disability program that would reduce the impact of 
     changes in the retirement income of workers in poor health or 
     physically demanding occupations;
       (D) an evaluation of the methodology used to develop 
     projections for trends in mortality, health status, and labor 
     force participation among individuals approaching eligibility 
     for social security retirement benefits and among individuals 
     receiving retirement benefits; and
       (E) an evaluation of such other matters as the Commissioner 
     deems appropriate for evaluating the effects of increases in 
     life expectancy.
       (2) Report on results of study.--Not later than February 
     15, 2006, the Commissioner of Social Security shall provide 
     to Congress an evaluation of the implications of the trends 
     studied under paragraph (1), along with recommendations, if 
     any, of the extent to which the conclusions of such 
     evaluations indicate that projected increases in life 
     expectancy require modification in the social security 
     disability program and other income support programs.

     SEC. 211. MECHANISM FOR REMEDYING UNFORESEEN DETERIORATION IN 
                   SOCIAL SECURITY SOLVENCY.

       (a) In General.--Section 709 of the Social Security Act (42 
     U.S.C. 910) is amended--
       (1) by redesignating subsection (b) as subsection (c); and
       (2) by striking ``Sec. 709. (a) If the Board of Trustees'' 
     and all that follows through ``any such Trust Fund'' and 
     inserting the following:
       ``Sec. 709. (a)(1)(A) If the Board of Trustees of the 
     Federal Old-Age and Survivors Insurance Trust Fund and the 
     Federal Disability Insurance Trust Fund determines at any 
     time, using intermediate actuarial assumptions, that the 
     balance ratio of either such Trust Fund for any calendar year 
     during the succeeding period of 75 calendar years will be 
     zero, the Board shall promptly submit to each House of the 
     Congress and to the President a report setting forth its 
     recommendations for statutory adjustments affecting the 
     receipts and disbursements of such Trust Fund necessary to 
     maintain the balance ratio of such Trust Fund at not less 
     than 20 percent, with due regard to the economic conditions 
     which created such inadequacy in the balance ratio and the 
     amount of time necessary to alleviate such inadequacy in a 
     prudent manner. The report shall set forth specifically the 
     extent to which benefits would have to be reduced, taxes 
     under section 1401, 3101, or 3111 of the Internal Revenue 
     Code of 1986 would have to be increased, or a combination 
     thereof, in order to obtain the objectives referred to in the 
     preceding sentence.
       ``(B) In addition to any reports under subparagraph (A), 
     the Board shall, not later than May 30, 2001, prepare and 
     submit to Congress and the President recommendations for 
     statutory adjustments to the disability insurance program 
     under title II of this Act to modify the changes in 
     disability benefits under the Bipartisan Social Security 
     Reform Act of 1999 without reducing the balance ratio of the 
     Federal Disability Insurance Trust Fund. The Board shall 
     develop such recommendations in consultation with the 
     National Council on Disability, taking into consideration the 
     adequacy of benefits under the program, the relationship of 
     such program with old age benefits under such title, and 
     changes in the process for determining initial eligibility 
     and reviewing continued eligibility for benefits under such 
     program.
       ``(2)(A) The President shall, no later than 30 days after 
     the submission of the report to the President, transmit to 
     the Board and to the Congress a report containing the 
     President's approval or disapproval of the Board's 
     recommendations.
       ``(B) If the President approves all the recommendations of 
     the Board, the President shall transmit a copy of such 
     recommendations to the Congress as the President's 
     recommendations, together with a certification of the 
     President's adoption of such recommendations.
       ``(C) If the President disapproves the recommendations of 
     the Board, in whole or in part, the President shall transmit 
     to the Board and the Congress the reasons for that 
     disapproval. The Board shall then transmit to the Congress 
     and the President, no later than 60 days after the date of 
     the submission of the original report to the President, a 
     revised list of recommendations.
       ``(D) If the President approves all of the revised 
     recommendations of the Board transmitted to the President 
     under subparagraph (C), the President shall transmit a copy 
     of such revised recommendations to the Congress as the 
     President's recommendations, together with a certification of 
     the President's adoption of such recommendations.
       ``(E) If the President disapproves the revised 
     recommendations of the Board, in whole or in part, the 
     President shall transmit to the Board and the Congress the 
     reasons for that disapproval, together with such revisions to 
     such recommendations as the President determines are 
     necessary to bring such recommendations within the 
     President's approval. The President shall transmit a copy of 
     such recommendations, as so revised, to the Board and the 
     Congress as the President's recommendations, together with a 
     certification of the President's adoption of such 
     recommendations.
       ``(3)(A) This paragraph is enacted by Congress--
       ``(i) as an exercise of the rulemaking power of the Senate 
     and the House of Representatives, respectively, and as such 
     it is deemed a part of the rules of each House, respectively, 
     but applicable only with respect to the procedure to be 
     followed in that House in the case of a joint resolution 
     described in subparagraph (B), and it supersedes other rules 
     only to the extent that it is inconsistent with such rules; 
     and
       ``(ii) with full recognition of the constitutional right of 
     either House to change the rules (so far as relating to the 
     procedure of that House) at any time, in the same manner, and 
     to the same extent as in the case of any other rule of that 
     House.
       ``(B) For purposes of this paragraph, the term `joint 
     resolution' means only a joint resolution which is introduced 
     within the 10-day period beginning on the date on which the 
     President transmits the President's recommendations, together 
     with the President's

[[Page 18502]]

     certification, to the Congress under subparagraph (B), (D), 
     or (E) of paragraph (2), and--
       ``(i) which does not have a preamble;
       ``(ii) the matter after the resolving clause of which is as 
     follows: `That the Congress approves the recommendations of 
     the President as transmitted on __ pursuant to section 709(a) 
     of the Social Security Act, as follows: ____', the first 
     blank space being filled in with the appropriate date and the 
     second blank space being filled in with the statutory 
     adjustments contained in the recommendations; and
       ``(iii) the title of which is as follows: `Joint resolution 
     approving the recommendations of the President regarding 
     social security.'.
       ``(C) A joint resolution described in subparagraph (B) that 
     is introduced in the House of Representatives shall be 
     referred to the Committee on Ways and Means of the House of 
     Representatives. A joint resolution described in subparagraph 
     (B) introduced in the Senate shall be referred to the 
     Committee on Finance of the Senate.
       ``(D) If the committee to which a joint resolution 
     described in subparagraph (B) is referred has not reported 
     such joint resolution (or an identical joint resolution) by 
     the end of the 20-day period beginning on the date on which 
     the President transmits the recommendation to the Congress 
     under paragraph (2), such committee shall be, at the end of 
     such period, discharged from further consideration of such 
     joint resolution, and such joint resolution shall be placed 
     on the appropriate calendar of the House involved.
       ``(E)(i) On or after the third day after the date on which 
     the committee to which such a joint resolution is referred 
     has reported, or has been discharged (under subparagraph (D)) 
     from further consideration of, such a joint resolution, it is 
     in order (even though a previous motion to the same effect 
     has been disagreed to) for any Member of the respective House 
     to move to proceed to the consideration of the joint 
     resolution. A Member may make the motion only on the day 
     after the calendar day on which the Member announces to the 
     House concerned the Member's intention to make the motion, 
     except that, in the case of the House of Representatives, the 
     motion may be made without such prior announcement if the 
     motion is made by direction of the committee to which the 
     joint resolution was referred. All points of order against 
     the joint resolution (and against consideration of the joint 
     resolution) are waived. The motion is highly privileged in 
     the House of Representatives and is privileged in the Senate 
     and is not debatable. The motion is not subject to amendment, 
     or to a motion to postpone, or to a motion to proceed to the 
     consideration of other business. A motion to reconsider the 
     vote by which the motion is agreed to or disagreed to shall 
     not be in order. If a motion to proceed to the consideration 
     of the joint resolution is agreed to, the respective House 
     shall immediately proceed to consideration of the joint 
     resolution without intervening motion, order, or other 
     business, and the joint resolution shall remain the 
     unfinished business of the respective House until disposed 
     of.
       ``(ii) Debate on the joint resolution, and on all debatable 
     motions and appeals in connection therewith, shall be limited 
     to not more than 2 hours, which shall be divided equally 
     between those favoring and those opposing the joint 
     resolution. An amendment to the joint resolution is not in 
     order. A motion further to limit debate is in order and not 
     debatable. A motion to postpone, or a motion to proceed to 
     the consideration of other business, or a motion to recommit 
     the joint resolution is not in order. A motion to reconsider 
     the vote by which the joint resolution is agreed to or 
     disagreed to is not in order.
       ``(iii) Immediately following the conclusion of the debate 
     on a joint resolution described in subparagraph (B) and a 
     single quorum call at the conclusion of the debate if 
     requested in accordance with the rules of the appropriate 
     House, the vote on final passage of the joint resolution 
     shall occur.
       ``(iv) Appeals from the decisions of the Chair relating to 
     the application of the rules of the Senate or the House of 
     Representatives, as the case may be, to the procedure 
     relating to a joint resolution described in subparagraph (B) 
     shall be decided without debate.
       ``(F)(i) If, before the passage by one House of a joint 
     resolution of that House described in subparagraph (B), that 
     House receives from the other House a joint resolution 
     described in subparagraph (B), then the following procedures 
     shall apply:
       ``(I) The joint resolution of the other House shall not be 
     referred to a committee and may not be considered in the 
     House receiving it except in the case of final passage as 
     provided in subclause (II).
       ``(II) With respect to a joint resolution described in 
     subparagraph (B) of the House receiving the joint resolution, 
     the procedure in that House shall be the same as if no joint 
     resolution had been received from the other House, but the 
     vote on final passage shall be on the joint resolution of the 
     other House.
       ``(ii) Upon disposition of the joint resolution received 
     from the other House, it shall no longer be in order to 
     consider the joint resolution that originated in the 
     receiving House.
       ``(b) If the Board of Trustees of the Federal Hospital 
     Insurance Trust Fund or the Federal Supplementary Medical 
     Insurance Trust Fund determines as any time that the balance 
     ratio of either such Trust Fund''.
       (b) Conforming Amendments.--
       (1) Section 709(b) of the Social Security Act (as amended 
     by subsection (a) of this section) is amended by striking 
     ``any such'' and inserting ``either such''.
       (2) Section 709(c) of such Act (as redesignated by 
     subsection (a) of this section) is amended by inserting ``or 
     (b)'' after ``subsection (a)''.
                                 ______
                                 

                        BOND AMENDMENT NO. 1425

  (Ordered to lie on the table.)
  Mr. BOND submitted an amendment intended to be proposed by him to the 
bill, S. 1429, supra; as follows:

       On page 214, strike lines 22 through 24 and insert the 
     following:
       (b) Clarification of Limitations on Other Coverage.--The 
     first sentence of section 162(1)(2)(B) of the Internal 
     Revenue Code of 1986 is amended to read as follows: 
     ``Paragraph (1) shall not apply to any taxpayer for any 
     calendar month for which the taxpayer participates in any 
     subsidized health plan maintained by any employer (other than 
     an employer described in section 401(c)(4)) of the taxpayer 
     or the spouse of the taxpayer.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.
                                 ______
                                 

               COVERDELL (AND OTHERS) AMENDMENT NO. 1426

  (Ordered to lie on the table.)
  Mr. COVERDELL (for himself, Mr. Torricelli, Mr. Domenici, and Mr. 
Bayh) submitted an amendment intended to be proposed by them to the 
bill, S. 1429, supra; as follows:

       On page 32, between lines 14 and 15, insert the following:

     SEC. __. LONG-TERM CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

       (a) General Rule.--Part I of subchapter P of chapter 1 
     (relating to treatment of capital gains) is amended by 
     redesignating section 1202 as section 1203 and by inserting 
     after section 1201 the following new section:

     ``SEC. 1202. CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a deduction for the taxable year an 
     amount equal to the lesser of--
       ``(1) the net capital gain of the taxpayer for the taxable 
     year, or
       ``(2) $2,500.
       ``(b) Sales Between Related Parties.--Gains from sales and 
     exchanges to any related person (within the meaning of 
     section 267(b) or 707(b)(1)) shall not be taken into account 
     in determining net capital gain.
       ``(c) Special Rule for Section 1250 Property.--Solely for 
     purposes of this section, in applying section 1250 to any 
     disposition of section 1250 property, all depreciation 
     adjustments in respect of the property shall be treated as 
     additional depreciation.
       ``(d) Section Not To Apply to Certain Taxpayers.--No 
     deduction shall be allowed under this section to--
       ``(1) an individual with respect to whom a deduction under 
     section 151 is allowable to another taxpayer for a taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins,
       ``(2) a married individual (within the meaning of section 
     7703) filing a separate return for the taxable year, or
       ``(3) an estate or trust.
       ``(e) Special Rule for Pass-Thru Entities.--
       ``(1) In general.--In applying this section with respect to 
     any pass-thru entity, the determination of when the sale or 
     exchange occurs shall be made at the entity level.
       ``(2) Pass-thru entity defined.--For purposes of paragraph 
     (1), the term `pass-thru entity' means--
       ``(A) a regulated investment company,
       ``(B) a real estate investment trust,
       ``(C) an S corporation,
       ``(D) a partnership,
       ``(E) an estate or trust, and
       ``(F) a common trust fund.''
       (b) Coordination With Maximum Capital Gains Rate.--
     Paragraph (3) of section 1(h) (relating to maximum capital 
     gains rate) is amended to read as follows:
       ``(3) Coordination with other provisions.--For purposes of 
     this subsection, the amount of the net capital gain shall be 
     reduced (but not below zero) by the sum of--
       ``(A) the amount of the net capital gain taken into account 
     under section 1202(a) for the taxable year, plus
       ``(B) the amount which the taxpayer elects to take into 
     account as investment income for the taxable year under 
     section 163(d)(4)(B)(iii).''
       (c) Deduction Allowable in Computing Adjusted Gross 
     Income.--Subsection (a) of section 62 (defining adjusted 
     gross income), as amended by section 501, is amended by 
     inserting after paragraph (18) the following new paragraph:
       ``(19) Long-term capital gains.--The deduction allowed by 
     section 1202.''
       (d) Treatment of Collectibles.--
       (1) In general.--Section 1222 (relating to other terms 
     relating to capital gains and

[[Page 18503]]

     losses) is amended by inserting after paragraph (11) the 
     following new paragraph:
       ``(12) Special rule for collectibles.--
       ``(A) In general.--Any gain or loss from the sale or 
     exchange of a collectible shall be treated as a short-term 
     capital gain or loss (as the case may be), without regard to 
     the period such asset was held. The preceding sentence shall 
     apply only to the extent the gain or loss is taken into 
     account in computing taxable income.
       ``(B) Treatment of certain sales of interest in 
     partnership, etc.--For purposes of subparagraph (A), any gain 
     from the sale or exchange of an interest in a partnership, S 
     corporation, or trust which is attributable to unrealized 
     appreciation in the value of collectibles held by such entity 
     shall be treated as gain from the sale or exchange of a 
     collectible. Rules similar to the rules of section 751(f) 
     shall apply for purposes of the preceding sentence.
       ``(C) Collectible.--For purposes of this paragraph, the 
     term `collectible' means any capital asset which is a 
     collectible (as defined in section 408(m) without regard to 
     paragraph (3) thereof).''
       (2) Charitable deduction not affected.--
       (A) Paragraph (1) of section 170(e) is amended by adding at 
     the end the following new sentence: ``For purposes of this 
     paragraph, section 1222 shall be applied without regard to 
     paragraph (12) thereof (relating to special rule for 
     collectibles).''
       (B) Clause (iv) of section 170(b)(1)(C) is amended by 
     inserting before the period at the end the following: ``and 
     section 1222 shall be applied without regard to paragraph 
     (12) thereof (relating to special rule for collectibles)''.
       (e) Conforming Amendments.--
       (1) Section 57(a)(7) is amended by striking ``1202'' and 
     inserting ``1203''.
       (2) Clause (iii) of section 163(d)(4)(B) is amended to read 
     as follows:
       ``(iii) the sum of--

       ``(I) the portion of the net capital gain referred to in 
     clause (ii)(II) (or, if lesser, the net capital gain referred 
     to in clause (ii)(I)) taken into account under section 1202, 
     reduced by the amount of the deduction allowed with respect 
     to such gain under section 1202, plus

       ``(II) so much of the gain described in subclause (I) which 
     is not taken into account under section 1202 and which the 
     taxpayer elects to take into account under this clause.''

       (3) Subparagraph (B) of section 172(d)(2) is amended to 
     read as follows:
       ``(B) the deduction under section 1202 and the exclusion 
     under section 1203 shall not be allowed.''
       (4) Section 642(c)(4) is amended by striking ``1202'' and 
     inserting ``1203''.
       (5) Section 643(a)(3) is amended by striking ``1202'' and 
     inserting ``1203''.
       (6) Paragraph (4) of section 691(c) is amended inserting 
     ``1203,'' after ``1202,''.
       (7) The second sentence of section 871(a)(2) is amended by 
     inserting ``or 1203'' after ``section 1202''.
       (8) The last sentence of section 1044(d) is amended by 
     striking ``1202'' and inserting ``1203''.
       (9) Paragraph (1) of section 1402(i) is amended by 
     inserting ``, and the deduction provided by section 1202 and 
     the exclusion provided by section 1203 shall not apply'' 
     before the period at the end.
       (10) Section 121 is amended by adding at the end the 
     following new subsection:
       ``(h) Cross Reference.--

  ``For treatment of eligible gain not excluded under subsection (a), 
see section 1202.''
       (11) Section 1203, as redesignated by subsection (a), is 
     amended by adding at the end the following new subsection:
       ``(l) Cross Reference.--

  ``For treatment of eligible gain not excluded under subsection (a), 
see section 1202.''
       (12) The table of sections for part I of subchapter P of 
     chapter 1 is amended by striking the item relating to section 
     1202 and by inserting after the item relating to section 1201 
     the following new items:

``Sec. 1202. Capital gains deduction.
``Sec. 1203. 50-percent exclusion for gain from certain small business 
              stock.''
       (f) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2004.
       (2) Collectibles.--The amendments made by subsection (d) 
     shall apply to sales and exchanges after December 31, 2004.
       On page 32, line 3, insert ``and ending before January 1, 
     2009'' before the period.
       On page 32, line 14, insert ``and ending before January 1, 
     2009'' before the period.
                                 ______
                                 

                    GREGG AMENDMENTS NOS. 1427-1428

  (Ordered to lie on the table.)
  Mr. GREGG submitted two amendments intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

                           Amendment No. 1427

       On page 21, before line 1, insert:
       (c) Minimum Dependent Care Credit Allowed for Stay-at-Home 
     Parents.--Section 21(e) (relating to special rules) is 
     amended by adding at the end the following:
       ``(11) Minimum credit allowed for stay-at-home parents.--
       ``(A) In general.--Notwithstanding subsection (d), in the 
     case of any taxpayer with 1 or more qualifying individuals 
     described in subsection (b)(1)(A) under the age of 1, such 
     taxpayer shall be deemed to have employment-related expenses 
     for the taxable year with respect to each such qualifying 
     individual in an amount equal to the sum of--
       ``(i) $200 for each month in such taxable year during which 
     such qualifying individual is under the age of 1, and
       ``(ii) the amount of employment-related expenses otherwise 
     incurred for such qualifying individual for the taxable year 
     (determined under this section without regard to this 
     paragraph).
       ``(B) Election to not apply this paragraph.--This paragraph 
     shall not apply with respect to any qualifying individual for 
     any taxable year if the taxpayer elects to not have this 
     paragraph apply to such qualifying individual for such 
     taxable year.''.
       On page 21, line 1, strike ``(c)'' and insert ``(d)''.
       On page 195, strike lines 4 through 23.
                                  ____


                           Amendment No. 1428

       At the appropriate place in the bill, insert the following:

     SEC. __. TWO-YEAR EXTENSION OF PERIOD OF TAX MORATORIUM UNDER 
                   INTERNET TAX FREEDOM ACT.

       Section 1101(a) of the Internet Tax Freedom Act (title XI 
     of division C of Public Law 105-277; 112 Stat. 2681-719; 47 
     U.S.C. 151 note) is amended by striking ``3 years after the 
     date of the enactment of this Act'' and inserting ``5 years 
     after October 21, 1998''.
                                 ______
                                 

                  WELLSTONE AMENDMENTS NOS. 1429-1430

  (Ordered to lie on the table.)
  Mr. WELLSTONE submitted two amendments intended to be proposed by him 
to the bill, S. 1429, supra; as follows:

                           Amendment No. 1429

       Beginning on page 15, strike line 22 and all that follows 
     through page 17, line 9, and insert the following:

     SEC. 202. MARRIAGE PENALTY RELIEF FOR EARNED INCOME CREDIT.

       (a) In General.--Paragraph (2) of section 32(b) (relating 
     to percentages and amounts) is amended--
       (1) by striking ``Amounts.--The earned'' and inserting 
     ``Amounts.--
       ``(A) In general.--Subject to subparagraph (B), the 
     earned'', and
       (2) by adding at the end the following new subparagraph:
       ``(B) Joint returns.--
       ``(i) Increase in phaseout amount.--In the case of a joint 
     return, the phaseout amount determined under subparagraph (A) 
     shall be increased by the applicable dollar amount.
       ``(ii) Applicable dollar amount.--

       ``(I) In general.--For purposes of clause (i), the 
     applicable dollar amount shall be determined in accordance 
     with the following table:

                                                             Applicable
``Taxable year beginning in calendar year:               dollar amount:
  2001 or 2002..............................................$1,000 ....

  2003 or 2004..............................................$2,000 ....

  2005 or 2006..............................................$3,000 ....

  2007 and thereafter.......................................$4,350.....

       ``(II) Cost-of-living adjustment.--In the case of any 
     taxable year beginning in a calendar year after 2007, the 
     applicable dollar amount under subclause (I) shall be 
     increased by an amount equal to such dollar amount multiplied 
     by the cost-of-living adjustment determined under section 
     1(f)(3) for the calendar year in which the taxable year 
     begins, except that subparagraph (B) thereof shall be applied 
     by substituting `calendar year 2006' for `calendar year 
     1992'. If any amount as adjusted under this clause is not a 
     multiple of $50, such amount shall be rounded to the next 
     lowest multiple of $50.''

       (b) Conforming Amendment.--Paragraph (1) of section 32(j) 
     (relating to inflation adjustments) is amended by striking 
     ``(b)(2)'' and inserting ``(b)(2)(A) (before being increased 
     under subparagraph (B) thereof)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
       Strike section 901.
                                  ____


                           Amendment No. 1430

       At the end, add the following:

     SEC. __. APPLICATION OF ACT.

       Notwithstanding any other amendment made by, or provision 
     of, this Act, the amendments made by, and provisions of, this 
     Act shall not apply with respect to any taxpayer who is an 
     individual, unless such taxpayer has an adjusted gross income 
     not in excess of $1,000,000 with respect to the taxable year 
     to which the amendment or provision applies.

[[Page 18504]]


                                 ______
                                 

                LIEBERMAN (AND LEVIN) AMENDMENT NO. 1431

  (Ordered to lie on the table.)
  Mr. LIEBERMAN (for himself, and Mr. Levin) submitted an amendment 
intended to be proposed by them to the bill, S. 1429, supra; as 
follows:

       Strike all after the first word.
                                 ______
                                 

                        KERRY AMENDMENT NO. 1432

  (Ordered to lie on the table.)
  Mr. KERRY submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. INCREASED LIFETIME LEARNING CREDIT FOR TECHNOLOGY 
                   TRAINING FOR ELEMENTARY AND SECONDARY TEACHERS.

       (a) In General.--Subsection (c) of section 25A (relating to 
     lifetime learning credit) is amended by adding at the end the 
     following new paragraph:
       ``(3) Special rule for technology training for elementary 
     and secondary teachers.--If any portion of the qualified 
     tuition and related expenses to which this subsection 
     applies--
       ``(A) is paid or incurred by an individual who is a teacher 
     in the classroom in an elementary or secondary school, and
       ``(B) is incurred before January 1, 2005--
       ``(i) for the enrollment or attendance of such individual 
     in a course of instruction on basic or advanced computer 
     functions or computer software (including educational 
     software offered by a single institution) approved for such 
     individual by such local educational agency, and
       ``(ii) for purposes of integrating materials covered by 
     such course into the courses taught in the elementary or 
     secondary classroom,

     paragraph (1) shall be applied with respect to such portion 
     by substituting `50 percent' for `20 percent'.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to expenses paid after December 31, 1999, for 
     education furnished in academic periods beginning after such 
     date.
       On page 37, strike lines 3 through 12, and insert the 
     following:
       (a) Increase in AGI Limit on Contributions.--Section 
     408A(c)(3)(A) (relating to dollar limit) is amended to read 
     as follows:
       ``(A) Dollar limit.--The amount determined under paragraph 
     (2) for any taxable year shall be zero for any taxable year 
     to which the contribution relates if the taxpayer's adjusted 
     gross income exceeds $200,000 for such year.''
       (b) Increase in AGI Limit for Rollover Contributions.--
     Section 408A(c)(3)(B) (relating to rollover from IRA) is 
     amended to read as follows:
       ``(B) Rollover from ira.--A taxpayer
       On page 37, strike lines 20 through 22 and insert the 
     following:
       (1) Subparagraph (C) of section 408A(c)(3) as in effect 
     before and after the amendments made by the Internal
       On page 38, line 1, strike ``(B)'' and insert ``(C)''.
       On page 38, line 10, strike ``(B)'' and insert ``(C)''.
                                 ______
                                 

                   DOMENICI AMENDMENTS NOS. 1433-1436

  (Ordered to lie on the table.)
  Mr. DOMENICI submitted four amendments intended to be proposed by him 
to the bill, S. 1429, supra; as follows:

                           Amendment No. 1433

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. IMPROVED ALTERNATIVE INCREMENTAL CREDIT.

       (a) In General.--Section 41 (relating to credit for 
     increasing research activities), as amended by section 1201, 
     is amended by adding at the end the following:
       ``(h) Election of Alternative Incremental Credit.--
       ``(1) In general.--At the election of the taxpayer, the 
     credit under subsection (a)(1) shall be determined under this 
     section by taking into account the modifications provided by 
     this subsection.
       ``(2) Determination of base amount.--
       ``(A) In general.--In computing the base amount under 
     subsection (c)--
       ``(i) notwithstanding subsection (c)(3), the fixed-base 
     percentage shall be equal to 80 percent of the percentage 
     which the aggregate qualified research expenses of the 
     taxpayer for the base period is of the aggregate gross 
     receipts of the taxpayer for the base period, and
       ``(ii) the minimum base amount under subsection (c)(2) 
     shall not apply.
       ``(B) Start-up and small taxpayers.--In computing the base 
     amount under subsection (c), the gross receipts of a taxpayer 
     for any taxable year in the base period shall be treated as 
     at least equal to $1,000,000.
       ``(C) Base period.--For purposes of this subsection, the 
     base period is the 8-taxable year period preceding the 
     taxable year (or, if shorter, the period the taxpayer (and 
     any predecessor) has been in existence).
       ``(3) Election.--An election under this subsection shall 
     apply to the taxable year for which made and all succeeding 
     taxable years unless revoked with the consent of the 
     Secretary.''
       (b) Conforming Amendment.--Section 41(c) is amended by 
     striking paragraph (4) and by redesignating paragraphs (5) 
     and (6) as paragraphs (4) and (5), respectively.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. __. MODIFICATIONS TO CREDIT FOR BASIC RESEARCH.

       (a) Elimination of Incremental Requirement.--
       (1) In general.--Paragraph (1) of section 41(e) (relating 
     to credit allowable with respect to certain payments to 
     qualified organizations for basic research) is amended to 
     read as follows:
       ``(1) In general.--The amount of basic research payments 
     taken into account under subsection (a)(2) shall be 
     determined in accordance with this subsection.''
       (2) Conforming amendments.--
       (A) Section 41(a)(2) is amended by striking ``determined 
     under subsection (e)(1)(A)'' and inserting ``for the taxable 
     year''.
       (B) Section 41(e) is amended by striking paragraphs (3), 
     (4), and (5) and by redesignating paragraphs (6) and (7) as 
     paragraphs (3) and (4), respectively.
       (C) Section 41(e)(4), as redesignated by subparagraph (B), 
     is amended by striking subparagraph (B) and by redesignating 
     subparagraphs (C), (D), and (E) as subparagraphs (B), (C), 
     and (D), respectively.
       (D) Clause (i) of section 170(e)(4)(B) is amended by 
     striking ``section 41(e)(6)'' and inserting ``section 
     41(e)(3)''.
       (b) Basic Research.--
       (1) Specific commercial objective.--Section 41(e)(4) 
     (relating to definitions and special rules), as redesignated 
     by subsection (a)(2)(B), is amended by adding at the end the 
     following:
       ``(E) Specific commercial objective.--For purposes of 
     subparagraph (A), research shall not be treated as having a 
     specific commercial objective if the results of such research 
     are to be published in a timely manner as to be available to 
     the general public prior to their use for a commercial 
     purpose.''.
       (2) Exclusions from basic research.--Clause (ii) of section 
     41(e)(4)(A) (relating to definitions and special rules), as 
     redesignated by subsection (a), is amended to read as 
     follows:
       ``(ii) basic research in the arts and humanities.''
       (c) Expansion of Credit to Research Done at Federal 
     Laboratories.--Section 41(e)(3), as redesignated by 
     subsection (a), is amended by adding at the end the following 
     new subparagraph:
       ``(E) Federal laboratories.--Any organization which is a 
     Federal laboratory (as defined in section 4(6) of the 
     Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 
     3703(6)).''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. __. CREDIT FOR EXPENSES ATTRIBUTABLE TO CERTAIN 
                   COLLABORATIVE RESEARCH CONSORTIA.

       (a) Credit for Expenses Attributable to Certain 
     Collaborative Research Consortia.--Subsection (a) of section 
     41 (relating to credit for increasing research activities) is 
     amended by striking ``and'' at the end of paragraph (1), 
     striking the period at the end of paragraph (2) and inserting 
     ``, and '', and by adding at the end the following:
       ``(3) 20 percent of the amounts paid or incurred by the 
     taxpayer in carrying on any trade or business of the taxpayer 
     during the taxable year (including as contributions) to a 
     qualified research consortium.''
       (b) Qualified Research Consortium Defined.--Subsection (f) 
     of section 41 is amended by adding at the end the following:
       ``(6) Qualified research consortium.--The term `qualified 
     research consortium' means any organization--
       ``(A) which is--
       ``(i) described in section 501(c)(3) and is exempt from tax 
     under section 501(a) and is organized and operated primarily 
     to conduct scientific or engineering research, or
       ``(ii) organized and operated primarily to conduct 
     scientific or engineering research in the public interest 
     (within the meaning of section 501(c)(3)),
       ``(B) which is not a private foundation,
       ``(C) to which at least 5 unrelated persons paid or 
     incurred during the calendar year in which the taxable year 
     of the organization begins amounts (including as 
     contributions) to such organization for scientific or 
     engineering research, and
       ``(D) to which no single person paid or incurred (including 
     as contributions) during such calendar year an amount equal 
     to more than 50 percent of the total amounts received by such 
     organization during such calendar year for scientific or 
     engineering research.

     All persons treated as a single employer under subsection (a) 
     or (b) of section 52 shall be treated as related persons for 
     purposes of subparagraph (C) and as a single person for 
     purposes of subparagraph (D).''

[[Page 18505]]

       (c) Conforming Amendment.--Paragraph (3) of section 41(b) 
     is amended by striking subparagraph (C).
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. __. IMPROVEMENT TO CREDIT FOR SMALL BUSINESSES AND 
                   RESEARCH PARTNERSHIPS.

       (a) Assistance to Small and Start-Up Businesses.--The 
     Secretary of the Treasury or the Secretary's delegate shall 
     take such actions as are appropriate to--
       (1) provide assistance to small and start-up businesses in 
     complying with the requirements of section 41 of the Internal 
     Revenue Code of 1986, and
       (2) reduce the costs of such compliance.
       (b) Repeal of Limitation on Contract Research Expenses Paid 
     to Small Businesses, Universities, and Federal 
     Laboratories.--Section 41(b)(3) is further amended by adding 
     at the end the following:
       ``(C) Amounts paid to eligible small businesses, 
     universities, and federal laboratories.--
       ``(i) In general.--In the case of amounts paid by the 
     taxpayer to an eligible small business, an institution of 
     higher education (as defined in section 3304(f)), or an 
     organization which is a Federal laboratory (as defined in 
     subsection (e)(3)(E)), subparagraph (A) shall be applied by 
     substituting `100 percent' for `65 percent'.
       ``(ii) Eligible small business.--For purposes of this 
     subparagraph, the term `eligible small business' means a 
     small business with respect to which the taxpayer does not 
     own (within the meaning of section 318) 50 percent or more 
     of--

       ``(I) in the case of a corporation, the outstanding stock 
     of the corporation (either by vote or value), and
       ``(II) in the case of a small business which is not a 
     corporation, the capital and profits interests of the small 
     business.

       ``(iii) Small business.--For purposes of this 
     subparagraph--

       ``(I) In general.--The term `small business' means, with 
     respect to any calendar year, any person if the annual 
     average number of employees employed by such person during 
     either of the 2 preceding calendar years was 500 or fewer. 
     For purposes of the preceding sentence, a preceding calendar 
     year may be taken into account only if the person was in 
     existence throughout the year.
       ``(II) Startups, controlled groups, and predecessors.--
     Rules similar to the rules of subparagraphs (B) and (D) of 
     section 220(c)(4) shall apply for purposes of this clause.''

       (c) Credit For Patent Filing Fees.--Section 41(a) is 
     further amended by striking ``and'' at the end of paragraph 
     (2), by striking the period at the end of paragraph (3) and 
     inserting ``, and'', and by adding at the end the following:
       ``(4) 20 percent of the patent filing fees paid or incurred 
     by a small business (as defined in subsection (b)(3)(C)(iii)) 
     to the United States or to any foreign government in carrying 
     on any trade or business.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.
       On page 372, strike lines 7 through 19.
       Beginning on page 236, strike line 11 and all that follows 
     through page 237, line 3, and insert the following:

     SEC. 721. INCREASE IN ANNUAL GIFT EXCLUSION.

       (a) In General.--Section 2503(b) (relating to exclusions 
     from gifts) is amended--
       (1) by striking ``$10,000'' in paragraph (1) and inserting 
     ``applicable dollar amount'', and
       (2) by striking paragraph (2) and inserting the following 
     new paragraph:
       ``(2) Applicable dollar amount.--For purposes of paragraph 
     (1), the applicable dollar amount shall be determined in 
     accordance with the following table:

The applicable dollar amount is--
  After 2000 but before 2002................................$12,000....

  After 2001 but before 2003................................$13,500....

  After 2002 but before 2004................................$15,000....

  After 2003................................................$16,500....

       (b) Effective Date.--The amendments made by this section 
     shall apply to gifts made after December 31, 2000.
                                  ____


                           Amendment No. 1434

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. IMPROVED ALTERNATIVE INCREMENTAL CREDIT.

       (a) In General.--Section 41 (relating to credit for 
     increasing research activities), as amended by section 1201, 
     is amended by adding at the end the following:
       ``(h) Election of Alternative Incremental Credit.--
       ``(1) In general.--At the election of the taxpayer, the 
     credit under subsection (a)(1) shall be determined under this 
     section by taking into account the modifications provided by 
     this subsection.
       ``(2) Determination of base amount.--
       ``(A) In general.--In computing the base amount under 
     subsection (c)--
       ``(i) notwithstanding subsection (c)(3), the fixed-base 
     percentage shall be equal to 80 percent of the percentage 
     which the aggregate qualified research expenses of the 
     taxpayer for the base period is of the aggregate gross 
     receipts of the taxpayer for the base period, and
       ``(ii) the minimum base amount under subsection (c)(2) 
     shall not apply.
       ``(B) Start-up and small taxpayers.--In computing the base 
     amount under subsection (c), the gross receipts of a taxpayer 
     for any taxable year in the base period shall be treated as 
     at least equal to $1,000,000.
       ``(C) Base period.--For purposes of this subsection, the 
     base period is the 8-taxable year period preceding the 
     taxable year (or, if shorter, the period the taxpayer (and 
     any predecessor) has been in existence).
       ``(3) Election.--An election under this subsection shall 
     apply to the taxable year for which made and all succeeding 
     taxable years unless revoked with the consent of the 
     Secretary.''
       (b) Conforming Amendment.--Section 41(c) is amended by 
     striking paragraph (4) and by redesignating paragraphs (5) 
     and (6) as paragraphs (4) and (5), respectively.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. __. MODIFICATIONS TO CREDIT FOR BASIC RESEARCH.

       (a) Elimination of Incremental Requirement.--
       (1) In general.--Paragraph (1) of section 41(e) (relating 
     to credit allowable with respect to certain payments to 
     qualified organizations for basic research) is amended to 
     read as follows:
       ``(1) In general.--The amount of basic research payments 
     taken into account under subsection (a)(2) shall be 
     determined in accordance with this subsection.''
       (2) Conforming amendments.--
       (A) Section 41(a)(2) is amended by striking ``determined 
     under subsection (e)(1)(A)'' and inserting ``for the taxable 
     year''.
       (B) Section 41(e) is amended by striking paragraphs (3), 
     (4), and (5) and by redesignating paragraphs (6) and (7) as 
     paragraphs (3) and (4), respectively.
       (C) Section 41(e)(4), as redesignated by subparagraph (B), 
     is amended by striking subparagraph (B) and by redesignating 
     subparagraphs (C), (D), and (E) as subparagraphs (B), (C), 
     and (D), respectively.
       (D) Clause (i) of section 170(e)(4)(B) is amended by 
     striking ``section 41(e)(6)'' and inserting ``section 
     41(e)(3)''.
       (b) Basic Research.--
       (1) Specific commercial objective.--Section 41(e)(4) 
     (relating to definitions and special rules), as redesignated 
     by subsection (a)(2)(B), is amended by adding at the end the 
     following:
       ``(E) Specific commercial objective.--For purposes of 
     subparagraph (A), research shall not be treated as having a 
     specific commercial objective if the results of such research 
     are to be published in a timely manner as to be available to 
     the general public prior to their use for a commercial 
     purpose.''.
       (2) Exclusions from basic research.--Clause (ii) of section 
     41(e)(4)(A) (relating to definitions and special rules), as 
     redesignated by subsection (a), is amended to read as 
     follows:
       ``(ii) basic research in the arts and humanities.''
       (c) Expansion of Credit to Research Done at Federal 
     Laboratories.--Section 41(e)(3), as redesignated by 
     subsection (a), is amended by adding at the end the following 
     new subparagraph:
       ``(E) Federal laboratories.--Any organization which is a 
     Federal laboratory (as defined in section 4(6) of the 
     Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 
     3703(6)).''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. __. CREDIT FOR EXPENSES ATTRIBUTABLE TO CERTAIN 
                   COLLABORATIVE RESEARCH CONSORTIA.

       (a) Credit for Expenses Attributable to Certain 
     Collaborative Research Consortia.--Subsection (a) of section 
     41 (relating to credit for increasing research activities) is 
     amended by striking ``and'' at the end of paragraph (1), 
     striking the period at the end of paragraph (2) and inserting 
     ``, and '', and by adding at the end the following:
       ``(3) 20 percent of the amounts paid or incurred by the 
     taxpayer in carrying on any trade or business of the taxpayer 
     during the taxable year (including as contributions) to a 
     qualified research consortium.''
       (b) Qualified Research Consortium Defined.--Subsection (f) 
     of section 41 is amended by adding at the end the following:
       ``(6) Qualified research consortium.--The term `qualified 
     research consortium' means any organization--
       ``(A) which is--
       ``(i) described in section 501(c)(3) and is exempt from tax 
     under section 501(a) and is organized and operated primarily 
     to conduct scientific or engineering research, or
       ``(ii) organized and operated primarily to conduct 
     scientific or engineering research in the public interest 
     (within the meaning of section 501(c)(3)),
       ``(B) which is not a private foundation,
       ``(C) to which at least 5 unrelated persons paid or 
     incurred during the calendar year in which the taxable year 
     of the organization begins amounts (including as 
     contributions) to such organization for scientific or 
     engineering research, and
       ``(D) to which no single person paid or incurred (including 
     as contributions) during such calendar year an amount equal 
     to more

[[Page 18506]]

     than 50 percent of the total amounts received by such 
     organization during such calendar year for scientific or 
     engineering research.

     All persons treated as a single employer under subsection (a) 
     or (b) of section 52 shall be treated as related persons for 
     purposes of subparagraph (C) and as a single person for 
     purposes of subparagraph (D).''
       (c) Conforming Amendment.--Paragraph (3) of section 41(b) 
     is amended by striking subparagraph (C).
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. __. IMPROVEMENT TO CREDIT FOR SMALL BUSINESSES AND 
                   RESEARCH PARTNERSHIPS.

       (a) Assistance to Small and Start-Up Businesses.--The 
     Secretary of the Treasury or the Secretary's delegate shall 
     take such actions as are appropriate to--
       (1) provide assistance to small and start-up businesses in 
     complying with the requirements of section 41 of the Internal 
     Revenue Code of 1986, and
       (2) reduce the costs of such compliance.
       (b) Repeal of Limitation on Contract Research Expenses Paid 
     to Small Businesses, Universities, and Federal 
     Laboratories.--Section 41(b)(3) is further amended by adding 
     at the end the following:
       ``(C) Amounts paid to eligible small businesses, 
     universities, and federal laboratories.--
       ``(i) In general.--In the case of amounts paid by the 
     taxpayer to an eligible small business, an institution of 
     higher education (as defined in section 3304(f)), or an 
     organization which is a Federal laboratory (as defined in 
     subsection (e)(3)(E)), subparagraph (A) shall be applied by 
     substituting `100 percent' for `65 percent'.
       ``(ii) Eligible small business.--For purposes of this 
     subparagraph, the term `eligible small business' means a 
     small business with respect to which the taxpayer does not 
     own (within the meaning of section 318) 50 percent or more 
     of--

       ``(I) in the case of a corporation, the outstanding stock 
     of the corporation (either by vote or value), and
       ``(II) in the case of a small business which is not a 
     corporation, the capital and profits interests of the small 
     business.

       ``(iii) Small business.--For purposes of this 
     subparagraph--

       ``(I) In general.--The term `small business' means, with 
     respect to any calendar year, any person if the annual 
     average number of employees employed by such person during 
     either of the 2 preceding calendar years was 500 or fewer. 
     For purposes of the preceding sentence, a preceding calendar 
     year may be taken into account only if the person was in 
     existence throughout the year.
       ``(II) Startups, controlled groups, and predecessors.--
     Rules similar to the rules of subparagraphs (B) and (D) of 
     section 220(c)(4) shall apply for purposes of this clause.''

       (c) Credit For Patent Filing Fees.--Section 41(a) is 
     further amended by striking ``and'' at the end of paragraph 
     (2), by striking the period at the end of paragraph (3) and 
     inserting ``, and'', and by adding at the end the following:
       ``(4) 20 percent of the patent filing fees paid or incurred 
     by a small business (as defined in subsection (b)(3)(C)(iii)) 
     to the United States or to any foreign government in carrying 
     on any trade or business.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.
       On page 372, strike lines 7 through 19.
       On page 195, strike lines 4 through 9, and insert the 
     following:

     SEC. 404. TEMPORARY EXTENSION OF EXCLUSION FOR EMPLOYER-
                   PROVIDED EDUCATIONAL ASSISTANCE.

       (a) In General.--Section 127(d) (relating to termination) 
     is amended by striking ``May 31, 2000'' and inserting 
     ``December 31, 2004''.
                                  ____


                           Amendment No. 1435

       Strike all after the enacting clause and insert in lieu the 
     following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Share the 
     Surplus Tax Reduction and Simplification Act''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                          TITLE I--TAX RELIEF

Sec. 11. Broad based tax relief for all taxpaying families.
Sec. 12. Marriage penalty mitigation and tax burden reduction.

               TITLE II--SAVING AND INVESTMENT PROVISIONS

Sec. 21. Dividend and interest tax relief.
Sec. 22. Long-term capital gains deduction for individuals.
Sec. 23. Increase in contribution limits for traditional IRAs.

               TITLE III--BUSINESS INVESTMENT PROVISIONS

Sec. 31. Repeal of alternative minimum tax on corporations.
Sec. 32. Increase in limit for expensing certain business assets.

                  TITLE IV--ESTATE AND GIFT TAX RELIEF

Sec. 41. Phaseout of estate and gift taxes.

          TITLE V--RESEARCH CREDIT EXTENSION AND MODIFICATION

Sec. 51. Purpose.
Sec. 52. Permanent extension of research credit.
Sec. 53. Improved alternative incremental credit.
Sec. 54. Modifications to credit for basic research.
Sec. 55. Credit for expenses attributable to certain collaborative 
              research consortia.
Sec. 56. Improvement to credit for small businesses and research 
              partnerships.

                     TITLE VI--ENERGY INDEPENDENCE

Sec. 61. Purposes.
Sec. 62. Tax credit for marginal domestic oil and natural gas well 
              production.
Sec. 63. 10-year carryback for unused minimum tax credit.
Sec. 64. 10-year net operating loss carryback for losses attributable 
              to oil servicing companies and mineral interests of oil 
              and gas producers.
Sec. 65. Waiver of limitations.
Sec. 66. Election to expense geological and geophysical expenditures 
              and delay rental payments.

                      TITLE VII--REVENUE PROVISION

Sec. 71. 4-year averaging for conversion of traditional IRA to Roth 
              IRA.

                          TITLE I--TAX RELIEF

     SEC. 11. BROAD BASED TAX RELIEF FOR ALL TAXPAYING FAMILIES.

       (a) Purpose.--The purpose of this section is to cut taxes 
     for 120,000,000 taxpaying families by lowering the 15 percent 
     tax rate.
       (b) In General.--Section 1 of the Internal Revenue Code of 
     1986 (relating to tax imposed) is amended--
       (1) by striking ``15%'' each place it appears in the tables 
     in subsections (a) through (e) and inserting ``The applicable 
     rate'', and
       (2) by adding at the end the following:
       ``(i) Applicable Rate.--For purposes of this section, the 
     applicable rate for any taxable year shall be determined in 
     accordance with the following table:

``In the case of any taxable year beginning in--The applicable rate is:
    2002..................................................14.9 percent 
    2003..................................................14.8 percent 
    2004..................................................14.7 percent 
    2005..................................................14.1 percent 
    2006 and thereafter....................................13.5 percent

       (b) Conforming Amendments.--
       (1) Section 1(f)(2) of the Internal Revenue Code of 1986 is 
     amended--
       (A) by inserting ``except as provided in subsection (i),'' 
     before ``by not changing'' in subparagraph (B), and
       (B) by inserting ``and the adjustment in rates under 
     subsection (i)'' after ``rate brackets'' in subparagraph (C).
       (2) Section 1(g)(7)(B)(ii)(II) of such Code is amended by 
     striking ``15 percent'' and inserting ``the applicable 
     rate''.
       (3) Section 3402(p)(2) of such Code is amended by striking 
     ``15 percent'' and inserting ``the applicable rate in effect 
     under section 1(i) for the taxable year''.
       (c) New Tables.--Not later than 15 days after the date of 
     enactment of this Act, the Secretary of the Treasury--
       (1) shall prescribe tables for taxable years beginning in 
     2002 which shall reflect the amendments made by this section 
     and which shall apply in lieu of the tables prescribed under 
     sections 1(f)(1) and 3(a) of the Internal Revenue Code of 
     1986 for such taxable years, and
       (2) shall modify the withholding tables and procedures for 
     such taxable years under section 3402(a)(1) of such Code to 
     take effect as if the reduction in the rate of tax under 
     section 1 of such Code (as amended by this section) was 
     attributable to such a reduction effective on such date of 
     enactment.
       (d) Section 15 Not To Apply.--No amendment made by this 
     section shall be treated as a change in a rate of tax for 
     purposes of section 15 of the Internal Revenue Code of 1986.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 12. MARRIAGE PENALTY MITIGATION AND TAX BURDEN 
                   REDUCTION.

       (a) Purpose.--The purposes of this section are to return 
     7,000,000 taxpaying families to the 15 percent tax bracket 
     and to cut taxes for 35,000,000 taxpaying families who will 
     benefit from a tax cut of up to $1,300 per family by 
     eliminating or mitigating the marriage penalty for many 
     middle class taxpaying families.
       (b) In General.--Section 1(f) of the Internal Revenue Code 
     of 1986 (relating to adjustments in tax tables so that 
     inflation will not result in tax increases) is amended--
       (1) in paragraph (2)--
       (A) by redesignating subparagraphs (B) and (C) as 
     subparagraphs (C) and (D),
       (B) by inserting after subparagraph (A) the following:
       ``(B) in the case of the tables contained in subsections 
     (a), (b), (c), and (d), by increasing the maximum taxable 
     income level for the lowest rate bracket and the minimum 
     taxable income level for the 28 percent rate

[[Page 18507]]

     bracket otherwise determined under subparagraph (A) for 
     taxable years beginning in any calendar year after 2001, by 
     the applicable dollar amount for such calendar year,'', and
       (C) by striking ``subparagraph (A)'' in subparagraph (C) 
     (as so redesignated) and inserting ``subparagraphs (A) and 
     (B)'', and
       (2) by adding at the end the following:
       ``(8) Applicable dollar amount.--For purposes of paragraph 
     (2)(B), the applicable dollar amount for any calendar year 
     shall be determined as follows:
       ``(A) Joint returns and surviving spouses.--In the case of 
     the table contained in subsection (a)--

                                                             Applicable
``Calendar year:                                         Dollar Amount:
  2002......................................................$2,000 ....

  2003......................................................$4,000 ....

  2004......................................................$6,000 ....

  2005......................................................$8,000 ....

  2006 and thereafter......................................$10,000.....

       ``(B) Other tables.--In the case of the table contained in 
     subsection (b), (c), or (d)--

                                                             Applicable
``Calendar year:                                         Dollar Amount:
    2002........................................................$1,000 
    2003........................................................$2,000 
    2004........................................................$3,000 
    2005........................................................$4,000 
    2006 and thereafter......................................$5,000.''.

     SEC. 13. REPEAL OF ALTERNATIVE MINIMUM TAX ON INDIVIDUALS.

       (a) Purposes.--The purposes of this section are--
       (1) to simplify the tax code so that millions of Americans 
     will no longer be required to calculate their income taxes 
     under 2 systems; and
       (2) to recognize that tax credits should not be denied to 
     individuals who are eligible for such credit.
       (b) In General.--Subsection (a) of section 55 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new flush sentence:

     ``For purposes of this title, the tentative minimum tax on 
     any taxpayer other than a corporation for any taxable year 
     beginning after December 31, 2009, shall be zero.''
       (c) Reduction of Tax on Individuals Prior to Repeal.--
     Section 55 of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following new subsection:
       ``(f) Phaseout of Tax on Individuals.--
       ``(1) In general.--The tax imposed by this section on a 
     taxpayer other than a corporation for any taxable year 
     beginning after December 31, 2004, and before January 1, 
     2010, shall be the applicable percentage of the tax which 
     would be imposed but for this subsection.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage shall be determined in 
     accordance with the following table:

``For taxable years beginning in calendarThe applicable percentage is--
    2005...........................................................80  
    2006...........................................................70  
    2007...........................................................60  
    2008 or 2009................................................50.''  

       (d) Nonrefundable Personal Credits Fully Allowed Against 
     Regular Tax Liability.--
       (1) In general.--Subsection (a) of section 26 of the 
     Internal Revenue Code of 1986 (relating to limitation based 
     on amount of tax) is amended to read as follows:
       ``(a) Limitation Based on Amount of Tax.--The aggregate 
     amount of credits allowed by this subpart for the taxable 
     year shall not exceed the taxpayer's regular tax liability 
     for the taxable year.''
       (2) Child credit.--Subsection (d) of section 24 of such 
     Code is amended by striking paragraph (2) and by 
     redesignating paragraph (3) as paragraph (2).
       (e) Limitation on Use of Credit for Prior Year Minimum Tax 
     Liability.--Subsection (c) of section 53 of the Internal 
     Revenue Code of 1986 is amended to read as follows:
       ``(c) Limitation.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the credit allowable under subsection (a) for any 
     taxable year shall not exceed the excess (if any) of--
       ``(A) the regular tax liability of the taxpayer for such 
     taxable year reduced by the sum of the credits allowable 
     under subparts A, B, D, E, and F of this part, over
       ``(B) the tentative minimum tax for the taxable year.
       ``(2) Taxable years beginning after 2009.--In the case of 
     any taxable year beginning after 2009, the credit allowable 
     under subsection (a) to a taxpayer other than a corporation 
     for any taxable year shall not exceed 90 percent of the 
     excess (if any) of--
       ``(A) regular tax liability of the taxpayer for such 
     taxable year, over
       ``(B) the sum of the credits allowable under subparts A, B, 
     D, E, and F of this part.''
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

               TITLE II--SAVING AND INVESTMENT PROVISIONS

     SEC. 21. DIVIDEND AND INTEREST TAX RELIEF.

       (a) Purposes.--The purposes of this section are--
       (1) to provide an incremental step toward taxing income 
     that is consumed rather than income that is earned and saved;
       (2) to simplify the tax code by eliminating 67,000,000 
     hours spent on tax preparation;
       (3) to eliminate all income tax on savings for more than 
     30,000,000 middle class families;
       (4) to reduce income taxes on savings for 37,000,000 
     individuals; and
       (5) to allow a $10,000 nest egg to grow tax-free and let 
     individuals experience the miracle of compound interest.
       (b) In General.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to amounts 
     specifically excluded from gross income) is amended by 
     inserting after section 115 the following new section:

     ``SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS AND INTEREST 
                   RECEIVED BY INDIVIDUALS.

       ``(a) Exclusion From Gross Income.--Gross income does not 
     include the sum of the amounts received during the taxable 
     year by an individual as--
       ``(1) dividends from domestic corporations, or
       ``(2) interest.
       ``(b) Limitations.--
       ``(1) Maximum amount.--The aggregate amount excluded under 
     subsection (a) for any taxable year shall not exceed $250 
     ($500 in the case of a joint return).
       ``(2) Certain dividends excluded.--Subsection (a)(1) shall 
     not apply to any dividend from a corporation which, for the 
     taxable year of the corporation in which the distribution is 
     made, or for the next preceding taxable year of the 
     corporation, is a corporation exempt from tax under section 
     501 (relating to certain charitable, etc., organization) or 
     section 521 (relating to farmers' cooperative associations).
       ``(c) Interest.--For purposes of this section, the term 
     `interest' means--
       ``(1) interest on deposits with a bank (as defined in 
     section 581),
       ``(2) amounts (whether or not designated as interest) paid 
     in respect of deposits, investment certificates, or 
     withdrawable or repurchasable shares, by--
       ``(A) a mutual savings bank, cooperative bank, domestic 
     building and loan association, industrial loan association or 
     bank, or credit union, or
       ``(B) any other savings or thrift institution which is 
     chartered and supervised under Federal or State law,
     the deposits or accounts in which are insured under Federal 
     or State law or which are protected and guaranteed under 
     State law,
       ``(3) interest on--
       ``(A) evidences of indebtedness (including bonds, 
     debentures, notes, and certificates) issued by a domestic 
     corporation in registered form, and
       ``(B) to the extent provided in regulations prescribed by 
     the Secretary, other evidences of indebtedness issued by a 
     domestic corporation of a type offered by corporations to the 
     public,
       ``(4) interest on obligations of the United States, a 
     State, or a political subdivision of a State (not excluded 
     from gross income of the taxpayer under any other provision 
     of law), and
       ``(5) interest attributable to participation shares in a 
     trust established and maintained by a corporation established 
     pursuant to Federal law.
       ``(d) Special Rules.--For purposes of this section--
       ``(1) Distributions from regulated investment companies and 
     real estate investment trusts.--Subsection (a) shall apply 
     with respect to distributions by--
       ``(A) regulated investment companies to the extent provided 
     in section 854(c), and
       ``(B) real estate investment trusts to the extent provided 
     in section 857(c).
       ``(2) Distributions by a trust.--For purposes of subsection 
     (a), the amount of dividends and interest properly allocable 
     to a beneficiary under section 652 or 662 shall be deemed to 
     have been received by the beneficiary ratably on the same 
     date that the dividends and interest were received by the 
     estate or trust.
       ``(3) Certain nonresident aliens ineligible for 
     exclusion.--In the case of a nonresident alien individual, 
     subsection (a) shall apply only--
       ``(A) in determining the tax imposed for the taxable year 
     pursuant to section 871(b)(1) and only in respect of 
     dividends and interest which are effectively connected with 
     the conduct of a trade or business within the United States, 
     or
       ``(B) in determining the tax imposed for the taxable year 
     pursuant to section 877(b).''.
       (c) Conforming Amendments.--
       (1) The table of sections for part III of subchapter B of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     inserting after the item relating to section 115 the 
     following:

``Sec. 116. Partial exclusion of dividends and interest received by 
              individuals.''.

       (2) Paragraph (2) of section 265(a) of such Code is amended 
     by inserting before the period at the end the following: ``, 
     or to purchase or carry obligations or shares, or to make 
     deposits, to the extent the interest thereon is excludable 
     from gross income under section 116''.

[[Page 18508]]

       (3) Subsection (c) of section 584 of such Code is amended 
     by adding at the end the following new flush sentence:

     ``The proportionate share of each participant in the amount 
     of dividends or interest received by the common trust fund 
     and to which section 116 applies shall be considered for 
     purposes of such section as having been received by such 
     participant.''.
       (4) Subsection (a) of section 643 of such Code is amended 
     by redesignating paragraph (7) as paragraph (8) and by 
     inserting after paragraph (6) the following:
       ``(7) Dividends or interest.--There shall be included the 
     amount of any dividends or interest excluded from gross 
     income pursuant to section 116.''.
       (5) Section 854 of such Code is amended by adding at the 
     end the following:
       ``(c) Treatment Under Section 116.--
       ``(1) In general.--For purposes of section 116, in the case 
     of any dividend (other than a dividend described in 
     subsection (a)) received from a regulated investment company 
     which meets the requirements of section 852 for the taxable 
     year in which it paid the dividend--
       ``(A) the entire amount of such dividend shall be treated 
     as a dividend if the sum of the aggregate dividends and the 
     aggregate interest received by such company during the 
     taxable year equals or exceeds 75 percent of its gross 
     income, or
       ``(B) if subparagraph (A) does not apply, there shall be 
     taken into account under section 116 only the portion of such 
     dividend which bears the same ratio to the amount of such 
     dividend as the sum of the aggregate dividends received and 
     aggregate interest received bears to gross income.

     For purposes of the preceding sentence, gross income and 
     aggregate interest received shall each be reduced by so much 
     of the deduction allowable by section 163 for the taxable 
     year as does not exceed aggregate interest received for the 
     taxable year.
       ``(2) Notice to shareholders.--The amount of any 
     distribution by a regulated investment company which may be 
     taken into account as a dividend for purposes of the 
     exclusion under section 116 shall not exceed the amount so 
     designated by the company in a written notice to its 
     shareholders mailed not later than 60 days after the close of 
     its taxable year.
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) Gross income.--The term `gross income' does not 
     include gain from the sale or other disposition of stock or 
     securities.
       ``(B) Aggregate dividends.--The term `aggregate dividends' 
     includes only dividends received from domestic corporations 
     other than dividends described in section 116(b)(2). In 
     determining the amount of any dividend for purposes of this 
     subparagraph, the rules provided in section 116(d)(1) 
     (relating to certain distributions) shall apply.
       ``(C) Interest.--The term `interest' has the meaning given 
     such term by section 116(c).''.
       (6) Subsection (c) of section 857 of such Code is amended 
     to read as follows:
       ``(c) Limitations Applicable to Dividends Received From 
     Real Estate Investment Trusts.--
       ``(1) In general.--For purposes of section 116 (relating to 
     an exclusion for dividends and interest received by 
     individuals) and section 243 (relating to deductions for 
     dividends received by corporations), a dividend received from 
     a real estate investment trust which meets the requirements 
     of this part shall not be considered as a dividend.
       ``(2) Treatment as interest.--For purposes of section 116, 
     in the case of a dividend (other than a capital gain 
     dividend, as defined in subsection (b)(3)(C)) received from a 
     real estate investment trust which meets the requirements of 
     this part for the taxable year in which it paid the 
     dividend--
       ``(A) such dividend shall be treated as interest if the 
     aggregate interest received by the real estate investment 
     trust for the taxable year equals or exceeds 75 percent of 
     its gross income, or
       ``(B) if subparagraph (A) does not apply, the portion of 
     such dividend which bears the same ratio to the amount of 
     such dividend as the aggregate interest received bears to 
     gross income shall be treated as interest.
       ``(3) Adjustments to gross income and aggregate interest 
     received.--For purposes of paragraph (2)--
       ``(A) gross income does not include the net capital gain,
       ``(B) gross income and aggregate interest received shall 
     each be reduced by so much of the deduction allowable by 
     section 163 for the taxable year (other than for interest on 
     mortgages on real property owned by the real estate 
     investment trust) as does not exceed aggregate interest 
     received by the taxable year, and
       ``(C) gross income shall be reduced by the sum of the taxes 
     imposed by paragraphs (4), (5), and (6) of section 857(b).
       ``(4) Interest.--The term `interest' has the meaning given 
     such term by section 116(c).
       ``(5) Notice to shareholders.--The amount of any 
     distribution by a real estate investment trust which may be 
     taken into account as interest for purposes of the exclusion 
     under section 116 shall not exceed the amount so designated 
     by the trust in a written notice to its shareholders mailed 
     not later than 60 days after the close of its taxable 
     year.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 22. LONG-TERM CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

       (a) Purposes.--The purposes of this section are--
       (1) to provide an incremental step toward shifting the 
     Internal Revenue Code away from taxing savings and 
     investment,
       (2) to lower the cost of capital so that prosperity, better 
     paying jobs, and innovation will continue in the United 
     States,
       (3) to eliminate capital gain taxes for 10,000,000 
     families, 75 percent of whom have annual incomes of $75,000 
     or less, and
       (4) to simplify the tax code and thereby eliminate 
     70,000,000 hours of tax preparation.
       (b) General Rule.--Part I of subchapter P of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to treatment of 
     capital gains) is amended by redesignating section 1202 as 
     section 1203 and by inserting after section 1201 the 
     following:

     ``SEC. 1202. CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a deduction for the taxable year an 
     amount equal to the lesser of--
       ``(1) the net capital gain of the taxpayer for the taxable 
     year, or
       ``(2) $5,000.
       ``(b) Sales Between Related Parties.--Gains from sales and 
     exchanges to any related person (within the meaning of 
     section 267(b) or 707(b)(1)) shall not be taken into account 
     in determining net capital gain.
       ``(c) Special Rule for Section 1250 Property.--Solely for 
     purposes of this section, in applying section 1250 to any 
     disposition of section 1250 property, all depreciation 
     adjustments in respect of the property shall be treated as 
     additional depreciation.
       ``(d) Section Not To Apply to Certain Taxpayers.--No 
     deduction shall be allowed under this section to--
       ``(1) an individual with respect to whom a deduction under 
     section 151 is allowable to another taxpayer for a taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins,
       ``(2) a married individual (within the meaning of section 
     7703) filing a separate return for the taxable year, or
       ``(3) an estate or trust.
       ``(e) Special Rule for Pass-Thru Entities.--
       ``(1) In general.--In applying this section with respect to 
     any pass-thru entity, the determination of when the sale or 
     exchange occurs shall be made at the entity level.
       ``(2) Pass-thru entity defined.--For purposes of paragraph 
     (1), the term `pass-thru entity' means--
       ``(A) a regulated investment company,
       ``(B) a real estate investment trust,
       ``(C) an S corporation,
       ``(D) a partnership,
       ``(E) an estate or trust, and
       ``(F) a common trust fund.''.
       (c) Coordination With Maximum Capital Gains Rate.--
     Paragraph (3) of section 1(h) of the Internal Revenue Code of 
     1986 (relating to maximum capital gains rate) is amended to 
     read as follows:
       ``(3) Coordination with other provisions.--For purposes of 
     this subsection, the amount of the net capital gain shall be 
     reduced (but not below zero) by the sum of--
       ``(A) the amount of the net capital gain taken into account 
     under section 1202(a) for the taxable year, plus
       ``(B) the amount which the taxpayer elects to take into 
     account as investment income for the taxable year under 
     section 163(d)(4)(B)(iii).''.
       (d) Deduction Allowable in Computing Adjusted Gross 
     Income.--Subsection (a) of section 62 of the Internal Revenue 
     Code of 1986 (defining adjusted gross income) is amended by 
     inserting after paragraph (17) the following:
       ``(18) Long-term capital gains.--The deduction allowed by 
     section 1202.''.
       (e) Treatment of Collectibles.--
       (1) In general.--Section 1222 of the Internal Revenue Code 
     of 1986 (relating to other terms relating to capital gains 
     and losses) is amended by inserting after paragraph (11) the 
     following:
       ``(12) Special rule for collectibles.--
       ``(A) In general.--Any gain or loss from the sale or 
     exchange of a collectible shall be treated as a short-term 
     capital gain or loss (as the case may be), without regard to 
     the period such asset was held. The preceding sentence shall 
     apply only to the extent the gain or loss is taken into 
     account in computing taxable income.
       ``(B) Treatment of certain sales of interest in 
     partnership, etc.--For purposes of subparagraph (A), any gain 
     from the sale or exchange of an interest in a partnership, S 
     corporation, or trust which is attributable to unrealized 
     appreciation in the value of collectibles held by such entity 
     shall be treated as gain from the sale or exchange of a 
     collectible. Rules similar to the rules of section 751(f) 
     shall apply for purposes of the preceding sentence.
       ``(C) Collectible.--For purposes of this paragraph, the 
     term `collectible' means any capital asset which is a 
     collectible (as defined in section 408(m) without regard to 
     paragraph (3) thereof).''.

[[Page 18509]]

       (2) Charitable deduction not affected.--
       (A) Paragraph (1) of section 170(e) of such Code is amended 
     by adding at the end the following: ``For purposes of this 
     paragraph, section 1222 shall be applied without regard to 
     paragraph (12) thereof (relating to special rule for 
     collectibles).''.
       (B) Clause (iv) of section 170(b)(1)(C) of such Code is 
     amended by inserting before the period at the end the 
     following: ``and section 1222 shall be applied without regard 
     to paragraph (12) thereof (relating to special rule for 
     collectibles)''.
       (f) Conforming Amendments.--
       (1) Section 57(a)(7) of the Internal Revenue Code of 1986 
     is amended by striking ``1202'' and inserting ``1203''.
       (2) Clause (iii) of section 163(d)(4)(B) of such Code is 
     amended to read as follows:
       ``(iii) the sum of--

       ``(I) the portion of the net capital gain referred to in 
     clause (ii)(II) (or, if lesser, the net capital gain referred 
     to in clause (ii)(I)) taken into account under section 1202, 
     reduced by the amount of the deduction allowed with respect 
     to such gain under section 1202, plus

       ``(II) so much of the gain described in subclause (I) which 
     is not taken into account under section 1202 and which the 
     taxpayer elects to take into account under this clause.''.

       (3) Subparagraph (B) of section 172(d)(2) of such Code is 
     amended to read as follows:
       ``(B) the deduction under section 1202 and the exclusion 
     under section 1203 shall not be allowed.''.
       (4) Section 642(c)(4) of such Code is amended by striking 
     ``1202'' and inserting ``1203''.
       (5) Section 643(a)(3) of such Code is amended by striking 
     ``1202'' and inserting ``1203''.
       (6) Paragraph (4) of section 691(c) of such Code is amended 
     inserting ``1203,'' after ``1202,''.
       (7) The second sentence of section 871(a)(2) of such Code 
     is amended by inserting ``or 1203'' after ``section 1202''.
       (8) The last sentence of section 1044(d) of such Code is 
     amended by striking ``1202'' and inserting ``1203''.
       (9) Paragraph (1) of section 1402(i) of such Code is 
     amended by inserting ``, and the deduction provided by 
     section 1202 and the exclusion provided by section 1203 shall 
     not apply'' before the period at the end.
       (10) Section 121 of such Code is amended by adding at the 
     end the following:
       ``(h) Cross Reference.--

  ``For treatment of eligible gain not excluded under subsection (a), 
see section 1202.''.

       (11) Section 1203 of such Code, as redesignated by 
     subsection (a), is amended by adding at the end the 
     following:
       ``(l) Cross Reference.--

  ``For treatment of eligible gain not excluded under subsection (a), 
see section 1202.''.

       (12) The table of sections for part I of subchapter P of 
     chapter 1 of such Code is amended by striking the item 
     relating to section 1202 and by inserting after the item 
     relating to section 1201 the following:

``Sec. 1202. Capital gains deduction.
``Sec. 1203. 50-percent exclusion for gain from certain small business 
              stock.''.

       (g) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2000.
       (2) Collectibles.--The amendments made by subsection (d) 
     shall apply to sales and exchanges after December 31, 2000.

     SEC. 23. INCREASE IN CONTRIBUTION LIMITS FOR TRADITIONAL 
                   IRAS.

       (a) Purposes.--The purposes of this section are--
       (1) to increase the savings rate for all Americans by 
     reforming the tax system to favorably treat income that is 
     invested for retirement, and
       (2) to provide targeted incentives to middle class families 
     to increase their retirement savings in a traditional IRA by 
     $1,000 per working member of the family per taxable year.
       (b) Increase in Contribution Limit.--Paragraph (1)(A) of 
     section 219(b) of the Internal Revenue Code of 1986 (relating 
     to maximum amount of deduction) is amended by striking 
     ``$2,000'' and inserting ``$3,000''.
       (c) Inflation Adjustment.--Section 219 of the Internal 
     Revenue Code of 1986 (relating to deduction for retirement 
     savings) is amended by redesignating subsection (h) as 
     subsection (i) and by inserting after subsection (g) the 
     following:
       ``(h) Cost-of-Living Adjustment.--
       ``(1) Deductible amounts.--In the case of any taxable year 
     beginning in a calendar year after 2009, the $3,000 amount 
     under subsection (b)(1)(A) 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, determined by substituting `calendar year 2008' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(2) Rounding rules.--If any amount after adjustment under 
     paragraph (1) is not a multiple of $100, such amount shall be 
     rounded to the next lower multiple of $100.''.
       (d) Conforming Amendments.--
       (1) Section 408(a)(1) of the Internal Revenue Code of 1986 
     is amended by striking ``in excess of $2,000 on behalf of any 
     individual'' and inserting ``on behalf of any individual in 
     excess of the amount in effect for such taxable year under 
     section 219(b)(1)(A)''.
       (2) Section 408(b)(2)(B) of such Code is amended by 
     striking ``$2,000'' and inserting ``the dollar amount in 
     effect under section 219(b)(1)(A)''.
       (3) Section 408(b) of such Code is amended by striking 
     ``$2,000'' in the matter following paragraph (4) and 
     inserting ``the dollar amount in effect under section 
     219(b)(1)(A)''.
       (4) Section 408(j) of such Code is amended by striking 
     ``$2,000''.
       (5) Section 408(p)(8) of such Code is amended by striking 
     ``$2,000'' and inserting ``the dollar amount in effect under 
     section 219(b)(1)(A)''.
       (6) Section 408A(c)(2)(A) of such Code is amended to read 
     as follows:
       ``(A) $2,000, over''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

               TITLE III--BUSINESS INVESTMENT PROVISIONS

     SEC. 31. REPEAL OF ALTERNATIVE MINIMUM TAX ON CORPORATIONS.

       (a) Purpose.--The purpose of this section is to eliminate 
     one of the most misguided, anti-growth, anti-investment tax 
     schemes ever devised.
       (b) In General.--The last sentence of section 55(a) of the 
     Internal Revenue Code of 1986, as amended by section 13, is 
     amended by striking ``on any taxpayer other than a 
     corporation''.
       (c) Repeal of 90 Percent Limitation on Foreign Tax 
     Credit.--
       (1) In general.--Section 59(a) of the Internal Revenue Code 
     of 1986 (relating to alternative minimum tax foreign tax 
     credit) is amended by striking paragraph (2) and by 
     redesignating paragraphs (3) and (4) as paragraphs (2) and 
     (3), respectively.
       (2) Conforming amendment.--Section 53(d)(1)(B)(i)(II) of 
     such Code is amended by striking ``and if section 59(a)(2) 
     did not apply''.
       (d) Limitation on Use of Credit for Prior Year Minimum Tax 
     Liability.--
       (1) In general.--Subsection (c) of section 53 of the 
     Internal Revenue Code of 1986, as amended by section 13, is 
     amended by redesignating paragraph (2) as paragraph (3) and 
     by inserting after paragraph (1) the following new paragraph:
       ``(2) Corporations for taxable years beginning after 
     2004.--In the case of corporation for any taxable year 
     beginning after 2004 and before 2010, the limitation under 
     paragraph (1) shall be increased by the applicable percentage 
     (determined in accordance with the following table) of the 
     tentative minimum tax for the taxable year.

``For taxable years beginning in calendarThe applicable percentage is--
    2005...........................................................20  
    2006...........................................................30  
    2007...........................................................40  
    2008 or 2009..................................................50.  

     In no event shall the limitation determined under this 
     paragraph be greater than the sum of the tax imposed by 
     section 55 and the regular tax reduced by the sum of the 
     credits allowed under subparts A, B, D, E, and F of this 
     part.''
       (2) Conforming amendments.--
       (A) Section 55(e) of such Code is amended by striking 
     paragraph (5).
       (B) Paragraph (3) of section 53(c) of such Code, as 
     redesignated by paragraph (1), is amended by striking ``to a 
     taxpayer other than a corporation''.
       (e) Effective Date.--
       (1) In general.--Except as provided in paragraphs (2) and 
     (3), the amendments made by this section shall apply to 
     taxable years beginning after December 31, 2004.
       (2) Repeal of 90 percent limitation on foreign tax 
     credit.--The amendments made by subsection (c) shall apply to 
     taxable years beginning after December 31, 2003.
       (3) Subsection (d)(2)(A).--The amendment made by subsection 
     (d)(2)(A) shall apply to taxable years beginning after 
     December 31, 2009.

     SEC. 32. INCREASE IN LIMIT FOR ELECTION TO EXPENSE CERTAIN 
                   BUSINESS ASSETS.

       (a) In General.--Section 179(b)(1) of the Internal Revenue 
     Code of 1986 (relating to dollar limitation) is amended by 
     striking the last item in the table and inserting the 
     following new items:

  ``2003 or 2004................................................25,000 
  ``2005 or thereafter.......................................100,000.''

       (b) Index.--Section 179(b) of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new 
     paragraph:
       ``(5) Inflation adjustment.--In the case of a taxable year 
     beginning after 2005, the $25,000 amount under 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, determined by substituting `calendar year 2004'

[[Page 18510]]

     for `calendar year 1992' in subparagraph (B) thereof.''
       (c) Increase in Limitation on Cost of Property Placed in 
     Service.--Section 179(b)(2) of the Internal Revenue Code of 
     1986 (relating to reduction in limitation) is amended by 
     striking ``$200,000'' and inserting ``$4,000,000''.

                  TITLE IV--ESTATE AND GIFT TAX RELIEF

     SEC. 41. PHASEOUT OF ESTATE AND GIFT TAXES.

       (a) Purpose.--The purpose of this section is to begin 
     phasing out the confiscatory gift and estate tax by reducing 
     the rate of tax.
       (b) Repeal of Estate and Gift Taxes.--Subtitle B of the 
     Internal Revenue Code of 1986 (relating to estate and gift 
     taxes) is repealed effective with respect to estates of 
     decedents dying, and gifts made, after December 31, 2009.
       (c) Phaseout of Tax.--Subsection (c) of section 2001 of the 
     Internal Revenue Code of 1986 (relating to imposition and 
     rate of tax) is amended by adding at the end the following:
       ``(3) Phaseout of tax.--In the case of estates of decedents 
     dying, and gifts made, during any calendar year after 1999 
     and before 2010--
       ``(A) In general.--The tentative tax under this subsection 
     shall be determined by using a table prescribed by the 
     Secretary (in lieu of using the table contained in paragraph 
     (1)) which is the same as such table; except that--
       ``(i) each of the rates of tax shall be reduced (but not 
     below zero) by the number of percentage points determined 
     under subparagraph (B), and
       ``(ii) the amounts setting forth the tax shall be adjusted 
     to the extent necessary to reflect the adjustments under 
     clause (i).
       ``(B) Percentage points of reduction.--

                                                          The number of
``For calendar year:                              percentage points is:
  2001...........................................................1 ....

  2002...........................................................2 ....

  2003...........................................................3 ....

  2004...........................................................4 ....

  2005...........................................................5 ....

  2006...........................................................7 ....

  2007...........................................................9 ....

  2008..........................................................11 ....

  2009..........................................................15.....

       ``(C) Coordination with paragraph (2).--Paragraph (2) shall 
     be applied by reducing the 55 percent percentage contained 
     therein by the number of percentage points determined for 
     such calendar year under subparagraph (B).
       ``(D) Coordination with credit for state death taxes.--
     Rules similar to the rules of subparagraph (A) shall apply to 
     the table contained in section 2011(b) except that the number 
     of percentage points referred to in subparagraph (A)(i) shall 
     be determined under the following table:

                                                          The number of
``For calendar year:                              percentage points is:
  2001...........................................................1 ....

  2002...........................................................2 ....

  2003...........................................................3 ....

  2004...........................................................4 ....

  2005...........................................................5 ....

  2006...........................................................7 ....

  2007...........................................................9 ....

  2008..........................................................11 ....

  2009.......................................................15.''.....

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

          TITLE V--RESEARCH CREDIT EXTENSION AND MODIFICATION

     SEC. 51. PURPOSE.

       The purpose of this title is to make the research credit 
     permanent and make certain modifications to the credit.

     SEC. 52. PERMANENT EXTENSION OF RESEARCH CREDIT.

       (a) In General.--Section 41 of the Internal Revenue Code of 
     1986 (relating to credit for increasing research activities) 
     is amended by striking subsection (h).
       (b) Conforming Amendment.--Section 45C(b)(1) of the 
     Internal Revenue Code of 1986 is amended by striking 
     subparagraph (D).
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after December 31, 
     2000.

     SEC. 53. IMPROVED ALTERNATIVE INCREMENTAL CREDIT.

       (a) In General.--Section 41 of the Internal Revenue Code of 
     1986 (relating to credit for increasing research activities), 
     as amended by section 52, is amended by adding at the end the 
     following:
       ``(h) Election of Alternative Incremental Credit.--
       ``(1) In general.--At the election of the taxpayer, the 
     credit under subsection (a)(1) shall be determined under this 
     section by taking into account the modifications provided by 
     this subsection.
       ``(2) Determination of base amount.--
       ``(A) In general.--In computing the base amount under 
     subsection (c)--
       ``(i) notwithstanding subsection (c)(3), the fixed-base 
     percentage shall be equal to 80 percent of the percentage 
     which the aggregate qualified research expenses of the 
     taxpayer for the base period is of the aggregate gross 
     receipts of the taxpayer for the base period, and
       ``(ii) the minimum base amount under subsection (c)(2) 
     shall not apply.
       ``(B) Start-up and small taxpayers.--In computing the base 
     amount under subsection (c), the gross receipts of a taxpayer 
     for any taxable year in the base period shall be treated as 
     at least equal to $1,000,000.
       ``(C) Base period.--For purposes of this subsection, the 
     base period is the 8-taxable year period preceding the 
     taxable year (or, if shorter, the period the taxpayer (and 
     any predecessor) has been in existence).
       ``(3) Election.--An election under this subsection shall 
     apply to the taxable year for which made and all succeeding 
     taxable years unless revoked with the consent of the 
     Secretary.''.
       (b) Conforming Amendment.--Section 41(c) of the Internal 
     Revenue Code of 1986 is amended by striking paragraph (4) and 
     by redesignating paragraphs (5) and (6) as paragraphs (4) and 
     (5), respectively.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. 54. MODIFICATIONS TO CREDIT FOR BASIC RESEARCH.

       (a) Elimination of Incremental Requirement.--
       (1) In general.--Paragraph (1) of section 41(e) of the 
     Internal Revenue Code of 1986 (relating to credit allowable 
     with respect to certain payments to qualified organizations 
     for basic research) is amended to read as follows:
       ``(1) In general.--The amount of basic research payments 
     taken into account under subsection (a)(2) shall be 
     determined in accordance with this subsection.''.
       (2) Conforming amendments.--
       (A) Section 41(a)(2) of the Internal Revenue Code of 1986 
     is amended by striking ``determined under subsection 
     (e)(1)(A)'' and inserting ``for the taxable year''.
       (B) Section 41(e) of such Code is amended by striking 
     paragraphs (3), (4), and (5) and by redesignating paragraphs 
     (6) and (7) as paragraphs (3) and (4), respectively.
       (C) Section 41(e)(4) of such Code, as redesignated by 
     subparagraph (B), is amended by striking subparagraph (B) and 
     by redesignating subparagraphs (C), (D), and (E) as 
     subparagraphs (B), (C), and (D), respectively.
       (D) Clause (i) of section 170(e)(4)(B) of such Code is 
     amended by striking ``section 41(e)(6)'' and inserting 
     ``section 41(e)(3)''.
       (b) Basic Research.--
       (1) Specific commercial objective.--Section 41(e)(4) of the 
     Internal Revenue Code of 1986 (relating to definitions and 
     special rules), as redesignated by subsection (a)(2)(B), is 
     amended by adding at the end the following:
       ``(E) Specific commercial objective.--For purposes of 
     subparagraph (A), research shall not be treated as having a 
     specific commercial objective if the results of such research 
     are to be published in a timely manner as to be available to 
     the general public prior to their use for a commercial 
     purpose.''.
       (2) Exclusions from basic research.--Clause (ii) of section 
     41(e)(4)(A) of such Code (relating to definitions and special 
     rules), as redesignated by subsection (a), is amended to read 
     as follows:
       ``(ii) basic research in the arts and humanities.''.
       (c) Expansion of Credit to Research Done at Federal 
     Laboratories.--Section 41(e)(3) of the Internal Revenue Code 
     of 1986, as redesignated by subsection (a), is amended by 
     adding at the end the following new subparagraph:
       ``(E) Federal laboratories.--Any organization which is a 
     Federal laboratory (as defined in section 4(6) of the 
     Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 
     3703(6)).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. 55. CREDIT FOR EXPENSES ATTRIBUTABLE TO CERTAIN 
                   COLLABORATIVE RESEARCH CONSORTIA.

       (a) Credit for Expenses Attributable to Certain 
     Collaborative Research Consortia.--Subsection (a) of section 
     41 of the Internal Revenue Code of 1986 (relating to credit 
     for increasing research activities) is amended by striking 
     ``and'' at the end of paragraph (1), striking the period at 
     the end of paragraph (2) and inserting ``, and '', and by 
     adding at the end the following:
       ``(3) 20 percent of the amounts paid or incurred by the 
     taxpayer in carrying on any trade or business of the taxpayer 
     during the taxable year (including as contributions) to a 
     qualified research consortium.''.
       (b) Qualified Research Consortium Defined.--Subsection (f) 
     of section 41 of the Internal Revenue Code of 1986 is amended 
     by adding at the end the following:
       ``(6) Qualified research consortium.--The term `qualified 
     research consortium' means any organization--
       ``(A) which is--
       ``(i) described in section 501(c)(3) and is exempt from tax 
     under section 501(a) and is organized and operated primarily 
     to conduct scientific or engineering research, or
       ``(ii) organized and operated primarily to conduct 
     scientific or engineering research in the public interest 
     (within the meaning of section 501(c)(3)),
       ``(B) which is not a private foundation,
       ``(C) to which at least 5 unrelated persons paid or 
     incurred during the calendar year in

[[Page 18511]]

     which the taxable year of the organization begins amounts 
     (including as contributions) to such organization for 
     scientific or engineering research, and
       ``(D) to which no single person paid or incurred (including 
     as contributions) during such calendar year an amount equal 
     to more than 50 percent of the total amounts received by such 
     organization during such calendar year for scientific or 
     engineering research.

     All persons treated as a single employer under subsection (a) 
     or (b) of section 52 shall be treated as related persons for 
     purposes of subparagraph (C) and as a single person for 
     purposes of subparagraph (D).''.
       (c) Conforming Amendment.--Paragraph (3) of section 41(b) 
     of the Internal Revenue Code of 1986 is amended by striking 
     subparagraph (C).
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. 56. IMPROVEMENT TO CREDIT FOR SMALL BUSINESSES AND 
                   RESEARCH PARTNERSHIPS.

       (a) Assistance to Small and Start-Up Businesses.--The 
     Secretary of the Treasury or the Secretary's delegate shall 
     take such actions as are appropriate to--
       (1) provide assistance to small and start-up businesses in 
     complying with the requirements of section 41 of the Internal 
     Revenue Code of 1986, and
       (2) reduce the costs of such compliance.
       (b) Repeal of Limitation on Contract Research Expenses Paid 
     to Small Businesses, Universities, and Federal 
     Laboratories.--Section 41(b)(3) of the Internal Revenue Code 
     of 1986, as amended by section 55(c), is amended by adding at 
     the end the following:
       ``(C) Amounts paid to eligible small businesses, 
     universities, and federal laboratories.--
       ``(i) In general.--In the case of amounts paid by the 
     taxpayer to an eligible small business, an institution of 
     higher education (as defined in section 3304(f)), or an 
     organization which is a Federal laboratory (as defined in 
     subsection (e)(3)(E)), subparagraph (A) shall be applied by 
     substituting `100 percent' for `65 percent'.
       ``(ii) Eligible small business.--For purposes of this 
     subparagraph, the term `eligible small business' means a 
     small business with respect to which the taxpayer does not 
     own (within the meaning of section 318) 50 percent or more 
     of--

       ``(I) in the case of a corporation, the outstanding stock 
     of the corporation (either by vote or value), and
       ``(II) in the case of a small business which is not a 
     corporation, the capital and profits interests of the small 
     business.

       ``(iii) Small business.--For purposes of this 
     subparagraph--

       ``(I) In general.--The term `small business' means, with 
     respect to any calendar year, any person if the annual 
     average number of employees employed by such person during 
     either of the 2 preceding calendar years was 500 or fewer. 
     For purposes of the preceding sentence, a preceding calendar 
     year may be taken into account only if the person was in 
     existence throughout the year.
       ``(II) Startups, controlled groups, and predecessors.--
     Rules similar to the rules of subparagraphs (B) and (D) of 
     section 220(c)(4) shall apply for purposes of this clause.''.

       (c) Credit for Patent Filing Fees.--Section 41(a) of the 
     Internal Revenue Code of 1986, as amended by section 55(a), 
     is amended by striking ``and'' at the end of paragraph (2), 
     by striking the period at the end of paragraph (3) and 
     inserting ``, and'', and by adding at the end the following:
       ``(4) 20 percent of the patent filing fees paid or incurred 
     by a small business (as defined in subsection (b)(3)(C)(iii)) 
     to the United States or to any foreign government in carrying 
     on any trade or business.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

                     TITLE VI--ENERGY INDEPENDENCE

     SEC. 61. PURPOSES.

       The purposes of this title are--
       (1) to prevent the abandonment of marginal oil and gas 
     wells owned and operated by independent oil and gas 
     producers, which are responsible for half of the United 
     States' domestic production, and
       (2) to transform earned tax credits and other benefits into 
     working capital for the cash-strapped domestic oil and gas 
     producers and service companies.

     SEC. 62. TAX CREDIT FOR MARGINAL DOMESTIC OIL AND NATURAL GAS 
                   WELL PRODUCTION.

       (a) Credit for Producing Oil and Gas From Marginal Wells.--
     Subpart D of part IV of subchapter A of chapter 1 of the 
     Internal Revenue Code of 1986 (relating to business credits) 
     is amended by adding at the end the following:

     ``SEC. 45D. CREDIT FOR PRODUCING OIL AND GAS FROM MARGINAL 
                   WELLS.

       ``(a) General Rule.--For purposes of section 38, the 
     marginal well production credit for any taxable year is an 
     amount equal to the product of--
       ``(1) the credit amount, and
       ``(2) the qualified crude oil production and the qualified 
     natural gas production which is attributable to the taxpayer.
       ``(b) Credit Amount.--For purposes of this section--
       ``(1) In general.--The credit amount is--
       ``(A) $3 per barrel of qualified crude oil production, and
       ``(B) 50 cents per 1,000 cubic feet of qualified natural 
     gas production.
       ``(2) Reduction as oil and gas prices increase.--
       ``(A) In general.--The $3 and 50 cents amounts under 
     paragraph (1) shall each be reduced (but not below zero) by 
     an amount which bears the same ratio to such amount 
     (determined without regard to this paragraph) as--
       ``(i) the excess (if any) of the applicable reference price 
     over $14 ($1.56 for qualified natural gas production), bears 
     to
       ``(ii) $3 ($0.33 for qualified natural gas production).

     The applicable reference price for a taxable year is the 
     reference price for the calendar year preceding the calendar 
     year in which the taxable year begins.
       ``(B) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2000, each of the 
     dollar amounts contained in subparagraph (A) shall be 
     increased to an amount equal to such dollar amount multiplied 
     by the inflation adjustment factor for such calendar year 
     (determined under section 43(b)(3)(B) by substituting `1999' 
     for `1990').
       ``(C) Reference price.--For purposes of this paragraph, the 
     term `reference price' means, with respect to any calendar 
     year--
       ``(i) in the case of qualified crude oil production, the 
     reference price determined under section 29(d)(2)(C), and
       ``(ii) in the case of qualified natural gas production, the 
     Secretary's estimate of the annual average wellhead price per 
     1,000 cubic feet for all domestic natural gas.
       ``(c) Qualified Crude Oil and Natural Gas Production.--For 
     purposes of this section--
       ``(1) In general.--The terms `qualified crude oil 
     production' and `qualified natural gas production' mean 
     domestic crude oil or natural gas which is produced from a 
     marginal well.
       ``(2) Limitation on amount of production which may 
     qualify.--
       ``(A) In general.--Crude oil or natural gas produced during 
     any taxable year from any well shall not be treated as 
     qualified crude oil production or qualified natural gas 
     production to the extent production from the well during the 
     taxable year exceeds 1,095 barrels or barrel equivalents.
       ``(B) Proportionate reductions.--
       ``(i) Short taxable years.--In the case of a short taxable 
     year, the limitations under this paragraph shall be 
     proportionately reduced to reflect the ratio which the number 
     of days in such taxable year bears to 365.
       ``(ii) Wells not in production entire year.--In the case of 
     a well which is not capable of production during each day of 
     a taxable year, the limitations under this paragraph 
     applicable to the well shall be proportionately reduced to 
     reflect the ratio which the number of days of production 
     bears to the total number of days in the taxable year.
       ``(3) Definitions.--
       ``(A) Marginal well.--The term `marginal well' means a 
     domestic well--
       ``(i) the production from which during the taxable year is 
     treated as marginal production under section 613A(c)(6), or
       ``(ii) which, during the taxable year--

       ``(I) has average daily production of not more than 25 
     barrel equivalents, and
       ``(II) produces water at a rate not less than 95 percent of 
     total well effluent.

       ``(B) Crude oil, etc.--The terms `crude oil', `natural 
     gas', `domestic', and `barrel' have the meanings given such 
     terms by section 613A(e).
       ``(C) Barrel equivalent.--The term `barrel equivalent' 
     means, with respect to natural gas, a conversion ratio of 
     6,000 cubic feet of natural gas to 1 barrel of crude oil.
       ``(d) Other Rules.--
       ``(1) Production attributable to the taxpayer.--In the case 
     of a marginal well in which there is more than one owner of 
     operating interests in the well and the crude oil or natural 
     gas production exceeds the limitation under subsection 
     (c)(2), qualifying crude oil production or qualifying natural 
     gas production attributable to the taxpayer shall be 
     determined on the basis of the ratio which taxpayer's revenue 
     interest in the production bears to the aggregate of the 
     revenue interests of all operating interest owners in the 
     production.
       ``(2) Operating interest required.--Any credit under this 
     section may be claimed only on production which is 
     attributable to the holder of an operating interest.
       ``(3) Production from nonconventional sources excluded.--In 
     the case of production from a marginal well which is eligible 
     for the credit allowed under section 29 for the taxable year, 
     no credit shall be allowable under this section unless the 
     taxpayer elects not to claim the credit under section 29 with 
     respect to the well.''.
       (b) Credit Treated as Business Credit.--Section 38(b) of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``plus'' at the end of paragraph (11), by striking the period 
     at the end of paragraph (12) and inserting ``, plus'', and by 
     adding at the end the following:

[[Page 18512]]

       ``(13) the marginal oil and gas well production credit 
     determined under section 45D(a).''.
       (c) Credit Allowed Against Regular and Minimum Tax.--
       (1) In general.--Subsection (c) of section 38 of the 
     Internal Revenue Code of 1986 (relating to limitation based 
     on amount of tax) is amended by redesignating paragraph (3) 
     as paragraph (4) and by inserting after paragraph (2) the 
     following:
       ``(3) Special rules for marginal oil and gas well 
     production credit.--
       ``(A) In general.--In the case of the marginal oil and gas 
     well production credit--
       ``(i) this section and section 39 shall be applied 
     separately with respect to the credit, and
       ``(ii) in applying paragraph (1) to the credit--

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

       ``(B) Marginal oil and gas well production credit.--For 
     purposes of this subsection, the term `marginal oil and gas 
     well production credit' means the credit allowable under 
     subsection (a) by reason of section 45D(a).''.
       (2) Conforming amendment.--Subclause (II) of section 
     38(c)(2)(A)(ii) of such Code is amended by inserting ``or the 
     marginal oil and gas well production credit'' after 
     ``employment credit''.
       (d) Carryback.--Subsection (a) of section 39 of the 
     Internal Revenue Code of 1986 (relating to carryback and 
     carryforward of unused credits generally) is amended by 
     adding at the end the following:
       ``(3) 10-year carryback for marginal oil and gas well 
     production credit.--In the case of the marginal oil and gas 
     well production credit--
       ``(A) this section shall be applied separately from the 
     business credit (other than the marginal oil and gas well 
     production credit),
       ``(B) paragraph (1) shall be applied by substituting `10 
     taxable years' for `1 taxable years' in subparagraph (A) 
     thereof, and
       ``(C) paragraph (2) shall be applied--
       ``(i) by substituting `31 taxable years' for `21 taxable 
     years' in subparagraph (A) thereof, and
       ``(ii) by substituting `30 taxable years' for `20 taxable 
     years' in subparagraph (B) thereof.''.
       (e) Coordination With Section 29.--Section 29(a) of the 
     Internal Revenue Code of 1986 is amended by striking 
     ``There'' and inserting ``At the election of the taxpayer, 
     there''.
       (f) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following:

``45D. Credit for producing oil and gas from marginal wells.''.

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

     SEC. 63. 10-YEAR CARRYBACK FOR UNUSED MINIMUM TAX CREDIT.

       (a) In General.--Section 53(c) of the Internal Revenue Code 
     of 1986 (relating to limitation) is amended by adding at the 
     end the following:
       ``(2) Special rule for taxpayers with unused energy minimum 
     tax credits.--
       ``(A) In general.--If, during the 10-taxable year period 
     ending with the current taxable year, a taxpayer has an 
     unused energy minimum tax credit for any taxable year in such 
     period (determined without regard to the application of this 
     paragraph to the current taxable year)--
       ``(i) paragraph (1) shall not apply to each of the taxable 
     years in such period for which the taxpayer has an unused 
     energy minimum tax credit (as so determined), and
       ``(ii) the credit allowable under subsection (a) for each 
     of such taxable years shall be equal to the excess (if any) 
     of--

       ``(I) the sum of the regular tax liability and the net 
     minimum tax for such taxable year, over
       ``(II) the sum of the credits allowable under subparts A, 
     B, D, E, and F of this part.

       ``(B) Energy minimum tax credit.--For purposes of this 
     paragraph, the term `energy minimum tax credit' means the 
     minimum tax credit which would be computed with respect to 
     any taxable year if the adjusted net minimum tax were 
     computed by only taking into account items attributable to--
       ``(i) the taxpayer's mineral interests in oil and gas 
     property, and
       ``(ii) the taxpayer's active conduct of a trade or business 
     of providing tools, products, personnel, and technical 
     solutions on a contractual basis to persons engaged in oil 
     and gas exploration and production.''.
       (b) Conforming Amendments.--Section 53(c) of the Internal 
     Revenue Code of 1986 (as in effect before the amendment made 
     by subsection (a)) is amended--
       (1) by striking ``The'' and inserting:
       ``(1) In general.--Except as provided in paragraph (2), the 
     '', and
       (2) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000, and to any taxable year beginning on or before such 
     date to the extent necessary to apply section 53(c)(2) of the 
     Internal Revenue Code of 1986 (as added by subsection (a)).

     SEC. 64. 10-YEAR NET OPERATING LOSS CARRYBACK FOR LOSSES 
                   ATTRIBUTABLE TO OIL SERVICING COMPANIES AND 
                   MINERAL INTERESTS OF OIL AND GAS PRODUCERS.

       (a) In General.--Paragraph (1) of section 172(b) of the 
     Internal Revenue Code of 1986 (relating to years to which 
     loss may be carried) is amended by adding at the end the 
     following:
       ``(H) Losses on operating mineral interests of oil and gas 
     producers and oilfield servicing companies.--In the case of a 
     taxpayer which has an eligible oil and gas loss (as defined 
     in subsection (j)) for a taxable year, such eligible oil and 
     gas loss shall be a net operating loss carryback to each of 
     the 10 taxable years preceding the taxable year of such 
     loss.''.
       (b) Eligible Oil and Gas Loss.--Section 172 of the Internal 
     Revenue Code of 1986 is amended by redesignating subsection 
     (j) as subsection (k) and by inserting after subsection (i) 
     the following:
       ``(j) Eligible Oil and Gas Loss.--For purposes of this 
     section--
       ``(1) In general.--The term `eligible oil and gas loss' 
     means the lesser of--
       ``(A) the amount which would be the net operating loss for 
     the taxable year if only income and deductions attributable 
     to--
       ``(i) mineral interests in oil and gas wells, and
       ``(ii) the active conduct of a trade or business of 
     providing tools, products, personnel, and technical solutions 
     on a contractual basis to persons engaged in oil and gas 
     exploration and production,

     are taken into account, and
       ``(B) the amount of the net operating loss for such taxable 
     year.
       ``(2) Coordination with subsection (b)(2).--For purposes of 
     applying subsection (b)(2), an eligible oil and gas loss for 
     any taxable year shall be treated in a manner similar to the 
     manner in which a specified liability loss is treated.
       ``(3) Election.--Any taxpayer entitled to a 10-year 
     carryback under subsection (b)(1)(H) from any loss year may 
     elect to have the carryback period with respect to such loss 
     year determined without regard to subsection (b)(1)(H). Such 
     election shall be made in such manner as may be prescribed by 
     the Secretary and shall be made by the due date (including 
     extensions of time) for filing the taxpayer's return for the 
     taxable year of the net operating loss. Such election, once 
     made for any taxable year, shall be irrevocable for such 
     taxable year.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to net operating losses for taxable years 
     beginning after December 31, 1999, and to any taxable year 
     beginning on or before such date to the extent necessary to 
     apply section 172(b)(1)(H) of the Internal Revenue Code of 
     1986 (as added by subsection (a)).

     SEC. 65. WAIVER OF LIMITATIONS.

       If refund or credit of any overpayment of tax resulting 
     from the application of the amendments made by sections 63 
     and 64 is prevented at any time before the close of the 1-
     year period beginning on the date of the enactment of this 
     Act by the operation of any law or rule of law (including res 
     judicata), such refund or credit may nevertheless be made or 
     allowed if claim therefor is filed before the close of such 
     period.

     SEC. 66. ELECTION TO EXPENSE GEOLOGICAL AND GEOPHYSICAL 
                   EXPENDITURES AND DELAY RENTAL PAYMENTS.

       (a) Purpose.--The purpose of this section is to recognize 
     that geological and geophysical expenditures and delay 
     rentals are ordinary and necessary business expenses that 
     should be deducted in the year the expense is incurred.
       (b) Election To Expense Geological and Geophysical 
     Expenditures.--
       (1) In general.--Section 263 of the Internal Revenue Code 
     of 1986 (relating to capital expenditures) is amended by 
     adding at the end the following:
       ``(j) Geological and Geophysical Expenditures for Domestic 
     Oil and Gas Wells.--Notwithstanding subsection (a), a 
     taxpayer may elect to treat geological and geophysical 
     expenses incurred in connection with the exploration for, or 
     development of, oil or gas within the United States (as 
     defined in section 638) as expenses which are not chargeable 
     to capital account. Any expenses so treated shall be allowed 
     as a deduction in the taxable year in which paid or 
     incurred.''.
       (2) Conforming amendment.--Section 263A(c)(3) of such Code 
     is amended by inserting ``263(j),'' after ``263(i),''.
       (3) Effective date.--
       (A) In general.--The amendments made by this subsection 
     shall apply to expenses paid or incurred after December 31, 
     2000.
       (B) Transition rule.--In the case of any expenses described 
     in section 263(j) of the Internal Revenue Code of 1986, as 
     added by this subsection, which were paid or incurred on or 
     before December 31, 2000, the taxpayer may elect, at such 
     time and in such manner as the Secretary of the Treasury may 
     prescribe, to amortize the unamortized portion

[[Page 18513]]

     of such expenses over the 36-month period beginning with the 
     month of January, 2001. For purposes of this subparagraph, 
     the unamortized portion of any expense is the amount 
     remaining unamortized as of the first day of the 36-month 
     period.
       (c) Election To Expense Delay Rental Payments.--
       (1) In general.--Section 263 of the Internal Revenue Code 
     of 1986 (relating to capital expenditures), as amended by 
     subsection (b)(1), is amended by adding at the end the 
     following:
       ``(k) Delay Rental Payments for Domestic Oil and Gas 
     Wells.--
       ``(1) In general.--Notwithstanding subsection (a), a 
     taxpayer may elect to treat delay rental payments incurred in 
     connection with the development of oil or gas within the 
     United States (as defined in section 638) as payments which 
     are not chargeable to capital account. Any payments so 
     treated shall be allowed as a deduction in the taxable year 
     in which paid or incurred.
       ``(2) Delay rental payments.--For purposes of paragraph 
     (1), the term `delay rental payment' means an amount paid for 
     the privilege of deferring development of an oil or gas 
     well.''.
       (2) Conforming amendment.--Section 263A(c)(3) of the 
     Internal Revenue Code of 1986, as amended by subsection 
     (b)(2), is amended by inserting ``263(k),'' after 
     ``263(j),''.
       (3) Effective date.--
       (A) In general.--The amendments made by this subsection 
     shall apply to payments made or incurred after December 31, 
     2000.
       (B) Transition rule.--In the case of any payments described 
     in section 263(k) of the Internal Revenue Code of 1986, as 
     added by this subsection, which were made or incurred on or 
     before December 31, 2000, the taxpayer may elect, at such 
     time and in such manner as the Secretary of the Treasury may 
     prescribe, to amortize the unamortized portion of such 
     payments over the 36-month period beginning with the month of 
     January, 2001. For purposes of this subparagraph, the 
     unamortized portion of any payment is the amount remaining 
     unamortized as of the first day of the 36-month period.

                      TITLE VII--REVENUE PROVISION

     SEC. 71. 4-YEAR AVERAGING FOR CONVERSION OF TRADITIONAL IRA 
                   TO ROTH IRA.

       (a) In General.--Section 408A(d)(3)(A)(iii) of the Internal 
     Revenue Code of 1986 is amended by striking ``January 1, 
     1999,'' and inserting ``January 1, 2004,''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to distributions made after December 31, 2000.
                                  ____


                           Amendment No. 1436

       Beginning on page 334, strike line 3 and all that follows 
     through page 335, line 16 and insert the following:

     SEC. 1101. MODIFICATIONS TO SPECIAL RULES FOR NUCLEAR 
                   DECOMMISSIONING COSTS.

       (a) Repeal of Limitation on Deposits Into Fund Based on 
     Cost of Service.--Subsection (b) of section 468A is amended 
     to read as follows:
       ``(b) Limitation on Amounts Paid Into Fund.--The amount 
     which a taxpayer may pay into the Fund for any taxable year 
     shall not exceed the ruling amount applicable to such taxable 
     year.''
       (b) Clarification of Treatment of Fund Transfers.--
     Subsection (e) of section 468A is amended by adding at the 
     end the following new paragraph:
       ``(8) Treatment of fund transfers.--If, in connection with 
     the transfer of the taxpayer's interest in a nuclear 
     powerplant, the taxpayer transfers the Fund with respect to 
     such powerplant to the transferee of such interest and the 
     transferee elects to continue the application of this section 
     to such Fund--
       ``(A) the transfer of such Fund shall not cause such Fund 
     to be disqualified from the application of this section, and
       ``(B) no amount shall be treated as distributed from such 
     Fund, or be includible in gross income, by reason of such 
     transfer.''
       (c) Transfers of Balances in Nonqualified Funds.--Section 
     468A is amended by redesignating subsections (f) and (g) as 
     subsections (g) and (h), respectively, and by inserting after 
     subsection (e) the following new subsection:
       ``(f) Transfers of Balances in Nonqualified Funds Into 
     Qualified Funds.--
       ``(1) In general.--Notwithstanding subsection (b), any 
     taxpayer maintaining a Fund to which this section applies 
     with respect to a nuclear powerplant may transfer into such 
     Fund amounts held in any nonqualified fund of such taxpayer 
     with respect to such powerplant.
       ``(2) Maximum amount permitted to be transferred.--The 
     amount permitted to be transferred under paragraph (1) shall 
     not exceed the balance in the nonqualified fund as of 
     December 31, 1998.
       ``(3) Deduction for amounts transferred.--
       ``(A) In general.--The deduction allowed by subsection (a) 
     for any transfer permitted by this subsection shall be 
     allowed ratably over the remaining estimated useful life 
     (within the meaning of subsection (d)(2)(A)) of the nuclear 
     powerplant, beginning with the later of the taxable year 
     during which the transfer is made or the taxpayer's first 
     taxable year beginning after December 31, 2001.
       ``(B) Denial of deduction for previously deducted 
     amounts.--No deduction shall be allowed for any transfer 
     under this subsection of an amount for which a deduction was 
     allowed when such amount was paid into the nonqualified fund. 
     For purposes of the preceding sentence, a ratable portion of 
     each transfer shall be treated as being from previously 
     deducted amounts to the extent thereof.
       ``(C) Transfers of qualified funds.--If--
       ``(i) any transfer permitted by this subsection is made to 
     any Fund to which this section applies, and
       ``(ii) such Fund is transferred thereafter,

     any deduction under this subsection for taxable years ending 
     after the date that such Fund is transferred shall be allowed 
     to the transferee and not to the transferor. The preceding 
     sentence shall not apply if the transferor is an organization 
     exempt from tax imposed by this chapter.
       ``(4) New ruling amount required.--Paragraph (1) shall not 
     apply to any transfer unless the taxpayer requests from the 
     Secretary a new schedule of ruling amounts in connection with 
     such transfer.
       ``(5) Nonqualified fund.--For purposes of this subsection, 
     the term `nonqualified fund' means, with respect to any 
     nuclear powerplant, any fund in which amounts are irrevocably 
     set aside pursuant to the requirements of any State or 
     Federal agency exclusively for the purpose of funding the 
     decommissioning of such powerplant.
       ``(6) No basis in qualified funds.--Notwithstanding any 
     other provision of law, the basis of any Fund to which this 
     section applies shall not be increased by reason of any 
     transfer permitted by this subsection.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.
       Strike section 1101.
                                 ______
                                 

               COVERDELL (AND OTHERS) AMENDMENT NO. 1437

  (Ordered to lie on the table.)
  Mr. COVERDELL (for himself, Mr. Torricelli, Mr. Craig, and Mr. 
McCain) submitted an amendment intended to be proposed by them to the 
bill, S. 1429, supra; as follows:

       On page 195, strike lines 4 through 23, and insert:

     SEC. 404. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT 
                   ACCOUNTS.

       (a) Maximum Annual Contributions.--
       (1) In general.--Section 530(b)(1)(A)(iii) (defining 
     education individual retirement account) is amended by 
     striking ``$500'' and inserting ``the contribution limit for 
     such taxable year''.
       (2) Contribution limit.--Section 530(b) (relating to 
     definitions and special rules) is amended by adding at the 
     end the following new paragraph:
       ``(4) Contribution limit.--The term `contribution limit' 
     means $500 ($2,000 in the case of any taxable year beginning 
     after December 31, 2004).''
       (3) Conforming amendment.--Section 4973(e)(1)(A) is amended 
     by striking ``$500'' and inserting ``the contribution limit 
     (as defined in section 530(b)(4)) for such taxable year''.
       (b) Tax-Free Expenditures for Elementary and Secondary 
     School Expenses.--
       (1) In general.--Section 530(b)(2) (defining qualified 
     higher education expenses) is amended to read as follows:
       ``(2) Qualified education expenses.--
       ``(A) In general.--The term `qualified education expenses' 
     means--
       ``(i) qualified higher education expenses (as defined in 
     section 529(e)(3)), and
       ``(ii) qualified elementary and secondary education 
     expenses (as defined in paragraph (5)).

     Such expenses shall be reduced as provided in section 
     25A(g)(2).
       ``(B) Qualified tuition programs.--Such term shall include 
     any contribution to a qualified tuition program (as defined 
     in section 529(b)) on behalf of the designated beneficiary 
     (as defined in section 529(e)(1)); but there shall be no 
     increase in the investment in the contract for purposes of 
     applying section 72 by reason of any portion of such 
     contribution which is not includible in gross income by 
     reason of subsection (d)(2).''
       (2) Qualified elementary and secondary education 
     expenses.--Section 530(b) (relating to definitions and 
     special rules), as amended by subsection (a)(2), is amended 
     by adding at the end the following new paragraph:
       ``(5) Qualified elementary and secondary education 
     expenses.--
       ``(A) In general.--The term `qualified elementary and 
     secondary education expenses' means--
       ``(i) expenses for tuition, fees, academic tutoring, 
     special needs services, books, supplies, computer equipment 
     (including related software and services), and other 
     equipment which are incurred in connection with the 
     enrollment or attendance of the designated beneficiary of the 
     trust as an elementary or secondary school student at a 
     public, private, or religious school, and
       ``(ii) expenses for room and board, uniforms, 
     transportation, and supplementary

[[Page 18514]]

     items and services (including extended day programs) which 
     are required or provided by a public, private, or religious 
     school in connection with such enrollment or attendance.
       ``(B) Special rule for homeschooling.--Such term shall 
     include expenses described in subparagraph (A)(i) in 
     connection with education provided by homeschooling if the 
     requirements of any applicable State or local law are met 
     with respect to such education.
       ``(C) School.--The term `school' means any school which 
     provides elementary education or secondary education 
     (kindergarten through grade 12), as determined under State 
     law.''
       (3) Special rules for applying exclusion to elementary and 
     secondary expenses.--Section 530(d)(2) (relating to 
     distributions for qualified higher education expenses) is 
     amended by adding at the end the following new subparagraph:
       ``(E) Special rules for elementary and secondary 
     expenses.--
       ``(i) In general.--The aggregate amount of qualified 
     elementary and secondary education expenses taken into 
     account for purposes of this paragraph with respect to any 
     education individual retirement account for all taxable years 
     shall not exceed the sum of the aggregate contributions to 
     such account for taxable years beginning after December 31, 
     2004, and earnings on such contributions.
       ``(ii) Special operating rules.--For purposes of clause 
     (i)--

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

       (4) Conforming amendments.--Section 530 is amended--
       (A) by striking ``higher'' each place it appears in 
     subsections (b)(1) and (d)(2), and
       (B) by striking ``higher'' in the heading for subsection 
     (d)(2).
       (c) Waiver of Age Limitations for Children With Special 
     Needs.--Section 530(b)(1) (defining education individual 
     retirement account) is amended by adding at the end the 
     following flush sentence:

     ``The age limitations in the preceding sentence and 
     paragraphs (5) and (6) of subsection (d) shall not apply to 
     any designated beneficiary with special needs (as determined 
     under regulations prescribed by the Secretary).''
       (d) Entities Permitted To Contribute to Accounts.--Section 
     530(c)(1) (relating to reduction in permitted contributions 
     based on adjusted gross income) is amended by striking ``The 
     maximum amount which a contributor'' and inserting ``In the 
     case of a contributor who is an individual, the maximum 
     amount the contributor''.
       (e) Time When Contributions Deemed Made.--
       (1) In general.--Section 530(b) (relating to definitions 
     and special rules), as amended by subsection (b)(2), is 
     amended by adding at the end the following new paragraph:
       ``(6) Time when contributions deemed made.--An individual 
     shall be deemed to have made a contribution to an education 
     individual retirement account on the last day of the 
     preceding taxable year if the contribution is made on account 
     of such taxable year and is made not later than the time 
     prescribed by law for filing the return for such taxable year 
     (not including extensions thereof).''
       (2) Extension of time to return excess contributions.--
     Subparagraph (C) of section 530(d)(4) (relating to additional 
     tax for distributions not used for educational expenses) is 
     amended--
       (A) by striking clause (i) and inserting the following new 
     clause:
       ``(i) such distribution is made before the 1st day of the 
     6th month of the taxable year following the taxable year, 
     and'', and
       (B) by striking ``due date of return'' in the heading and 
     inserting ``june''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. 404A. EXTENSION OF EXCLUSION FOR EMPLOYER-PROVIDED 
                   EDUCATIONAL ASSISTANCE.

       (a) In General.--Section 127(d) (relating to termination of 
     exclusion for educational assistance programs) is amended by 
     striking ``May 31, 2000'' and inserting ``December 31, 
     2006''.
       (b) Repeal of Limitation on Graduate Education.--
       (1) In general.--The last sentence of section 127(c)(1) is 
     amended by striking ``, and such term also does not include 
     any payment for, or the provision of any benefits with 
     respect to, any graduate level course of a kind normally 
     taken by an individual pursuing a program leading to a law, 
     business, medical, or other advanced academic or professional 
     degree''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply with respect to expenses relating to courses 
     beginning after December 31, 1999.
                                 ______
                                 

                       DASCHLE AMENDMENT NO. 1438

  (Ordered to lie on the table.)
  Mr. DASCHLE submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       At the appropriate place add the following:

     SECTION 1. CERTAIN CASH RENTALS OF FARMLAND NOT TO CAUSE 
                   RECAPTURE OF SPECIAL ESTATE TAX VALUATION.

       (a) In General.--Subsection (c) of section 2032A of the 
     Internal Revenue Code of 1986 (relating to tax treatment of 
     dispositions and failures to use for qualified use) is 
     amended by adding at the end the following new paragraph:
       ``(8) Certain cash rental not to cause recapture.--For 
     purposes of this subsection, a qualified heir shall not be 
     treated as failing to use property in a qualified use solely 
     because such heir rents such property on a net cash basis to 
     a member of the decedent's family, but only if, during the 
     period of the lease, such member of the decedent's family 
     uses such property in a qualified use.''
       (b) Conforming Amendment.--Section 2032A(b)(5)(A) is 
     amended by striking the last sentence.
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to rentals occurring after December 
     31, 1976.
                                 ______
                                 

                 CONRAD (AND OTHERS) AMENDMENT NO. 1439

  (Ordered to lie on the table.)
  Mr. CONRAD (for himself, Mr. Reid, and Mr. Robb) submitted an 
amendment intended to be proposed by them to the bill, S. 1429, supra; 
as follows:

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. CREDIT FOR INFORMATION TECHNOLOGY TRAINING PROGRAM 
                   EXPENSES.

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

     ``SEC. 45D. INFORMATION TECHNOLOGY TRAINING PROGRAM EXPENSES.

       ``(a) General Rule.--For purposes of section 38, in the 
     case of an employer, the information technology training 
     program credit determined under this section is an amount 
     equal to 20 percent of information technology training 
     program expenses paid or incurred by the taxpayer during the 
     taxable year.
       ``(b) Additional Credit Percentage for Certain Programs.--
     The percentage under subsection (a) shall be increased by 5 
     percentage points for information technology training program 
     expenses paid or incurred--
       ``(1) by the taxpayer with respect to a program operated 
     in--
       ``(A) an empowerment zone or enterprise community 
     designated under part I of subchapter U,
       ``(B) a school district in which at least 50 percent of the 
     students attending schools in such district are eligible for 
     free or reduced-cost lunches under the school lunch program 
     established under the National School Lunch Act,
       ``(C) an area designated as a disaster area by the 
     Secretary of Agriculture or by the President under the 
     Disaster Relief and Emergency Assistance Act in the taxable 
     year or the 4 preceding taxable years,
       ``(D) a rural enterprise community designated under section 
     766 of the Agriculture, Rural Development, Food and Drug 
     Administration, and Related Agencies Appropriations Act, 
     1999,
       ``(E) an area designated by the Secretary of Agriculture as 
     a Rural Economic Area Partnership Zone, or
       ``(F) an area designated by the Secretary of Agriculture as 
     a Champion Community, or
       ``(2) by a small employer.
       ``(c) Limitation.--The amount of information technology 
     training program expenses with respect to an individual which 
     may be taken into account under subsection (a) for the 
     taxable year shall not exceed $6,000.
       ``(d) Information Technology Training Program Expenses.--
     For purposes of this section--
       ``(1) In general.--The term `information technology 
     training program expenses' means expenses paid or incurred by 
     reason of the participation of the employer in any 
     information technology training program.
       ``(2) Information technology training program.--The term 
     `information technology training program' means a program--
       ``(A) for the training of--
       ``(i) computer programmers, systems analysts, and computer 
     scientists or engineers (as such occupations are defined by 
     the Bureau of Labor Statistics), and
       ``(ii) such other occupations as determined by the 
     Secretary, after consultation with a working group broadly 
     solicited by the Secretary and open to all interested 
     information technology entities and trade and professional 
     associations,
       ``(B) involving a partnership of--
       ``(i) employers, and
       ``(ii) State training programs, school districts, 
     university systems, tribal colleges, or certified commercial 
     information technology training providers, and
       ``(C) at least 50 percent of the costs of which is paid or 
     incurred by the employers.

[[Page 18515]]

       ``(3) Certified commercial information technology training 
     provider.--The term `certified commercial information 
     technology training providers' means a private sector 
     provider of educational products and services utilized for 
     training in information technology which is certified with 
     respect to--
       ``(A) the curriculum that is used for the training, or
       ``(B) the technical knowledge of the instructors of such 
     provider,
     by 1 or more software publishers or hardware manufacturers 
     the products of which are a subject of the training.
       ``(e) Small Employer.--For purposes of this section, the 
     term `small employer' means, with respect to any calendar 
     year, any employer if such employer employed 200 or fewer 
     employees on each business day in each of 20 or more calendar 
     weeks in such year or the preceding calendar year.
       ``(f) Denial of Double Benefit.--No deduction or credit 
     under any other provision of this chapter shall be allowed 
     with respect to information technology training program 
     expenses (determined without regard to the limitation under 
     subsection (c)).
       ``(g) Certain rules made applicable.--For purposes of this 
     section, rules similar to the rules of section 45A(e)(2) and 
     subsections (c), (d), and (e) of section 52 shall apply.''
       (b) Credit To Be Part of General Business Credit.--Section 
     38(b) (relating to current year business credit) is amended 
     by striking ``plus'' at the end of paragraph (11), by 
     striking the period at the end of paragraph (12) and 
     inserting ``, plus'', and by adding at the end the following:
       ``(13) the information technology training program credit 
     determined under section 45D.''
       (c) No Carrybacks.--Subsection (d) of section 39 (relating 
     to carryback and carryforward of unused credits) is amended 
     by adding at the end the following:
       ``(9) No carryback of section 45D credit before effective 
     date.--No portion of the unused business credit for any 
     taxable year which is attributable to the information 
     technology training program credit determined under section 
     45D may be carried back to a taxable year ending before the 
     date of the enactment of section 45D.''
       (d) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 is amended by 
     adding at the end the following:

``Sec. 45D. Information technology training program expenses.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after the date of 
     enactment of this Act in taxable years ending after such 
     date.
       On page 99, strike lines 11 through 14, and insert the 
     following:
       ``(B) Applicable percentage.--
       ``(i) In general.--Subject to clause (ii), for purposes of 
     this paragraph, the applicable percentage shall be determined 
     in accordance with the following table:

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

  2002...................................................20 percent....

  2003...................................................30 percent....

  2004...................................................40 percent....

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

       On page 99, before line 15, insert the following:
       ``(ii) Adjustment.--The Secretary shall adjust any 
     applicable percentage under clause (i) in order to reduce the 
     reduction in revenues deposited in the Treasury as the result 
     of the enactment of this subsection by $386,000,000.
                                 ______
                                 

                       CONRAD AMENDMENT NO. 1440

  (Ordered to lie on the table.)
  Mr. CONRAD submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       On page 423, strike lines 1 through 3, and insert:
       (b) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to assumptions of 
     liability after July 14, 1999.
       (2) Transition rule.--In the case of any assumption of 
     liability made pursuant to an agreement which was binding on 
     July 14, 1999, and at all times thereafter, the amendments 
     made by this section shall apply to such assumption of 
     liability after September 30, 1999.
                                 ______
                                 

                       DORGAN AMENDMENT NO. 1441

  (Ordered to lie on the table.)
  Mr. DORGAN submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       At the appropriate place, insert the following:

     SEC. __. SENSE OF CONGRESS REGARDING THE NEED FOR ADDITIONAL 
                   FEDERAL FUNDING AND TAX INCENTIVES FOR 
                   EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES 
                   AUTHORIZED AND DESIGNATED PURSUANT TO 1997 AND 
                   1998 LAWS.

       (a) Findings.--The Senate finds that--
       (1) providing Federal tax incentives and other incentives 
     to distressed communities across the Nation to help them 
     rebuild and grow was one of the important goals of the 
     Taxpayer Relief Act of 1997 and the Omnibus Consolidated and 
     Emergency Supplemental Appropriations Act, 1999;
       (2) to help reach that goal, the Taxpayer Relief Act of 
     1997 authorized 20 additional empowerment zones, 15 urban and 
     5 rural, followed by 20 new rural enterprise communities 
     authorized in 1998;
       (3) the 1997 law authorizing this second round of 
     empowerment zones (EZs) was also significant and important 
     because it broadened empowerment zone eligibility, for the 
     first time, to Indian tribes and rural regions suffering from 
     massive out-migration;
       (4) many of our urban and rural communities are not sharing 
     in the benefits of the prolonged economic expansion now 
     enjoyed by many other parts of our country;
       (5) a total of more than 250 economically distressed urban 
     and rural communities competed for the 20 new empowerment 
     zones and 20 new rural enterprise communities, and those 
     areas designated as zones and communities should be provided 
     with the Federal incentives and encouragement they need to 
     attract new businesses, and the jobs they provide, in order 
     to stimulate economic growth and improvement;
       (6) unfortunately, those areas that are designated EZs or 
     ECs under the 1997 and 1998 laws or rural economic area 
     partnerships (REAPs) by the Department of Agriculture, are 
     not given the full advantage of Social Services Block Grant 
     funds, tax credits, and some other Federal incentives that 
     Congress provided to the first round of empowerment zones and 
     enterprise communities authorized pursuant to 1993 budget 
     legislation;
       (7) Congress should act swiftly to provide such designated 
     areas an equal share of tax incentives, grant benefits, and 
     other Federal support at aggregate levels of at least that 
     provided by Congress to distressed urban and rural 
     empowerment zones and enterprise communities pursuant to the 
     1993 omnibus budget reconciliation bill; and
       (8) a fully funded second round of EZs and ECs is estimated 
     to create and retain about 90,000 jobs and stimulate 
     $10,000,000,000 in private and public investments over the 
     next decade.
       (b) Sense of Congress.--It is the sense of Congress that--
       (1) if Congress and the President agree to a substantial 
     tax relief measure, it should ensure that such measure 
     includes full funding for the second round of empowerment 
     zones and enterprise communities authorized in 1997 and 1998 
     as well as those areas currently designated rural economic 
     area partnerships (REAPs) by the Department of Agriculture; 
     and
       (2) all such designated distressed areas, rural and urban, 
     should equally share at least the same aggregate level of 
     funding, tax incentives, and other Federal support that 
     Congress provided to urban and rural empowerment zones and 
     enterprise communities authorized by the 1993 omnibus budget 
     reconciliation bill.

                BREAUX (AND OTHERS) AMENDMENTS NO. 1442

  Mr. BREAUX (for himself, Mr. Chafee, Mr. Kerrey, Mr. Jeffords, Mr. 
Torricelli, Mr. Specter, Mr. Bayh, Ms. Snowe, and Ms. Collins) proposed 
an amendment to the bill, S. 1429, supra; as follows:

       Strike all after the enacting clause, and insert the 
     following:

     SECTION 1. SHORT TITLE; ETC.

       (a) Short Title.--This Act may be cited as the ``Taxpayer 
     Refund Act of 1999''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Section 15 Not To Apply.--No amendment made by this Act 
     shall be treated as a change in a rate of tax for purposes of 
     section 15 of the Internal Revenue Code of 1986.
       (d) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; etc.

                    TITLE I--BROAD-BASED TAX RELIEF

Sec. 101. Increase in standard deduction.
Sec. 102. Increase in maximum taxable income for 15 percent rate 
              bracket.

                      TITLE II--FAMILY TAX RELIEF

Sec. 201. Modification of alternative minimum tax for individuals.
Sec. 202. Marriage penalty relief for earned income credit.
Sec. 203. Modification of dependent care credit.
Sec. 204. Exclusion for foster care payments to apply to payments by 
              qualified placement agencies.

[[Page 18516]]

              TITLE III--SAVINGS AND INVESTMENT PROVISIONS

                  Subtitle A--Long-Term Capital Gains

Sec. 301. Long-term capital gains deduction for individuals.

             Subtitle B--Individual Retirement Arrangements

Sec. 311. Modification of deduction limits for IRA contributions.

                     Subtitle C--Expanding Coverage

Sec. 321. Option to treat elective deferrals as after-tax 
              contributions.
Sec. 322. Increase in elective contribution limits.
Sec. 323. Plan loans for subchapter S owners, partners, and sole 
              proprietors.
Sec. 324. Elective deferrals not taken into account for purposes of 
              deduction limits.
Sec. 325. Reduced PBGC premium for new plans of small employers.
Sec. 326. Reduction of additional PBGC premium for new plans.
Sec. 327. Elimination of user fee for requests to IRS regarding new 
              pension plans.
Sec. 328. Safe annuities and trusts.
Sec. 329. Modification of top-heavy rules.

                Subtitle D--Enhancing Fairness for Women

Sec. 331. Catchup contributions for individuals age 50 or over.
Sec. 332. Equitable treatment for contributions of employees to defined 
              contribution plans.
Sec. 333. Clarification of tax treatment of division of section 457 
              plan benefits upon divorce.
Sec. 334. Modification of safe harbor relief for hardship withdrawals 
              from cash or deferred arrangements.
Sec. 335. Faster vesting of certain employer matching contributions.

          Subtitle E--Increasing Portability for Participants

Sec. 341. Rollovers allowed among various types of plans.
Sec. 342. Rollovers of IRAs into workplace retirement plans.
Sec. 343. Rollovers of after-tax contributions.
Sec. 344. Hardship exception to 60-day rule.
Sec. 345. Treatment of forms of distribution.
Sec. 346. Rationalization of restrictions on distributions.
Sec. 347. Purchase of service credit in governmental defined benefit 
              plans.
Sec. 348. Employers may disregard rollovers for purposes of cash-out 
              amounts.
Sec. 349. Inclusion requirements for section 457 plans.

       Subtitle F--Strengthening Pension Security and Enforcement

Sec. 351. Repeal of 150 percent of current liability funding limit.
Sec. 352. Extension of missing participants program to multiemployer 
              plans.
Sec. 353. Excise tax relief for sound pension funding.
Sec. 354. Failure to provide notice by defined benefit plans 
              significantly reducing future benefit accruals.
Sec. 355. Protection of investment of employee contributions to 401(k) 
              plans.
Sec. 356. Treatment of multiemployer plans under section 415.

              Subtitle G--Encouraging Retirement Education

Sec. 361. Periodic pension benefits Statements.
Sec. 362. Clarification of treatment of employer-provided retirement 
              advice.

                Subtitle H--Reducing Regulatory Burdens

Sec. 371. Flexibility in nondiscrimination and coverage rules.
Sec. 372. Modification of timing of plan valuations.
Sec. 373. Substantial owner benefits in terminated plans.
Sec. 374. ESOP dividends may be reinvested without loss of dividend 
              deduction.
Sec. 375. Notice and consent period regarding distributions.
Sec. 376. Repeal of transition rule relating to certain highly 
              compensated employees.
Sec. 377. Employees of tax-exempt entities.
Sec. 378. Extension to international organizations of moratorium on 
              application of certain nondiscrimination rules applicable 
              to State and local plans.
Sec. 379. Annual report dissemination.
Sec. 380. Modification of exclusion for employer provided transit 
              passes.

                      Subtitle I--Plan Amendments

Sec. 381. Provisions relating to plan amendments.

                     TITLE IV--EDUCATION TAX RELIEF

Sec. 401. Permanent extension of exclusion for employer-provided 
              educational assistance.
Sec. 402. Elimination of 60-month limit and increase in income 
              limitation on student loan interest deduction.
Sec. 403. Modifications to qualified tuition programs.
Sec. 404. Additional increase in arbitrage rebate exception for 
              governmental bonds used to finance educational 
              facilities.
Sec. 405. Exclusion of certain amounts received under the National 
              Health Service Corps Scholarship Program and the F. 
              Edward Hebert Armed Forces Health Professions Scholarship 
              and Financial Assistance Program.

                      TITLE V--HEALTH CARE RELIEF

Sec. 501. Deduction for health and long-term care insurance costs of 
              individuals not participating in employer-subsidized 
              health plans.
Sec. 502. Long-term care insurance permitted to be offered under 
              cafeteria plans and flexible spending arrangements.
Sec. 503. Long-term care tax credit.
Sec. 504. Inclusion of certain vaccines against streptococcus 
              pneumoniae to list of taxable vaccines; reduction in per 
              dose tax rate.

                      TITLE VI--ESTATE TAX RELIEF

Sec. 601. Increase in unified estate and gift tax credit.

           TITLE VII--SMALL BUSINESS AND AGRICULTURAL RELIEF

Sec. 701. Deduction for 100 percent of health insurance costs of self-
              employed individuals.
Sec. 702. Repeal of Federal unemployment surtax.
Sec. 703. Income averaging for farmers not to increase alternative 
              minimum tax liability.
Sec. 704. Farm and ranch risk management accounts.
Sec. 705. Increase in estate tax deduction for family-owned business 
              interest.
Sec. 706. Increase in expense treatment for small businesses.
Sec. 707. Recovery period for depreciation of certain leasehold 
              improvements.

 TITLE VIII--PROVISIONS RELATING TO HOUSING, REAL ESTATE, ENVIRONMENT, 
                           AND TRANSPORTATION

                  Subtitle A--Housing and Real Estate

Sec. 801. Modification of State ceiling on low-income housing credit.
Sec. 802. Increase in volume cap on private activity bonds.

                  Subtitle B--Environmental Provisions

Sec. 811. Tax credit for renovating historic homes.
Sec. 812. Extension and modification of credit for producing 
              electricity from certain renewable resources.
Sec. 813. Extension of expensing of environmental remediation costs.
Sec. 814. Temporary suspension of maximum amount of amortizable 
              reforestation expenditures.

                 Subtitle C--Transportation Provisions

Sec. 821. Repeal of certain motor fuel excise taxes on fuel used by 
              railroads and on inland waterway transportation.

                 TITLE IX--CHARITABLE GIVING INCENTIVES

Sec. 901. Tax-free distributions from individual retirement accounts 
              for charitable purposes.
Sec. 902. Increase in limit on charitable contributions as percentage 
              of AGI.

 TITLE X--EXTENSION OF EXPIRED AND EXPIRING PROVISIONS; INTERNATIONAL 
                               TAX RELIEF

Sec. 1001. Permanent extension and modification of research credit.
Sec. 1002. Work opportunity credit and welfare-to-work credit.
Sec. 1003. Subpart F exemption for active financing income.
Sec. 1004. Taxable income limit on percentage depletion for marginal 
              production.
Sec. 1005. Repeal of foreign tax credit limitation under alternative 
              minimum tax.

                       TITLE XI--REVENUE OFFSETS

                     Subtitle A--General Provisions

Sec. 1101. Modification of foreign tax credit carryback and carryover 
              periods.
Sec. 1102. Returns relating to cancellations of indebtedness by 
              organizations lending money.
Sec. 1103. Increase in elective withholding rate for nonperiodic 
              distributions from deferred compensation plans.
Sec. 1104. Extension of Internal Revenue Service user fees.
Sec. 1105. Transfer of excess defined benefit plan assets for retiree 
              health benefits.
Sec. 1106. Tax treatment of income and loss on derivatives.

                      Subtitle B--Loophole Closers

Sec. 1111. Limitation on use of non-accrual experience method of 
              accounting.
Sec. 1112. Limitations on welfare benefit funds of 10 or more employer 
              plans.

[[Page 18517]]

Sec. 1113. Modification of installment method and repeal of installment 
              method for accrual method taxpayers.
Sec. 1114. Treatment of gain from constructive ownership transactions.
Sec. 1115. Charitable split-dollar life insurance, annuity, and 
              endowment contracts.
Sec. 1116. Restriction on use of real estate investment trusts to avoid 
              estimated tax payment requirements.
Sec. 1117. Prohibited allocations of S corporation stock held by an 
              ESOP.
Sec. 1118. Modification of anti-abuse rules related to assumption of 
              liability.
Sec. 1119. Allocation of basis on transfers of intangibles in certain 
              nonrecognition transactions.
Sec. 1120. Controlled entities ineligible for REIT status.
Sec. 1121. Distributions to a corporate partner of stock in another 
              corporation.

          TITLE XII--COMPLIANCE WITH CONGRESSIONAL BUDGET ACT

Sec. 1201. Sunset of provisions of Act.

                    TITLE I--BROAD-BASED TAX RELIEF

     SEC. 101. INCREASE IN STANDARD DEDUCTION.

       Subsection (c) of section 63 (relating to standard 
     deduction) is amended by adding at the end the following new 
     paragraph:
       ``(7) Increase in amount.--
       ``(A) In general.--In the case of taxable years beginning 
     in any calendar year beginning after 2000, the dollar amounts 
     determined under paragraph (2) (after any increase under 
     paragraph (4)) shall be increased by the applicable dollar 
     amount for such calendar year.
       ``(B) Applicable dollar amount.--
       ``(i) Amount.--The applicable dollar amount for any 
     calendar year shall be determined as follows:

       ``(I) Joint returns and surviving spouses.--In the case of 
     the $5,000 amount under paragraph (2)(A)--

                                                             Applicable
``Calendar year:                                         dollar amount:
  2001 or 2002..............................................$1,000 ....

  2003 or 2004..............................................$2,000 ....

  2005 or 2006..............................................$3,000 ....

  2007 and thereafter......................................$4,350. ....

       ``(II) Head of household.--In the case of the $4,400 amount 
     under paragraph (2)(B)--

                                                             Applicable
``Calendar year:                                         dollar amount:
  2001 or 2002................................................$500 ....

  2003 or 2004..............................................$1,000 ....

  2005 or 2006..............................................$1,500 ....

  2007 and thereafter......................................$2,150. ....

       ``(III) Individual.--In the case of the $3,000 amount under 
     paragraph (2)(C)--

                                                             Applicable
``Calendar year:                                         dollar amount:
  2001 or 2002................................................$300 ....

  2003 or 2004................................................$600 ....

  2005 or 2006................................................$900 ....

  2007 and thereafter......................................$1,300. ....

       ``(IV) Married filing separately.--In the case of the 
     $2,500 amount under paragraph (2)(D)--

                                                             Applicable
``Calendar year:                                         dollar amount:
  2001 or 2002................................................$500 ....

  2003 or 2004..............................................$1,000 ....

  2005 or 2006..............................................$1,500 ....

  2007 and thereafter......................................$2,175. ....

       ``(ii) Cost-of-living adjustment.--In the case of any 
     taxable year beginning in a calendar year after 2007, the 
     applicable dollar amount under clause (i) shall be increased 
     by an amount equal to such dollar amount multiplied by the 
     cost-of-living adjustment determined under section 1(f)(3) 
     for the calendar year in which the taxable year begins, 
     except that subparagraph (B) thereof shall be applied by 
     substituting `calendar year 2006' for `calendar year 1992'. 
     If any amount as adjusted under this subparagraph is not a 
     multiple of $50, such amount shall be rounded to the next 
     lowest multiple of $50.''

     SEC. 102. INCREASE IN MAXIMUM TAXABLE INCOME FOR 15 PERCENT 
                   RATE BRACKET.

       (a) In General.--Section 1(f) (relating to adjustments in 
     tax tables so that inflation will not result in tax 
     increases) is amended--
       (1) in paragraph (2)--
       (A) by redesignating subparagraphs (B) and (C) as 
     subparagraphs (C) and (D),
       (B) by inserting after subparagraph (A) the following:
       ``(B) in the case of the tables contained in subsections 
     (a), (b), (c), and (d), by increasing the maximum taxable 
     income level for the 15 percent rate bracket and the minimum 
     taxable income level for the 28 percent rate bracket 
     otherwise determined under subparagraph (A) for taxable years 
     beginning in any calendar year after 2004 by the applicable 
     dollar amount for such calendar year,'', and
       (C) by striking ``subparagraph (A)'' in subparagraph (C) 
     (as so redesignated) and inserting ``subparagraphs (A) and 
     (B)'', and
       (2) by adding at the end the following:
       ``(9) Applicable dollar amount.--For purposes of paragraph 
     (2)(B)--
       ``(A) In general.--The applicable dollar amount for any 
     calendar year shall be determined as follows:
       ``(i) Joint returns and surviving spouses.--In the case of 
     the table contained in subsection (a)--

                                                             Applicable
``Calendar year:                                         dollar amount:
  2001........................................................$500 ....

  2002......................................................$1,000 ....

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

       ``(ii) Other tables.--In the case of the table contained in 
     subsection (b), (c), or (d)--

                                                             Applicable
``Calendar year:                                         dollar amount:
  2001........................................................$250 ....

  2002........................................................$500 ....

  2003 and thereafter......................................$2,500. ....

       ``(B) Cost-of-living adjustment.--In the case of any 
     taxable year beginning in any calendar year after 2003, the 
     applicable dollar amount shall be increased by an amount 
     equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of living adjustment determined under 
     paragraph (3) for the calendar year in which the taxable year 
     begins, determined by substituting `calendar year 2002' for 
     `calendar year 1992' in subparagraph (B) thereof.''
       (b) Rounding.--Section 1(f)(6)(A) is amended by inserting 
     ``(after being increased under paragraph (2)(B))'' after 
     ``paragraph (2)(A)''.

                      TITLE II--FAMILY TAX RELIEF

     SEC. 201. MODIFICATION OF ALTERNATIVE MINIMUM TAX FOR 
                   INDIVIDUALS.

       (a) Nonrefundable Personal Credits Fully Allowed Against 
     Regular Tax Liability.--Subsection (a) of section 26 
     (relating to limitation based on amount of tax) is amended to 
     read as follows:
       ``(a) Limitation Based on Amount of Tax.--The aggregate 
     amount of credits allowed by this subpart for the taxable 
     year shall not exceed the taxpayer's regular tax liability 
     for the taxable year.''
       (b) Child credit.--Subsection (d) of section 24 is amended 
     by striking paragraph (2) and by redesignating paragraph (3) 
     as paragraph (2).
       (c) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     1998.

     SEC. 202. MARRIAGE PENALTY RELIEF FOR EARNED INCOME CREDIT.

       (a) In General.--Paragraph (2) of section 32(b) (relating 
     to percentages and amounts) is amended--
       (1) by striking ``Amounts.--The earned'' and inserting 
     ``Amounts.--
       ``(A) In general.--Subject to subparagraph (B), the 
     earned'', and
       (2) by adding at the end the following new subparagraph:
       ``(B) Joint returns.--In the case of a joint return, the 
     phaseout amount determined under subparagraph (A) shall be 
     increased by $2,000.''
       (b) Inflation adjustment.--Paragraph (1)(B) of section 
     32(j) (relating to inflation adjustments) is amended to read 
     as follows:
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined--
       ``(i) in the case of amounts in subsections (b)(1)(A) and 
     (i)(1), by substituting `calendar year 1995' for `calendar 
     year 1992' in subparagraph (B) thereof, and
       ``(ii) in the case of the $2,000 amount in subsection 
     (b)(1)(B), by substituting `calendar year 2004' for `calendar 
     year 1992' in subparagraph (B) of such section 1.''
       (c) Rounding.--Section 32(j)(2)(A) (relating to rounding) 
     is amended by striking ``subsection (b)(2)'' and inserting 
     ``subsection (b)(2)(A) (after being increased under 
     subparagraph (B) thereof)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. 203. MODIFICATION OF DEPENDENT CARE CREDIT.

       (a) Increase in Percentage of Employment-Related Expenses 
     Taken Into Account.--Subsection (a)(2) of section 21 
     (relating to expenses for household and dependent care 
     services necessary for gainful employment) is amended--
       (1) by striking ``30 percent'' and inserting ``50 
     percent'',
       (2) by striking ``$2,000'' and inserting ``$1,000'', and
       (3) by striking ``$10,000'' and inserting ``$30,000''.
       (b) Indexing of Limit on Employment-Related Expenses.--
     Section 21(c) (relating to dollar limit on amount creditable) 
     is amended to read as follows:
       ``(c) Dollar Limit on Amount Creditable.--
       ``(1) In general.--The amount of the employment-related 
     expenses incurred during any taxable year which may be taken 
     into account under subsection (a) shall not exceed--
       ``(A) an amount equal to 50 percent of the amount 
     determined under subparagraph (B) if there is 1 qualifying 
     individual with respect to the taxpayer for such taxable 
     year, or
       ``(B) $4,800 if there are 2 or more qualifying individuals 
     with respect to the taxpayer for such taxable year.

     The amount determined under subparagraph (A) or (B) 
     (whichever is applicable) shall be reduced by the aggregate 
     amount excludable from gross income under section 129 for the 
     taxable year.

[[Page 18518]]

       ``(2) Cost-of-living adjustment.--
       ``(A) In general.--In the case of a taxable year beginning 
     after 2000, the $4,800 amount under paragraph (1)(B) shall be 
     increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 1999' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(B) Rounding rules.--If any amount after adjustment under 
     subparagraph (A) is not a multiple of $50, such amount shall 
     be rounded to the next lower multiple of $50.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 204. EXCLUSION FOR FOSTER CARE PAYMENTS TO APPLY TO 
                   PAYMENTS BY QUALIFIED PLACEMENT AGENCIES.

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

     to make foster care payments under the foster care program of 
     such State or political subdivision to providers of foster 
     care.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

              TITLE III--SAVINGS AND INVESTMENT PROVISIONS

                  Subtitle A--Long-Term Capital Gains

     SEC. 301. LONG-TERM CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

       (a) General Rule.--Part I of subchapter P of chapter 1 
     (relating to treatment of capital gains) is amended by 
     redesignating section 1202 as section 1203 and by inserting 
     after section 1201 the following new section:

     ``SEC. 1202. CAPITAL GAINS DEDUCTION FOR INDIVIDUALS.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a deduction for the taxable year an 
     amount equal to the lesser of--
       ``(1) the net capital gain of the taxpayer for the taxable 
     year, or
       ``(2) the applicable dollar amount.
       ``(b) Applicable Dollar Amount.--The applicable dollar 
     amount for any calendar year shall be determined as follows:
       ``(1) Joint returns.--In the case of a taxpayer described 
     in section 1(a)--

                                                             Applicable
``Calendar year:                                         dollar amount:
  2000 and 2001.............................................$1,000 ....

  2002 and thereafter......................................$1,500. ....

       ``(2) Other taxpayers.--In the case of a taxpayer not 
     described in paragraph (1)--

                                                             Applicable
``Calendar year:                                         dollar amount:
  2000 and 2001...............................................$500 ....

  2002 and thereafter......................................$1,000. ....

       ``(c) Sales Between Related Parties.--Gains from sales and 
     exchanges to any related person (within the meaning of 
     section 267(b) or 707(b)(1)) shall not be taken into account 
     in determining net capital gain.
       ``(d) Special Rule for Section 1250 Property.--Solely for 
     purposes of this section, in applying section 1250 to any 
     disposition of section 1250 property, all depreciation 
     adjustments in respect of the property shall be treated as 
     additional depreciation.
       ``(e) Section Not To Apply to Certain Taxpayers.--No 
     deduction shall be allowed under this section to--
       ``(1) an individual with respect to whom a deduction under 
     section 151 is allowable to another taxpayer for a taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins,
       ``(2) a married individual (within the meaning of section 
     7703) filing a separate return for the taxable year, or
       ``(3) an estate or trust.
       ``(f) Special Rule for Pass-Thru Entities.--
       ``(1) In general.--In applying this section with respect to 
     any pass-thru entity, the determination of when the sale or 
     exchange occurs shall be made at the entity level.
       ``(2) Pass-thru entity defined.--For purposes of paragraph 
     (1), the term `pass-thru entity' means--
       ``(A) a regulated investment company,
       ``(B) a real estate investment trust,
       ``(C) an S corporation,
       ``(D) a partnership,
       ``(E) an estate or trust, and
       ``(F) a common trust fund.''
       (b) Coordination With Maximum Capital Gains Rate.--
     Paragraph (3) of section 1(h) (relating to maximum capital 
     gains rate) is amended to read as follows:
       ``(3) Coordination with other provisions.--For purposes of 
     this subsection, the amount of the net capital gain shall be 
     reduced (but not below zero) by the sum of--
       ``(A) the amount of the net capital gain taken into account 
     under section 1202(a) for the taxable year, plus
       ``(B) the amount which the taxpayer elects to take into 
     account as investment income for the taxable year under 
     section 163(d)(4)(B)(iii).''
       (c) Deduction Allowable in Computing Adjusted Gross 
     Income.--Subsection (a) of section 62 (defining adjusted 
     gross income) is amended by inserting after paragraph (17) 
     the following new paragraph:
       ``(18) Long-term capital gains.--The deduction allowed by 
     section 1202.''
       (d) Treatment of Collectibles.--
       (1) In general.--Section 1222 (relating to other terms 
     relating to capital gains and losses) is amended by inserting 
     after paragraph (11) the following new paragraph:
       ``(12) Special rule for collectibles.--
       ``(A) In general.--Any gain or loss from the sale or 
     exchange of a collectible shall be treated as a short-term 
     capital gain or loss (as the case may be), without regard to 
     the period such asset was held. The preceding sentence shall 
     apply only to the extent the gain or loss is taken into 
     account in computing taxable income.
       ``(B) Treatment of certain sales of interest in 
     partnership, etc.--For purposes of subparagraph (A), any gain 
     from the sale or exchange of an interest in a partnership, S 
     corporation, or trust which is attributable to unrealized 
     appreciation in the value of collectibles held by such entity 
     shall be treated as gain from the sale or exchange of a 
     collectible. Rules similar to the rules of section 751(f) 
     shall apply for purposes of the preceding sentence.
       ``(C) Collectible.--For purposes of this paragraph, the 
     term `collectible' means any capital asset which is a 
     collectible (as defined in section 408(m) without regard to 
     paragraph (3) thereof).''
       (2) Charitable deduction not affected.--
       (A) Paragraph (1) of section 170(e) is amended by adding at 
     the end the following new sentence: ``For purposes of this 
     paragraph, section 1222 shall be applied without regard to 
     paragraph (12) thereof (relating to special rule for 
     collectibles).''
       (B) Clause (iv) of section 170(b)(1)(C) is amended by 
     inserting before the period at the end the following: ``and 
     section 1222 shall be applied without regard to paragraph 
     (12) thereof (relating to special rule for collectibles)''.
       (e) Conforming Amendments.--
       (1) Section 57(a)(7) is amended by striking ``1202'' and 
     inserting ``1203''.
       (2) Clause (iii) of section 163(d)(4)(B) is amended to read 
     as follows:
       ``(iii) the sum of--

       ``(I) the portion of the net capital gain referred to in 
     clause (ii)(II) (or, if lesser, the net capital gain referred 
     to in clause (ii)(I)) taken into account under section 1202, 
     reduced by the amount of the deduction allowed with respect 
     to such gain under section 1202, plus

       ``(II) so much of the gain described in subclause (I) which 
     is not taken into account under section 1202 and which the 
     taxpayer elects to take into account under this clause.''

       (3) Subparagraph (B) of section 172(d)(2) is amended to 
     read as follows:
       ``(B) the deduction under section 1202 and the exclusion 
     under section 1203 shall not be allowed.''
       (4) Section 642(c)(4) is amended by striking ``1202'' and 
     inserting ``1203''.
       (5) Section 643(a)(3) is amended by striking ``1202'' and 
     inserting ``1203''.
       (6) Paragraph (4) of section 691(c) is amended inserting 
     ``1203,'' after ``1202,''.
       (7) The second sentence of section 871(a)(2) is amended by 
     inserting ``or 1203'' after ``section 1202''.
       (8) The last sentence of section 1044(d) is amended by 
     striking ``1202'' and inserting ``1203''.
       (9) Paragraph (1) of section 1402(i) is amended by 
     inserting ``, and the deduction provided by section 1202 and 
     the exclusion provided by section 1203 shall not apply'' 
     before the period at the end.
       (10) Section 121 is amended by adding at the end the 
     following new subsection:
       ``(h) Cross Reference.--

  ``For treatment of eligible gain not excluded under subsection (a), 
see section 1202.''
       (11) Section 1203, as redesignated by subsection (a), is 
     amended by adding at the end the following new subsection:
       ``(l) Cross Reference.--

  ``For treatment of eligible gain not excluded under subsection (a), 
see section 1202.''

[[Page 18519]]

       (12) The table of sections for part I of subchapter P of 
     chapter 1 is amended by striking the item relating to section 
     1202 and by inserting after the item relating to section 1201 
     the following new items:

``Sec. 1202. Capital gains deduction.
``Sec. 1203. 50-percent exclusion for gain from certain small business 
              stock.''
       (f) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 1999.
       (2) Collectibles.--The amendments made by subsection (d) 
     shall apply to sales and exchanges after December 31, 1999.

             Subtitle B--Individual Retirement Arrangements

     SEC. 311. MODIFICATION OF DEDUCTION LIMITS FOR IRA 
                   CONTRIBUTIONS.

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

``For taxable years                                      The deductible
beginning in:                                                amount is:
  2001......................................................$1,500 ....

  2002......................................................$2,000 ....

  2003 and thereafter.......................................$3,500.....

       ``(B) Cost-of-living adjustment.--
       ``(i) In general.--In the case of any taxable year 
     beginning in a calendar year after 2003, the $3,500 amount 
     under subparagraph (A) shall be increased by an amount equal 
     to--

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

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $100, such amount shall 
     be rounded to the next lower multiple of $100.''

                     Subtitle C--Expanding Coverage

     SEC. 321. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX 
                   CONTRIBUTIONS.

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

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

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

``Sec. 402A. Optional treatment of elective deferrals as plus 
              contributions.''
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

[[Page 18520]]



     SEC. 322. INCREASE IN ELECTIVE CONTRIBUTION LIMITS.

       (a) Elective Deferrals.--
       (1) In general.--Paragraph (1) of section 402(g) (relating 
     to limitation on exclusion for elective deferrals) is amended 
     to read as follows:
       ``(1) In general.--
       ``(A) Limitation.--Notwithstanding subsections (e)(3) and 
     (h)(1)(B), the elective deferrals of any individual for any 
     taxable year shall be included in such individual's gross 
     income to the extent the amount of such deferrals for the 
     taxable year exceeds the applicable dollar amount.
       ``(B) Applicable dollar amount.--For purposes of 
     subparagraph (A), the applicable dollar amount shall be the 
     amount determined in accordance with the following table:

``For taxable years                               The applicable dollar
beginning in calendar year:                                  amount is:
  2001.....................................................$11,000 ....

  2002.....................................................$12,000 ....

  2003.....................................................$13,000 ....

  2004.....................................................$14,000 ....

  2005 or thereafter........................................$15,000....

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

``For taxable years                               The applicable dollar
beginning in calendar year:                                  amount is:
  2001......................................................$9,000 ....

  2002.....................................................$10,000 ....

  2003.....................................................$11,000 ....

  2004 or thereafter.......................................$12,000.....

       ``(B) Cost-of-living adjustments.--In the case of taxable 
     years beginning after December 31, 2004, the Secretary shall 
     adjust the $12,000 amount specified in the table in 
     subparagraph (A) at the same time and in the same manner as 
     under section 415(d), except that the base period shall be 
     the calendar quarter beginning July 1, 2003, and any increase 
     under this paragraph which is not a multiple of $500 shall be 
     rounded to the next lowest multiple of $500.''
       (c) Simple Retirement Accounts.--
       (1) Limitation.--Clause (ii) of section 408(p)(2)(A) 
     (relating to general rule for qualified salary reduction 
     arrangement) is amended by striking ``$6,000'' and inserting 
     ``the applicable dollar amount''.
       (2) Applicable dollar amount.--Subparagraph (E) of 
     408(p)(2) is amended to read as follows:
       ``(E) Applicable dollar amount; cost-of-living 
     adjustment.--
       ``(i) In general.--For purposes of subparagraph (A)(ii), 
     the applicable dollar amount shall be the amount determined 
     in accordance with the following table:

``For taxable years                               The applicable dollar
beginning in calendar year:                                  amount is:
  2001......................................................$7,000 ....

  2002......................................................$8,000 ....

  2003......................................................$9,000 ....

  2004 or thereafter.......................................$10,000.....

       ``(ii) Cost-of-living adjustment.--In the case of a year 
     beginning after December 31, 2004, the Secretary shall adjust 
     the $10,000 amount under clause (i) at the same time and in 
     the same manner as under section 415(d), except that the base 
     period taken into account shall be the calendar quarter 
     beginning July 1, 2003, and any increase under this 
     subparagraph which is not a multiple of $500 shall be rounded 
     to the next lower multiple of $500.''
       (3) Conforming amendments.--
       (A) Subclause (I) of section 401(k)(11)(B)(i) is amended by 
     striking ``$6,000'' and inserting ``the amount in effect 
     under section 408(p)(2)(A)(ii)''.
       (B) Section 401(k)(11) is amended by striking subparagraph 
     (E).
       (d) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 323. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND 
                   SOLE PROPRIETORS.

       (a) Amendment to 1986 Code.--Subparagraph (B) of section 
     4975(f)(6) (relating to exemptions not to apply to certain 
     transactions) is amended by adding at the end the following 
     new clause:
       ``(iii) Loan exception.--For purposes of subparagraph 
     (A)(i), the term `owner-employee' shall only include a person 
     described in subclause (II) or (III) of clause (i).''
       (b) Amendment to ERISA.--Section 408(d)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(C) For purposes of paragraph (1)(A), the term `owner-
     employee' shall only include a person described in clause 
     (ii) or (iii) of subparagraph (A).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to loans made after December 31, 2000.

     SEC. 324. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR 
                   PURPOSES OF DEDUCTION LIMITS.

       (a) In General.--Section 404 (relating to deduction for 
     contributions of an employer to an employees' trust or 
     annuity plan and compensation under a deferred payment plan) 
     is amended by adding at the end the following new subsection:
       ``(n) Elective Deferrals Not Taken Into Account for 
     Purposes of Deduction Limits.--Elective deferrals (as defined 
     in section 402(g)(3)) shall not be subject to any limitation 
     contained in paragraph (3), (7), or (9) of subsection (a), 
     and such elective deferrals shall not be taken into account 
     in applying any such limitation to any other contributions.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 325. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL 
                   EMPLOYERS.

       (a) In General.--Subparagraph (A) of section 4006(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1306(a)(3)(A)) is amended--
       (1) in clause (i), by inserting ``other than a new single-
     employer plan (as defined in subparagraph (F)) maintained by 
     a small employer (as so defined),'' after ``single-employer 
     plan,'',
       (2) in clause (iii), by striking the period at the end and 
     inserting ``, and'', and
       (3) by adding at the end the following new clause:
       ``(iv) in the case of a new single-employer plan (as 
     defined in subparagraph (F)) maintained by a small employer 
     (as so defined) for the plan year, $5 for each individual who 
     is a participant in such plan during the plan year.''
       (b) Definition of New Single-Employer Plan.--Section 
     4006(a)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1306(a)(3)) is amended by adding at the end 
     the following new subparagraph:
       ``(F)(i) For purposes of this paragraph, a single-employer 
     plan maintained by a contributing sponsor shall be treated as 
     a new single-employer plan for each of its first 5 plan years 
     if, during the 36-month period ending on the date of the 
     adoption of such plan, the sponsor or any member of such 
     sponsor's controlled group (or any predecessor of either) had 
     not established or maintained a plan to which this title 
     applies with respect to which benefits were accrued for 
     substantially the same employees as are in the new single-
     employer plan.
       ``(ii)(I) For purposes of this paragraph, the term `small 
     employer' means an employer which on the first day of any 
     plan year has, in aggregation with all members of the 
     controlled group of such employer, 100 or fewer employees.
       ``(II) In the case of a plan maintained by 2 or more 
     contributing sponsors that are not part of the same 
     controlled group, the employees of all contributing sponsors 
     and controlled groups of such sponsors shall be aggregated 
     for purposes of determining whether any contributing sponsor 
     is a small employer.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to plans established after December 31, 2000.

     SEC. 326. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW PLANS.

       (a) In General.--Subparagraph (E) of section 4006(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1306(a)(3)(E)) is amended by adding at the end the 
     following new clause:

[[Page 18521]]

       ``(v) In the case of a new defined benefit plan, the amount 
     determined under clause (ii) for any plan year shall be an 
     amount equal to the product of the amount determined under 
     clause (ii) and the applicable percentage. For purposes of 
     this clause, the term `applicable percentage' means--
       ``(I) 0 percent, for the first plan year.
       ``(II) 20 percent, for the second plan year.
       ``(III) 40 percent, for the third plan year.
       ``(IV) 60 percent, for the fourth plan year.
       ``(V) 80 percent, for the fifth plan year.

     For purposes of this clause, a defined benefit plan (as 
     defined in section 3(35)) maintained by a contributing 
     sponsor shall be treated as a new defined benefit plan for 
     its first 5 plan years if, during the 36-month period ending 
     on the date of the adoption of the plan, the sponsor and each 
     member of any controlled group including the sponsor (or any 
     predecessor of either) did not establish or maintain a plan 
     to which this title applies with respect to which benefits 
     were accrued for substantially the same employees as are in 
     the new plan.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to plans established after December 31, 2000.

     SEC. 327. ELIMINATION OF USER FEE FOR REQUESTS TO IRS 
                   REGARDING NEW PENSION PLANS.

       (a) Elimination of Certain User Fees.--The Secretary of the 
     Treasury or the Secretary's delegate shall not require 
     payment of user fees under the program established under 
     section 7527 of the Internal Revenue Code of 1986 for 
     requests to the Internal Revenue Service for ruling letters, 
     opinion letters, and determination letters or similar 
     requests with respect to the qualified status of a new 
     pension benefit plan or any trust which is part of the plan.
       (b) New Pension Benefit Plan.--For purposes of this 
     section--
       (1) In general.--The term ``new pension benefit plan'' 
     means a pension, profit-sharing, stock bonus, annuity, or 
     employee stock ownership plan which is maintained by one or 
     more eligible employers if such employer (or any predecessor 
     employer) has not made a prior request described in 
     subsection (a) for such plan (or any predecessor plan).
       (2) Eligible employer.--The term ``eligible employer'' 
     means an employer (or any predecessor employer) which has not 
     established or maintained a qualified employer plan with 
     respect to which contributions were made, or benefits were 
     accrued for service, in the 3 most recent taxable years 
     ending prior to the first taxable year in which the request 
     is made.
       (c) Effective Date.--The provisions of this section shall 
     apply with respect to requests made after December 31, 2000.

     SEC. 328. SAFE ANNUITIES AND TRUSTS.

       (a) In General.--Subpart A of part I of subchapter D of 
     chapter 1 (relating to deferred compensation, etc.) is 
     amended by inserting after section 408A the following new 
     section:

     ``SEC. 408B. SAFE ANNUITIES AND TRUSTS.

       ``(a) Employer Eligibility.--
       ``(1) In general.--An employer may establish and maintain a 
     SAFE annuity or a SAFE trust for any year only if--
       ``(A) the employer is an eligible employer (as defined in 
     section 408(p)(2)(C)), and
       ``(B) the employer does not maintain (and no predecessor of 
     the employer maintains) a qualified plan (other than a 
     permissible plan) with respect to which contributions were 
     made, or benefits were accrued, for service in any year in 
     the period beginning with the year such annuity or trust 
     became effective and ending with the year for which the 
     determination is being made.
       ``(2) Definitions.--For purposes of paragraph (1)--
       ``(A) Qualified plan.--The term `qualified plan' has the 
     meaning given such term by section 408(p)(2)(D)(ii).
       ``(B) Permissible plan.--The term `permissible plan' 
     means--
       ``(i) a SIMPLE plan described in section 408(p),
       ``(ii) a SIMPLE 401(k) plan described in section 
     401(k)(11),
       ``(iii) an eligible deferred compensation plan described in 
     section 457(b),
       ``(iv) a collectively bargained plan but only if the 
     employees eligible to participate in such plan are not also 
     entitled to a benefit described in subsection (b)(5) or 
     (c)(5), or
       ``(v) a plan under which there may be made only--

       ``(I) elective deferrals described in section 402(g)(3), 
     and
       ``(II) employer matching contributions not in excess of the 
     amounts described in subclauses (I) and (II) of section 
     401(k)(12)(B)(i).

       ``(b) SAFE Annuity.--
       ``(1) In general.--For purposes of this title, the term 
     `SAFE annuity' means an individual retirement annuity (as 
     defined in section 408(b) without regard to paragraph (2) 
     thereof and without regard to the limitation on aggregate 
     annual premiums contained in the flush language of section 
     408(b)) if--
       ``(A) such annuity meets the requirements of paragraphs (2) 
     through (7), and
       ``(B) the only contributions to such annuity (other than 
     rollover contributions) are employer contributions.

     Nothing in this section shall be construed as preventing an 
     employer from using a group annuity contract which is 
     divisible into individual retirement annuities for purposes 
     of providing SAFE annuities.
       ``(2) Participation requirements.--
       ``(A) In general.--The requirements of this paragraph are 
     met for any year only if all employees of the employer who--
       ``(i) received at least $5,000 in compensation from the 
     employer during any 2 consecutive preceding years, and
       ``(ii) received at least $5,000 in compensation during the 
     year,

     are entitled to the benefit described in paragraph (5) for 
     such year.
       ``(B) Excludable employees.--An employer may elect to 
     exclude from the requirements under subparagraph (A) 
     employees described in section 410(b)(3).
       ``(3) Vesting.--The requirements of this paragraph are met 
     if the employee's rights to any benefits under the annuity 
     are nonforfeitable.
       ``(4) Benefit form.--
       ``(A) In general.--The requirements of this paragraph are 
     met if the only form of benefit is--
       ``(i) a benefit payable annually in the form of a single 
     life annuity with monthly payments (with no ancillary 
     benefits) beginning at age 65, or
       ``(ii) at the election of the participant, any other form 
     of benefit which is the actuarial equivalent (based on the 
     assumptions specified in the SAFE annuity) of the benefit 
     described in clause (i).

     The requirements of section 401(a)(11) shall apply to the 
     benefits described in this subparagraph.
       ``(B) Direct transfers and rollovers.--A plan shall not 
     fail to meet the requirements of this paragraph by reason of 
     permitting, at the election of the employee, a trustee-to-
     trustee transfer or a rollover contribution.
       ``(5) Amount of annual accrued benefit.--
       ``(A) In general.--The requirements of this paragraph are 
     met for any year if the accrued benefit of each participant 
     derived from employer contributions for such year, when 
     expressed as a benefit described in paragraph (4)(A), is not 
     less than the applicable percentage of the participant's 
     compensation for such year.
       ``(B) Applicable percentage.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable percentage' means 3 
     percent.
       ``(ii) Election of lower percentage.--An employer may elect 
     to apply an applicable percentage of 1 percent, 2 percent or 
     zero percent for any plan year for all employees eligible to 
     participate in the plan for such year if the employer 
     notifies the employees of such percentage within a reasonable 
     period before the beginning of such year.
       ``(C) Compensation limit.--The compensation taken into 
     account under this paragraph for any year shall not exceed 
     the limitation in effect for such year under section 
     401(a)(17).
       ``(D) Credit for service before plan adopted.--
       ``(i) In general.--An employer may elect to take into 
     account a specified number of years of service (not greater 
     than 10) performed before the adoption of the plan (each 
     hereinafter referred to as a `prior service year') as service 
     under the plan if the same specified number of years is 
     available to all employees eligible to participate in the 
     plan for the first plan year.
       ``(ii) Accrual of prior service benefit.--Such an election 
     shall be effective for a prior service year only if the 
     requirements of this paragraph are met for an eligible plan 
     year (with respect to employees entitled to credit for such 
     prior service year) by doubling the applicable percentage (if 
     any) for such plan year. For purposes of the preceding 
     sentence, an eligible plan year is a plan year in the period 
     of consecutive plan years (but not more than the number 
     specified under clause (i)) beginning with the first plan 
     year that the plan is in effect.
       ``(iii) Election may not apply to certain prior service 
     years.--This subparagraph shall not apply with respect to any 
     prior service year of an employee if--

       ``(I) for any part of such prior service year such employee 
     was an active participant (within the meaning of section 
     219(g)(5)) under any defined benefit plan of the employer (or 
     any predecessor thereof), or

       ``(II) such employee received during such prior service 
     year less than $5,000 in compensation from the employer.

       ``(6) Funding.--
       ``(A) In general.--The requirements of this paragraph are 
     met only if the employer is required to contribute to the 
     annuity for each plan year the amount necessary to purchase a 
     SAFE annuity in the amount of the benefit accrued for such 
     year for each participant entitled to such benefit.
       ``(B) Time when contributions deemed made.--For purposes of 
     this paragraph, an employer shall be deemed to have made a 
     contribution on the last day of the preceding taxable year if 
     the payment is on account of such taxable year and is made 
     not later than the time prescribed by law for filing the 
     return for such taxable year (including extensions thereof).
       ``(C) Penalty for failure to make required contribution.--
     The taxes imposed by section 4971 shall apply to a failure to 
     make

[[Page 18522]]

     the contribution required by this paragraph in the same 
     manner as if the amount of the failure were an accumulated 
     funding deficiency to which such section applies.
       ``(7) Limitation on distributions.--The requirements of 
     this paragraph are met only if payments under the contract 
     may be made only after the employee attains age 65 or when 
     the employee separates from service, dies, or becomes 
     disabled (within the meaning of section 72(m)(7)).
       ``(c) SAFE Trust.--
       ``(1) In general.--For purposes of this title, the term 
     `SAFE trust' means a trust forming part of a defined benefit 
     plan if--
       ``(A) such trust meets the requirements of section 401(a) 
     as modified by subsection (d),
       ``(B) a participant's benefits under the plan are based 
     solely on the balance of a separate account in such plan of 
     such participant,
       ``(C) such plan meets the requirements of paragraphs (2) 
     through (8), and
       ``(D) the only contributions to such trust (other than 
     rollover contributions) are employer contributions.
       ``(2) Participation requirements.--A plan meets the 
     requirements of this paragraph for any year only if the 
     requirements of subsection (b)(2) are met for such year.
       ``(3) Vesting.--A plan meets the requirements of this 
     paragraph for any year only if the requirements of subsection 
     (b)(3) are met for such year.
       ``(4) Benefit form.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     a plan meets the requirements of this paragraph only if the 
     trustee distributes a SAFE annuity that satisfies subsection 
     (b)(4) where the annual benefit described in subsection 
     (b)(4)(A) is not less than the accrued benefit determined 
     under paragraph (5).
       ``(B) Direct transfers to individual retirement plan or 
     safe annuity.--A plan shall not fail to meet the requirements 
     of this paragraph by reason of permitting, as an optional 
     form of benefit, the distribution of the entire balance to 
     the credit of the employee. If the employee is under age 65, 
     such distribution must be in the form of a direct trustee-to-
     trustee transfer to a SAFE annuity, another SAFE trust, or a 
     SAFE rollover plan (or, in the case of a distribution that 
     does not exceed the dollar limit in effect under section 
     411(a)(11)(A), any other individual retirement plan).
       ``(C) SAFE rollover plan.--For purposes of this section, 
     the term `SAFE rollover plan' means an individual retirement 
     plan for the benefit of the employee to which a rollover was 
     made from a SAFE annuity, SAFE trust, or another SAFE 
     rollover plan.
       ``(5) Amount of annual accrued benefit.--A plan meets the 
     requirements of this paragraph for any year only if the 
     requirements of subsection (b)(5) are met for such year.
       ``(6) Funding.--
       ``(A) In general.--A plan meets the requirements of this 
     paragraph for any year only if--
       ``(i) the requirements of subsection (b)(6) are met for 
     such year,
       ``(ii) in the case of a plan which has an unfunded annuity 
     amount with respect to the account of any participant, the 
     plan requires that the employer make an additional 
     contribution to such plan (at the time the annuity contract 
     to which such amount relates is purchased) equal to the 
     unfunded annuity amount, and
       ``(iii) in the case of a plan which has an unfunded prior 
     year liability as of the close of such plan year, the plan 
     requires that the employer make an additional contribution to 
     such plan for such year equal to the amount of such unfunded 
     prior year liability no later than 8\1/2\ months following 
     the end of the plan year.
       ``(B) Unfunded annuity amount.--For purposes of this 
     paragraph, the term `unfunded annuity amount' means, with 
     respect to the account of any participant for whom an annuity 
     is being purchased, the excess (if any) of--
       ``(i) the amount necessary to purchase an annuity contract 
     which meets the requirements of subsection (b)(4) in the 
     amount of the participant's accrued benefit determined under 
     paragraph (5), over
       ``(ii) the balance in such account at the time such 
     contract is purchased.
       ``(C) Unfunded prior year liability.--For purposes of this 
     paragraph, the term `unfunded prior year liability' means, 
     with respect to any plan year, the excess (if any) of--
       ``(i) the aggregate of the present value of the accrued 
     liabilities under the plan as of the close of the prior plan 
     year, over
       ``(ii) the value of the plan's assets determined under 
     section 412(c)(2) as of the close of the plan year 
     (determined without regard to any contributions for such plan 
     year).

     Such present value shall be determined using the assumptions 
     specified in subparagraph (D).
       ``(D) Actuarial assumptions.--In determining the amount 
     required to be contributed under subparagraph (A)--
       ``(i) the assumed interest rate shall be not less than 3 
     percent, and not greater than 5 percent, per year,
       ``(ii) the assumed mortality shall be determined under the 
     applicable mortality table (as defined in section 417(e)(3), 
     as modified by the Secretary so that it does not include any 
     assumption for preretirement mortality), and
       ``(iii) the assumed retirement age shall be 65.
       ``(E) Changes in mortality table.--If, for purposes of this 
     subsection, the applicable mortality table under section 
     417(e)(3) for any plan year is not the same as such table for 
     the prior plan year, the Secretary shall prescribe 
     regulations for such purposes which phase in the effect of 
     the changes over a reasonable period of plan years determined 
     by the Secretary.
       ``(F) Penalty for failure to make required contribution.--
     The taxes imposed by section 4971 shall apply to a failure to 
     make the contribution required by this paragraph in the same 
     manner as if the amount of the failure were an accumulated 
     funding deficiency to which such section applies.
       ``(7) Separate accounts for participants.--A plan meets the 
     requirements of this paragraph for any year only if the plan 
     provides--
       ``(A) for an individual account for each participant, and
       ``(B) for benefits based solely on--
       ``(i) the amount contributed to the participant's account,
       ``(ii) any income, expenses, gains and losses, and any 
     forfeitures of accounts of other participants which may be 
     allocated to such participant's account, and
       ``(iii) the amount of any unfunded annuity amount with 
     respect to the participant.
       ``(8) Trust may not hold securities which are not readily 
     tradable.--A plan meets the requirements of this paragraph 
     only if the plan prohibits the trust from holding directly or 
     indirectly securities which are not readily tradable on an 
     established securities market or otherwise. Nothing in this 
     paragraph shall prohibit the trust from holding insurance 
     company products regulated by State law.
       ``(d) Special Rules for SAFE Annuities and Trusts.--
       ``(1) Certain requirements treated as met.--For purposes of 
     section 401(a), a SAFE annuity and a SAFE trust shall be 
     treated as meeting the requirements of the following 
     provisions:
       ``(A) Section 401(a)(4) (relating to nondiscrimination 
     rules).
       ``(B) Section 401(a)(26) (relating to minimum 
     participation).
       ``(C) Section 410 (relating to minimum participation and 
     coverage requirements).
       ``(D) Section 411(b) (relating to accrued benefit 
     requirements).
       ``(E) Section 412 (relating to minimum funding standards).
       ``(F) Section 415 (relating to limitations on benefits and 
     contributions under qualified plans).
       ``(G) Section 416 (relating to special rules for top-heavy 
     plans).
       ``(2) Contributions not taken into account in applying 
     limits to other plans.--
       ``(A) Deduction limits.--Contributions to a SAFE annuity or 
     a SAFE trust shall not be taken into account in applying 
     sections 404 to other plans maintained by the employer.
       ``(B) Benefit limits.--A SAFE annuity or a SAFE trust shall 
     be treated as a defined benefit plan for purposes of section 
     415.
       ``(3) Use of designated financial institutions.--A rule 
     similar to the rule of section 408(p)(7) (without regard to 
     the last sentence thereof) shall apply for purposes of this 
     section.
       ``(4) Definitions.--The definitions in section 408(p)(6) 
     shall apply for purposes of this section.''
       (b) Deduction Limits Not To Apply to Employer 
     Contributions.--
       (1) In general.--Section 404 (relating to deductions for 
     contributions of an employer to pension, etc., plans), as 
     amended by section 314, is amended by adding at the end the 
     following new subsection:
       ``(o) Special Rules for SAFE Annuities.--
       ``(1) In general.--Employer contributions to a SAFE annuity 
     shall be treated as if they are made to a plan subject to the 
     requirements of this section.
       ``(2) Deductible limit.--For purposes of subsection 
     (a)(1)(A)(i), the amount necessary to satisfy the minimum 
     funding requirement of section 408B(b)(6) or (c)(6) shall be 
     treated as the amount necessary to satisfy the minimum 
     funding requirement of section 412.''
       (2) Coordination with deduction under section 219.--
       (A) Section 219(b) (relating to maximum amount of 
     deduction), as amended by section 301, is amended by adding 
     at the end the following new paragraph:
       ``(6) Special rule for safe annuities.--This section shall 
     not apply with respect to any amount contributed to a SAFE 
     annuity established under section 408B(b).''
       (B) Section 219(g)(5)(A) (defining active participant) is 
     amended by striking ``or'' at the end of clause (v) and by 
     adding at the end the following new clause:
       ``(vii) any SAFE annuity (within the meaning of section 
     408B), or''.
       (c) Contributions and Distributions.--
       (1) Section 402 (relating to taxability of beneficiary of 
     employees' trust) is amended by adding at the end the 
     following new subsection:
       ``(l) Treatment of SAFE Annuities.--Rules similar to the 
     rules of paragraphs (1)

[[Page 18523]]

     and (3) of subsection (h) shall apply to contributions and 
     distributions with respect to a SAFE annuities under section 
     408B.''
       (2) Section 408(d)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(H) SAFE annuities.--This paragraph shall not apply to 
     any amount paid or distributed out of a SAFE annuity (as 
     defined in section 408B) unless it is paid in a trustee-to-
     trustee transfer into another SAFE annuity.''
       (d) Increased Penalty on Early Withdrawals.--Section 72(t) 
     (relating to additional tax on early distributions) is 
     amended by adding at the end the following new paragraph:
       ``(7) Special rules for safe annuities and trusts.--In the 
     case of any amount received from a SAFE annuity or a SAFE 
     trust (within the meaning of section 408B), paragraph (1) 
     shall be applied by substituting `20 percent' for `10 
     percent'.''
       (e) Simplified Employer Reports.--
       (1) SAFE annuities.--Section 408(l) (relating to simplified 
     employer reports) is amended by adding at the end the 
     following new paragraph:
       ``(3) SAFE annuities.--
       ``(A) Simplified report.--The employer maintaining any SAFE 
     annuity (within the meaning of section 408B) shall file a 
     simplified annual return with the Secretary containing only 
     the information described in subparagraph (B).
       ``(B) Contents.--The return required by subparagraph (A) 
     shall set forth--
       ``(i) the name and address of the employer,
       ``(ii) the date the plan was adopted,
       ``(iii) the number of employees of the employer,
       ``(iv) the number of such employees who are eligible to 
     participate in the plan,
       ``(v) the total amount contributed by the employer to each 
     such annuity for such year and the minimum amount required 
     under section 408B to be so contributed,
       ``(vi) the percentage elected under section 408B(b)(5)(B), 
     and
       ``(vii) the number of employees with respect to whom 
     contributions are required to be made for such year under 
     section 408B(b)(5)(D).
       ``(C) Reporting by issuer of safe annuity.--
       ``(i) In general.--The issuer of each SAFE annuity shall 
     provide to the owner of the annuity for each year a statement 
     setting forth as of the close of such year--

       ``(I) the benefits guaranteed at age 65 under the annuity, 
     and
       ``(II) the cash surrender value of the annuity.

       ``(ii) Summary description.--The issuer of any SAFE annuity 
     shall provide to the employer maintaining the annuity for 
     each year a description containing the following information:

       ``(I) The name and address of the employer and the issuer.

       ``(II) The requirements for eligibility for participation.
       ``(III) The benefits provided with respect to the annuity.
       ``(IV) The procedures for, and effects of, withdrawals 
     (including rollovers) from the annuity.

       ``(D) Time and manner of reporting.--Any return, report, or 
     statement required under this paragraph shall be made in such 
     form and at such time as the Secretary shall prescribe.''
       (2) SAFE trusts.--Section 6059 (relating to actuarial 
     reports) is amended by redesignating subsections (c) and (d) 
     as subsections (d) and (e), respectively, and by inserting 
     after subsection (b) the following new subsection:
       ``(c) SAFE Trusts.--In the case of a SAFE trust (within the 
     meaning of section 408B), the Secretary shall require a 
     simplified actuarial report which contains information 
     similar to the information required in section 
     408(l)(3)(B).''
       (f) Conforming Amendments.--
       (1) Section 280G(b)(6) is amended by striking ``or'' at the 
     end of subparagraph (C), by striking the period at the end of 
     subparagraph (D) and inserting ``, or'' and by adding after 
     subparagraph (D) the following new subparagraph:
       ``(E) a SAFE annuity described in section 408B.''
       (2) Clause (ii) of section 408(p)(2)(D) is amended by 
     inserting before the period ``(other than clause (vii) of 
     such subparagraph (A))''.
       (3) Subsections (b), (c), (m)(4)(B), and (n)(3)(B) of 
     section 414 are each amended by inserting ``408B,'' after 
     ``408(p),''.
       (4) Section 4972(d)(1)(A) is amended by striking ``and'' at 
     the end of clause (iii), by striking the period at the end of 
     clause (iv) and inserting ``, and'', and by adding after 
     clause (iv) the following new clause:
       ``(v) any SAFE annuity (within the meaning of section 
     408B).''
       (5) The table of sections for subpart A of part I of 
     subchapter D of chapter 1 is amended by inserting after the 
     item relating to section 408A the following new item:

``Sec. 408B. SAFE annuities and trusts.''
       (g) Modifications of ERISA.--
       (1) Exemption from insurance coverage.--Subsection (b) of 
     section 4021 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1321) is amended by striking ``or'' at the 
     end of paragraph (12), by striking the period at the end of 
     paragraph (13) and inserting ``; or'', and by adding at the 
     end the following new paragraph:
       ``(14) which is established and maintained as part of a 
     SAFE trust (as defined in section 408B of the Internal 
     Revenue Code of 1986).''
       (2) Reporting requirements.--Section 101 of such Act (29 
     U.S.C. 1021) is amended by redesignating the second 
     subsection (h) as subsection (j) and by inserting after the 
     first subsection (h) the following new subsection:
       ``(i) SAFE Annuities.--
       ``(1) No employer reports.--Except as provided in this 
     subsection, no report shall be required under this section by 
     an employer maintaining a SAFE annuity under section 408B(b) 
     of the Internal Revenue Code of 1986.
       ``(2) Summary description.--The issuer of any SAFE annuity 
     shall provide to the employer maintaining the annuity for 
     each year a description containing the following information:
       ``(A) The name and address of the employer and the issuer.
       ``(B) The requirements for eligibility for participation.
       ``(C) The benefits provided with respect to the annuity.
       ``(D) The procedures for, and effects of, withdrawals 
     (including rollovers) from the annuity.
       ``(3) Employee notification.--The employer shall provide 
     each employee eligible to participate in the SAFE annuity 
     with the description described in paragraph (2) at the same 
     time as the notification required under section 408B(b)(5)(B) 
     of the Internal Revenue Code of 1986.''
       (3) Waiver of funding standards.--Section 301(a) of such 
     Act (29 U.S.C. 1081) is amended by striking ``or'' at the end 
     of paragraph (9), by striking the period at the end of 
     paragraph (10) and inserting ``; or'', and by adding at the 
     end the following new paragraph:
       ``(11) any plan providing for the purchase of any SAFE 
     annuity or any SAFE trust (as such terms are defined in 
     section 408B of such Code).''
       (h) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 329. MODIFICATION OF TOP-HEAVY RULES.

       (a) Matching Contributions Taken Into Account for Minimum 
     Contribution Requirements.--Section 416(c)(2)(A) (relating to 
     defined contribution plans) is amended by adding at the end 
     the following: ``Employer matching contributions (as defined 
     in section 401(m)(4)(A)) shall be taken into account for 
     purposes of this subparagraph.''.
       (b) Elimination of Family Attribution.--Section 
     416(i)(1)(B) (defining 5-percent owner) is amended by adding 
     at the end the following new clause:
       ``(iv) Family attribution disregarded.--Solely for purposes 
     of applying this paragraph (and not for purposes of any 
     provision of this title which incorporates by reference the 
     definition of a key employee or 5-percent owner under this 
     paragraph), section 318 shall be applied without regard to 
     subsection (a)(1) thereof in determining whether any person 
     is a 5-percent owner.''
       (c) Definition of Top-Heavy Plans.--Paragraph (4) of 
     section 416(g) (relating to other special rules for top-heavy 
     plans) is amended by adding at the end the following new 
     subparagraph:
       ``(H) Cash or deferred arrangements using alternative 
     methods of meeting nondiscrimination requirements.--The term 
     `top-heavy plan' shall not include a plan which consists 
     solely of--
       ``(i) a cash or deferred arrangement which meets the 
     requirements of section 401(k)(12), and
       ``(ii) matching contributions with respect to which the 
     requirements of section 401(m)(11) are met.

     If, but for this subparagraph, a plan would be treated as a 
     top-heavy plan because it is a member of an aggregation group 
     which is a top-heavy group, contributions under the plan may 
     be taken into account in determining whether any other plan 
     in the group meets the requirements of subsection (c)(2).''
       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2000.

                Subtitle D--Enhancing Fairness for Women

     SEC. 331. CATCHUP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR 
                   OVER.

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

[[Page 18524]]

       ``(ii) the excess (if any) of--

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

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

``For taxable years beginning in:         The applicable percentage is:
  2001......................................................10 percent 
  2002......................................................20 percent 
  2003......................................................30 percent 
  2004......................................................40 percent 
  2005 and thereafter......................................250 percent.
       ``(3) Treatment of contributions.--In the case of any 
     contribution to a plan under paragraph (1)--
       ``(A) such contribution shall not, with respect to the year 
     in which the contribution is made--
       ``(i) be subject to any otherwise applicable limitation 
     contained in section 402(g), 402(h), 403(b), 404(a), 404(h), 
     408, 415, or 457, or
       ``(ii) be taken into account in applying such limitations 
     to other contributions or benefits under such plan or any 
     other such plan, and
       ``(B) such plan shall not be treated as failing to meet the 
     requirements of section 401(a)(4), 401(a)(26), 401(k)(3), 
     401(k)(11), 401(k)(12), 401(m), 403(b)(12), 408(k), 408(p), 
     408B, 410(b), or 416 by reason of the making of (or the right 
     to make) such contribution.
       ``(4) Eligible participant.--For purposes of this 
     subsection, the term `eligible participant' means, with 
     respect to any plan year, a participant in a plan--
       ``(A) who has attained the age of 50 before the close of 
     the plan year, and
       ``(B) with respect to whom no other elective deferrals may 
     (without regard to this subsection) be made to the plan for 
     the plan year by reason of the application of any limitation 
     or other restriction described in paragraph (3) or contained 
     in the terms of the plan.
       ``(5) Other definitions and rules.--For purposes of this 
     subsection--
       ``(A) Applicable dollar amount.--The term `applicable 
     dollar amount' means, with respect to any year, the amount in 
     effect under section 402(g)(1)(B), 408(p)(2)(E)(i), or 
     457(e)(15)(A), whichever is applicable to an applicable 
     employer plan, for such year.
       ``(B) Applicable employer plan.--The term `applicable 
     employer plan' means--
       ``(i) an employees' trust described in section 401(a) which 
     is exempt from tax under section 501(a),
       ``(ii) a plan under which amounts are contributed by an 
     individual's employer for an annuity contract described in 
     section 403(b),
       ``(iii) an eligible deferred compensation plan under 
     section 457 of an eligible employer as defined in section 
     457(e)(1)(A), and
       ``(iv) an arrangement meeting the requirements of section 
     408 (k) or (p).
       ``(C) Elective deferral.--The term `elective deferral' has 
     the meaning given such term by subsection (u)(2)(C).
       ``(D) Exception for section 457 plans.--This subsection 
     shall not apply to an applicable employer plan described in 
     paragraph (5)(B)(iii) for any year to which section 457(b)(3) 
     applies.''
       (b) Individual Retirement Plans.--Section 219(b), as 
     amended by sections 301 and 318, is amended by adding at the 
     end the following new paragraph:
       ``(7) Catchup contributions.--
       ``(A) In general.--In the case of an individual who has 
     attained the age of 50 before the close of the taxable year, 
     the dollar amount in effect under paragraph (1)(A) for such 
     taxable year shall be equal to the applicable percentage of 
     such amount determined without regard to this paragraph.
       ``(B) Applicable percentage.--For purposes of this 
     paragraph, the applicable percentage shall be determined in 
     accordance with the following table:

``For taxable years beginning in:         The applicable percentage is:
  2001.....................................................110 percent 
  2002.....................................................120 percent 
  2003.....................................................130 percent 
  2004.....................................................140 percent 
  2005 and thereafter....................................150 percent.''
       (c) Effective Date.--The amendment made by this section 
     shall apply to contributions in taxable years beginning after 
     December 31, 2000.

     SEC. 332. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES 
                   TO DEFINED CONTRIBUTION PLANS.

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

     SEC. 333. CLARIFICATION OF TAX TREATMENT OF DIVISION OF 
                   SECTION 457 PLAN BENEFITS UPON DIVORCE.

       (a) In General.--Section 414(p)(11) (relating to 
     application of rules to governmental and church plans) is 
     amended--
       (1) by inserting ``or an eligible deferred compensation 
     plan (within the meaning of section 457(b))'' after 
     ``subsection (e))'', and
       (2) in the heading, by striking ``governmental and church 
     plans'' and inserting ``certain other plans''.
       (b) Waiver of Certain Distribution Requirements.--Paragraph 
     (10) of section 414(p) is amended by striking ``and section 
     409(d)'' and inserting ``section 409(d), and section 
     457(d)''.
       (c) Tax Treatment of Payments From a Section 457 Plan.--
     Subsection (p) of section 414 is amended by redesignating 
     paragraph (12) as paragraph (13) and inserting after 
     paragraph (11) the following new paragraph:
       ``(12) Tax treatment of payments from a section 457 plan.--
     If a distribution or payment from an eligible deferred 
     compensation plan described in section 457(b) is made 
     pursuant to a qualified domestic relations order, rules 
     similar to the rules of section 402(e)(1)(A) shall apply to 
     such distribution or payment.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to transfers, distributions, and payments made 
     after December 31, 2000.

[[Page 18525]]



     SEC. 334. MODIFICATION OF SAFE HARBOR RELIEF FOR HARDSHIP 
                   WITHDRAWALS FROM CASH OR DEFERRED ARRANGEMENTS.

       (a) In General.--The Secretary of the Treasury shall revise 
     the regulations relating to hardship distributions under 
     section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 
     1986 to provide that the period an employee is prohibited 
     from making elective and employee contributions in order for 
     a distribution to be deemed necessary to satisfy financial 
     need shall be equal to 6 months.
       (b) Effective Date.--The revised regulations under 
     subsection (a) shall apply to years beginning after December 
     31, 2000.

     SEC. 335. FASTER VESTING OF CERTAIN EMPLOYER MATCHING 
                   CONTRIBUTIONS.

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

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

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

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

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

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

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

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

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

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

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

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

       (c) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to contributions 
     for plan years beginning after December 31, 2000.
       (2) Collective bargaining agreements.--In the case of a 
     plan maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers ratified by the date of enactment of this Act, the 
     amendments made by this section shall not apply to 
     contributions on behalf of employees covered by any such 
     agreement for plan years beginning before the earlier of--
       (A) the later of--
       (i) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof on or after such date of enactment), 
     or
       (ii) January 1, 2001, or
       (B) January 1, 2005.
       (3) Service required.--With respect to any plan, the 
     amendments made by this section shall not apply to any 
     employee before the date that such employee has 1 hour of 
     service under such plan in any plan year to which the 
     amendments made by this section apply.

          Subtitle E--Increasing Portability for Participants

     SEC. 341. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF PLANS.

       (a) Rollovers From and to Section 457 Plans.--
       (1) Rollovers from section 457 plans.--
       (A) In general.--Section 457(e) (relating to other 
     definitions and special rules) is amended by adding at the 
     end the following:
       ``(16) Rollover amounts.--
       ``(A) General rule.--In the case of an eligible deferred 
     compensation plan established and maintained by an employer 
     described in subsection (e)(1)(A), if--
       ``(i) any portion of the balance to the credit of an 
     employee in such plan is paid to such employee in an eligible 
     rollover distribution (within the meaning of section 
     402(c)(4) without regard to subparagraph (C) thereof),
       ``(ii) the employee transfers any portion of the property 
     such employee receives in such distribution to an eligible 
     retirement plan described in section 402(c)(8)(B), and
       ``(iii) in the case of a distribution of property other 
     than money, the amount so transferred consists of the 
     property distributed,
     then such distribution (to the extent so transferred) shall 
     not be includible in gross income for the taxable year in 
     which paid.
       ``(B) Certain rules made applicable.--The rules of 
     paragraphs (2) through (7) (other than paragraph (4)(C)) and 
     (9) of section 402(c) and section 402(f) shall apply for 
     purposes of subparagraph (A).
       ``(C) Reporting.--Rollovers under this paragraph shall be 
     reported to the Secretary in the same manner as rollovers 
     from qualified retirement plans (as defined in section 
     4974(c)).''
       (B) Deferral limit determined without regard to rollover 
     amounts.--Section 457(b)(2) (defining eligible deferred 
     compensation plan) is amended by inserting ``(other than 
     rollover amounts)'' after ``taxable year''.
       (C) Direct rollover.--Paragraph (1) of section 457(d) is 
     amended by striking ``and'' at the end of subparagraph (A), 
     by striking the period at the end of subparagraph (B) and 
     inserting ``, and'', and by inserting after subparagraph (B) 
     the following:
       ``(C) in the case of a plan maintained by an employer 
     described in subsection (e)(1)(A), the plan meets 
     requirements similar to the requirements of section 
     401(a)(31).

     Any amount transferred in a direct trustee-to-trustee 
     transfer in accordance with section 401(a)(31) shall not be 
     includible in gross income for the taxable year of 
     transfer.''
       (D) Withholding.--
       (i) Paragraph (12) of section 3401(a) is amended by adding 
     at the end the following:
       ``(E) under or to an eligible deferred compensation plan 
     which, at the time of such payment, is a plan described in 
     section 457(b) maintained by an employer described in section 
     457(e)(1)(A); or''.
       (ii) Paragraph (3) of section 3405(c) is amended to read as 
     follows:
       ``(3) Eligible rollover distribution.--For purposes of this 
     subsection, the term `eligible rollover distribution' has the 
     meaning given such term by section 402(f)(2)(A).''
       (iii) Liability for withholding.--Subparagraph (B) of 
     section 3405(d)(2) is amended by striking ``or'' at the end 
     of clause (ii), by striking the period at the end of clause 
     (iii) and inserting ``, or'', and by adding at the end the 
     following:
       ``(iv) section 457(b).''
       (2) Rollovers to section 457 plans.--
       (A) In general.--Section 402(c)(8)(B) (defining eligible 
     retirement plan) is amended by striking ``and'' at the end of 
     clause (iii), by striking the period at the end of clause 
     (iv) and inserting ``, and'', and by inserting after clause 
     (iv) the following new clause:
       ``(v) an eligible deferred compensation plan described in 
     section 457(b) of an employer described in section 
     457(e)(1)(A).''
       (B) Separate accounting.--Section 402(c) is amended by 
     adding at the end the following new paragraph:
       ``(11) Separate accounting.--Unless a plan described in 
     clause (v) of paragraph (8)(B) agrees to separately account 
     for amounts rolled into such plan from eligible retirement 
     plans not described in such clause, the plan described in 
     such clause may not accept transfers or rollovers from such 
     retirement plans.''
       (C) 10 percent additional tax.--Subsection (t) of section 
     72 (relating to 10-percent additional tax on early 
     distributions from qualified retirement plans) is amended by 
     adding at the end the following new paragraph:
       ``(9) Special rule for rollovers to section 457 plans.--For 
     purposes of this subsection, a distribution from an eligible 
     deferred compensation plan (as defined in section 457(b)) of 
     an employer described in section 457(e)(1)(A) shall be 
     treated as a distribution from a qualified retirement plan 
     described in 4974(c)(1) to the extent that such distribution 
     is attributable to an amount transferred to an eligible 
     deferred compensation plan from a qualified retirement plan 
     (as defined in section 4974(c)).''
       (b) Allowance of Rollovers From and to 403(b) Plans.--
       (1) Rollovers from section 403(b) plans.--Section 
     403(b)(8)(A)(ii) (relating to rollover amounts) is amended by 
     striking ``such distribution'' and all that follows and 
     inserting ``such distribution to an eligible retirement plan 
     described in section 402(c)(8)(B), and''.
       (2) Rollovers to section 403(b) plans.--Section 
     402(c)(8)(B) (defining eligible retirement plan), as amended 
     by subsection (a), is amended by striking ``and'' at the end 
     of clause (iv), by striking the period at the end of clause 
     (v) and inserting 
     ``, and'', and by inserting after clause (v) the following 
     new clause:
       ``(vi) an annuity contract described in section 403(b).''
       (c) Expanded Explanation to Recipients of Rollover 
     Distributions.--Paragraph (1) of section 402(f) (relating to 
     written explanation to recipients of distributions eligible 
     for rollover treatment) is amended by striking ``and'' at the 
     end of subparagraph (C), by striking the period at the end of 
     subparagraph (D) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(E) of the provisions under which distributions from the 
     eligible retirement plan receiving the distribution may be 
     subject to restrictions and tax consequences which are 
     different from those applicable to distributions from the 
     plan making such distribution.''
       (d) Spousal Rollovers.--Section 402(c)(9) (relating to 
     rollover where spouse receives

[[Page 18526]]

     distribution after death of employee) is amended by striking 
     ``; except that'' and all that follows up to the end period.
       (e) Conforming Amendments.--
       (1) Section 72(o)(4) is amended by striking ``and 
     408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and 
     457(e)(16)''.
       (2) Section 219(d)(2) is amended by striking ``or 
     408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
       (3) Section 401(a)(31)(B) is amended by striking ``and 
     403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and 
     457(e)(16)''.
       (4) Subparagraph (A) of section 402(f)(2) is amended by 
     striking ``or paragraph (4) of section 403(a)'' and inserting 
     ``, paragraph (4) of section 403(a), subparagraph (A) of 
     section 403(b)(8), or subparagraph (A) of section 
     457(e)(16)''.
       (5) Paragraph (1) of section 402(f) is amended by striking 
     ``from an eligible retirement plan''.
       (6) Subparagraphs (A) and (B) of section 402(f)(1) are 
     amended by striking ``another eligible retirement plan'' and 
     inserting ``an eligible retirement plan''.
       (7) Subparagraph (B) of section 403(b)(8) is amended to 
     read as follows:
       ``(B) Certain rules made applicable.--The rules of 
     paragraphs (2) through (7) and (9) of section 402(c) and 
     section 402(f) shall apply for purposes of subparagraph (A), 
     except that section 402(f) shall be applied to the payor in 
     lieu of the plan administrator.''
       (8) Section 408(a)(1) is amended by striking ``or 
     403(b)(8)'' and inserting ``, 403(b)(8), or 457(e)(16)''.
       (9) Subparagraphs (A) and (B) of section 415(b)(2) are each 
     amended by striking ``and 408(d)(3)'' and inserting 
     ``403(b)(8), 408(d)(3), and 457(e)(16)''.
       (10) Section 415(c)(2) is amended by striking ``and 
     408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
       (11) Section 4973(b)(1)(A) is amended by striking ``or 
     408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
       (f) Effective Date; Special Rule.--
       (1) Effective date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.
       (2) Special rule.--Notwithstanding any other provision of 
     law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
     Reform Act of 1986 shall not apply to any distribution from 
     an eligible retirement plan (as defined in clause (iii) or 
     (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 
     1986) on behalf of an individual if there was a rollover to 
     such plan on behalf of such individual which is permitted 
     solely by reason of any amendment made by this section.

     SEC. 342. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT PLANS.

       (a) In General.--Subparagraph (A) of section 408(d)(3) 
     (relating to rollover amounts) is amended by adding ``or'' at 
     the end of clause (i), by striking clauses (ii) and (iii), 
     and by adding at the end the following:
       ``(ii) the entire amount received (including money and any 
     other property) is paid into an eligible retirement plan for 
     the benefit of such individual not later than the 60th day 
     after the date on which the payment or distribution is 
     received, except that the maximum amount which may be paid 
     into such plan may not exceed the portion of the amount 
     received which is includible in gross income (determined 
     without regard to this paragraph).

     For purposes of clause (ii), the term `eligible retirement 
     plan' means an eligible retirement plan described in clause 
     (iii), (iv), (v), or (vi) of section 402(c)(8)(B).''
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 403(b) is amended by striking 
     ``section 408(d)(3)(A)(iii)'' and inserting ``section 
     408(d)(3)(A)(ii)''.
       (2) Clause (i) of section 408(d)(3)(D) is amended by 
     striking ``(i), (ii), or (iii)'' and inserting ``(i) or 
     (ii)''.
       (3) Subparagraph (G) of section 408(d)(3) is amended to 
     read as follows:
       ``(G) Simple retirement accounts.--In the case of any 
     payment or distribution out of a simple retirement account 
     (as defined in subsection (p)) to which section 72(t)(6) 
     applies, this paragraph shall not apply unless such payment 
     or distribution is paid into another simple retirement 
     account.''
       (c) Effective Date; Special Rule.--
       (1) Effective date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.
       (2) Special rule.--Notwithstanding any other provision of 
     law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
     Reform Act of 1986 shall not apply to any distribution from 
     an eligible retirement plan (as defined in clause (iii) or 
     (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 
     1986) on behalf of an individual if there was a rollover to 
     such plan on behalf of such individual which is permitted 
     solely by reason of the amendments made by this section.

     SEC. 343. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.

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

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

     then, notwithstanding paragraph (2), the rules of clause (ii) 
     shall apply for purposes of applying section 72.

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

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

     SEC. 344. HARDSHIP EXCEPTION TO 60-DAY RULE.

       (a) Exempt Trusts.--Paragraph (3) of section 402(c) 
     (relating to transfer must be made within 60 days of receipt) 
     is amended to read as follows:
       ``(3) Transfer must be made within 60 days of receipt.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     paragraph (1) shall not apply to any transfer of a 
     distribution made after the 60th day following the day on 
     which the distributee received the property distributed.
       ``(B) Hardship exception.--The Secretary may waive the 60-
     day requirement under subparagraph (A) where the failure to 
     waive such requirement would be against equity or good 
     conscience, including casualty, disaster, or other events 
     beyond the reasonable control of the individual subject to 
     such requirement.''
       (b) IRAs.--Paragraph (3) of section 408(d) (relating to 
     rollover contributions), as amended by section 333, is 
     amended by adding after subparagraph (H) the following new 
     subparagraph:
       ``(I) Waiver of 60-day requirement.--The Secretary may 
     waive the 60-day requirement under subparagraphs (A) and (D) 
     where the failure to waive such requirement would be against 
     equity or good conscience, including casualty, disaster, or 
     other events beyond the reasonable control of the individual 
     subject to such requirement.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.

     SEC. 345. TREATMENT OF FORMS OF DISTRIBUTION.

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

       ``(I) the forms of distribution previously available under 
     the transferor plan applied to the account of a participant 
     or beneficiary under the transferor plan that was transferred 
     from the transferor plan to the transferee plan pursuant to a 
     direct transfer rather than pursuant to a distribution from 
     the transferor plan,

[[Page 18527]]

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

       ``(ii) Clause (i) shall apply to plan mergers and other 
     transactions having the effect of a direct transfer, 
     including consolidations of benefits attributable to 
     different employers within a multiple employer plan.
       ``(E) Elimination of form of distribution.--Except to the 
     extent provided in regulations, a defined contribution plan 
     shall not be treated as failing to meet the requirements of 
     this section merely because of the elimination of a form of 
     distribution previously available thereunder. This 
     subparagraph shall not apply to the elimination of a form of 
     distribution with respect to any participant unless--
       ``(i) a single sum payment is available to such participant 
     at the same time or times as the form of distribution being 
     eliminated, and
       ``(ii) such single sum payment is based on the same or 
     greater portion of the participant's account as the form of 
     distribution being eliminated.''
       (2) Amendment to erisa.--Section 204(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
     amended by adding at the end the following:
       ``(4)(A) A defined contribution plan (in this subparagraph 
     referred to as the `transferee plan') shall not be treated as 
     failing to meet the requirements of this subsection merely 
     because the transferee plan does not provide some or all of 
     the forms of distribution previously available under another 
     defined contribution plan (in this paragraph referred to as 
     the `transferor plan') to the extent that--
       ``(i) the forms of distribution previously available under 
     the transferor plan applied to the account of a participant 
     or beneficiary under the transferor plan that was transferred 
     from the transferor plan to the transferee plan pursuant to a 
     direct transfer rather than pursuant to a distribution from 
     the transferor plan;
       ``(ii) the terms of both the transferor plan and the 
     transferee plan authorize the transfer described in clause 
     (i);
       ``(iii) the transfer described in clause (i) was made 
     pursuant to a voluntary election by the participant or 
     beneficiary whose account was transferred to the transferee 
     plan;
       ``(iv) the election described in clause (iii) was made 
     after the participant or beneficiary received a notice 
     describing the consequences of making the election;
       ``(v) if the transferor plan provides for an annuity as the 
     normal form of distribution under the plan in accordance with 
     section 417, the transfer is made with the consent of the 
     participant's spouse (if any), and such consent meets 
     requirements similar to the requirements imposed by section 
     417(a)(2); and
       ``(vi) the transferee plan allows the participant or 
     beneficiary described in subclause (III) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under the transferee plan in the form of a single 
     sum distribution.
       ``(B) Subparagraph (A) shall apply to plan mergers and 
     other transactions having the effect of a direct transfer, 
     including consolidations of benefits attributable to 
     different employers within a multiple employer plan.
       ``(5) Elimination of form of distribution.--Except to the 
     extent provided in regulations, a defined contribution plan 
     shall not be treated as failing to meet the requirements of 
     this section merely because of the elimination of a form of 
     distribution previously available thereunder. This paragraph 
     shall not apply to the elimination of a form of distribution 
     with respect to any participant unless--
       ``(A) a single sum payment is available to such participant 
     at the same time or times as the form of distribution being 
     eliminated; and
       ``(B) such single sum payment is based on the same or 
     greater portion of the participant's account as the form of 
     distribution being eliminated.''
       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2000.
       (b) Regulations.--
       (1) Amendment to internal revenue code of 1986.--The last 
     sentence of paragraph (6)(B) of section 411(d) (relating to 
     accrued benefit not to be decreased by amendment) is amended 
     to read as follows: ``The Secretary may by regulations 
     provide that this subparagraph shall not apply to any plan 
     amendment that does not adversely affect the rights of 
     participants in a material manner.''
       (2) Amendment to erisa.--The last sentence of section 
     204(g)(2) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1054(g)(2)) is amended to read as follows: 
     ``The Secretary of the Treasury may by regulations provide 
     that this paragraph shall not apply to any plan amendment 
     that does not adversely affect the rights of participants in 
     a material manner.''
       (3) Secretary directed.--Not later than December 31, 2001, 
     the Secretary of the Treasury is directed to issue final 
     regulations under section 411(d)(6) of the Internal Revenue 
     Code of 1986 and section 204(g)(2) of the Employee Retirement 
     Income Security Act of 1974. Such regulations shall apply to 
     plan years beginning after December 31, 2001, or such earlier 
     date as is specified by the Secretary of the Treasury.

     SEC. 346. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.

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

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

       (ii) by striking subparagraph (C), and
       (iii) by striking ``or disposition of assets or 
     subsidiary'' in the heading.
       (2) Section 403(b).--
       (A) Paragraphs (7)(A)(ii) and (11)(A) of section 403(b) are 
     each amended by striking ``separates from service'' and 
     inserting ``has a severance from employment''.
       (B) The heading for paragraph (11) of section 403(b) is 
     amended by striking ``separation from service'' and inserting 
     ``severance from employment''.
       (3) Section 457.--Clause (ii) of section 457(d)(1)(A) is 
     amended by striking ``is separated from service'' and 
     inserting ``has a severance from employment''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.

     SEC. 347. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED 
                   BENEFIT PLANS.

       (a) 403(b) Plans.--Subsection (b) of section 403 is amended 
     by adding at the end the following new paragraph:
       ``(13) Trustee-to-trustee transfers to purchase permissive 
     service credit.--No amount shall be includible in gross 
     income by reason of a direct trustee-to-trustee transfer to a 
     defined benefit governmental plan (as defined in section 
     414(d)) if such transfer is--
       ``(A) for the purchase of permissive service credit (as 
     defined in section 415(n)(3)(A)) under such plan, or
       ``(B) a repayment to which section 415 does not apply by 
     reason of subsection (k)(3) thereof.''
       (b) 457 Plans.--
       (1) Subsection (e) of section 457 is amended by adding 
     after paragraph (17) the following new paragraph:
       ``(18) Trustee-to-trustee transfers to purchase permissive 
     service credit.--No amount shall be includible in gross 
     income by reason of a direct trustee-to-trustee transfer to a 
     defined benefit governmental plan (as defined in section 
     414(d)) if such transfer is--
       ``(A) for the purchase of permissive service credit (as 
     defined in section 415(n)(3)(A)) under such plan, or
       ``(B) a repayment to which section 415 does not apply by 
     reason of subsection (k)(3) thereof.''
       (2) Section 457(b)(2) is amended by striking ``(other than 
     rollover amounts)'' and inserting ``(other than rollover 
     amounts and amounts received in a transfer referred to in 
     subsection (e)(16))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to trustee-to-trustee transfers after December 
     31, 2000.

     SEC. 348. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES OF 
                   CASH-OUT AMOUNTS.

       (a) Qualified Plans.--
       (1) Amendment to internal revenue code of 1986.--Section 
     411(a)(11) (relating to restrictions on certain mandatory 
     distributions) is amended by adding at the end the following:
       ``(D) Special rule for rollover contributions.--A plan 
     shall not fail to meet the requirements of this paragraph if, 
     under the

[[Page 18528]]

     terms of the plan, the present value of the nonforfeitable 
     accrued benefit is determined without regard to that portion 
     of such benefit which is attributable to rollover 
     contributions (and earnings allocable thereto). For purposes 
     of this subparagraph, the term `rollover contributions' means 
     any rollover contribution under sections 402(c), 403(a)(4), 
     403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16).''
       (2) Amendment to erisa.--Section 203(e) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) is 
     amended by adding at the end the following:
       ``(4) A plan shall not fail to meet the requirements of 
     this subsection if, under the terms of the plan, the present 
     value of the nonforfeitable accrued benefit is determined 
     without regard to that portion of such benefit which is 
     attributable to rollover contributions (and earnings 
     allocable thereto). For purposes of this subparagraph, the 
     term `rollover contributions' means any rollover contribution 
     under sections 402(c), 403(a)(4), 403(b)(8), 
     408(d)(3)(A)(ii), and 457(e)(16) of the Internal Revenue Code 
     of 1986.''
       (b) Eligible Deferred Compensation Plans.--Clause (i) of 
     section 457(e)(9)(A) is amended by striking ``such amount'' 
     and inserting ``the portion of such amount which is not 
     attributable to rollover contributions (as defined in section 
     411(a)(11)(D))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.

     SEC. 349. INCLUSION REQUIREMENTS FOR SECTION 457 PLANS.

       (a) Year of Inclusion.--Subsection (a) of section 457 
     (relating to year of inclusion in gross income) is amended to 
     read as follows:
       ``(a) Year of Inclusion in Gross Income.--
       ``(1) In general.--Any amount of compensation deferred 
     under an eligible deferred compensation plan, and any income 
     attributable to the amounts so deferred, shall be includible 
     in gross income only for the taxable year in which such 
     compensation or other income--
       ``(A) is paid to the participant or other beneficiary, in 
     the case of a plan of an eligible employer described in 
     subsection (e)(1)(A), and
       ``(B) is paid or otherwise made available to the 
     participant or other beneficiary, in the case of a plan of an 
     eligible employer described in subsection (e)(1)(B).
       ``(2) Special rule for rollover amounts.--To the extent 
     provided in section 72(t)(9), section 72(t) shall apply to 
     any amount includible in gross income under this 
     subsection.''
       (b) Conforming Amendment.--So much of paragraph (9) of 
     section 457(e) as precedes subparagraph (A) is amended to 
     read as follows:
       ``(9) Benefits of tax exempt organization plans not treated 
     as made available by reason of certain elections, etc.--In 
     the case of an eligible deferred compensation plan of an 
     employer described in paragraph (1)(B)--''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.

       Subtitle F--Strengthening Pension Security and Enforcement

     SEC. 351. REPEAL OF 150 PERCENT OF CURRENT LIABILITY FUNDING 
                   LIMIT.

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

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

``In the case of any
  plan year                                              The applicable
  beginning in--                                        percentage is--
      2001.........................................................160 

      2002.........................................................165 
      2003.......................................................170.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2000.

     SEC. 352. EXTENSION OF MISSING PARTICIPANTS PROGRAM TO 
                   MULTIEMPLOYER PLANS.

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

     SEC. 353. EXCISE TAX RELIEF FOR SOUND PENSION FUNDING.

       (a) In General.--Subsection (c) of section 4972 (relating 
     to nondeductible contributions) is amended by adding at the 
     end the following new paragraph:
       ``(7) Defined benefit plan exception.--In determining the 
     amount of nondeductible contributions for any taxable year, 
     an employer may elect for such year not to take into account 
     any contributions to a defined benefit plan except to the 
     extent that such contributions exceed the full-funding 
     limitation (as defined in section 412(c)(7), determined 
     without regard to subparagraph (A)(i)(I) thereof). For 
     purposes of this paragraph, the deductible limits under 
     section 404(a)(7) shall first be applied to amounts 
     contributed to defined contribution plans and then to amounts 
     described in this paragraph. If an employer makes an election 
     under this paragraph for a taxable year, paragraph (6) shall 
     not apply to such employer for such taxable year.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 354. FAILURE TO PROVIDE NOTICE BY DEFINED BENEFIT PLANS 
                   SIGNIFICANTLY REDUCING FUTURE BENEFIT ACCRUALS.

       (a) Excise Tax.--
       (1) In general.--Chapter 43 of subtitle D (relating to 
     qualified pension, etc., plans) is amended by adding at the 
     end the following new section:

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

       ``(a) Imposition of Tax.--There is hereby imposed a tax on 
     the failure of an applicable pension plan to meet the 
     requirements of subsection (e) with respect to any applicable 
     individual.
       ``(b) Amount of Tax.--
       ``(1) In general.--The amount of the tax imposed by 
     subsection (a) on any failure with respect to any applicable 
     individual shall be $100 for each day in the noncompliance 
     period with respect to such failure.
       ``(2) Noncompliance period.--For purposes of this section, 
     the term `noncompliance period' means, with respect to any 
     failure, the period beginning on the date the failure first 
     occurs and ending on the date the failure is corrected.
       ``(3) Minimum tax for noncompliance period where failure 
     discovered after notice of examination.--Notwithstanding 
     paragraphs (1) and (2) of subsection (c)--
       ``(A) In general.--In the case of 1 or more failures with 
     respect to an applicable individual--
       ``(i) which are not corrected before the date a notice of 
     examination of income tax liability is sent to the employer, 
     and
       ``(ii) which occurred or continued during the period under 
     examination,

     the amount of tax imposed by subsection (a) by reason of such 
     failures with respect to such beneficiary shall not be less 
     than the lesser of $2,500 or the amount of tax which would be 
     imposed by subsection (a) without regard to such paragraphs.
       ``(B) Higher minimum tax where violations are more than de 
     minimis.--To the extent violations by the employer (or the 
     plan in the case of a multiemployer plan) for any year are 
     more than de minimis, subparagraph (A) shall be applied by 
     substituting `$15,000' for `$2,500' with respect to the 
     employer (or such plan).
       ``(c) Limitations on Amount of Tax.--
       ``(1) Tax not to apply where failure not discovered 
     exercising reasonable diligence.--No tax shall be imposed by 
     subsection (a) on any failure during any period for which it 
     is established to the satisfaction of the Secretary that none 
     of the persons referred to in subsection (d) knew, or 
     exercising reasonable diligence would have known, that the 
     failure existed.
       ``(2) Tax not to apply to failures corrected within 30 
     days.--No tax shall be imposed by subsection (a) on any 
     failure if--
       ``(A) such failure was due to reasonable cause and not to 
     willful neglect, and
       ``(B) such failure is corrected during the 30-day period 
     beginning on the first date any of the persons referred to in 
     subsection (d) knew, or exercising reasonable diligence would 
     have known, that such failure existed.
       ``(3) Overall limitation for unintentional failures.--
       ``(A) In general.--In the case of failures that are due to 
     reasonable cause and not to willful neglect, the tax imposed 
     by subsection (a) for failures during the taxable

[[Page 18529]]

     year of the employer (or, in the case of a multiemployer 
     plan, the taxable year of the trust forming part of the plan) 
     shall not exceed $500,000. For purposes of the preceding 
     sentence, all multiemployer plans of which the same trust 
     forms a part shall be treated as 1 plan.
       ``(B) Taxable years in the case of certain controlled 
     groups.--For purposes of this paragraph, if all persons who 
     are treated as a single employer for purposes of this section 
     do not have the same taxable year, the taxable years taken 
     into account shall be determined under principles similar to 
     the principles of section 1561.
       ``(4) Waiver by secretary.--In the case of a failure which 
     is due to reasonable cause and not to willful neglect, the 
     Secretary may waive part or all of the tax imposed by 
     subsection (a) to the extent that the payment of such tax 
     would be excessive relative to the failure involved.
       ``(d) Liability for Tax.--The following shall be liable for 
     the tax imposed by subsection (a):
       ``(1) In the case of a plan other than a multiemployer 
     plan, the employer.
       ``(2) In the case of a multiemployer plan, the plan.
       ``(e) Notice Requirements for Plans Significantly Reducing 
     Benefit Accruals.--
       ``(1) In general.--If a defined benefit plan adopts an 
     amendment which has the effect of significantly reducing the 
     rate of future benefit accrual of 1 or more participants 
     (including any elimination or reduction of an early 
     retirement benefit or retirement-type subsidy), the plan 
     administrator shall, not later than the 30th day before the 
     effective date of the amendment, provide written notice to 
     each applicable individual (and to each employee organization 
     representing applicable individuals) which--
       ``(A) sets forth the plan amendment and its effective date, 
     and
       ``(B) includes sufficient information (as determined in 
     accordance with regulations prescribed by the Secretary) to 
     allow such participants and beneficiaries to understand how 
     the amendment generally affects different classes of 
     employees.
       ``(2) Additional notice required in certain cases.--
       ``(A) In general.--If a plan amendment to which paragraph 
     (1) applies--
       ``(i) either--

       ``(I) provides for a significant change in the manner in 
     which the accrued benefit of an applicable individual is 
     determined under the plan, or
       ``(II) requires an applicable individual to choose between 
     2 or more benefit formulas, and

       ``(ii) may reasonably be expected to affect such applicable 
     individual,

     the plan shall, not later than the date which is 6 months 
     after the effective date of the amendment, provide written 
     notice to such applicable individual which includes the 
     information described in subparagraph (B).
       ``(B) Additional information.--The notice under 
     subparagraph (A) shall include the following information:
       ``(i) The accrued benefit (and if the amendment adds the 
     option of an immediate lump sum distribution, the present 
     value of the accrued benefit) as of the effective date, 
     determined under the terms of the plan in effect immediately 
     before the effective date.
       ``(ii) The accrued benefit as of the effective date, 
     determined under the terms of the plan in effect on the 
     effective date and without regard to any minimum accrued 
     benefit required by reason of section 411(d)(6).
       ``(iii) Sufficient information (as determined in accordance 
     with regulations prescribed by the Secretary) for an 
     applicable individual to compute their projected accrued 
     benefit under the terms of the plan in effect on the 
     effective date or to acquire information necessary to compute 
     such projected accrued benefit.
       ``(C) Option to provide projected accrued benefit.--A plan 
     may, in lieu of the information described in subparagraph 
     (B)(iii), include a determination of an applicable 
     individual's projected accrued benefit under the terms of the 
     plan in effect on the effective date. Such determination 
     shall include a disclosure of the assumptions used by the 
     plan in determining such benefit and such assumptions must be 
     reasonable in the aggregate.
       ``(D) Rules for computing benefits.--For purposes of this 
     paragraph, an applicable individual's accrued benefit and 
     projected accrued benefit shall be computed--
       ``(i) as if the accrued benefit were in the form of a 
     single life annuity commencing at normal retirement age (and 
     by taking into account any early retirement subsidy), and
       ``(ii) by using the applicable mortality table and the 
     applicable interest rate under section 417(e)(3)(A).
       ``(3) Secretary may change notice and time for notice.--If 
     a plan amendment to which paragraph (1) applies requires an 
     applicable individual to choose between 2 or more benefit 
     formulas, the Secretary may, after consultation with the 
     Secretary of Labor--
       ``(A) require additional information to be provided in 
     either of the notices described in paragraph (1) or (2), and
       ``(B) require either of such notices to be provided at a 
     time other than the time required under either such 
     paragraph.
       ``(4) Notice before adoption of amendment.--A plan shall 
     not be treated as failing to meet the requirements of 
     paragraph (1) or (2) merely because notice is provided before 
     the adoption of the plan amendment if no material 
     modification of the amendment occurs before the amendment is 
     adopted.
       ``(5) Notice to designee.--Any notice under paragraph (1) 
     or (2) may be provided to a person designated, in writing, by 
     the person to which it would otherwise be provided.
       ``(f) Applicable Individual.--For purposes of this 
     section--
       ``(1) In general.--The term `applicable individual' means, 
     with respect to any plan amendment--
       ``(A) any participant in the plan, and
       ``(B) any beneficiary who is an alternate payee (within the 
     meaning of section 414(p)(8)) under an applicable qualified 
     domestic relations order (within the meaning of section 
     414(p)(1)(A)).
       ``(2) Exception for participants with less than 1 year of 
     participation.--Such term shall not include a participant who 
     has less than 1 year of participation (within the meaning of 
     section 411(b)(4)) under the plan as of the effective date of 
     the plan amendment.
       ``(3) Participants getting higher of benefits.--Such term 
     shall not include a participant or beneficiary who, under the 
     terms of the plan as of the effective date of the plan 
     amendment, is entitled to the greater of the accrued benefit 
     under such terms or the accrued benefit under the terms of 
     the plan in effect immediately before the effective date.
       ``(g) Applicable Pension Plan.--For purposes of this 
     section, the term `applicable pension plan' means--
       ``(1) a defined benefit plan, or
       ``(2) an individual account plan which is subject to the 
     funding standards of section 412.''
       (2) Conforming amendment.--The table of sections for 
     chapter 43 of subtitle D is amended by adding at the end the 
     following new item:

``Sec. 4980F. Failure of defined benefit plans reducing benefit 
              accruals to satisfy notice requirements.''
       (b) Amendment to ERISA.--Section 204(h) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(h)) is 
     amended to read as follows:
       ``(h)(1) An applicable pension plan may not adopt an 
     amendment which has the effect of significantly reducing the 
     rate of future benefit accrual of 1 or more participants 
     (including any elimination or reduction of an early 
     retirement benefit or retirement-type subsidy) unless the 
     plan administrator provides, not later than the 30th day 
     before the effective date of the amendment, written notice to 
     each applicable individual (and to each employee organization 
     representing applicable individuals) which--
       ``(A) sets forth the plan amendment and its effective date, 
     and
       ``(B) includes sufficient information (as determined in 
     accordance with regulations prescribed by the Secretary of 
     the Treasury) to allow applicable individuals to understand 
     how the amendment generally affects different classes of 
     employees.
       ``(2)(A) If a plan amendment to which paragraph (1) 
     applies--
       ``(i) either--
       ``(I) provides for a significant change in the manner in 
     which the accrued benefit is determined under the plan, or
       ``(II) requires an applicable individual to choose between 
     2 or more benefit formulas, and
       ``(ii) may reasonably be expected to affect such applicable 
     individual,

     the plan shall, not later than the date which is 6 months 
     after the effective date of the amendment, provide written 
     notice to such applicable individual which includes the 
     information described in subparagraph (B).
       ``(B) The notice under subparagraph (A) shall include the 
     following information:
       ``(i) The accrued benefit (and if the amendment adds the 
     option of an immediate lump sum distribution, the present 
     value of the accrued benefit) as of the effective date, 
     determined under the terms of the plan in effect immediately 
     before the effective date.
       ``(ii) The accrued benefit as of the effective date, 
     determined under the terms of the plan in effect on the 
     effective date and without regard to any minimum accrued 
     benefit required by reason of section 204(g).
       ``(iii) Sufficient information (as determined in accordance 
     with regulations prescribed by the Secretary of the Treasury) 
     for an applicable individual to compute their projected 
     accrued benefit under the terms of the plan in effect on the 
     effective date or to acquire information necessary to compute 
     such projected accrued benefit.
       ``(C) A plan may, in lieu of the information described in 
     subparagraph (B)(iii), include a determination of an 
     applicable individual's projected accrued benefit under the 
     terms of the plan in effect on the effective date. Such 
     determination shall include a disclosure of the assumptions 
     used by the plan in determining such benefit and such 
     assumptions must be reasonable in the aggregate.
       ``(D) For purposes of this paragraph, an applicable 
     individual's accrued benefit and projected accrued benefit 
     shall be computed--
       ``(i) as if the accrued benefit were in the form of a 
     single life annuity commencing at

[[Page 18530]]

     normal retirement age (and by taking into account any early 
     retirement subsidy), and
       ``(ii) by using the applicable mortality table and the 
     applicable interest rate under section 205(g)(3)(A).
       ``(3) If a plan amendment to which paragraph (1) applies 
     requires an applicable individual to choose between 2 or more 
     benefit formulas, the Secretary of the Treasury may, after 
     consultation with the Secretary--
       ``(A) require additional information to be provided in 
     either of the notices described in paragraph (1) or (2), and
       ``(B) require either of such notices to be provided at a 
     time other than the time required under either such 
     paragraph.
       ``(4) A plan shall not be treated as failing to meet the 
     requirements of paragraph (1) or (2) merely because notice is 
     provided before the adoption of the plan amendment if no 
     material modification of the amendment occurs before the 
     amendment is adopted.
       ``(5) Any notice under paragraph (1) or (2) may be provided 
     to a person designated, in writing, by the person to which it 
     would otherwise be provided.
       ``(6)(A) For purposes of this subsection, the term 
     `applicable individual' means, with respect to any plan 
     amendment--
       ``(i) any participant in the plan, and
       ``(ii) any beneficiary who is an alternate payee (within 
     the meaning of section 206(d)(3)(K)) under an applicable 
     qualified domestic relations order (within the meaning of 
     section 206(d)(3)(B)).
       ``(B) Such term shall not include a participant who has 
     less than 1 year of participation (within the meaning of 
     section 204(b)(4)) under the plan as of the effective date of 
     the plan amendment.
       ``(C) Such term shall not include a participant or 
     beneficiary who, under the terms of the plan as of the 
     effective date of the plan amendment, is entitled to the 
     greater of the accrued benefit under such terms or the 
     accrued benefit under the terms of the plan in effect 
     immediately before the effective date.
       ``(7) For purposes of this subsection, the term `applicable 
     pension plan' means--
       ``(A) a defined benefit plan, or
       ``(B) an individual account plan which is subject to the 
     funding standards of section 302.''
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to plan amendments taking effect on or after the date 
     of the enactment of this Act.
       (2) Special rule for collectively bargained plans.--In the 
     case of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified by the date of the enactment of 
     this Act, the amendments made by this section shall not apply 
     to plan amendments taking effect before the earlier of--
       (A) the later of--
       (i) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof on or after such date of enactment), 
     or
       (ii) January 1, 2000, or
       (B) January 1, 2002.
       (3) Special rule.--The period for providing any notice 
     required by the amendments made by this section shall not end 
     before the date which is 3 months after the date of the 
     enactment of this Act.

     SEC. 355. PROTECTION OF INVESTMENT OF EMPLOYEE CONTRIBUTIONS 
                   TO 401(K) PLANS.

       (a) In General.--Section 1524(b) of the Taxpayer Relief Act 
     of 1997 is amended to read as follows:
       ``(b) Effective Date.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to elective 
     deferrals for plan years beginning after December 31, 1998.
       ``(2) Nonapplication to previously acquired property.--The 
     amendments made by this section shall not apply to any 
     elective deferral used to acquire an interest in the income 
     or gain from employer securities or employer real property 
     acquired--
       ``(A) before January 1, 1999, or
       ``(B) after such date pursuant to a written contract which 
     was binding on such date and at all times thereafter on such 
     plan.''
       (b) Effective Date.--The amendment made by this section 
     shall apply as if included in the provision of the Taxpayer 
     Relief Act of 1997 to which it relates.

     SEC. 356. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

       (a) Compensation Limit.--Paragraph (11) of section 415(b) 
     (relating to limitation for defined benefit plans) is amended 
     to read as follows:
       ``(11) Special limitation rule for governmental and 
     multiemployer plans.--In the case of a governmental plan (as 
     defined in section 414(d)) or a multiemployer plan (as 
     defined in section 414(f)), subparagraph (B) of paragraph (1) 
     shall not apply.''
       (b) Combining and Aggregation of Plans.--
       (1) Combining of plans.--Subsection (f) of section 415 
     (relating to combining of plans) is amended by adding at the 
     end the following:
       ``(3) Exception for multiemployer plans.--Notwithstanding 
     paragraph (1) and subsection (g), a multiemployer plan (as 
     defined in section 414(f)) shall not be combined or 
     aggregated with any other plan maintained by an employer for 
     purposes of applying the limitations established in this 
     section. The preceding sentence shall not apply for purposes 
     of applying subsection (b)(1)(A) to a plan which is not a 
     multiemployer plan.''
       (2) Conforming amendment for aggregation of plans.--
     Subsection (g) of section 415 (relating to aggregation of 
     plans) is amended by striking ``The Secretary'' and inserting 
     ``Except as provided in subsection (f)(3), the Secretary''.
       (c) Application of Special Early Retirement Rules.--Section 
     415(b)(2)(F) (relating to plans maintained by governments and 
     tax-exempt organizations) is amended--
       (1) by inserting ``a multiemployer plan (within the meaning 
     of section 414(f)),'' after ``section 414(d)),'', and
       (2) by striking the heading and inserting:
       ``(F) Special early retirement rules for certain plans.--
     ''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

              Subtitle G--Encouraging Retirement Education

     SEC. 361. PERIODIC PENSION BENEFITS STATEMENTS.

       (a) In General.--Section 105(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1025 (a)) is amended 
     to read as follows:
       ``(a)(1) Except as provided in paragraph (2)--
       ``(A) the administrator of an individual account plan shall 
     furnish a pension benefit statement--
       ``(i) to a plan participant at least once annually, and
       ``(ii) to a plan beneficiary upon written request, and
       ``(B) the administrator of a defined benefit plan shall 
     furnish a pension benefit statement--
       ``(i) at least once every 3 years to each participant with 
     a nonforfeitable accrued benefit who is employed by the 
     employer maintaining the plan at the time the statement is 
     furnished to participants, and
       ``(ii) to a participant or beneficiary of the plan upon 
     written request.
       ``(2) Notwithstanding paragraph (1), the administrator of a 
     plan to which more than 1 unaffiliated employer is required 
     to contribute shall only be required to furnish a pension 
     benefit statement under paragraph (1) upon the written 
     request of a participant or beneficiary of the plan.
       ``(3) A pension benefit statement under paragraph (1)--
       ``(A) shall indicate, on the basis of the latest available 
     information--
       ``(i) the total benefits accrued, and
       ``(ii) the nonforfeitable pension benefits, if any, which 
     have accrued, or the earliest date on which benefits will 
     become nonforfeitable,
       ``(B) shall be written in a manner calculated to be 
     understood by the average plan participant, and
       ``(C) may be provided in written, electronic, telephonic, 
     or other appropriate form.
       ``(4) In the case of a defined benefit plan, the 
     requirements of paragraph (1)(B)(i) shall be treated as met 
     with respect to a participant if the administrator provides 
     the participant at least once each year with notice of the 
     availability of the pension benefit statement and the ways in 
     which the participant may obtain such statement. Such notice 
     shall be provided in written, electronic, telephonic, or 
     other appropriate form, and may be included with other 
     communications to the participant if done in a manner 
     reasonably designed to attract the attention of the 
     participant.''
       (b) Conforming Amendments.--
       (1) Section 105 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1025) is amended by striking 
     subsection (d).
       (2) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
     amended to read as follows:
       ``(b) In no case shall a participant or beneficiary of a 
     plan be entitled to more than one statement described in 
     subsection (a)(1)(A) or (a)(1)(B)(ii), whichever is 
     applicable, in any 12-month period.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2000.

     SEC. 362. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED 
                   RETIREMENT ADVICE.

       (a) In General.--Subsection (a) of section 132 (relating to 
     exclusion from gross income) is amended by striking ``or'' at 
     the end of paragraph (5), by striking the period at the end 
     of paragraph (6) and inserting ``, or'', and by adding at the 
     end the following new paragraph:
       ``(7) qualified retirement planning services.''
       (b) Qualified Retirement Planning Services Defined.--
     Section 132 is amended by redesignating subsection (m) as 
     subsection (n) and by inserting after subsection (l) the 
     following:
       ``(m) Qualified Retirement Planning Services.--
       ``(1) In general.--For purposes of this section, the term 
     `qualified retirement planning services' means any retirement 
     planning service provided to an employee and his spouse by an 
     employer maintaining a qualified employer plan.

[[Page 18531]]

       ``(2) Nondiscrimination rule.--Subsection (a)(7) shall 
     apply in the case of highly compensated employees only if 
     such services are available on substantially the same terms 
     to each member of the group of employees normally provided 
     education and information regarding the employer's qualified 
     employer plan.
       ``(3) Qualified employer plan.--For purposes of this 
     subsection, the term `qualified employer plan' means a plan, 
     contract, pension, or account described in section 
     219(g)(5).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

                Subtitle H--Reducing Regulatory Burdens

     SEC. 371. FLEXIBILITY IN NONDISCRIMINATION AND COVERAGE 
                   RULES.

       (a) Nondiscrimination.--
       (1) In general.--The Secretary of the Treasury shall, by 
     regulation, provide that a plan shall be deemed to satisfy 
     the requirements of section 401(a)(4) of the Internal Revenue 
     Code of 1986 if such plan satisfies the facts and 
     circumstances test under section 401(a)(4) of such Code, as 
     in effect before January 1, 1994, but only if--
       (A) the plan satisfies conditions prescribed by the 
     Secretary to appropriately limit the availability of such 
     test, and
       (B) the plan is submitted to the Secretary for a 
     determination of whether it satisfies such test.

     Subparagraph (B) shall only apply to the extent provided by 
     the Secretary.
       (2) Effective dates.--
       (A) Regulations.--The regulation required by subsection (a) 
     shall apply to years beginning after December 31, 2000.
       (B) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under paragraph 
     (1)(A) shall not apply before the first year beginning not 
     less than 120 days after the date on which such condition is 
     prescribed.
       (b) Coverage Test.--
       (1) In general.--Section 410(b)(1) (relating to minimum 
     coverage requirements) is amended by adding at the end the 
     following:
       ``(D) In the case that the plan fails to meet the 
     requirements of subparagraphs (A), (B) and (C), the plan--
       ``(i) satisfies subparagraph (B), as in effect immediately 
     before the enactment of the Tax Reform Act of 1986,
       ``(ii) is submitted to the Secretary for a determination of 
     whether it satisfies the requirement described in clause (i), 
     and
       ``(iii) satisfies conditions prescribed by the Secretary by 
     regulation that appropriately limit the availability of this 
     subparagraph.

     Clause (ii) shall apply only to the extent provided by the 
     Secretary.''.
       (2) Effective dates.--
       (A) In general.--The amendment made by subsection (a) shall 
     apply to years beginning after December 31, 2000.
       (B) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under regulations 
     prescribed by the Secretary under section 410(b)(1)(D) of the 
     Internal Revenue Code of 1986 shall not apply before the 
     first year beginning not less than 120 days after the date on 
     which such condition is prescribed.

     SEC. 372. MODIFICATION OF TIMING OF PLAN VALUATIONS.

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

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

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

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

       ``(iii) Adjustments.--Information under clause (i) shall, 
     in accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iv) Election.--An election under this subparagraph, once 
     made, shall be irrevocable without the consent of the 
     Secretary.''
       (b) Amendments to ERISA.--Paragraph (9) of section 302(c) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1053(c)) is amended--
       (1) by inserting ``(A)'' after ``(9)'', and
       (2) by adding at the end the following:
       ``(B)(i) Except as provided in clause (ii), if, for any 
     plan year--
       ``(I) an election is in effect under this subparagraph with 
     respect to a plan, and
       ``(II) the assets of the plan are not less than 125 percent 
     of the plan's current liability (as defined in paragraph 
     (7)(B)), determined as of the valuation date for the 
     preceding plan year,

     then this section shall be applied using the information 
     available as of such valuation date.
       ``(ii)(I) Clause (i) shall not apply for more than 2 
     consecutive plan years and valuation shall be under 
     subparagraph (A) with respect to any plan year to which 
     clause (i) does not apply by reason of this subclause.
       ``(II) Clause (i) shall not apply to the extent that more 
     frequent valuations are required under the regulations under 
     subparagraph (A).
       ``(iii) Information under clause (i) shall, in accordance 
     with regulations, be actuarially adjusted to reflect 
     significant differences in participants.
       ``(iv) An election under this subparagraph, once made, 
     shall be irrevocable without the consent of the Secretary of 
     the Treasury.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2000.

     SEC. 373. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

       (a) Modification of Phase-In of Guarantee.--Section 
     4022(b)(5) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322(b)(5)) is amended to read as follows:
       ``(5)(A) For purposes of this paragraph, the term `majority 
     owner' means an individual who, at any time during the 60-
     month period ending on the date the determination is being 
     made--
       ``(i) owns the entire interest in an unincorporated trade 
     or business,
       ``(ii) in the case of a partnership, is a partner who owns, 
     directly or indirectly, 50 percent or more of either the 
     capital interest or the profits interest in such partnership, 
     or
       ``(iii) in the case of a corporation, owns, directly or 
     indirectly, 50 percent or more in value of either the voting 
     stock of that corporation or all the stock of that 
     corporation.

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

     For purposes of paragraph (3), the constructive ownership 
     rules of section 1563(e) of the Internal Revenue Code of 1986 
     shall apply (determined without regard to section 
     1563(e)(3)(C)).''

[[Page 18532]]

       (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) 
     is amended by striking ``section 4022(b)(6)'' and inserting 
     ``section 4021(d)''.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to plan 
     terminations--
       (A) under section 4041(c) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1341(c)) with respect to 
     which notices of intent to terminate are provided under 
     section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) after 
     December 31, 2000, and
       (B) under section 4042 of such Act (29 U.S.C. 1342) with 
     respect to which proceedings are instituted by the 
     corporation after such date.
       (2) Conforming amendments.--The amendments made by 
     subsection (c) shall take effect on the date of enactment of 
     this Act.

     SEC. 374. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF 
                   DIVIDEND DEDUCTION.

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

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

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

     SEC. 375. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

       (a) Expansion of Period.--
       (1) In general.--
       (A) Amendment of internal revenue code of 1986.--
     Subparagraph (A) of section 417(a)(6) is amended by striking 
     ``90-day'' and inserting ``1-year''.
       (B) Amendment to erisa.--Subparagraph (A) of section 
     205(c)(7) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1055(c)(7)) is amended by striking ``90-day'' 
     and inserting ``1-year''.
       (2) Modification of regulations.--The Secretary of the 
     Treasury shall modify the regulations under sections 402(f), 
     411(a)(11), and 417 of the Internal Revenue Code of 1986 to 
     substitute ``1-year'' for ``90 days'' each place it appears 
     in Treasury Regulations sections 1.402(f)-1, 1.411(a)-11(c), 
     and 1.417(e)-1(b).
       (3) Effective date.--The amendments made by paragraph (1) 
     and the modifications required by paragraph (2) shall apply 
     to years beginning after December 31, 2000.
       (b) Consent Regulation Inapplicable to Certain 
     Distributions.--
       (1) In general.--The Secretary of the Treasury shall modify 
     the regulations under section 411(a)(11) of the Internal 
     Revenue Code of 1986 to provide that the description of a 
     participant's right, if any, to defer receipt of a 
     distribution shall also describe the consequences of failing 
     to defer such receipt.
       (2) Effective date.--The modifications required by 
     paragraph (1) shall apply to years beginning after December 
     31, 2000.

     SEC. 376. REPEAL OF TRANSITION RULE RELATING TO CERTAIN 
                   HIGHLY COMPENSATED EMPLOYEES.

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

     SEC. 377. EMPLOYEES OF TAX-EXEMPT ENTITIES.

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

     SEC. 378. EXTENSION TO INTERNATIONAL ORGANIZATIONS OF 
                   MORATORIUM ON APPLICATION OF CERTAIN 
                   NONDISCRIMINATION RULES APPLICABLE TO STATE AND 
                   LOCAL PLANS.

       (a) In General.--Subparagraph (G) of section 401(a)(5), 
     subparagraph (H) of section 401(a)(26), subparagraph (G) of 
     section 401(k)(3), and paragraph (2) of section 1505(d) of 
     the Taxpayer Relief Act of 1997 are each amended by inserting 
     ``or by an international organization which is described in 
     section 414(d)'' after ``or instrumentality thereof)''.
       (b) Conforming Amendments.--
       (1) The headings for subparagraph (G) of section 401(a)(5) 
     and subparagraph (H) of section 401(a)(26) are each amended 
     by inserting ``and international organization'' after 
     ``governmental''.
       (2) Subparagraph (G) of section 401(k)(3) is amended by 
     inserting ``State and local governmental and international 
     organization plans.--'' after ``(G)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 379. ANNUAL REPORT DISSEMINATION.

       (a) In General.--Section 104(b)(3) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1024(b)(3)) 
     is amended by striking ``shall furnish'' and inserting 
     ``shall make available for examination (and, upon request, 
     shall furnish)''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to reports for years beginning after December 31, 
     1998.

     SEC. 380. MODIFICATION OF EXCLUSION FOR EMPLOYER PROVIDED 
                   TRANSIT PASSES.

       (a) In General.--Section 132(f)(3) (relating to cash 
     reimbursements) is amended by striking the last sentence.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

                      Subtitle I--Plan Amendments

     SEC. 381. PROVISIONS RELATING TO PLAN AMENDMENTS.

       (a) In General.--If this section applies to any plan or 
     contract amendment--
       (1) such plan or contract shall be treated as being 
     operated in accordance with the terms of the plan during the 
     period described in subsection (b)(2)(A), and
       (2) such plan shall not fail to meet the requirements of 
     section 411(d)(6) of the Internal Revenue Code of 1986 by 
     reason of such amendment.
       (b) Amendments to Which Section Applies.--
       (1) In general.--This section shall apply to any amendment 
     to any plan or annuity contract which is made--
       (A) pursuant to any amendment made by this title, or 
     pursuant to any regulation issued under this title, and
       (B) on or before the last day of the first plan year 
     beginning on or after January 1, 2003.

     In the case of a government plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this paragraph 
     shall be applied by substituting ``2005'' for ``2003''.
       (2) Conditions.--This section shall not apply to any 
     amendment unless--
       (A) during the period--
       (i) beginning on the date the legislative or regulatory 
     amendment described in paragraph (1)(A) takes effect (or in 
     the case of a plan or contract amendment not required by such 
     legislative or regulatory amendment, the effective date 
     specified by the plan), and
       (ii) ending on the date described in paragraph (1)(B) (or, 
     if earlier, the date the plan or contract amendment is 
     adopted),

     the plan or contract is operated as if such plan or contract 
     amendment were in effect, and
       (B) such plan or contract amendment applies retroactively 
     for such period.

                     TITLE IV--EDUCATION TAX RELIEF

     SEC. 401. PERMANENT EXTENSION OF EXCLUSION FOR EMPLOYER-
                   PROVIDED EDUCATIONAL ASSISTANCE.

       (a) In General.--Section 127 (relating to exclusion for 
     educational assistance programs) is amended by striking 
     subsection (d).
       (b) Repeal of Limitation on Graduate Education.--
       (1) In general.--The last sentence of section 127(c)(1) is 
     amended by striking ``, and such term also does not include 
     any payment for, or the provision of any benefits with 
     respect to, any graduate level course of a kind normally 
     taken by an individual pursuing a program leading to a law, 
     business, medical, or other advanced academic or professional 
     degree''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply with respect to expenses relating to courses 
     beginning after December 31, 1999.

     SEC. 402. ELIMINATION OF 60-MONTH LIMIT AND INCREASE IN 
                   INCOME LIMITATION ON STUDENT LOAN INTEREST 
                   DEDUCTION.

       (a) Elimination of 60-Month Limit.--
       (1) In general.--Section 221 (relating to interest on 
     education loans) is amended by striking subsection (d) and by 
     redesignating subsections (e), (f), and (g) as subsections 
     (d), (e), and (f), respectively.
       (2) Conforming amendment.--Section 6050S(e) is amended by 
     striking ``section 221(e)(1)'' and inserting ``section 
     221(d)(1)''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply with respect to any loan interest paid after 
     December 31, 1999, in taxable years ending after such date.
       (b) Increase in Income Limitation.--
       (1) In general.--Section 221(b)(2)(B) (relating to amount 
     of reduction) is amended by striking clauses (i) and (ii) and 
     inserting the following:
       ``(i) the excess of--

       ``(I) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(II) $50,000 (twice such dollar amount in the case of a 
     joint return), bears to

       ``(ii) $15,000.''

[[Page 18533]]

       (2) Conforming amendment.--Section 221(g)(1) is amended by 
     striking ``$40,000 and $60,000 amounts'' and inserting 
     ``$50,000 amount''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years ending after December 31, 1999.

     SEC. 403. MODIFICATIONS TO QUALIFIED TUITION PROGRAMS.

       (a) Eligible Educational Institutions Permitted To Maintain 
     Qualified Tuition Programs.--
       (1) In general.--Section 529(b)(1) (defining qualified 
     State tuition program) is amended by inserting ``or by 1 or 
     more eligible educational institutions'' after ``maintained 
     by a State or agency or instrumentality thereof ''.
       (2) Private qualified tuition programs limited to benefit 
     plans.--Clause (ii) of section 529(b)(1)(A) is amended by 
     inserting ``in the case of a program established and 
     maintained by a State or agency or instrumentality thereof,'' 
     before ``may make''.
       (3) Conforming amendments.--
       (A) Sections 72(e)(9), 135(c)(2)(C), 135(d)(1)(D), 529, 
     530(b)(2)(B), 4973(e), and 6693(a)(2)(C) are each amended by 
     striking ``qualified State tuition'' each place it appears 
     and inserting ``qualified tuition''.
       (B) The headings for sections 72(e)(9) and 135(c)(2)(C) are 
     each amended by striking ``qualified state tuition'' and 
     inserting ``qualified tuition''.
       (C) The headings for sections 529(b) and 530(b)(2)(B) are 
     each amended by striking ``Qualified state tuition'' and 
     inserting ``Qualified tuition''.
       (D) The heading for section 529 is amended by striking 
     ``STATE''.
       (E) The item relating to section 529 in the table of 
     sections for part VIII of subchapter F of chapter 1 is 
     amended by striking ``State''.
       (b) Exclusion From Gross Income of Education Distributions 
     From Qualified Tuition Programs.--
       (1) In general.--Section 529(c)(3)(B) (relating to 
     distributions) is amended to read as follows:
       ``(B) Distributions for qualified higher education 
     expenses.--For purposes of this paragraph--
       ``(i) In-kind distributions.--No amount shall be includible 
     in gross income under subparagraph (A) by reason of a 
     distribution which consists of providing a benefit to the 
     distributee which, if paid for by the distributee, would 
     constitute payment of a qualified higher education expense.
       ``(ii) Cash distributions.--In the case of distributions 
     not described in clause (i), if--

       ``(I) such distributions do not exceed the qualified higher 
     education expenses (reduced by expenses described in clause 
     (i)), no amount shall be includible in gross income, and
       ``(II) in any other case, the amount otherwise includible 
     in gross income shall be reduced by an amount which bears the 
     same ratio to such amount as such expenses bear to such 
     distributions.

       ``(iii) Exception for institutional programs.--In the case 
     of any taxable year beginning before January 1, 2004, clauses 
     (i) and (ii) shall not apply with respect to any distribution 
     during such taxable year under a qualified tuition program 
     established and maintained by 1 or more eligible educational 
     institutions.
       ``(iv) Treatment as distributions.--Any benefit furnished 
     to a designated beneficiary under a qualified tuition program 
     shall be treated as a distribution to the beneficiary for 
     purposes of this paragraph.
       ``(v) Coordination with hope and lifetime learning 
     credits.--The total amount of qualified higher education 
     expenses with respect to an individual for the taxable year 
     shall be reduced--

       ``(I) as provided in section 25A(g)(2), and
       ``(II) by the amount of such expenses which were taken into 
     account in determining the credit allowed to the taxpayer or 
     any other person under section 25A.

       ``(vi) Coordination with education individual retirement 
     accounts.--If, with respect to an individual for any taxable 
     year--

       ``(I) the aggregate distributions to which clauses (i) and 
     (ii) and section 530(d)(2)(A) apply, exceed
       ``(II) the total amount of qualified higher education 
     expenses otherwise taken into account under clauses (i) and 
     (ii) (after the application of clause (v)) for such year,

     the taxpayer shall allocate such expenses among such 
     distributions for purposes of determining the amount of the 
     exclusion under clauses (i) and (ii) and section 
     530(d)(2)(A).''
       (2) Conforming amendments.--
       (A) Section 135(d)(2)(B) is amended by striking ``the 
     exclusion under section 530(d)(2)'' and inserting ``the 
     exclusions under sections 529(c)(3)(B)(i) and 530(d)(2)''.
       (B) Section 221(e)(2)(A) is amended by inserting ``529,'' 
     after ``135,''.
       (c) Coordination With Hope and Lifetime Learning Credits 
     and Qualified Tuition Programs.--
       (1) In general.--Section 530(d)(2)(C) is amended to read as 
     follows:
       ``(C) Coordination with hope and lifetime learning credits 
     and qualified tuition programs.--For purposes of subparagraph 
     (A)--
       ``(i) Credit coordination.--The total amount of qualified 
     higher education expenses with respect to an individual for 
     the taxable year shall be reduced--

       ``(I) as provided in section 25A(g)(2), and
       ``(II) by the amount of such expenses which were taken into 
     account in determining the credit allowed to the taxpayer or 
     any other person under section 25A.

       ``(ii) Coordination with qualified tuition programs.--If, 
     with respect to an individual for any taxable year--

       ``(I) the aggregate distributions during such year to which 
     subparagraph (A) and section 529(c)(3)(B) apply, exceed
       ``(II) the total amount of qualified higher education 
     expenses otherwise taken into account under subparagraph (A) 
     (after the application of clause (i)) for such year,

     the taxpayer shall allocate such expenses among such 
     distributions for purposes of determining the amount of the 
     exclusion under subparagraph (A) and section 529(c)(3)(B).''
       (2) Conforming amendments.--
       (A) Subsection (e) of section 25A is amended to read as 
     follows:
       ``(e) Election To Have Section Apply.--No credit shall be 
     allowed under subsection (a) for a taxable year with respect 
     to the qualified tuition and related expenses of an 
     individual unless the taxpayer elects to have this section 
     apply with respect to such individual for such year.''
       (B) Section 135(d)(2)(A) is amended by striking 
     ``allowable'' and inserting ``allowed''.
       (C) Section 530(d)(2)(D) is amended--
       (i) by striking ``or credit'', and
       (ii) by striking ``credit or'' in the heading.
       (d) Rollover to Different Program for Benefit of Same 
     Designated Beneficiary.--Section 529(c)(3)(C) (relating to 
     change in beneficiaries) is amended--
       (1) by striking ``transferred to the credit'' in clause (i) 
     and inserting ``transferred--

       ``(I) to another qualified tuition program for the benefit 
     of the designated beneficiary, or
       ``(II) to the credit'',

       (2) by adding at the end the following new clause:
       ``(iii) Limitation on certain rollovers.--Clause (i)(I) 
     shall not apply to any amount transferred with respect to a 
     designated beneficiary if, at any time during the 1-year 
     period ending on the day of such transfer, any other amount 
     was transferred with respect to such beneficiary which was 
     not includible in gross income by reason of clause (i)(I).'', 
     and
       (3) by inserting ``or programs'' after ``beneficiaries'' in 
     the heading.
       (e) Member of Family Includes First Cousin.--Section 
     529(e)(2) (defining member of family) is amended by striking 
     ``and'' at the end of subparagraph (B), by striking the 
     period at the end of subparagraph (C) and by inserting ``; 
     and'', and by adding at the end the following new 
     subparagraph:
       ``(D) any first cousin of such beneficiary.''
       (f) Definition of Qualified Higher Education Expenses.--
       (1) In general.--Subparagraph (A) of section 529(e)(3) 
     (relating to definition of qualified higher education 
     expenses) is amended to read as follows:
       ``(A) In general.--The term `qualified higher education 
     expenses' means--
       ``(i) tuition and fees required for the enrollment or 
     attendance of a designated beneficiary at an eligible 
     educational institution for courses of instruction of such 
     beneficiary at such institution, and
       ``(ii) expenses for books, supplies, and equipment which 
     are incurred in connection with such enrollment or 
     attendance, but not to exceed the allowance for books and 
     supplies included in the cost of attendance (as defined in 
     section 472 of the Higher Education Act of 1965 (20 U.S.C. 
     1087ll), as in effect on the date of enactment of the 
     Taxpayer Refund Act of 1999) as determined by the eligible 
     educational institution.''
       (2) Exception for education involving sports, etc..--
     Paragraph (3) of section 529(e) (relating to qualified higher 
     education expenses) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Exception for education involving sports, etc..--The 
     term `qualified higher education expenses' shall not include 
     expenses with respect to any course or other education 
     involving sports, games, or hobbies unless such course or 
     other education is part of the beneficiary's degree program 
     or is taken to acquire or improve job skills of the 
     beneficiary.''
       (g) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 1999.
       (2) Qualified higher education expenses.--The amendments 
     made by subsection (f) shall apply to amounts paid for 
     courses beginning after December 31, 1999.

     SEC. 404. ADDITIONAL INCREASE IN ARBITRAGE REBATE EXCEPTION 
                   FOR GOVERNMENTAL BONDS USED TO FINANCE 
                   EDUCATIONAL FACILITIES.

       (a) In General.--Section 148(f)(4)(D)(vii) (relating to 
     increase in exception for bonds financing public school 
     capital expenditures) is amended by striking ``$5,000,000'' 
     the second place it appears and inserting ``$10,000,000''.

[[Page 18534]]

       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to obligations issued in calendar years beginning 
     after December 31, 1999.

     SEC. 405. EXCLUSION OF CERTAIN AMOUNTS RECEIVED UNDER THE 
                   NATIONAL HEALTH SERVICE CORPS SCHOLARSHIP 
                   PROGRAM AND THE F. EDWARD HEBERT ARMED FORCES 
                   HEALTH PROFESSIONS SCHOLARSHIP AND FINANCIAL 
                   ASSISTANCE PROGRAM.

       (a) In General.--Section 117(c) (relating to the exclusion 
     from gross income amounts received as a qualified 
     scholarship) is amended--
       (1) by striking ``Subsections (a)'' and inserting the 
     following:
       ``(1) In general.--Except as provided in paragraph (2), 
     subsections (a)'', and
       (2) by adding at the end the following new paragraph:
       ``(2) Exceptions.--Paragraph (1) shall not apply to any 
     amount received by an individual under--
       ``(A) the National Health Service Corps Scholarship program 
     under section 338A(g)(1)(A) of the Public Health Service Act, 
     or
       ``(B) the Armed Forces Health Professions Scholarship and 
     Financial Assistance program under subchapter I of chapter 
     105 of title 10, United States Code.''
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to amounts received in taxable years beginning 
     after December 31, 1993.

                      TITLE V--HEALTH CARE RELIEF

     SEC. 501. DEDUCTION FOR HEALTH AND LONG-TERM CARE INSURANCE 
                   COSTS OF INDIVIDUALS NOT PARTICIPATING IN 
                   EMPLOYER-SUBSIDIZED HEALTH PLANS.

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

     ``SEC. 222. HEALTH AND LONG-TERM CARE INSURANCE COSTS.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a deduction an amount equal to the 
     applicable percentage of the amount paid during the taxable 
     year for insurance which constitutes medical care for the 
     taxpayer and the taxpayer's spouse and dependents.
       ``(b) Applicable Percentage.--For purposes of subsection 
     (a)--
       ``(1) Health insurance.--In the case of insurance not 
     described in paragraph (2), the applicable percentage shall 
     be determined in accordance with the following table:

``For taxable years beginning                            The applicable
  in calendar year--                                    percentage is--
  2001, 2002, 2003...............................................12.5  
  2004 and 2005....................................................25  
  2006 and thereafter.............................................50.  
       ``(2) Long-term care insurance.--In the case of qualified 
     long-term care insurance, the applicable percentage shall be 
     determined in accordance with the following table:

``For taxable years beginning                            The applicable
  in calendar year--                                    percentage is--
  2001, 2002, 2003.................................................25  
  2004 and 2005....................................................50  
  2006 and thereafter............................................100.  
       ``(c) Limitation Based on Other Coverage.--
       ``(1) Coverage under certain subsidized employer plans.--
       ``(A) In general.--Subsection (a) shall not apply to any 
     taxpayer for any calendar month for which the taxpayer 
     participates in any health plan maintained by any employer of 
     the taxpayer or of the spouse of the taxpayer if 50 percent 
     or more of the cost of coverage under such plan (determined 
     under section 4980B and without regard to payments made with 
     respect to any coverage described in subsection (e)) is paid 
     or incurred by the employer.
       ``(B) Employer contributions to cafeteria plans, flexible 
     spending arrangements, and medical savings accounts.--
     Employer contributions to a cafeteria plan, a flexible 
     spending or similar arrangement, or a medical savings account 
     which are excluded from gross income under section 106 shall 
     be treated for purposes of subparagraph (A) as paid by the 
     employer.
       ``(C) Aggregation of plans of employer.--A health plan 
     which is not otherwise described in subparagraph (A) shall be 
     treated as described in such subparagraph if such plan would 
     be so described if all health plans of persons treated as a 
     single employer under subsections (b), (c), (m), or (o) of 
     section 414 were treated as one health plan.
       ``(D) Separate application to health insurance and long-
     term care insurance.--Subparagraphs (A) and (C) shall be 
     applied separately with respect to--
       ``(i) plans which include primarily coverage for qualified 
     long-term care services or are qualified long-term care 
     insurance contracts, and
       ``(ii) plans which do not include such coverage and are not 
     such contracts.
       ``(2) Coverage under certain federal programs.--
       ``(A) In general.--Subsection (a) shall not apply to any 
     amount paid for any coverage for an individual for any 
     calendar month if, as of the first day of such month, the 
     individual is covered under any medical care program 
     described in--
       ``(i) title XVIII, XIX, or XXI of the Social Security Act,
       ``(ii) chapter 55 of title 10, United States Code,
       ``(iii) chapter 17 of title 38, United States Code,
       ``(iv) chapter 89 of title 5, United States Code, or
       ``(v) the Indian Health Care Improvement Act.
       ``(B) Exceptions.--
       ``(i) Qualified long-term care.--Subparagraph (A) shall not 
     apply to amounts paid for coverage under a qualified long-
     term care insurance contract.
       ``(ii) Continuation coverage of fehbp.--Subparagraph 
     (A)(iv) shall not apply to coverage which is comparable to 
     continuation coverage under section 4980B.
       ``(d) Long-Term Care Deduction Limited to Qualified Long-
     Term Care Insurance Contracts.--In the case of a qualified 
     long-term care insurance contract, only eligible long-term 
     care premiums (as defined in section 213(d)(10)) may be taken 
     into account under subsection (a).
       ``(e) Deduction Not Available for Payment of Ancillary 
     Coverage Premiums.--Any amount paid as a premium for 
     insurance which provides for--
       ``(1) coverage for accidents, disability, dental care, 
     vision care, or a specified illness, or
       ``(2) making payments of a fixed amount per day (or other 
     period) by reason of being hospitalized.
     shall not be taken into account under subsection (a).
       ``(f) Special Rules.--
       ``(1) Coordination with deduction for health insurance 
     costs of self-employed individuals.--The amount taken into 
     account by the taxpayer in computing the deduction under 
     section 162(l) shall not be taken into account under this 
     section.
       ``(2) Coordination with medical expense deduction.--The 
     amount taken into account by the taxpayer in computing the 
     deduction under this section shall not be taken into account 
     under section 213.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out this section, 
     including regulations requiring employers to report to their 
     employees and the Secretary such information as the Secretary 
     determines to be appropriate.''
       (b) Deduction Allowed Whether or Not Taxpayer Itemizes 
     Other Deductions.--Subsection (a) of section 62, as amended 
     by section 301, is amended by inserting after paragraph (18) 
     the following new item:
       ``(19) Health and long-term care insurance costs.--The 
     deduction allowed by section 222.''
       (c) Clerical Amendment.--The table of sections for part VII 
     of subchapter B of chapter 1 is amended by striking the last 
     item and inserting the following new items:

``Sec. 222. Health and long-term care insurance costs.
``Sec. 223. Cross reference.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 502. LONG-TERM CARE INSURANCE PERMITTED TO BE OFFERED 
                   UNDER CAFETERIA PLANS AND FLEXIBLE SPENDING 
                   ARRANGEMENTS.

       (a) Cafeteria Plans.--
       (1) In general.--Subsection (f) of section 125 (defining 
     qualified benefits) is amended by inserting before the period 
     at the end ``; except that such term shall include the 
     payment of premiums for any qualified long-term care 
     insurance contract (as defined in section 7702B) to the 
     extent the amount of such payment does not exceed the 
     eligible long-term care premiums (as defined in section 
     213(d)(10)) for such contract.''
       (b) Flexible Spending Arrangements.--Section 106 (relating 
     to contributions by employer to accident and health plans) is 
     amended by striking subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 503. LONG-TERM CARE TAX CREDIT.

       (a) Allowance of Credit.--
       (1) In general.--Section 24(a) (relating to allowance of 
     child tax credit) is amended to read as follows:
       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for the 
     taxable year an amount equal to the sum of--
       ``(1) $500 multiplied by the number of qualifying children 
     of the taxpayer, plus
       ``(2) $500 ($250 for taxable years ending before 2007) 
     multiplied by the number of applicable individuals with 
     respect to whom the taxpayer is an eligible caregiver for the 
     taxable year.''
       (2) Additional credit for taxpayer with 3 or more separate 
     credit amounts.--So much of section 24(d) as precedes 
     paragraph (1)(A) thereof is amended to read as follows:
       ``(d) Additional Credit for Taxpayers With 3 or More 
     Separate Credit Amounts.--
       ``(1) In general.--If the sum of the number of qualifying 
     children of the taxpayer and the number of applicable 
     individuals with respect to which the taxpayer is an eligible 
     caregiver is 3 or more for any taxable year, the aggregate 
     credits allowed under subpart C shall be increased by the 
     lesser of--''.

[[Page 18535]]

       (3) Conforming amendments.--
       (A) The heading for section 32(n) is amended by striking 
     ``Child'' and inserting ``Family Care''.
       (B) The heading for section 24 is amended to read as 
     follows:

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

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

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

     Such term shall not include any individual otherwise meeting 
     the requirements of the preceding sentence unless within the 
     39-\1/2\ month period ending on such due date (or such other 
     period as the Secretary prescribes) a physician (as so 
     defined) has certified that such individual meets such 
     requirements.
       ``(B) Individuals with long-term care needs.--An individual 
     is described in this subparagraph if the individual meets any 
     of the following requirements:
       ``(i) The individual is at least 6 years of age and--

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

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

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

       ``(B) Residency test.--The requirements of this 
     subparagraph are met if an individual has as his principal 
     place of abode the home of the taxpayer and--
       ``(i) in the case of an individual who is an ancestor or 
     descendant of the taxpayer or the taxpayer's spouse, is a 
     member of the taxpayer's household for over half the taxable 
     year, or
       ``(ii) in the case of any other individual, is a member of 
     the taxpayer's household for the entire taxable year.
       ``(C) Special rules where more than 1 eligible caregiver.--
       ``(i) In general.--If more than 1 individual is an eligible 
     caregiver with respect to the same applicable individual for 
     taxable years ending with or within the same calendar year, a 
     taxpayer shall be treated as the eligible caregiver if each 
     such individual (other than the taxpayer) files a written 
     declaration (in such form and manner as the Secretary may 
     prescribe) that such individual will not claim such 
     applicable individual for the credit under this section.
       ``(ii) No agreement.--If each individual required under 
     clause (i) to file a written declaration under clause (i) 
     does not do so, the individual with the highest modified 
     adjusted gross income (as defined in section 32(c)(5)) shall 
     be treated as the eligible caregiver.
       ``(iii) Married individuals filing separately.--In the case 
     of married individuals filing separately, the determination 
     under this subparagraph as to whether the husband or wife is 
     the eligible caregiver shall be made under the rules of 
     clause (ii) (whether or not one of them has filed a written 
     declaration under clause (i)).''
       (c) Identification Requirements.--
       (1) In general.--Section 24(e) is amended by adding at the 
     end the following new sentence: ``No credit shall be allowed 
     under this section to a taxpayer with respect to any 
     applicable individual unless the taxpayer includes the name 
     and taxpayer identification number of such individual, and 
     the identification number of the physician certifying such 
     individual, on the return of tax for the taxable year.''
       (2) Assessment.--Section 6213(g)(2)(I) is amended--
       (A) by inserting ``or physician identification'' after 
     ``correct TIN'', and
       (B) by striking ``child'' and inserting ``family care''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.

     SEC. 504. INCLUSION OF CERTAIN VACCINES AGAINST STREPTOCOCCUS 
                   PNEUMONIAE TO LIST OF TAXABLE VACCINES; 
                   REDUCTION IN PER DOSE TAX RATE.

       (a) Inclusion of Vaccines.--
       (1) In general.--Section 4132(a)(1) (defining taxable 
     vaccine) is amended by adding at the end the following new 
     subparagraph:
       ``(L) Any conjugate vaccine against streptococcus 
     pneumoniae.''
       (2) Effective date.--
       (A) Sales.--The amendment made by this subsection shall 
     apply to vaccine sales beginning on the day after the date on 
     which the Centers for Disease Control makes a final 
     recommendation for routine administration to children of any 
     conjugate vaccine against streptococcus pneumoniae, but shall 
     not take effect if subsection (c) does not take effect.
       (B) Deliveries.--For purposes of subparagraph (A), in the 
     case of sales on or before the date described in such 
     subparagraph for which delivery is made after such date, the 
     delivery date shall be considered the sale date.
       (b) Reduction in Per Dose Tax Rate.--
       (1) In general.--Section 4131(b)(1) (relating to amount of 
     tax) is amended by striking ``75 cents'' and inserting ``25 
     cents''.
       (2) Effective date.--
       (A) Sales.--The amendment made by this subsection shall 
     apply to vaccine sales after December 31, 2004, but shall not 
     take effect if subsection (c) does not take effect.
       (B) Deliveries.--For purposes of subparagraph (A), in the 
     case of sales on or before the date described in such 
     subparagraph for which delivery is made after such date, the 
     delivery date shall be considered the sale date.
       (3) Limitation on certain credits or refunds.--For purposes 
     of applying section 4132(b) of the Internal Revenue Code of 
     1986 with respect to any claim for credit or refund filed 
     after August 31, 2004, the amount of tax taken into account 
     shall not exceed the tax computed under the rate in effect on 
     January 1, 2005.
       (c) Vaccine Tax and Trust Fund Amendments.--
       (1) Sections 1503 and 1504 of the Vaccine Injury 
     Compensation Program Modification Act (and the amendments 
     made by such sections) are hereby repealed.
       (2) Subparagraph (A) of section 9510(c)(1) is amended by 
     striking ``August 5, 1997'' and inserting ``October 21, 
     1998''.
       (3) The amendments made by this subsection shall take 
     effect as if included in the provisions of the Tax and Trade 
     Relief Extension Act of 1998 to which they relate.
       (d) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Comptroller General of the United 
     States shall prepare and submit a report to the Committee on 
     Ways and Means of the House of Representatives and the 
     Committee on Finance of the Senate on the operation the 
     Vaccine Injury Compensation Trust Fund and on the adequacy of 
     such Fund to meet future claims made under the Vaccine Injury 
     Compensation Program.

[[Page 18536]]



                      TITLE VI--ESTATE TAX RELIEF

     SEC. 601. INCREASE IN UNIFIED ESTATE AND GIFT TAX CREDIT.

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

``In the case of estates of decedentThe applicable exclusion amount is:
      2000 and 2001...........................................$675,000 
      2002....................................................$700,000 
      2003....................................................$740,000 
      2004..................................................$1,000,000 
      2005..................................................$1,075,000 
      2006..................................................$1,150,000 
      2007..................................................$1,225,000 
      2008 and thereafter.................................$1,300,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 1999.

           TITLE VII--SMALL BUSINESS AND AGRICULTURAL RELIEF

     SEC. 701. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS 
                   OF SELF-EMPLOYED INDIVIDUALS.

       (a) In General.--Paragraph (1) of section 162(l) is amended 
     to read as follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to 100 percent of the amount paid during the 
     taxable year for insurance which constitutes medical care for 
     the taxpayer and the taxpayer's spouse and dependents.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 702. REPEAL OF FEDERAL UNEMPLOYMENT SURTAX.

       Section 3301 (relating to rate of Federal unemployment tax) 
     is amended--
       (1) by striking ``2007'' and inserting ``2004'', and
       (2) by striking ``2008'' and inserting ``2005''.

     SEC. 703. INCOME AVERAGING FOR FARMERS NOT TO INCREASE 
                   ALTERNATIVE MINIMUM TAX LIABILITY.

       (a) In General.--Section 55(c) (defining regular tax) is 
     amended by redesignating paragraph (2) as paragraph (3) and 
     by inserting after paragraph (1) the following:
       ``(2) Coordination with income averaging for farmers.--
     Solely for purposes of this section, section 1301 (relating 
     to averaging of farm income) shall not apply in computing the 
     regular tax.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 704. FARM AND RANCH RISK MANAGEMENT ACCOUNTS.

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

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

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

     For purposes of subparagraph (A), distributions shall be 
     treated as first attributable to income and then to other 
     amounts.
       ``(f) Special Rules.--
       ``(1) Tax on deposits in account which are not distributed 
     within 5 years.--
       ``(A) In general.--If, at the close of any taxable year, 
     there is a nonqualified balance in any FARRM Account--
       ``(i) there shall be deemed distributed from such Account 
     during such taxable year an amount equal to such balance, and
       ``(ii) the taxpayer's tax imposed by this chapter for such 
     taxable year shall be increased by 10 percent of such deemed 
     distribution.

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

[[Page 18537]]

     such manner as may be required by such regulations.''
       (b) Tax on Excess Contributions.--
       (1) Subsection (a) of section 4973 (relating to tax on 
     excess contributions to certain tax-favored accounts and 
     annuities), as amended by section 303(b)(1), is amended by 
     striking ``or'' at the end of paragraph (4), by redesignating 
     paragraphs (4) and (5) as paragraphs (5) and (6), 
     respectively, and by inserting after paragraph (3) the 
     following:
       ``(4) a FARRM Account (within the meaning of section 
     468C(d)), or''.
       (2) Section 4973, as amended by section 303(b)(2), is 
     amended by adding at the end the following:
       ``(h) Excess Contributions to FARRM Accounts.--For purposes 
     of this section, in the case of a FARRM Account (within the 
     meaning of section 468C(d)), the term `excess contributions' 
     means the amount by which the amount contributed for the 
     taxable year to the Account exceeds the amount which may be 
     contributed to the Account under section 468C(b) for such 
     taxable year. For purposes of this subsection, any 
     contribution which is distributed out of the FARRM Account in 
     a distribution to which section 468C(e)(2)(B) applies shall 
     be treated as an amount not contributed.''
       (3) The section heading for section 4973 is amended to read 
     as follows:

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

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

``Sec. 4973. Excess contributions to certain accounts, annuities, 
              etc.''
       (c) Tax on Prohibited Transactions.--
       (1) Subsection (c) of section 4975 (relating to tax on 
     prohibited transactions) is amended by adding at the end the 
     following:
       ``(6) Special rule for farrm accounts.--A person for whose 
     benefit a FARRM Account (within the meaning of section 
     468C(d)) is established shall be exempt from the tax imposed 
     by this section with respect to any transaction concerning 
     such account (which would otherwise be taxable under this 
     section) if, with respect to such transaction, the account 
     ceases to be a FARRM Account by reason of the application of 
     section 468C(f)(3)(A) to such account.''
       (2) Paragraph (1) of section 4975(e) is amended by 
     redesignating subparagraphs (E) and (F) as subparagraphs (F) 
     and (G), respectively, and by inserting after subparagraph 
     (D) the following:
       ``(E) a FARRM Account described in section 468C(d),''.
       (d) Failure To Provide Reports on FARRM Accounts.--
     Paragraph (2) of section 6693(a) (relating to failure to 
     provide reports on certain tax-favored accounts or 
     annuities), as amended by section 303(d), is amended by 
     redesignating subparagraphs (C), (D), and (E) as 
     subparagraphs (D), (E), and (F), respectively, and by 
     inserting after subparagraph (B) the following:
       ``(C) section 468C(g) (relating to FARRM Accounts),''.
       (e) Clerical Amendment.--The table of sections for subpart 
     C of part II of subchapter E of chapter 1 is amended by 
     inserting after the item relating to section 468B the 
     following:

``Sec. 468C. Farm and Ranch Risk Management Accounts.''
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 705. INCREASE IN ESTATE TAX DEDUCTION FOR FAMILY-OWNED 
                   BUSINESS INTEREST.

       (a) In General.--Section 2057(a)(2) (relating to maximum 
     deduction) is amended by striking ``$675,000'' and inserting 
     ``$1,125,000''.
       (b) Conforming Amendments.--Section 2057(a)(3)(B) (relating 
     to coordination with unified credit) is amended by striking 
     ``$675,000'' each place it appears in the text and heading 
     and inserting ``$1,125,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     2002.

     SEC. 706. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.

       (a) In General.--Paragraph (1) of section 179(b) (relating 
     to dollar limitation) is amended to read as follows:
       ``(1) Dollar limitation.--The aggregate cost which may be 
     taken into account under subsection (a) for any taxable year 
     shall not exceed $30,000.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 707. RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN 
                   LEASEHOLD IMPROVEMENTS.

       (a) 15-Year Recovery Period.--Subparagraph (E) of section 
     168(e)(3) (relating to 15-year property) is amended by 
     striking ``and'' at the end of clause (ii), by striking the 
     period at the end of clause (iii) and inserting ``, and'', 
     and by adding at the end the following new clause:
       ``(iv) any qualified leasehold improvement property.''
       (b) Qualified Leasehold Improvement Property.--Subsection 
     (e) of section 168 is amended by adding at the end the 
     following new paragraph:
       ``(6) Qualified leasehold improvement property.--
       ``(A) In general.--The term `qualified leasehold 
     improvement property' means any improvement to an interior 
     portion of a building which is nonresidential real property 
     if--
       ``(i) such improvement is made under or pursuant to a lease 
     (as defined in subsection (h)(7))--

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

       ``(ii) the original use of such improvement begins with the 
     lessee and after December 31, 2002,
       ``(iii) such portion is to be occupied exclusively by the 
     lessee (or any sublessee) of such portion, and
       ``(iv) such improvement is placed in service more than 3 
     years after the date the building was first placed in 
     service.
       ``(B) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefiting a common area, 
     and
       ``(iv) the internal structural framework of the building.
       ``(C) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Commitment to lease treated as lease.--A commitment 
     to enter into a lease shall be treated as a lease, and the 
     parties to such commitment shall be treated as lessor and 
     lessee, respectively, if the lease is in effect at the time 
     the property is placed in service.
       ``(ii) Related persons.--A lease between related persons 
     shall not be considered a lease. For purposes of the 
     preceding sentence, the term `related persons' means--

       ``(I) members of an affiliated group (as defined in section 
     1504), and
       ``(II) persons having a relationship described in 
     subsection (b) of section 267(b) or 707(b)(1); except that, 
     for purposes of this clause, the phrase `80 percent or more' 
     shall be substituted for the phrase `more than 50 percent' 
     each place it appears in such subsections.''

       (c) Requirement To Use Straight Line Method.--Paragraph (3) 
     of section 168(b) is amended by adding at the end the 
     following new subparagraph:
       ``(G) Qualified leasehold improvement property described in 
     subsection (e)(6).''
       (d) Effective Date.--The amendments made by this section 
     shall apply to qualified leasehold improvement property 
     placed in service after December 31, 2002.

 TITLE VIII--PROVISIONS RELATING TO HOUSING, REAL ESTATE, ENVIRONMENT, 
                           AND TRANSPORTATION

                  Subtitle A--Housing and Real Estate

     SEC. 801. MODIFICATION OF STATE CEILING ON LOW-INCOME HOUSING 
                   CREDIT.

       (a) In General.--Clauses (i) and (ii) of section 
     42(h)(3)(C) (relating to State housing credit ceiling) are 
     amended to read as follows:
       ``(i) the unused State housing credit ceiling (if any) of 
     such State for the preceding calendar year,
       ``(ii) the greater of--

       ``(I) the applicable amount under subparagraph (H) 
     multiplied by the State population, or
       ``(II) $2,000,000,''.

       (b) Applicable Amount.--Paragraph (3) of section 42(h) 
     (relating to housing credit dollar amount for agencies) is 
     amended by adding at the end the following new subparagraph:
       ``(H) Applicable amount of state ceiling.--For purposes of 
     subparagraph (C)(ii), the applicable amount shall be 
     determined under the following table:

``For calendar year--                        The applicable amount is--
    2001.........................................................$1.35 
    2002........................................................  1.45 
    2003........................................................  1.55 
    2004........................................................  1.65 
    2005 and thereafter.......................................  1.75.''

       (c) Conforming Amendments.--
       (1) Section 42(h)(3)(C), as amended by subsection (a), is 
     amended--
       (A) by striking ``clause (ii)'' in the matter following 
     clause (iv) and inserting ``clause (i)'', and
       (B) by striking ``clauses (i)'' in the matter following 
     clause (iv) and inserting ``clauses (ii)''.
       (2) Section 42(h)(3)(D)(ii) is amended--
       (A) by striking ``subparagraph (C)(ii)'' and inserting 
     ``subparagraph (C)(i)'', and
       (B) by striking ``clauses (i)'' in subclause (II) and 
     inserting ``clauses (ii)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to calendar years after 2000.

     SEC. 802. INCREASE IN VOLUME CAP ON PRIVATE ACTIVITY BONDS.

       (a) In General.--The table contained in section 146(d)(2) 
     (relating to per capita limit; aggregate limit) is amended by 
     striking ``2002'', ``2003'', ``2004'', ``2005'', ``2006'', 
     and ``2007'' and inserting ``2000'', ``2001'', ``2002'', 
     ``2003'', ``2004'', and ``2005'', respectively.
       (b) Effective Date.--The amendments made by this section 
     shall apply to calendar years after 2000.

[[Page 18538]]



                  Subtitle B--Environmental Provisions

     SEC. 811. TAX CREDIT FOR RENOVATING HISTORIC HOMES.

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

     ``SEC. 25B. HISTORIC HOMEOWNERSHIP REHABILITATION CREDIT.

       ``(a) General Rule.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     chapter for the taxable year an amount equal to 20 percent of 
     the qualified rehabilitation expenditures made by the 
     taxpayer with respect to a qualified historic home.
       ``(b) Dollar Limitation.--The credit allowed by subsection 
     (a) with respect to any residence of a taxpayer shall not 
     exceed $20,000 ($10,000 in the case of a married individual 
     filing a separate return).
       ``(c) Qualified Rehabilitation Expenditure.--For purposes 
     of this section--
       ``(1) In general.--The term `qualified rehabilitation 
     expenditure' means any amount properly chargeable to capital 
     account--
       ``(A) in connection with the certified rehabilitation of a 
     qualified historic home, and
       ``(B) for property for which depreciation would be 
     allowable under section 168 if the qualified historic home 
     were used in a trade or business.
       ``(2) Certain expenditures not included.--
       ``(A) Exterior.--Such term shall not include any 
     expenditure in connection with the rehabilitation of a 
     building unless at least 5 percent of the total expenditures 
     made in the rehabilitation process are allocable to the 
     rehabilitation of the exterior of such building.
       ``(B) Other rules to apply.--Rules similar to the rules of 
     clauses (ii) and (iii) of section 47(c)(2)(B) shall apply.
       ``(3) Mixed use or multifamily building.--If only a portion 
     of a building is used as the principal residence of the 
     taxpayer, only qualified rehabilitation expenditures which 
     are properly allocable to such portion shall be taken into 
     account under this section.
       ``(d) Certified Rehabilitation.--For purposes of this 
     section:
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the term `certified rehabilitation' has the 
     meaning given such term by section 47(c)(2)(C).
       ``(2) Factors to be considered in the case of targeted area 
     residences, etc.--
       ``(A) In general.--For purposes of applying section 
     47(c)(2)(C) under this section with respect to the 
     rehabilitation of a building to which this paragraph applies, 
     consideration shall be given to--
       ``(i) the feasibility of preserving existing architectural 
     and design elements of the interior of such building,
       ``(ii) the risk of further deterioration or demolition of 
     such building in the event that certification is denied 
     because of the failure to preserve such interior elements, 
     and
       ``(iii) the effects of such deterioration or demolition on 
     neighboring historic properties.
       ``(B) Buildings to which this paragraph applies.--This 
     paragraph shall apply with respect to any building--
       ``(i) any part of which is a targeted area residence within 
     the meaning of section 143(j)(1), or
       ``(ii) which is located within an enterprise community or 
     empowerment zone as designated under section 1391,
     but shall not apply with respect to any building which is 
     listed in the National Register.
       ``(3) Approved state program.--The term `certified 
     rehabilitation' includes a certification made by--
       ``(A) a State Historic Preservation Officer who administers 
     a State Historic Preservation Program approved by the 
     Secretary of the Interior pursuant to section 101(b)(1) of 
     the National Historic Preservation Act, as in effect on July 
     21, 1999, or
       ``(B) a local government, certified pursuant to section 
     101(c)(1) of the National Historic Preservation Act, as in 
     effect on July 21, 1999, and authorized by a State Historic 
     Preservation Officer, or the Secretary of the Interior where 
     there is no approved State program),

     subject to such terms and conditions as may be specified by 
     the Secretary of the Interior for the rehabilitation of 
     buildings within the jurisdiction of such officer (or local 
     government) for purposes of this section.
       ``(e) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Qualified historic home.--The term `qualified 
     historic home' means a certified historic structure--
       ``(A) which has been substantially rehabilitated, and
       ``(B) which (or any portion of which)--
       ``(i) is owned by the taxpayer, and
       ``(ii) is used (or will, within a reasonable period, be 
     used) by such taxpayer as his principal residence.
       ``(2) Substantially rehabilitated.--The term `substantially 
     rehabilitated' has the meaning given such term by section 
     47(c)(1)(C); except that, in the case of any building 
     described in subsection (d)(2), clause (i)(I) thereof shall 
     not apply.
       ``(3) Principal residence.--The term `principal residence' 
     has the same meaning as when used in section 121.
       ``(4) Certified historic structure.--
       ``(A) In general.--The term `certified historic structure' 
     means any building (and its structural components) which--
       ``(i) is listed in the National Register, or
       ``(ii) is located in a registered historic district (as 
     defined in section 47(c)(3)(B)) within which only qualified 
     census tracts (or portions thereof) are located, and is 
     certified by the Secretary of the Interior to the Secretary 
     as being of historic significance to the district.
       ``(B) Certain structures included.--Such term includes any 
     building (and its structural components) which is designated 
     as being of historic significance under a statute of a State 
     or local government, if such statute is certified by the 
     Secretary of the Interior to the Secretary as containing 
     criteria which will substantially achieve the purpose of 
     preserving and rehabilitating buildings of historic 
     significance.
       ``(C) Qualified census tracts.--For purposes of 
     subparagraph (A)(ii)--
       ``(i) In general.--The term `qualified census tract' means 
     a census tract in which the median family income is less than 
     twice the statewide median family income.
       ``(ii) Data used.--The determination under clause (i) shall 
     be made on the basis of the most recent decennial census for 
     which data are available.
       ``(5) Rehabilitation not complete before certification.--A 
     rehabilitation shall not be treated as complete before the 
     date of the certification referred to in subsection (d).
       ``(6) Lessees.--A taxpayer who leases his principal 
     residence shall, for purposes of this section, be treated as 
     the owner thereof if the remaining term of the lease (as of 
     the date determined under regulations prescribed by the 
     Secretary) is not less than such minimum period as the 
     regulations require.
       ``(7) Tenant-stockholder in cooperative housing 
     corporation.--If the taxpayer holds stock as a tenant-
     stockholder (as defined in section 216) in a cooperative 
     housing corporation (as defined in such section), such 
     stockholder shall be treated as owning the house or apartment 
     which the taxpayer is entitled to occupy as such stockholder.
       ``(8) Allocation of expenditures relating to exterior of 
     building containing cooperative or condominium units.--The 
     percentage of the total expenditures made in the 
     rehabilitation of a building containing cooperative or 
     condominium residential units allocated to the rehabilitation 
     of the exterior of the building shall be attributed 
     proportionately to each cooperative or condominium 
     residential unit in such building for which a credit under 
     this section is claimed.
       ``(f) When Expenditures Taken Into Account.--In the case of 
     a building other than a building to which subsection (g) 
     applies, qualified rehabilitation expenditures shall be 
     treated for purposes of this section as made on the date the 
     rehabilitation is completed.
       ``(g) Allowance of Credit for Purchase of Rehabilitated 
     Historic Home.--
       ``(1) In general.--In the case of a qualified purchased 
     historic home, the taxpayer shall be treated as having made 
     (on the date of purchase) the qualified rehabilitation 
     expenditures made by the seller of such home. For purposes of 
     the preceding sentence, expenditures made by the seller shall 
     be deemed to be qualified rehabilitation expenditures if such 
     expenditures, if made by the purchaser, would be qualified 
     rehabilitation expenditures.
       ``(2) Qualified purchased historic home.--For purposes of 
     this subsection, the term `qualified purchased historic home' 
     means any substantially rehabilitated certified historic 
     structure purchased by the taxpayer if--
       ``(A) the taxpayer is the first purchaser of such structure 
     after the date rehabilitation is completed, and the purchase 
     occurs within 5 years after such date,
       ``(B) the structure (or a portion thereof) will, within a 
     reasonable period, be the principal residence of the 
     taxpayer,
       ``(C) no credit was allowed to the seller under this 
     section or section 47 with respect to such rehabilitation, 
     and
       ``(D) the taxpayer is furnished with such information as 
     the Secretary determines is necessary to determine the credit 
     under this subsection.
       ``(h) Historic Rehabilitation Mortgage Credit 
     Certificate.--
       ``(1) In general.--The taxpayer may elect, in lieu of the 
     credit otherwise allowable under this section, to receive a 
     historic rehabilitation mortgage credit certificate. An 
     election under this paragraph shall be made--
       ``(A) in the case of a building to which subsection (g) 
     applies, at the time of purchase, or
       ``(B) in any other case, at the time rehabilitation is 
     completed.
       ``(2) Historic rehabilitation mortgage credit 
     certificate.--For purposes of this subsection, the term 
     `historic rehabilitation mortgage credit certificate' means a 
     certificate--
       ``(A) issued to the taxpayer, in accordance with procedures 
     prescribed by the Secretary, with respect to a certified 
     rehabilitation,

[[Page 18539]]

       ``(B) the face amount of which shall be equal to the credit 
     which would (but for this subsection) be allowable under 
     subsection (a) to the taxpayer with respect to such 
     rehabilitation,
       ``(C) which may only be transferred by the taxpayer to a 
     lending institution (including a non-depository institution) 
     in connection with a loan--
       ``(i) that is secured by the building with respect to which 
     the credit relates, and
       ``(ii) the proceeds of which may not be used for any 
     purpose other than the acquisition or rehabilitation of such 
     building, and
       ``(D) in exchange for which such lending institution 
     provides the taxpayer--
       ``(i) a reduction in the rate of interest on the loan which 
     results in interest payment reductions which are 
     substantially equivalent on a present value basis to the face 
     amount of such certificate, or
       ``(ii) if the taxpayer so elects with respect to a 
     specified amount of the face amount of such a certificate 
     relating to a building--

       ``(I) which is a targeted area residence within the meaning 
     of section 143(j)(1), or
       ``(II) which is located in an enterprise community or 
     empowerment zone as designated under section 1391,

     a payment which is substantially equivalent to such specified 
     amount to be used to reduce the taxpayer's cost of purchasing 
     the building (and only the remainder of such face amount 
     shall be taken into account under clause (i)).
       ``(3) Method of discounting.--The present value under 
     paragraph (2)(D)(i) shall be determined--
       ``(A) for a period equal to the term of the loan referred 
     to in subparagraph (D)(i),
       ``(B) by using the convention that any payment on such loan 
     in any taxable year within such period is deemed to have been 
     made on the last day of such taxable year,
       ``(C) by using a discount rate equal to 65 percent of the 
     average of the annual Federal mid-term rate and the annual 
     Federal long-term rate applicable under section 1274(d)(1) to 
     the month in which the taxpayer makes an election under 
     paragraph (1) and compounded annually, and
       ``(D) by assuming that the credit allowable under this 
     section for any year is received on the last day of such 
     year.
       ``(4) Use of certificate by lender.--The amount of the 
     credit specified in the certificate shall be allowed to the 
     lender only to offset the regular tax (as defined in section 
     55(c)) of such lender. The lender may carry forward all 
     unused amounts under this subsection until exhausted.
       ``(5) Historic rehabilitation mortgage credit certificate 
     not treated as taxable income.--Notwithstanding any other 
     provision of law, no benefit accruing to the taxpayer through 
     the use of an historic rehabilitation mortgage credit 
     certificate shall be treated as taxable income for purposes 
     of this title.
       ``(i) Recapture.--
       ``(1) In general.--If, before the end of the 5-year period 
     beginning on the date on which the rehabilitation of the 
     building is completed (or, if subsection (g) applies, the 
     date of purchase of such building by the taxpayer, or, if 
     subsection (h) applies, the date of the loan)--
       ``(A) the taxpayer disposes of such taxpayer's interest in 
     such building, or
       ``(B) such building ceases to be used as the principal 
     residence of the taxpayer,

     the taxpayer's tax imposed by this chapter for the taxable 
     year in which such disposition or cessation occurs shall be 
     increased by the recapture percentage of the credit allowed 
     under this section for all prior taxable years with respect 
     to such rehabilitation.
       ``(2) Recapture percentage.--For purposes of paragraph (1), 
     the recapture percentage shall be determined in accordance 
     with the following table:

The recapture percentage is--tion occurs within--
  (i) One full year after the taxpayer becomes entitled to the 100 it..

  (ii) One full year after the close of the period described in clause 
    (i).........................................................80 ....

  (iii) One full year after the close of the period described in clause 
    (ii)........................................................60 ....

  (iv) One full year after the close of the period described in clause 
    (iii).......................................................40 ....

  (v) One full year after the close of the period described in clause 
    (iv)......................................................20.''....

       ``(j) Basis Adjustments.--For purposes of this subtitle, if 
     a credit is allowed under this section for any expenditure 
     with respect to any property (including any purchase under 
     subsection (g) and any transfer under subsection (h)), the 
     increase in the basis of such property which would (but for 
     this subsection) result from such expenditure shall be 
     reduced by the amount of the credit so allowed.
       ``(k) Denial of Double Benefit.--No credit shall be allowed 
     under this section for any amount for which credit is allowed 
     under section 47.
       ``(l) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out the purposes 
     of this section, including regulations where less than all of 
     a building is used as a principal residence and where more 
     than 1 taxpayer use the same dwelling unit as their principal 
     residence.''
       (b) Conforming Amendment.--Subsection (a) of section 1016 
     is amended by striking ``and'' at the end of paragraph (26), 
     by striking the period at the end of paragraph (27) and 
     inserting ``, and'', and by adding at the end the following 
     new item:
       ``(28) to the extent provided in section 25B(j).''
       (c) Clerical Amendment.--The table of sections for subpart 
     A of part IV of subchapter A of chapter 1 is amended by 
     inserting after the item relating to section 25A the 
     following new item:

``Sec. 25B. Historic homeownership rehabilitation credit.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to expenses paid or incurred in taxable years 
     beginning after December 31, 1999.

     SEC. 812. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING 
                   ELECTRICITY FROM CERTAIN RENEWABLE RESOURCES.

       (a) Extension and Modification of Placed-in-Service 
     Rules.--Paragraph (3) of section 45(c) is amended to read as 
     follows:
       ``(3) Qualified facility.--
       ``(A) Wind facility.--In the case of a facility using wind 
     to produce electricity, the term `qualified facility' means 
     any facility owned by the taxpayer which is originally placed 
     in service after December 31, 1993, and before July 1, 2004.
       ``(B) Closed-loop biomass facility.--In the case of a 
     facility using closed-loop biomass to produce electricity, 
     the term `qualified facility' means any facility owned by the 
     taxpayer which is originally placed in service after December 
     31, 1992, and before July 1, 2004.
       ``(C) Biomass facility.--In the case of a facility using 
     biomass (other than closed-loop biomass) to produce 
     electricity, the term `qualified facility' means any facility 
     owned by the taxpayer which is originally placed in service 
     before January 1, 2003.
       ``(D) Landfill gas or poultry waste facility.--
       ``(i) In general.--In the case of a facility using landfill 
     gas or poultry waste to produce electricity, the term 
     `qualified facility' means any facility of the taxpayer which 
     is originally placed in service after December 31, 1999, and 
     before July 1, 2004.
       ``(ii) Landfill gas.--In the case of a facility using 
     landfill gas, such term shall include equipment and housing 
     (not including wells and related systems required to collect 
     and transmit gas to the production facility) required to 
     generate electricity which are owned by the taxpayer and so 
     placed in service.
       ``(E) Special rule.--In the case of a qualified facility 
     described in subparagraph (C), the 10-year period referred to 
     in subsection (a) shall be treated as beginning no earlier 
     than January 1, 2000.''
       (b) Expansion of Qualified Energy Resources.--
       (1) In general.--Section 45(c)(1) (defining qualified 
     energy resources) is amended by striking ``and'' at the end 
     of subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting a comma, and by adding at the 
     end the following new subparagraphs:
       ``(C) biomass (other than closed-loop biomass),
       ``(B) landfill gas, and
       ``(C) poultry waste.''
       (2) Definitions.--Section 45(c) is amended by redesignating 
     paragraph (3) as paragraph (6) and inserting after paragraph 
     (2) the following new paragraphs:
       ``(3) Biomass.--The term `biomass' means any solid, 
     nonhazardous, cellulosic waste material which is segregated 
     from other waste materials and which is derived from--
       ``(A) any of the following forest-related resources: mill 
     residues, precommercial thinnings, slash, and brush, but not 
     including old-growth timber,
       ``(B) urban sources, including waste pallets, crates, and 
     dunnage, manufacturing and construction wood wastes, and 
     landscape or right-of-way tree trimmings, but not including 
     unsegregated municipal solid waste (garbage) or paper that is 
     commonly recycled, or
       ``(C) agriculture sources, including orchard tree crops, 
     vineyard, grain, legumes, sugar, and other crop by-products 
     or residues.
       ``(4) Landfill gas.--The term `landfill gas' means gas from 
     the decomposition of any household solid waste, commercial 
     solid waste, and industrial solid waste disposed of in a 
     municipal solid waste landfill unit (as such terms are 
     defined in regulations promulgated under subtitle D of the 
     Solid Waste Disposal Act (42 U.S.C. 6941 et seq.)).
       ``(5) Poultry waste.--The term `poultry waste' means 
     poultry manure and litter, including wood shavings, straw, 
     rice hulls, and other bedding material for the disposition of 
     manure.''
       (c) Special Rules.--Section 45(d) (relating to definitions 
     and special rules) is amended by adding at the end the 
     following new paragraphs:
       ``(6) Credit eligibility in the case of government-owned 
     facilities using poultry waste.--In the case of a facility 
     using poultry waste to produce electricity and owned by a 
     governmental unit, the person eligible for the credit under 
     subsection (a) is the lessor or the operator of such 
     facility.

[[Page 18540]]

       ``(7) Proportional credit for facility using coal to co-
     fire with certain biomass.--In the case of a qualified 
     facility as defined in subsection (c)(3)(C) using coal to co-
     fire with biomass (other than closed-loop biomass), the 
     amount of the credit determined under subsection (a) for the 
     taxable year shall be reduced by the percentage coal 
     comprises (on a Btu basis) of the average fuel input of the 
     facility for the taxable year.''
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 813. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION 
                   COSTS.

       (a) Extension of Termination Date.--Subsection (h) of 
     section 198 is amended by striking ``December 31, 2000'' and 
     inserting ``June 30, 2004''.
       (b) Expansion of Qualified Contaminated Site.--Section 
     198(c) is amended to read as follows:
       ``(c) Qualified Contaminated Site.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified contaminated site' 
     means any area--
       ``(A) which is held by the taxpayer for use in a trade or 
     business or for the production of income, or which is 
     property described in section 1221(1) in the hands of the 
     taxpayer, and
       ``(B) at or on which there has been a release (or threat of 
     release) or disposal of any hazardous substance.
       ``(2) National priorities listed sites not included.--Such 
     term shall not include any site which is on, or proposed for, 
     the national priorities list under section 105(a)(8)(B) of 
     the Comprehensive Environmental Response, Compensation, and 
     Liability Act of 1980 (as in effect on the date of the 
     enactment of this section).
       ``(3) Taxpayer must receive statement from state 
     environmental agency.--An area shall be treated as a 
     qualified contaminated site with respect to expenditures paid 
     or incurred during any taxable year only if the taxpayer 
     receives a statement from the appropriate agency of the State 
     in which such area is located that such area meets the 
     requirement of paragraph (1)(B).
       ``(4) Appropriate state agency.--For purposes of paragraph 
     (2), the chief executive officer of each State may, in 
     consultation with the Administrator of the Environmental 
     Protection Agency, designate the appropriate State 
     environmental agency within 60 days of the date of the 
     enactment of this section. If the chief executive officer of 
     a State has not designated an appropriate State environmental 
     agency within such 60-day period, the appropriate 
     environmental agency for such State shall be designated by 
     the Administrator of the Environmental Protection Agency.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to expenditures paid or incurred after December 
     31, 1999.

     SEC. 814. TEMPORARY SUSPENSION OF MAXIMUM AMOUNT OF 
                   AMORTIZABLE REFORESTATION EXPENDITURES.

       (a) Increase in Dollar Limitation.--Paragraph (1) of 
     section 194(b) (relating to amortization of reforestation 
     expenditures) is amended by striking ``$10,000 ($5,000'' and 
     inserting ``$25,000 ($12,500''.
       (b) Temporary Suspension of Increased Dollar Limitation.--
     Subsection (b) of section 194(b) (relating to amortization of 
     reforestation expenditures) is amended by adding at the end 
     the following new paragraph:
       ``(5) Suspension of dollar limitation.--Paragraph (1) shall 
     not apply to taxable years beginning after December 31, 1999, 
     and before January 1, 2004.
       (c) Conforming Amendment.--Paragraph (1) of section 48(b) 
     is amended by striking ``section 194(b)(1)'' and inserting 
     ``section 194(b)(1) and without regard to section 
     194(b)(5)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

                 Subtitle C--Transportation Provisions

     SEC. 821. REPEAL OF CERTAIN MOTOR FUEL EXCISE TAXES ON FUEL 
                   USED BY RAILROADS AND ON INLAND WATERWAY 
                   TRANSPORTATION.

       (a) Repeal of 4.3-Cent Motor Fuel Excise Taxes on Railroads 
     and Inland Waterway Transportation Which Remain in General 
     Fund.--
       (1) Taxes on trains.--
       (A) In general.--Subparagraph (A) of section 4041(a)(1) is 
     amended by striking ``or a diesel-powered train'' each place 
     it appears and by striking ``or train''.
       (B) Conforming amendments.--
       (i) Subparagraph (C) of section 4041(a)(1) is amended by 
     striking clause (ii) and by redesignating clause (iii) as 
     clause (ii).
       (ii) Subparagraph (C) of section 4041(b)(1) is amended by 
     striking all that follows ``section 6421(e)(2)'' and 
     inserting a period.
       (iii) Paragraph (3) of section 4083(a) is amended by 
     striking ``or a diesel-powered train''.
       (iv) Section 6427(l) is amended by striking paragraph (3) 
     and by redesignating paragraphs (4) and (5) as paragraphs (3) 
     and (4), respectively.
       (2) Fuel used on inland waterways.--
       (A) In general.--Paragraph (1) of section 4042(b) is 
     amended by adding ``and'' at the end of subparagraph (A), by 
     striking ``, and'' at the end of subparagraph (B) and 
     inserting a period, and by striking subparagraph (C).
       (B) Conforming amendment.--Paragraph (2) of section 4042(b) 
     is amended by striking subparagraph (C).
       (b) Effective Date.--The amendments made by this subsection 
     shall take effect on October 1, 2000.

                 TITLE IX--CHARITABLE GIVING INCENTIVES

     SEC. 901. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT 
                   ACCOUNTS FOR CHARITABLE PURPOSES.

       (a) In General.--Subsection (d) of section 408 (relating to 
     individual retirement accounts) is amended by adding at the 
     end the following new paragraph:
       ``(8) Distributions for charitable purposes.--
       ``(A) In general.--In the case of a qualified charitable 
     distribution from an individual retirement account to an 
     organization described in section 170(c), no amount shall be 
     includible in the gross income of the distributee.
       ``(B) Special rules relating to charitable remainder 
     trusts, pooled income funds, and charitable gift annuities.--
       ``(i) In general.--In the case of a qualified charitable 
     distribution from an individual retirement account--

       ``(I) to a charitable remainder annuity trust or a 
     charitable remainder unitrust (as such terms are defined in 
     section 664(d)),
       ``(II) to a pooled income fund (as defined in section 
     642(c)(5)), or
       ``(III) for the issuance of a charitable gift annuity (as 
     defined in section 501(m)(5)),

     no amount shall be includible in gross income of the 
     distributee. The preceding sentence shall apply only if no 
     person holds any interest in the amounts in the trust, fund, 
     or annuity attributable to such distribution other than one 
     or more of the following: the individual for whose benefit 
     such account is maintained, the spouse of such individual, or 
     any organization described in section 170(c).
       ``(ii) Determination of inclusion of amounts distributed.--
     In determining the amount includible in the gross income of 
     the distributee of a distribution from a trust described in 
     clause (i)(I) or an annuity (as described in clause 
     (i)(III)), the portion of any qualified charitable 
     distribution to such trust or for such annuity which would 
     (but for this subparagraph) have been includible in gross 
     income--

       ``(I) in the case of any such trust, shall be treated as 
     income described in section 664(b)(1), or
       ``(II) in the case of any such annuity, shall not be 
     treated as an investment in the contract.

       ``(iii) No inclusion for distribution to pooled income 
     fund.--No amount shall be includible in the gross income of a 
     pooled income fund (as so defined) by reason of a qualified 
     charitable distribution to such fund.
       ``(C) Qualified charitable distribution.--For purposes of 
     this paragraph, the term `qualified charitable distribution' 
     means any distribution from an individual retirement 
     account--
       ``(i) which is made on or after the date that the 
     individual for whose benefit the account is maintained has 
     attained age 70\1/2\, and
       ``(ii) which is a charitable contribution (as defined in 
     section 170(c)) made directly from the account to--

       ``(I) an organization described in section 170(c), or
       ``(II) a trust, fund, or annuity described in subparagraph 
     (B).

       ``(D) Denial of deduction.--The amount allowable as a 
     deduction to the taxpayer for the taxable year under section 
     170 for qualified charitable distributions shall be reduced 
     (but not below zero) by the sum of the amounts of the 
     qualified charitable distributions during such year which 
     (but for this paragraph) would have been includible in the 
     gross income of the taxpayer for such year.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 902. INCREASE IN LIMIT ON CHARITABLE CONTRIBUTIONS AS 
                   PERCENTAGE OF AGI.

       (a) In General.--
       (1) Individual limit.--Section 170(b)(1) (relating to 
     percentage limitations) is amended--
       (A) by striking ``50 percent'' in subparagraph (A) and 
     inserting ``the applicable percentage'', and
       (B) by striking ``30 percent'' each place it appears in 
     subparagraph (C) and inserting ``the applicable percentage''.
       (2) Corporate limit.--Section 170(b)(2) is amended by 
     striking ``10 percent'' and inserting ``the applicable 
     percentage''.
       (b) Applicable Percentage.--Section 170(b) is amended by 
     adding at the end the following new paragraph:
       ``(3) Applicable percentage.--For purposes of this 
     subsection, the applicable percentage shall be determined 
     under the following tables:
       ``(A) In the case of paragraph (1)(A):

``For taxable year--                     The applicable percentage is--
    2002............................................................52 
    2003............................................................54 
    2004............................................................56 
    2005............................................................58 

[[Page 18541]]

    2006............................................................60 
    2007 and thereafter.............................................70.

       ``(B) In the case of paragraph (1)(C):

``For taxable year--                     The applicable percentage is--
      2002..........................................................32 
      2003..........................................................34 
      2004..........................................................36 
      2005..........................................................38 
      2006..........................................................40 
      2007 and thereafter...........................................50.

       ``(C) In the case of paragraph (2):

``For taxable year--                     The applicable percentage is--
      2002..........................................................12 
      2003..........................................................14 
      2004..........................................................16 
      2005..........................................................18 
      2006 and thereafter.........................................20.''

       (c) Conforming Amendment.--Section 170(d)(1)(A) is amended 
     by striking ``50 percent'' each place it appears and 
     inserting ``the applicable percentage in effect under 
     subsection (b)(1)(A)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

 TITLE X--EXTENSION OF EXPIRED AND EXPIRING PROVISIONS; INTERNATIONAL 
                               TAX RELIEF

     SEC. 1001. PERMANENT EXTENSION AND MODIFICATION OF RESEARCH 
                   CREDIT.

       (a) Permanent Extension.--
       (1) In general.--Section 41 (relating to credit for 
     increasing research activities) is amended by striking 
     subsection (h).
       (2) Conforming amendment.--Paragraph (1) of section 45C(b) 
     is amended by striking subparagraph (D).
       (3) Effective date.--The amendments made by this subsection 
     shall apply to amounts paid or incurred after June 30, 1999.
       (b) Increase in Percentages Under Alternative Incremental 
     Credit.--
       (1) In general.--Subparagraph (A) of section 41(c)(4) is 
     amended--
       (A) by striking ``1.65 percent'' and inserting ``2.65 
     percent'',
       (B) by striking ``2.2 percent'' and inserting ``3.2 
     percent'', and
       (C) by striking ``2.75 percent'' and inserting ``3.75 
     percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after June 30, 1999.

     SEC. 1002. WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK 
                   CREDIT.

       (a) Temporary Extension.--Sections 51(c)(4)(B) and 51A(f) 
     (relating to termination) are each amended by striking ``June 
     30, 1999'' and inserting ``June 30, 2004''.
       (b) Clarification of First Year of Employment.--Paragraph 
     (2) of section 51(i) is amended by striking ``during which he 
     was not a member of a targeted group''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after June 30, 1999.

     SEC. 1003. SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME.

       (a) In General.--Sections 953(e)(10) and 954(h)(9) are each 
     amended--
       (1) by striking ``the first taxable year'' and inserting 
     ``taxable years'', and
       (2) by striking ``January 1, 2000'' and inserting ``January 
     1, 2005''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 1004. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR 
                   MARGINAL PRODUCTION.

       (a) In General.--Subparagraph (H) of section 613A(c)(6) is 
     amended by striking ``January 1, 2000'' and inserting 
     ``January 1, 2005''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 1005. REPEAL OF FOREIGN TAX CREDIT LIMITATION UNDER 
                   ALTERNATIVE MINIMUM TAX.

       (a) In General.--Section 59(a) (relating to alternative 
     minimum tax foreign tax credit) is amended by striking 
     paragraph (2) and by redesignating paragraphs (3) and (4) as 
     paragraphs (2) and (3), respectively.
       (b) Conforming Amendment.--Section 53(d)(1)(B)(i)(II) is 
     amended by striking ``and if section 59(a)(2) did not 
     apply''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

                       TITLE XI--REVENUE OFFSETS

                     Subtitle A--General Provisions

     SEC. 1101. MODIFICATION TO FOREIGN TAX CREDIT CARRYBACK AND 
                   CARRYOVER PERIODS.

       (a) In General.--Section 904(c) (relating to limitation on 
     credit) is amended--
       (1) by striking ``in the second preceding taxable year,'', 
     and
       (2) by striking ``or fifth'' and inserting ``fifth, sixth, 
     or seventh''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to credits arising in taxable years beginning 
     after December 31, 1999.

     SEC. 1102. RETURNS RELATING TO CANCELLATIONS OF INDEBTEDNESS 
                   BY ORGANIZATIONS LENDING MONEY.

       (a) In General.--Paragraph (2) of section 6050P(c) 
     (relating to definitions and special rules) is amended by 
     striking ``and'' at the end of subparagraph (B), by striking 
     the period at the end of subparagraph (C) and inserting ``, 
     and'', and by inserting after subparagraph (C) the following 
     new subparagraph:
       ``(D) any organization a significant trade or business of 
     which is the lending of money.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to discharges of indebtedness after December 31, 
     1999.

     SEC. 1103. INCREASE IN ELECTIVE WITHHOLDING RATE FOR 
                   NONPERIODIC DISTRIBUTIONS FROM DEFERRED 
                   COMPENSATION PLANS.

       (a) In General.--Section 3405(b)(1) (relating to 
     withholding) is amended by striking ``10 percent'' and 
     inserting ``15 percent''.
         (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to distributions after December 31, 2000.

     SEC. 1104. EXTENSION OF INTERNAL REVENUE SERVICE USER FEES.

       (a) In General.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     section:

     ``SEC. 7527. INTERNAL REVENUE SERVICE USER FEES.

       ``(a) General Rule.--The Secretary shall establish a 
     program requiring the payment of user fees for--
       ``(1) requests to the Internal Revenue Service for ruling 
     letters, opinion letters, and determination letters, and
       ``(2) other similar requests.
       ``(b) Program Criteria.--
       ``(1) In general.--The fees charged under the program 
     required by subsection (a)--
       ``(A) shall vary according to categories (or subcategories) 
     established by the Secretary,
       ``(B) shall be determined after taking into account the 
     average time for (and difficulty of) complying with requests 
     in each category (and subcategory), and
       ``(C) shall be payable in advance.
       ``(2) Exemptions, etc.--The Secretary shall provide for 
     such exemptions (and reduced fees) under such program as the 
     Secretary determines to be appropriate.
       ``(3) Average fee requirement.--The average fee charged 
     under the program required by subsection (a) shall not be 
     less than the amount determined under the following table:

``Category                                                  Average Fee
  Employee plan ruling and opinion............................$250 ....

  Exempt organization ruling..................................$350 ....

  Employee plan determination.................................$300 ....

  Exempt organization determination...........................$275 ....

  Chief counsel ruling........................................$200.....

       ``(c) Termination.--No fee shall be imposed under this 
     section with respect to requests made after September 30, 
     2009.''
       (b) Conforming Amendments.--
       (1) The table of sections for chapter 77 is amended by 
     adding at the end the following new item:

``Sec. 7527. Internal Revenue Service user fees.''

       (2) Section 10511 of the Revenue Act of 1987 is repealed.
       (c) Effective Date.--The amendments made by this section 
     shall apply to requests made after the date of the enactment 
     of this Act.

     SEC. 1105. TRANSFER OF EXCESS DEFINED BENEFIT PLAN ASSETS FOR 
                   RETIREE HEALTH BENEFITS.

       (a) Extension.--
       (1) In General.--Paragraph (5) of section 420(b) (relating 
     to expiration) is amended by striking ``in any taxable year 
     beginning after December 31, 2000'' and inserting ``made 
     after September 30, 2009''.
       (2) Conforming amendments.--
       (A) Section 101(e)(3) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1021(e)(3)) is amended by 
     striking ``1995'' and inserting ``2001''.
       (B) Section 403(c)(1) of such Act (29 U.S.C. 1103(c)(1)) is 
     amended by striking ``1995'' and inserting ``2001''.
       (C) Paragraph (13) of section 408(b) of such Act (29 U.S.C. 
     1108(b)(13)) is amended--
       (i) by striking ``in a taxable year beginning before 
     January 1, 2001'' and inserting ``made before October 1, 
     2009'', and
       (ii) by striking ``1995'' and inserting ``2001''.
       (b) Application of Minimum Cost Requirements.--
       (1) In general.--Paragraph (3) of section 420(c) is amended 
     to read as follows:
       ``(3) Minimum cost requirements.--
       ``(A) In general.--The requirements of this paragraph are 
     met if each group health plan or arrangement under which 
     applicable health benefits are provided provides that the 
     applicable employer cost for each taxable year during the 
     cost maintenance period shall not be less than the higher of 
     the applicable employer costs for each of the 2 taxable years 
     immediately preceding the taxable year of the qualified 
     transfer.
       ``(B) Applicable employer cost.--For purposes of this 
     paragraph, the term `applicable employer cost' means, with 
     respect to any taxable year, the amount determined by 
     dividing--
       ``(i) the qualified current retiree health liabilities of 
     the employer for such taxable year determined--

       ``(I) without regard to any reduction under subsection 
     (e)(1)(B), and

[[Page 18542]]

       ``(II) in the case of a taxable year in which there was no 
     qualified transfer, in the same manner as if there had been 
     such a transfer at the end of the taxable year, by

       ``(ii) the number of individuals to whom coverage for 
     applicable health benefits was provided during such taxable 
     year.
       ``(C) Election to compute cost separately.--An employer may 
     elect to have this paragraph applied separately with respect 
     to individuals eligible for benefits under title XVIII of the 
     Social Security Act at any time during the taxable year and 
     with respect to individuals not so eligible.
       ``(D) Cost maintenance period.--For purposes of this 
     paragraph, the term `cost maintenance period' means the 
     period of 5 taxable years beginning with the taxable year in 
     which the qualified transfer occurs. If a taxable year is in 
     2 or more overlapping cost maintenance periods, this 
     paragraph shall be applied by taking into account the highest 
     applicable employer cost required to be provided under 
     subparagraph (A) for such taxable year.''
       (2) Conforming amendments.--
       (A) Clause (iii) of section 420(b)(1)(C) is amended by 
     striking ``benefits'' and inserting ``cost''.
       (B) Subparagraph (D) of section 420(e)(1) is amended by 
     striking ``and shall not be subject to the minimum benefit 
     requirements of subsection (c)(3)'' and inserting ``or in 
     calculating applicable employer cost under subsection 
     (c)(3)(B)''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to qualified transfers occurring after the date of the 
     enactment of this Act.
       (2) Transition rule.--If the cost maintenance period for 
     any qualified transfer after the date of the enactment of 
     this Act includes any portion of a benefit maintenance period 
     for any qualified transfer on or before such date, the 
     amendments made by subsection (b) shall not apply to such 
     portion of the cost maintenance period (and such portion 
     shall be treated as a benefit maintenance period).

     SEC. 1106. TAX TREATMENT OF INCOME AND LOSS ON DERIVATIVES.

       (a) In General.--Section 1221 (defining capital assets) is 
     amended--
       (1) by striking ``For purposes'' and inserting the 
     following:
       ``(a) In General.--For purposes'',
       (2) by striking the period at the end of paragraph (5) and 
     inserting a semicolon, and
       (3) by adding at the end the following:
       ``(6) any commodities derivative financial instrument held 
     by a commodities derivatives dealer, unless--
       ``(A) it is established to the satisfaction of the 
     Secretary that such instrument has no connection to the 
     activities of such dealer as a dealer, and
       ``(B) such instrument is clearly identified in such 
     dealer's records as being described in subparagraph (A) 
     before the close of the day on which it was acquired, 
     originated, or entered into (or such other time as the 
     Secretary may by regulations prescribe);
       ``(7) any hedging transaction which is clearly identified 
     as such before the close of the day on which it was acquired, 
     originated, or entered into (or such other time as the 
     Secretary may by regulations prescribe); or
       ``(8) supplies of a type regularly used or consumed by the 
     taxpayer in the ordinary course of a trade or business of the 
     taxpayer.
       ``(b) Definitions and Special Rules.--
       ``(1) Commodities derivative financial instruments.--For 
     purposes of subsection (a)(6)--
       ``(A) Commodities derivatives dealer.--The term 
     `commodities derivatives dealer' means a person which 
     regularly offers to enter into, assume, offset, assign, or 
     terminate positions in commodities derivative financial 
     instruments with customers in the ordinary course of a trade 
     or business.
       ``(B) Commodities derivative financial instrument.--
       ``(i) In general.--The term `commodities derivative 
     financial instrument' means any contract or financial 
     instrument with respect to commodities (other than a share of 
     stock in a corporation, a beneficial interest in a 
     partnership or trust, a note, bond, debenture, or other 
     evidence of indebtedness, or a section 1256 contract (as 
     defined in section 1256(b)), the value or settlement price of 
     which is calculated by or determined by reference to a 
     specified index.
       ``(ii) Specified index.--The term `specified index' means 
     any one or more or any combination of--

       ``(I) a fixed rate, price, or amount, or
       ``(II) a variable rate, price, or amount,

     which is based on any current, objectively determinable 
     financial or economic information with respect to commodities 
     which is not within the control of any of the parties to the 
     contract or instrument and is not unique to any of the 
     parties' circumstances.
       ``(2) Hedging transaction.--
       ``(A) In general.--For purposes of this section, the term 
     `hedging transaction' means any transaction entered into by 
     the taxpayer in the normal course of the taxpayer's trade or 
     business primarily--
       ``(i) to manage risk of price changes or currency 
     fluctuations with respect to ordinary property which is held 
     or to be held by the taxpayer,
       ``(ii) to manage risk of interest rate or price changes or 
     currency fluctuations with respect to borrowings made or to 
     be made, or ordinary obligations incurred or to be incurred, 
     by the taxpayer, or
       ``(iii) to manage such other risks as the Secretary may 
     prescribe in regulations.
       ``(B) Treatment of nonidentification or improper 
     identification of hedging transactions.--Notwithstanding 
     subsection (a)(7), the Secretary shall prescribe regulations 
     to properly characterize any income, gain, expense, or loss 
     arising from a transaction--
       ``(i) which is a hedging transaction but which was not 
     identified as such in accordance with subsection (a)(7), or
       ``(ii) which was so identified but is not a hedging 
     transaction.
       ``(3) Regulations.--The Secretary shall prescribe such 
     regulations as are appropriate to carry out the purposes of 
     paragraph (6) and (7) of subsection (a) in the case of 
     transactions involving related parties.''
       (b) Management of Risk.--
       (1) Section 475(c)(3) is amended by striking ``reduces'' 
     and inserting ``manages''.
       (2) Section 871(h)(4)(C)(iv) is amended by striking ``to 
     reduce'' and inserting ``to manage''.
       (3) Clauses (i) and (ii) of section 988(d)(2)(A) are each 
     amended by striking ``to reduce'' and inserting ``to 
     manage''.
       (4) Paragraph (2) of section 1256(e) is amended to read as 
     follows:
       ``(2) Definition of hedging transaction.--For purposes of 
     this subsection, the term `hedging transaction' means any 
     hedging transaction (as defined in section 1221(b)(2)(A)) if, 
     before the close of the day on which such transaction was 
     entered into (or such earlier time as the Secretary may 
     prescribe by regulations), the taxpayer clearly identifies 
     such transaction as being a hedging transaction.''
       (c) Conforming Amendments.--
       (1) Each of the following sections are amended by striking 
     ``section 1221'' and inserting ``section 1221(a)'':
       (A) Section 170(e)(3)(A).
       (B) Section 170(e)(4)(B).
       (C) Section 367(a)(3)(B)(i).
       (D) Section 818(c)(3).
       (E) Section 865(i)(1).
       (F) Section 1092(a)(3)(B)(ii)(II).
       (G) Subparagraphs (C) and (D) of section 1231(b)(1).
       (H) Section 1234(a)(3)(A).
       (2) Each of the following sections are amended by striking 
     ``section 1221(1)'' and inserting ``section 1221(a)(1)'':
       (A) Section 198(c)(1)(A)(i).
       (B) Section 263A(b)(2)(A).
       (C) Clauses (i) and (iii) of section 267(f)(3)(B).
       (D) Section 341(d)(3).
       (E) Section 543(a)(1)(D)(i).
       (F) Section 751(d)(1).
       (G) Section 775(c).
       (H) Section 856(c)(2)(D).
       (I) Section 856(c)(3)(C).
       (J) Section 856(e)(1).
       (K) Section 856(j)(2)(B).
       (L) Section 857(b)(4)(B)(i).
       (M) Section 857(b)(6)(B)(iii).
       (N) Section 864(c)(4)(B)(iii).
       (O) Section 864(d)(3)(A).
       (P) Section 864(d)(6)(A).
       (Q) Section 954(c)(1)(B)(iii).
       (R) Section 995(b)(1)(C).
       (S) Section 1017(b)(3)(E)(i).
       (T) Section 1362(d)(3)(C)(ii).
       (U) Section 4662(c)(2)(C).
       (V) Section 7704(c)(3).
       (W) Section 7704(d)(1)(D).
       (X) Section 7704(d)(1)(G).
       (Y) Section 7704(d)(5).
       (3) Section 818(b)(2) is amended by striking ``section 
     1221(2)'' and inserting ``section 1221(a)(2)''.
       (4) Section 1397B(e)(2) is amended by striking ``section 
     1221(4)'' and inserting ``section 1221(a)(4)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to any instrument held, acquired, or entered 
     into, any transaction entered into, and supplies held or 
     acquired on or after the date of enactment of this Act.

                      Subtitle B--Loophole Closers

     SEC. 1111. LIMITATION ON USE OF NON-ACCRUAL EXPERIENCE METHOD 
                   OF ACCOUNTING.

       (a) In General.--Section 448(d)(5) (relating to special 
     rule for services) is amended--
       (1) by inserting ``in fields described in paragraph 
     (2)(A)'' after ``services by such person'', and
       (2) by inserting ``certain personal'' before ``services'' 
     in the heading.
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years ending after the date of the enactment 
     of this Act.
       (2) Change in method of accounting.--In the case of any 
     taxpayer required by the amendments made by this section to 
     change its method of accounting for its first taxable year 
     ending after the date of the enactment of this Act--
       (A) such change shall be treated as initiated by the 
     taxpayer,
       (B) such change shall be treated as made with the consent 
     of the Secretary of the Treasury, and

[[Page 18543]]

       (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 first taxable year.

     SEC. 1112. LIMITATIONS ON WELFARE BENEFIT FUNDS OF 10 OR MORE 
                   EMPLOYER PLANS.

       (a) Benefits to Which Exception Applies.--Section 
     419A(f)(6)(A) (relating to exception for 10 or more employer 
     plans) is amended to read as follows:
       ``(A) In general.--This subpart shall not apply to a 
     welfare benefit fund which is part of a 10 or more employer 
     plan if the only benefits provided through the fund are 1 or 
     more of the following:
       ``(i) Medical benefits.
       ``(ii) Disability benefits.
       ``(iii) Group term life insurance benefits which do not 
     provide directly or indirectly for any cash surrender value 
     or other money that can be paid, assigned, borrowed, or 
     pledged for collateral for a loan.

     The preceding sentence shall not apply to any plan which 
     maintains experience-rating arrangements with respect to 
     individual employers.''
       (b) Limitation on Use of Amounts for Other Purposes.--
     Section 4976(b) (defining disqualified benefit) is amended by 
     adding at the end the following new paragraph:
       ``(5) Special rule for 10 or more employer plans exempted 
     from prefunding limits.--For purposes of paragraph (1)(C), 
     if--
       ``(A) subpart D of part I of subchapter D of chapter 1 does 
     not apply by reason of section 419A(f)(6) to contributions to 
     provide 1 or more welfare benefits through a welfare benefit 
     fund under a 10 or more employer plan, and
       ``(B) any portion of the welfare benefit fund attributable 
     to such contributions is used for a purpose other than that 
     for which the contributions were made,

     then such portion shall be treated as reverting to the 
     benefit of the employers maintaining the fund.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions paid or accrued after June 9, 
     1999, in taxable years ending after such date.

     SEC. 1113. MODIFICATION OF INSTALLMENT METHOD AND REPEAL OF 
                   INSTALLMENT METHOD FOR ACCRUAL METHOD 
                   TAXPAYERS.

       (a) Repeal of Installment Method for Accrual Basis 
     Taxpayers.--
       (1) In general.--Subsection (a) of section 453 (relating to 
     installment method) is amended to read as follows:
       ``(a) Use of Installment Method.--
       ``(1) In general.--Except as otherwise provided in this 
     section, income from an installment sale shall be taken into 
     account for purposes of this title under the installment 
     method.
       ``(2) Accrual method taxpayer.--The installment method 
     shall not apply to income from an installment sale if such 
     income would be reported under an accrual method of 
     accounting without regard to this section.

     The preceding sentence shall not apply to a disposition 
     described in subparagraph (A) or (B) of subsection (l)(2).''
       (2) Conforming amendments.--Sections 453(d)(1), 453(i)(1), 
     and 453(k) are each amended by striking ``(a)'' each place it 
     appears and inserting ``(a)(1)''.
       (b) Modification of Pledge Rules.--Paragraph (4) of section 
     453A(d) (relating to pledges, etc., of installment 
     obligations) is amended by adding at the end the following: 
     ``A payment shall be treated as directly secured by an 
     interest in an installment obligation to the extent an 
     arrangement allows the taxpayer to satisfy all or a portion 
     of the indebtedness with the installment obligation.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to sales or other dispositions occurring on or 
     after the date of the enactment of this Act.

     SEC. 1114. TREATMENT OF GAIN FROM CONSTRUCTIVE OWNERSHIP 
                   TRANSACTIONS.

       (a) In General.--Part IV of subchapter P of chapter 1 
     (relating to special rules for determining capital gains and 
     losses) is amended by inserting after section 1259 the 
     following new section:

     ``SEC. 1260. GAINS FROM CONSTRUCTIVE OWNERSHIP TRANSACTIONS.

       ``(a) In General.--If the taxpayer has gain from a 
     constructive ownership transaction with respect to any 
     financial asset and such gain would (without regard to this 
     section) be treated as a long-term capital gain--
       ``(1) such gain shall be treated as ordinary income to the 
     extent that such gain exceeds the net underlying long-term 
     capital gain, and
       ``(2) to the extent such gain is treated as a long-term 
     capital gain after the application of paragraph (1), the 
     determination of the capital gain rate (or rates) applicable 
     to such gain under section 1(h) shall be determined on the 
     basis of the respective rate (or rates) that would have been 
     applicable to the net underlying long-term capital gain.
       ``(b) Interest Charge on Deferral of Gain Recognition.--
       ``(1) In general.--If any gain is treated as ordinary 
     income for any taxable year by reason of subsection (a)(1), 
     the tax imposed by this chapter for such taxable year shall 
     be increased by the amount of interest determined under 
     paragraph (2) with respect to each prior taxable year during 
     any portion of which the constructive ownership transaction 
     was open. Any amount payable under this paragraph shall be 
     taken into account in computing the amount of any deduction 
     allowable to the taxpayer for interest paid or accrued during 
     such taxable year.
       ``(2) Amount of interest.--The amount of interest 
     determined under this paragraph with respect to a prior 
     taxable year is the amount of interest which would have been 
     imposed under section 6601 on the underpayment of tax for 
     such year which would have resulted if the gain (which is 
     treated as ordinary income by reason of subsection (a)(1)) 
     had been included in gross income in the taxable years in 
     which it accrued (determined by treating the income as 
     accruing at a constant rate equal to the applicable Federal 
     rate as in effect on the day the transaction closed). The 
     period during which such interest shall accrue shall end on 
     the due date (without extensions) for the return of tax 
     imposed by this chapter for the taxable year in which such 
     transaction closed.
       ``(3) Applicable federal rate.--For purposes of paragraph 
     (2), the applicable Federal rate is the applicable Federal 
     rate determined under 1274(d) (compounded semiannually) which 
     would apply to a debt instrument with a term equal to the 
     period the transaction was open.
       ``(4) No credits against increase in tax.--Any increase in 
     tax under paragraph (1) shall not be treated as tax imposed 
     by this chapter for purposes of determining--
       ``(A) the amount of any credit allowable under this 
     chapter, or
       ``(B) the amount of the tax imposed by section 55.
       ``(c) Financial Asset.--For purposes of this section--
       ``(1) In general.--The term `financial asset' means--
       ``(A) any equity interest in any pass-thru entity, and
       ``(B) to the extent provided in regulations--
       ``(i) any debt instrument, and
       ``(ii) any stock in a corporation which is not a pass-thru 
     entity.
       ``(2) Pass-thru entity.--For purposes of paragraph (1), the 
     term `pass-thru entity' means--
       ``(A) a regulated investment company,
       ``(B) a real estate investment trust,
       ``(C) an S corporation,
       ``(D) a partnership,
       ``(E) a trust,
       ``(F) a common trust fund,
       ``(G) a passive foreign investment company (as defined in 
     section 1297 without regard to subsection (e) thereof),
       ``(H) a foreign personal holding company,
       ``(I) a foreign investment company (as defined in section 
     1246(b)), and
       ``(J) a REMIC.
       ``(d) Constructive Ownership Transaction.--For purposes of 
     this section--
       ``(1) In general.--The taxpayer shall be treated as having 
     entered into a constructive ownership transaction with 
     respect to any financial asset if the taxpayer--
       ``(A) holds a long position under a notional principal 
     contract with respect to the financial asset,
       ``(B) enters into a forward or futures contract to acquire 
     the financial asset,
       ``(C) is the holder of a call option, and is the grantor of 
     a put option, with respect to the financial asset and such 
     options have substantially equal strike prices and 
     substantially contemporaneous maturity dates, or
       ``(D) to the extent provided in regulations prescribed by 
     the Secretary, enters into 1 or more other transactions (or 
     acquires 1 or more positions) that have substantially the 
     same effect as a transaction described in any of the 
     preceding subparagraphs.
       ``(2) Exception for positions which are marked to market.--
     This section shall not apply to any constructive ownership 
     transaction if all of the positions which are part of such 
     transaction are marked to market under any provision of this 
     title or the regulations thereunder.
       ``(3) Long position under notional principal contract.--A 
     person shall be treated as holding a long position under a 
     notional principal contract with respect to any financial 
     asset if such person--
       ``(A) has the right to be paid (or receive credit for) all 
     or substantially all of the investment yield (including 
     appreciation) on such financial asset for a specified period, 
     and
       ``(B) is obligated to reimburse (or provide credit for) all 
     or substantially all of any decline in the value of such 
     financial asset.
       ``(4) Forward contract.--The term `forward contract' means 
     any contract to acquire in the future (or provide or receive 
     credit for the future value of) any financial asset.
       ``(e) Net Underlying Long-Term Capital Gain.--For purposes 
     of this section, in the case of any constructive ownership 
     transaction with respect to any financial asset, the term 
     `net underlying long-term capital gain' means the aggregate 
     net capital gain that the taxpayer would have had if--

[[Page 18544]]

       ``(1) the financial asset had been acquired for fair market 
     value on the date such transaction was opened and sold for 
     fair market value on the date such transaction was closed, 
     and
       ``(2) only gains and losses that would have resulted from 
     the deemed ownership under paragraph (1) were taken into 
     account.

     The amount of the net underlying long-term capital gain with 
     respect to any financial asset shall be treated as zero 
     unless the amount thereof is established by clear and 
     convincing evidence.
       ``(f) Special Rule Where Taxpayer Takes Delivery.--Except 
     as provided in regulations prescribed by the Secretary, if a 
     constructive ownership transaction is closed by reason of 
     taking delivery, this section shall be applied as if the 
     taxpayer had sold all the contracts, options, or other 
     positions which are part of such transaction for fair market 
     value on the closing date. The amount of gain recognized 
     under the preceding sentence shall not exceed the amount of 
     gain treated as ordinary income under subsection (a). Proper 
     adjustments shall be made in the amount of any gain or loss 
     subsequently realized for gain recognized and treated as 
     ordinary income under this subsection.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section, including regulations--
       ``(1) to permit taxpayers to mark to market constructive 
     ownership transactions in lieu of applying this section, and
       ``(2) to exclude certain forward contracts which do not 
     convey substantially all of the economic return with respect 
     to a financial asset.''
       (b) Clerical Amendment.--The table of sections for part IV 
     of subchapter P of chapter 1 is amended by adding at the end 
     the following new item:

``Sec. 1260. Gains from constructive ownership transactions.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after July 11, 1999.

     SEC. 1115. CHARITABLE SPLIT-DOLLAR LIFE INSURANCE, ANNUITY, 
                   AND ENDOWMENT CONTRACTS.

       (a) In General.--Subsection (f) of section 170 (relating to 
     disallowance of deduction in certain cases and special 
     rules), as amended by section 807, is amended by adding at 
     the end the following new paragraph:
       ``(11) Split-dollar life insurance, annuity, and endowment 
     contracts.--
       ``(A) In general.--Nothing in this section or in section 
     545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 shall 
     be construed to allow a deduction, and no deduction shall be 
     allowed, for any transfer to or for the use of an 
     organization described in subsection (c) if in connection 
     with such transfer--
       ``(i) the organization directly or indirectly pays, or has 
     previously paid, any premium on any personal benefit contract 
     with respect to the transferor, or
       ``(ii) there is an understanding or expectation that any 
     person will directly or indirectly pay any premium on any 
     personal benefit contract with respect to the transferor.
       ``(B) Personal benefit contract.--For purposes of 
     subparagraph (A), the term `personal benefit contract' means, 
     with respect to the transferor, any life insurance, annuity, 
     or endowment contract if any direct or indirect beneficiary 
     under such contract is the transferor, any member of the 
     transferor's family, or any other person (other than an 
     organization described in subsection (c)) designated by the 
     transferor.
       ``(C) Application to charitable remainder trusts.--In the 
     case of a transfer to a trust referred to in subparagraph 
     (E), references in subparagraphs (A) and (F) to an 
     organization described in subsection (c) shall be treated as 
     a reference to such trust.
       ``(D) Exception for certain annuity contracts.--If, in 
     connection with a transfer to or for the use of an 
     organization described in subsection (c), such organization 
     incurs an obligation to pay a charitable gift annuity (as 
     defined in section 501(m)) and such organization purchases 
     any annuity contract to fund such obligation, persons 
     receiving payments under the charitable gift annuity shall 
     not be treated for purposes of subparagraph (B) as indirect 
     beneficiaries under such contract if--
       ``(i) such organization possesses all of the incidents of 
     ownership under such contract,
       ``(ii) such organization is entitled to all the payments 
     under such contract, and
       ``(iii) the timing and amount of payments under such 
     contract are substantially the same as the timing and amount 
     of payments to each such person under such obligation (as 
     such obligation is in effect at the time of such transfer).
       ``(E) Exception for certain contracts held by charitable 
     remainder trusts.--A person shall not be treated for purposes 
     of subparagraph (B) as an indirect beneficiary under any life 
     insurance, annuity, or endowment contract held by a 
     charitable remainder annuity trust or a charitable remainder 
     unitrust (as defined in section 664(d)) solely by reason of 
     being entitled to any payment referred to in paragraph (1)(A) 
     or (2)(A) of section 664(d) if--
       ``(i) such trust possesses all of the incidents of 
     ownership under such contract, and
       ``(ii) such trust is entitled to all the payments under 
     such contract.
       ``(F) Excise tax on premiums paid.--
       ``(i) In general.--There is hereby imposed on any 
     organization described in subsection (c) an excise tax equal 
     to the premiums paid by such organization on any life 
     insurance, annuity, or endowment contract if the payment of 
     premiums on such contract is in connection with a transfer 
     for which a deduction is not allowable under subparagraph 
     (A), determined without regard to when such transfer is made.
       ``(ii) Payments by other persons.--For purposes of clause 
     (i), payments made by any other person pursuant to an 
     understanding or expectation referred to in subparagraph (A) 
     shall be treated as made by the organization.
       ``(iii) Reporting.--Any organization on which tax is 
     imposed by clause (i) with respect to any premium shall file 
     an annual return which includes--

       ``(I) the amount of such premium paid during the year and 
     the name and TIN of each beneficiary under the contract to 
     which the premium relates, and
       ``(II) such other information as the Secretary may require.

     The penalties applicable to returns required under section 
     6033 shall apply to returns required under this clause. 
     Returns required under this clause shall be furnished at such 
     time and in such manner as the Secretary shall by forms or 
     regulations require.
       ``(iv) Certain rules to apply.--The tax imposed by this 
     subparagraph shall be treated as imposed by chapter 42 for 
     purposes of this title other than subchapter B of chapter 42.
       ``(G) Special rule where state requires specification of 
     charitable gift annuitant in contract.--In the case of an 
     obligation to pay a charitable gift annuity referred to in 
     subparagraph (D) which is entered into under the laws of a 
     State which requires, in order for the charitable gift 
     annuity to be exempt from insurance regulation by such State, 
     that each beneficiary under the charitable gift annuity be 
     named as a beneficiary under an annuity contract issued by an 
     insurance company authorized to transact business in such 
     State, the requirements of clauses (i) and (ii) of 
     subparagraph (D) shall be treated as met if--
       ``(i) such State law requirement was in effect on February 
     8, 1999,
       ``(ii) each such beneficiary under the charitable gift 
     annuity is a bona fide resident of such State at the time the 
     obligation to pay a charitable gift annuity is entered into, 
     and
       ``(iii) the only persons entitled to payments under such 
     contract are persons entitled to payments as beneficiaries 
     under such obligation on the date such obligation is entered 
     into.
       ``(H) Member of family.--For purposes of this paragraph, an 
     individual's family consists of the individual's 
     grandparents, the grandparents of such individual's spouse, 
     the lineal descendants of such grandparents, and any spouse 
     of such a lineal descendant.
       ``(I) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations to 
     prevent the avoidance of such purposes.''
       (b) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     section, the amendment made by this section shall apply to 
     transfers made after February 8, 1999.
       (2) Excise tax.--Except as provided in paragraph (3) of 
     this subsection, section 170(f)(11)(F) of the Internal 
     Revenue Code of 1986 (as added by this section) shall apply 
     to premiums paid after the date of the enactment of this Act.
       (3) Reporting.--Clause (iii) of such section 170(f)(11)(F) 
     shall apply to premiums paid after February 8, 1999 
     (determined as if the tax imposed by such section applies to 
     premiums paid after such date).

     SEC. 1116. RESTRICTION ON USE OF REAL ESTATE INVESTMENT 
                   TRUSTS TO AVOID ESTIMATED TAX PAYMENT 
                   REQUIREMENTS.

       (a) In General.--Subsection (e) of section 6655 (relating 
     to estimated tax by corporations) is amended by adding at the 
     end the following new paragraph:
       ``(5) Treatment of certain reit dividends.--
       ``(A) In general.--Any dividend received from a closely 
     held real estate investment trust by any person which owns 
     (after application of subsections (d)(5) and (l)(3)(B) of 
     section 856) 10 percent or more (by vote or value) of the 
     stock or beneficial interests in the trust shall be taken 
     into account in computing annualized income installments 
     under paragraph (2) in a manner similar to the manner under 
     which partnership income inclusions are taken into account.
       ``(B) Closely held reit.--For purposes of subparagraph (A), 
     the term `closely held real estate investment trust' means a 
     real estate investment trust with respect to which 5 or fewer 
     persons own (after application of subsections (d)(5) and 
     (l)(3)(B) of section 856) 50 percent or more (by vote or 
     value) of the stock or beneficial interests in the trust.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to estimated tax payments due on or after 
     September 15, 1999.

[[Page 18545]]



     SEC. 1117. PROHIBITED ALLOCATIONS OF S CORPORATION STOCK HELD 
                   BY AN ESOP.

       (a) In General.--Section 409 (relating to qualifications 
     for tax credit employee stock ownership plans) is amended by 
     redesignating subsection (p) as subsection (q) and by 
     inserting after subsection (o) the following new subsection:
       ``(p) Prohibited Allocation of Securities in an S 
     Corporation.--
       ``(1) In general.--An employee stock ownership plan holding 
     employer securities consisting of stock in an S corporation 
     shall provide that no portion of the assets of the plan 
     attributable to (or allocable in lieu of) such employer 
     securities may, during a nonallocation year, accrue (or be 
     allocated directly or indirectly under any plan of the 
     employer meeting the requirements of section 401(a)) for the 
     benefit of any disqualified individual.
       ``(2) Failure to meet requirements.--If a plan fails to 
     meet the requirements of paragraph (1)--
       ``(A) the plan shall be treated as having distributed to 
     any disqualified individual the amount allocated to the 
     account of such individual in violation of paragraph (1) at 
     the time of such allocation,
       ``(B) the provisions of section 4979A shall apply, and
       ``(C) the statutory period for the assessment of any tax 
     imposed by section 4979A shall not expire before the date 
     which is 3 years from the later of--
       ``(i) the allocation of employer securities resulting in 
     the failure under paragraph (1) giving rise to such tax, or
       ``(ii) the date on which the Secretary is notified of such 
     failure.
       ``(3) Nonallocation year.--For purposes of this 
     subsection--
       ``(A) In general.--The term `nonallocation year' means any 
     plan year of an employee stock ownership plan if, at any time 
     during such plan year--
       ``(i) such plan holds employer securities consisting of 
     stock in an S corporation, and
       ``(ii) disqualified individuals own at least 50 percent of 
     the number of outstanding shares of stock in such S 
     corporation.
       ``(B) Attribution rules.--For purposes of subparagraph 
     (A)--
       ``(i) In general.--The rules of section 318(a) shall apply 
     for purposes of determining ownership, except that--

       ``(I) in applying paragraph (1) thereof, the members of an 
     individual's family shall include members of the family 
     described in paragraph (4)(D), and
       ``(II) paragraph (4) thereof shall not apply.

       ``(ii) Deemed-owned shares.--Notwithstanding the employee 
     trust exception in section 318(a)(2)(B)(i), disqualified 
     individuals shall be treated as owning deemed-owned shares.
       ``(4) Disqualified individual.--For purposes of this 
     subsection--
       ``(A) In general.--The term `disqualified individual' means 
     any individual who is a participant or beneficiary under the 
     employee stock ownership plan if--
       ``(i) the aggregate number of deemed-owned shares of such 
     individual and the members of the individual's family is at 
     least 20 percent of the number of outstanding shares of stock 
     in the S corporation constituting employer securities of such 
     plan, or
       ``(ii) if such individual is not described in clause (i), 
     the number of deemed-owned shares of such individual is at 
     least 10 percent of the number of outstanding shares of stock 
     in such corporation.
       ``(B) Treatment of family members.--In the case of a 
     disqualified individual described in subparagraph (A)(i), any 
     member of the individual's family with deemed-owned shares 
     shall be treated as a disqualified individual if not 
     otherwise a disqualified individual under subparagraph (A).
       ``(C) Deemed-owned shares.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `deemed-owned shares' means, 
     with respect to any participant or beneficiary under the 
     employee stock ownership plan--

       ``(I) the stock in the S corporation constituting employer 
     securities of such plan which is allocated to such 
     participant or beneficiary under the plan, and
       ``(II) such participant's or beneficiary's share of the 
     stock in such corporation which is held by such trust but 
     which is not allocated under the plan to employees.

       ``(ii) Individual's share of unallocated stock.--For 
     purposes of clause (i)(II), an individual's share of 
     unallocated S corporation stock held by the trust is the 
     amount of the unallocated stock which would be allocated to 
     such individual if the unallocated stock were allocated to 
     individuals in the same proportions as the most recent stock 
     allocation under the plan.
       ``(D) Member of family.--For purposes of this paragraph, 
     the term `member of the family' means, with respect to any 
     individual--
       ``(i) the spouse of the individual,
       ``(ii) an ancestor or lineal descendant of the individual 
     or the individual's spouse,
       ``(iii) a brother or sister of the individual or the 
     individual's spouse and any lineal descendant of the brother 
     or sister, and
       ``(iv) the spouse of any person described in clause (ii) or 
     (iii).
       ``(5) Definitions.--For purposes of this subsection--
       ``(A) Employee stock ownership plan.--The term `employee 
     stock ownership plan' has the meaning given such term by 
     section 4975(e)(7).
       ``(B) Employer securities.--The term `employer security' 
     has the meaning given such term by section 409(l).
       ``(6) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection, including regulations providing for the 
     treatment of any stock option, restricted stock, stock 
     appreciation right, phantom stock unit, performance unit, or 
     similar instrument granted by an S corporation as stock or 
     not stock.''
       (b) Excise Tax.--
       (1) In general.--Section 4979A(b) (defining prohibited 
     allocation) is amended by striking ``and'' at the end of 
     paragraph (1), by striking the period at the end of paragraph 
     (2) and inserting ``, and'', and by adding at the end the 
     following new paragraph:
       ``(3) any allocation of employer securities which violates 
     the provisions of section 409(p).''
       (2) Liability.--Section 4979A(c) (defining liability for 
     tax) is amended by adding at the end the following new 
     sentence: ``In the case of a prohibited allocation described 
     in subsection (b)(3), such tax shall be paid by the S 
     corporation the stock in which was allocated in violation of 
     section 409(p).''
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2000.
       (2) Exception for certain plans.--In the case of any--
       (A) employee stock ownership plan established after July 
     14, 1999, or
       (B) employee stock ownership plan established on or before 
     such date if employer securities held by the plan consist of 
     stock in a corporation with respect to which an election 
     under section 1362(a) of the Internal Revenue Code of 1986 is 
     not in effect on such date,

     the amendments made by this section shall apply to plan years 
     ending after July 14, 1999.

     SEC. 1118. MODIFICATION OF ANTI-ABUSE RULES RELATED TO 
                   ASSUMPTION OF LIABILITY.

       (a) In General.--Section 357(b)(1) (relating to tax 
     avoidance purpose) is amended--
       (1) by striking ``the principal purpose'' and inserting ``a 
     principal purpose'', and
       (2) by striking ``on the exchange'' in subparagraph (A).
       (b) Effective Date.--The amendments made by this section 
     shall apply to assumptions of liability after July 14, 1999.

     SEC. 1119. ALLOCATION OF BASIS ON TRANSFERS OF INTANGIBLES IN 
                   CERTAIN NONRECOGNITION TRANSACTIONS.

       (a) Transfers to Corporations.--Section 351 (relating to 
     transfer to corporation controlled by transferor) is amended 
     by redesignating subsection (h) as subsection (i) and by 
     inserting after subsection (g) the following new subsection:
       ``(h) Treatment of Transfers of Intangible Property.--
       ``(1) Transfers of less than all substantial rights.
       ``(A) In general.--A transfer of an interest in intangible 
     property (as defined in section 936(h)(3)(B)) shall be 
     treated under this section as a transfer of property even if 
     the transfer is of less than all of the substantial rights of 
     the transferor in the property.
       ``(B) Allocation of basis.--In the case of a transfer of 
     less than all of the substantial rights of the transferor in 
     the intangible property, the transferor's basis immediately 
     before the transfer shall be allocated among the rights 
     retained by the transferor and the rights transferred on the 
     basis of their respective fair market values.
       ``(2) Nonrecognition not to apply to intangible property 
     developed for transferee.--This section shall not apply to a 
     transfer of intangible property developed by the transferor 
     or any related person if such development was pursuant to an 
     arrangement with the transferee.''
       (b) Transfers to Partnerships.--Subsection (d) of section 
     721 is amended to read as follows:
       ``(d) Transfers of Intangible Property.--
       ``(1) In general.--Rules similar to the rules of section 
     351(h) shall apply for purposes of this section.
       ``(2) Transfers to foreign partnerships.--For regulatory 
     authority to treat intangibles transferred to a partnership 
     as sold, see section 367(d)(3).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers on or after the date of the 
     enactment of this Act.

     SEC. 1120. CONTROLLED ENTITIES INELIGIBLE FOR REIT STATUS.

       (a) In General.--Subsection (a) of section 856 (relating to 
     definition of real estate investment trust) is amended by 
     striking ``and'' at the end of paragraph (6), by 
     redesignating paragraph (7) as paragraph (8), and by 
     inserting after paragraph (6) the following new paragraph:
       ``(7) which is not a controlled entity (as defined in 
     subsection (l)); and''.
       (b) Controlled Entity.--Section 856 is amended by adding at 
     the end the following new subsection:

[[Page 18546]]

       ``(l) Controlled Entity.--
       ``(1) In general.--For purposes of subsection (a)(7), an 
     entity is a controlled entity if, at any time during the 
     taxable year, one person (other than a qualified entity)--
       ``(A) in the case of a corporation, owns stock--
       ``(i) possessing at least 50 percent of the total voting 
     power of the stock of such corporation, or
       ``(ii) having a value equal to at least 50 percent of the 
     total value of the stock of such corporation, or
       ``(B) in the case of a trust, owns beneficial interests in 
     the trust which would meet the requirements of subparagraph 
     (A) if such interests were stock.
       ``(2) Qualified entity.--For purposes of paragraph (1), the 
     term `qualified entity' means--
       ``(A) any real estate investment trust, and
       ``(B) any partnership in which one real estate investment 
     trust owns at least 50 percent of the capital and profits 
     interests in the partnership.
       ``(3) Attribution rules.--For purposes of this paragraphs 
     (1) and (2)--
       ``(A) In general.--Rules similar to the rules of 
     subsections (d)(5) and (h)(3) shall apply.
       ``(B) Stapled entities.--A group of entities which are 
     stapled entities (as defined in section 269B(c)(2)) shall be 
     treated as 1 person.
       ``(4) Exception for certain new reits.--
       ``(A) In general.--The term `controlled entity' shall not 
     include an incubator REIT.
       ``(B) Incubator reit.--A corporation shall be treated as an 
     incubator REIT for any taxable year during the eligibility 
     period if it meets all the following requirements for such 
     year:
       ``(i) The corporation elects to be treated as an incubator 
     REIT.
       ``(ii) The corporation has only voting common stock 
     outstanding.
       ``(iii) Not more than 50 percent of the corporation's real 
     estate assets consist of mortgages.
       ``(iv) From not later than the beginning of the last half 
     of the second taxable year, at least 10 percent of the 
     corporation's capital is provided by lenders or equity 
     investors who are unrelated to the corporation's largest 
     shareholder.
       ``(v) The corporation annually increases the value of its 
     real estate assets by at least 10 percent.
       ``(vi) The directors of the corporation adopt a resolution 
     setting forth an intent to engage in a going public 
     transaction.
     No election may be made with respect to any REIT if an 
     election under this subsection was in effect for any 
     predecessor of such REIT.
       ``(C) Eligibility period.--
       ``(i) In general.--The eligibility period (for which an 
     incubator REIT election can be made) begins with the REIT's 
     second taxable year and ends at the close of the REIT's third 
     taxable year, except that the REIT may, subject to clauses 
     (ii), (iii), and (iv), elect to extend such period for an 
     additional 2 taxable years.
       ``(ii) Going public transaction.--A REIT may not elect to 
     extend the eligibility period under clause (i) unless it 
     enters into an agreement with the Secretary that if it does 
     not engage in a going public transaction by the end of the 
     extended eligibility period, it shall pay Federal income 
     taxes for the 2 years of the extended eligibility period as 
     if it had not made an incubator REIT election and had ceased 
     to qualify as a REIT for those 2 taxable years.
       ``(iii) Returns, interest, and notice.--

       ``(I) Returns.--In the event the corporation ceases to be 
     treated as a REIT by operation of clause (ii), the 
     corporation shall file any appropriate amended returns 
     reflecting the change in status within 3 months of the close 
     of the extended eligibility period.
       ``(II) Interest.--Interest shall be payable on any tax 
     imposed by reason of clause (ii) for any taxable year but, 
     unless there was a finding under subparagraph (D), no 
     substantial underpayment penalties shall be imposed.
       ``(III) Notice.--The corporation shall, at the same time it 
     files its returns under subclause (I), notify its 
     shareholders and any other persons whose tax position is, or 
     may reasonably be expected to be, affected by the change in 
     status so they also may file any appropriate amended returns 
     to conform their tax treatment consistent with the 
     corporation's loss of REIT status.
       ``(IV) Regulations.--The Secretary shall provide 
     appropriate regulations setting forth transferee liability 
     and other provisions to ensure collection of tax and the 
     proper administration of this provision.

       ``(iv) Clauses (ii) and (iii) shall not apply if the 
     corporation allows its incubator REIT status to lapse at the 
     end of the initial 2-year eligibility period without engaging 
     in a going public transaction if the corporation is not a 
     controlled entity as of the beginning of its fourth taxable 
     year. In such a case, the corporation's directors may still 
     be liable for the penalties described in subparagraph (D) 
     during the eligibility period.
       ``(D) Special penalties.--If the Secretary determines that 
     an incubator REIT election was filed for a principal purpose 
     other than as part of a reasonable plan to undertake a going 
     public transaction, an excise tax of $20,000 shall be imposed 
     on each of the corporation's directors for each taxable year 
     for which an election was in effect.
       ``(E) Going public transaction.--For purposes of this 
     paragraph, a going public transaction means--
       ``(i) a public offering of shares of the stock of the 
     incubator REIT;
       ``(ii) a transaction, or series of transactions, that 
     results in the stock of the incubator REIT being regularly 
     traded on an established securities market and that results 
     in at least 50 percent of such stock being held by 
     shareholders who are unrelated to persons who held such stock 
     before it began to be so regularly traded; or
       ``(iii) any transaction resulting in ownership of the REIT 
     by 200 or more persons (excluding the largest single 
     shareholder) who in the aggregate own at least 50 percent of 
     the stock of the REIT.

     For the purposes of this subparagraph, the rules of paragraph 
     (3) shall apply in determining the ownership of stock.
       ``(F) Definitions.--The term `established securities 
     market' shall have the meaning set forth in the regulations 
     under section 897.''
       (c) Conforming Amendment.--Paragraph (2) of section 856(h) 
     is amended by striking ``and (6)'' each place it appears and 
     inserting ``, (6), and (7)''.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years ending after July 14, 1999.
       (2) Exception for existing controlled entities.--The 
     amendments made by this section shall not apply to any entity 
     which is a controlled entity (as defined in section 856(l) of 
     the Internal Revenue Code of 1986, as added by this section) 
     as of July 14, 1999, which is a real estate investment trust 
     for the taxable year which includes such date, and which has 
     significant business assets or activities as of such date.

     SEC. 1121. DISTRIBUTIONS TO A CORPORATE PARTNER OF STOCK IN 
                   ANOTHER CORPORATION.

       (a) In General.--Section 732 (relating to basis of 
     distributed property other than money) is amended by adding 
     at the end the following new subsection:
       ``(f) Corresponding Adjustment to Basis of Assets of a 
     Distributed Corporation Controlled by a Corporate Partner.--
       ``(1) In general.--If--
       ``(A) a corporation (hereafter in this subsection referred 
     to as the `corporate partner') receives a distribution from a 
     partnership of stock in another corporation (hereafter in 
     this subsection referred to as the `distributed 
     corporation'),
       ``(B) the corporate partner has control of the distributed 
     corporation immediately after the distribution or at any time 
     thereafter, and
       ``(C) the partnership's adjusted basis in such stock 
     immediately before the distribution exceeded the corporate 
     partner's adjusted basis in such stock immediately after the 
     distribution,

     then an amount equal to such excess shall be applied to 
     reduce (in accordance with subsection (c)) the basis of 
     property held by the distributed corporation at such time 
     (or, if the corporate partner does not control the 
     distributed corporation at such time, at the time the 
     corporate partner first has such control).
       ``(2) Exception for certain distributions before control 
     acquired.--Paragraph (1) shall not apply to any distribution 
     of stock in the distributed corporation if--
       ``(A) the corporate partner does not have control of such 
     corporation immediately after such distribution, and
       ``(B) the corporate partner establishes to the satisfaction 
     of the Secretary that such distribution was not part of a 
     plan or arrangement to acquire control of the distributed 
     corporation.
       ``(3) Limitations on basis reduction.--
       ``(A) In general.--The amount of the reduction under 
     paragraph (1) shall not exceed the amount by which the sum of 
     the aggregate adjusted bases of the property and the amount 
     of money of the distributed corporation exceeds the corporate 
     partner's adjusted basis in the stock of the distributed 
     corporation.
       ``(B) Reduction not to exceed adjusted basis of property.--
     No reduction under paragraph (1) in the basis of any property 
     shall exceed the adjusted basis of such property (determined 
     without regard to such reduction).
       ``(4) Gain recognition where reduction limited.--If the 
     amount of any reduction under paragraph (1) (determined after 
     the application of paragraph (3)(A)) exceeds the aggregate 
     adjusted bases of the property of the distributed 
     corporation--
       ``(A) such excess shall be recognized by the corporate 
     partner as long-term capital gain, and
       ``(B) the corporate partner's adjusted basis in the stock 
     of the distributed corporation shall be increased by such 
     excess.
       ``(5) Control.--For purposes of this subsection, the term 
     `control' means ownership of stock meeting the requirements 
     of section 1504(a)(2).
       ``(6) Indirect distributions.--For purposes of paragraph 
     (1), if a corporation acquires (other than in a distribution 
     from a partnership) stock the basis of which is determined

[[Page 18547]]

     in whole or in part by reference to subsection (a)(2) or (b), 
     the corporation shall be treated as receiving a distribution 
     of such stock from a partnership.
       ``(7) Special rule for stock in controlled corporation.--If 
     the property held by a distributed corporation is stock in a 
     corporation which the distributed corporation controls, this 
     subsection shall be applied to reduce the basis of the 
     property of such controlled corporation. This subsection 
     shall be reapplied to any property of any controlled 
     corporation which is stock in a corporation which it 
     controls.
       ``(8) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection, including regulations to avoid double 
     counting and to prevent the abuse of such purposes.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions made after July 14, 1999.

          TITLE XII--COMPLIANCE WITH CONGRESSIONAL BUDGET ACT

     SEC. 1201. SUNSET OF PROVISIONS OF ACT.

       All provisions of, and amendments made by, this Act which 
     are in effect on September 30, 2009, shall cease to apply as 
     of the close of September 30, 2009.
                                 ______
                                 

                        FRIST AMENDMENT NO. 1443

  (Ordered to lie on the table.)
  Mr. FRIST submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       On page 32, between lines 14 and 15, insert the following:

     SEC. 207. MODIFICATION OF TAX RATES FOR TRUSTS FOR 
                   INDIVIDUALS WHO ARE DISABLED.

       (a) In General.--Section 1(e) (relating to tax imposed on 
     estates and trusts) is amended to read as follows:
       ``(e) Estates and Trusts.--
       ``(1) In general.--Except as provided in paragraph (2), 
     there is hereby imposed on the taxable income of--
       ``(A) every estate, and
       ``(B) every trust,
     taxable under this subsection a tax determined in accordance 
     with the following table:

The tax is:e income is:
15% of taxable income..................................................
$225, plus 28% of the excess over $1,500...............................
$785, plus 31% of the excess over $3,500...............................
$1,405, plus 36% of the excess over $5,500.............................
$2,125, plus 39.6% of the excess over $7,500...........................
       ``(2) Special rule for trusts for disabled individuals.--
       ``(A) In general.--There is hereby imposed on the taxable 
     income of an eligible trust taxable under this subsection a 
     tax determined in the same manner as under subsection (c).
       ``(B) Eligible trust.--For purposes of subparagraph (A), a 
     trust shall be treated as an eligible trust for any taxable 
     year if, at all times during such year during which the trust 
     is in existence, the exclusive purpose of the trust is to 
     provide reasonable amounts for the support and maintenance of 
     1 or more beneficiaries each of whom is permanently and 
     totally disabled (within the meaning of section 22(e)(3)). A 
     trust shall not fail to meet the requirements of this 
     subparagraph merely because the corpus of the trust may 
     revert to the grantor or a member of the grantor's family 
     upon the death of the beneficiary.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2003.
       On page 270, line 18, strike ``2003'' and insert ``2004''.
       On page 273, line 21, strike ``2003'' and insert ``2004''.
       On page 275, line 12, strike ``2003'' and insert ``2004''.
                                 ______
                                 

                SESSIONS (AND OTHERS) AMENDMENT NO. 1444

  (Ordered to lie on the table.)
  Mr. SESSIONS (for himself, Mr. Coverdell, and Mr. Craig) submitted an 
amendment intended to be proposed by them to the bill, S. 1429, supra; 
as follows:

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. CAPITAL GAIN TREATMENT UNDER SECTION 631(B) TO APPLY 
                   TO OUTRIGHT SALES BY LAND OWNER.

       (a) In General.--Subsection (b) of section 631 (relating to 
     disposal of timber with a retained economic interest) is 
     amended--
       (1) by inserting ``and Outright Sales of Timber'' after 
     ``Economic Interest'' in the subsection heading, and
       (2) by adding before the last sentence the following new 
     sentence: ``The requirement in the first sentence of this 
     subsection to retain an economic interest in timber shall not 
     apply to an outright sale of such timber by the owner thereof 
     if such owner owned the land (at the time of such sale) from 
     which the timber is cut.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to sales after the date of the enactment of this 
     Act.
                                 ______
                                 

               COVERDELL (AND COLLINS) AMENDMENT NO. 1445

  (Ordered to lie on the table.)
  Mr. COVERDELL (for himself and Ms. Collins) submitted an amendment 
intended to be proposed by them to the bill, S. 1429, supra; as 
follows:

       On page 371, between lines 16 and 17, and insert:

     SEC. __. 2-PERCENT FLOOR ON MISCELLANEOUS ITEMIZED DEDUCTIONS 
                   NOT TO APPLY TO QUALIFIED INCIDENTAL EXPENSES 
                   OF ELEMENTARY AND SECONDARY SCHOOL TEACHERS.

       (a) In General.--Section 67(b) (defining miscellaneous 
     itemized deductions) is amended by striking ``and'' at the 
     end of paragraph (11), by striking the period at the end of 
     paragraph (12) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(13) any deduction allowable for the qualified incidental 
     expenses of an eligible teacher.''
       (b) Definitions.--Section 67 (relating to 2-percent floor 
     on miscellaneous itemized deductions) is amended by adding at 
     the end the following new subsection:
       ``(g) Qualified Incidental Expenses of Eligible Teachers.--
     For purposes of subsection (b)(13)--
       ``(1) Qualified incidental expenses.--
       ``(A) In general.--The term `qualified incidental expenses' 
     means expenses paid or incurred by an eligible teacher in an 
     amount not to exceed $250 for any taxable year--
       ``(i) for books, supplies, and equipment related to 
     instruction, teaching, or other educational job-related 
     activities of such eligible teacher, and
       ``(ii) with respect to which a deduction is allowable under 
     section 162 (determined without regard to this section).
       ``(B) Special rule for homeschooling.--Such term shall 
     include expenses described in subparagraph (A)(i) in 
     connection with education provided by homeschooling if the 
     requirements of any applicable State or local law are met 
     with respect to such education.
       ``(2) Eligible teacher.--
       ``(A) In general.--The term `eligible teacher' means an 
     individual who is a kindergarten through grade 12 classroom 
     teacher, instructor, counselor, aide, or principal in an 
     elementary or secondary school.
       ``(B) Elementary or secondary school.--The terms 
     `elementary school' and `secondary school' have the meanings 
     given such terms by section 14101 of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 8801), as so in 
     effect.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. __. EXTENSION OF EXCLUSION FOR EMPLOYER-PROVIDED 
                   EDUCATIONAL ASSISTANCE.

       Section 127(d) (relating to termination of exclusion for 
     educational assistance programs), as amended by this Act, is 
     amended by striking ``December 31, and inserting ``December 
     31, 2005''.
                                 ______
                                 

            COLLINS (AND COVERDELL) AMENDMENTS NO. 1446-1447

  (Ordered to lie on the table.)
  Ms. COLLINS (for herself and Mr. Coverdell) submitted an amendment 
intended to be proposed by them to the bill, S. 1429, supra; as 
follows:

                           Amendment No. 1446

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. 2-PERCENT FLOOR ON MISCELLANEOUS ITEMIZED DEDUCTIONS 
                   NOT TO APPLY TO QUALIFIED PROFESSIONAL 
                   DEVELOPMENT EXPENSES AND QUALIFIED INCIDENTAL 
                   EXPENSES OF ELEMENTARY AND SECONDARY SCHOOL 
                   TEACHERS.

       (a) Qualified Professional Development Expenses 
     Deduction.--
       (1) In general.--Section 67(b) (defining miscellaneous 
     itemized deductions) is amended by striking ``and'' at the 
     end of paragraph (11), by striking the period at the end of 
     paragraph (12) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(13) any deduction allowable for the qualified 
     professional development expenses of an eligible teacher.''
       (2) Definitions.--Section 67 (relating to 2-percent floor 
     on miscellaneous itemized deductions) is amended by adding at 
     the end the following new subsection:
       ``(g) Qualified Professional Development Expenses of 
     Eligible Teachers.--For purposes of subsection (b)(13)--
       ``(1) Qualified professional development expenses.--
       ``(A) In general.--The term `qualified professional 
     development expenses' means expenses--
       ``(i) for tuition, fees, books, supplies, equipment, and 
     transportation required for the enrollment or attendance of 
     an individual in a qualified course of instruction, and
       ``(ii) with respect to which a deduction is allowable under 
     section 162 (determined without regard to this section).

[[Page 18548]]

       ``(B) Qualified course of instruction.--The term `qualified 
     course of instruction' means a course of instruction which--
       ``(i) is--

       ``(I) at an institution of higher education (as defined in 
     section 481 of the Higher Education Act of 1965 (20 U.S.C. 
     1088), as in effect on the date of the enactment of this 
     subsection), or
       ``(II) a professional conference, and

       ``(ii) is part of a program of professional development 
     which is approved and certified by the appropriate local 
     educational agency as furthering the individual's teaching 
     skills.
       ``(C) Local educational agency.--The term `local 
     educational agency' has the meaning given such term by 
     section 14101 of the Elementary and Secondary Education Act 
     of 1965, as so in effect.
       ``(2) Eligible teacher.--
       ``(A) In general.--The term `eligible teacher' means an 
     individual who is a kindergarten through grade 12 classroom 
     teacher, instructor, counselor, aide, or principal in an 
     elementary or secondary school.
       ``(B) Elementary or secondary school.--The terms 
     `elementary school' and `secondary school' have the meanings 
     given such terms by section 14101 of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 8801), as so in 
     effect.''
       (3) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000, and ending before December 31, 2004.
       (b) Qualified Incidental Expenses.--
       (1) In general.--Section 67(g)(1)(A), as added by 
     subsection (a)(2), is amended by striking ``and'' at the end 
     of clause (i), by redesignating clause (ii) as clause (iii), 
     and by inserting after clause (i) the following new clause:
       ``(ii) for qualified incidental expenses, and''.
       (2) Definition.--Section 67(g), as added by subsection 
     (a)(2), is amended by adding at the end the following new 
     paragraph:
       ``(3) Qualified incidental expenses.--
       ``(A) In general.--The term `qualified incidental expenses' 
     means expenses paid or incurred by an eligible teacher in an 
     amount not to exceed $125 for any taxable year for books, 
     supplies, and equipment related to instruction, teaching, or 
     other educational job-related activities of such eligible 
     teacher.
       ``(B) Special rule for homeschooling.--Such term shall 
     include expenses described in subparagraph (A) in connection 
     with education provided by homeschooling if the requirements 
     of any applicable State or local law are met with respect to 
     such education.''
       (3) Effective date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000, and ending before December 31, 2004.

                           Amendment No. 1447

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. 2-PERCENT FLOOR ON MISCELLANEOUS ITEMIZED DEDUCTIONS 
                   NOT TO APPLY TO QUALIFIED PROFESSIONAL 
                   DEVELOPMENT EXPENSES AND QUALIFIED INCIDENTAL 
                   EXPENSES OF ELEMENTARY AND SECONDARY SCHOOL 
                   TEACHERS.

       (a) Qualified Professional Development Expenses 
     Deduction.--
       (1) In general.--Section 67(b) (defining miscellaneous 
     itemized deductions) is amended by striking ``and'' at the 
     end of paragraph (11), by striking the period at the end of 
     paragraph (12) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(13) any deduction allowable for the qualified 
     professional development expenses of an eligible teacher.''
       (2) Definitions.--Section 67 (relating to 2-percent floor 
     on miscellaneous itemized deductions) is amended by adding at 
     the end the following new subsection:
       ``(g) Qualified Professional Development Expenses of 
     Eligible Teachers.--For purposes of subsection (b)(13)--
       ``(1) Qualified professional development expenses.--
       ``(A) In general.--The term `qualified professional 
     development expenses' means expenses--
       ``(i) for tuition, fees, books, supplies, equipment, and 
     transportation required for the enrollment or attendance of 
     an individual in a qualified course of instruction, and
       ``(ii) with respect to which a deduction is allowable under 
     section 162 (determined without regard to this section).
       ``(B) Qualified course of instruction.--The term `qualified 
     course of instruction' means a course of instruction which--
       ``(i) is--

       ``(I) at an institution of higher education (as defined in 
     section 481 of the Higher Education Act of 1965 (20 U.S.C. 
     1088), as in effect on the date of the enactment of this 
     subsection), or
       ``(II) a professional conference, and

       ``(ii) is part of a program of professional development 
     which is approved and certified by the appropriate local 
     educational agency as furthering the individual's teaching 
     skills.
       ``(C) Local educational agency.--The term `local 
     educational agency' has the meaning given such term by 
     section 14101 of the Elementary and Secondary Education Act 
     of 1965, as so in effect.
       ``(2) Eligible teacher.--
       ``(A) In general.--The term `eligible teacher' means an 
     individual who is a kindergarten through grade 12 classroom 
     teacher, instructor, counselor, aide, or principal in an 
     elementary or secondary school.
       ``(B) Elementary or secondary school.--The terms 
     `elementary school' and `secondary school' have the meanings 
     given such terms by section 14101 of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 8801), as so in 
     effect.''
       (3) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
       (b) Qualified Incidental Expenses.--
       (1) In general.--Section 67(g)(1)(A), as added by 
     subsection (a)(2), is amended by striking ``and'' at the end 
     of clause (i), by redesignating clause (ii) as clause (iii), 
     and by inserting after clause (i) the following new clause:
       ``(ii) for qualified incidental expenses, and''.
       (2) Definition.--Section 67(g), as added by subsection 
     (a)(2), is amended by adding at the end the following new 
     paragraph:
       ``(3) Qualified incidental expenses.--
       ``(A) In general.--The term `qualified incidental expenses' 
     means expenses paid or incurred by an eligible teacher in an 
     amount not to exceed $250 for any taxable year for books, 
     supplies, and equipment related to instruction, teaching, or 
     other educational job-related activities of such eligible 
     teacher.
       ``(B) Special rule for homeschooling.--Such term shall 
     include expenses described in subparagraph (A) in connection 
     with education provided by homeschooling if the requirements 
     of any applicable State or local law are met with respect to 
     such education.''
       (3) Effective date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004, and ending before December 31, 2007.
       On page 37, strike lines 3 through 12 and insert the 
     following:
       (a) Phaseout of AGI Limit on Contributions.--
       (1) In general.--Section 408A(c)(3)(A) (relating to dollar 
     limit) is amended to read as follows:
       ``(A) Dollar limit.--The amount determined under paragraph 
     (2) for any taxable year with respect to a taxpayer shall be 
     zero for any taxable year to which the contribution relates 
     if the taxpayer's adjusted gross income exceeds $500,000.''
       (2) Repeal.--Section 408A(c)(3) (relating to limits based 
     on modified adjusted gross income) is amended by striking 
     subparagraph (A) and by redesignating subparagraphs (B), (C), 
     and (D) as subparagraphs (A), (B), and (C), respectively.
       (b) Increase in AGI Limit for Rollover Contributions.--
     Section 408A(c)(3)(B) (relating to rollover from IRA) is 
     amended to read as follows:
       ``(B) Rollover from ira.--A taxpayer
       On page 38, after line 24, add the following:
       (4) Repeal of contribution limit.--The amendment made by 
     subsection (a)(2) shall apply to taxable years beginning 
     after December 31, 2003.
                                 ______
                                 

                COLLINS    AMENDMENTS    NOS. 1448-1449

  (Ordered to lie on the table.)
  Ms. COLLINS submitted an amendment intended to be proposed by her to 
the bill, S. 1429, supra; as follows:

                           Amendment No. 1448

       On page 371, between lines 16 and 17, insert:

     SEC. __. ELECTRIC UTILITY DIVESTITURES.

       Section 1033 (relating to involuntary conversions) is 
     amended by redesignating subsection (k) as subsection (l) and 
     by inserting after subsection (j) the following:
       ``(k) State-Required Electric Utility Divestitures to Carry 
     Out Competitive Restructuring Policies.--
       ``(1) General rule for involuntary conversion treatment.--
     For purposes of this subtitle, if a taxpayer elects the 
     application of this subsection to all or part of a qualified 
     sale, such sale or part thereof shall be treated as an 
     involuntary conversion to which this section applies.
       ``(2) Qualified sale.--For purposes of paragraph (1), the 
     term `qualified sale' means a sale by an electric utility of 
     non-nuclear electric generation property, or a sale of stock 
     in a corporation owning non-nuclear electric generation 
     property, if the following occurs:
       ``(A) State divestiture requirement.--The State, by 
     legislative enactment, specifically requires such sale, of 
     all non-nuclear generating capacity in such utility's service 
     area not later than March 1, 2000, and prohibits such utility 
     (or related party) from acquiring non-nuclear generating 
     capacity within such service area at anytime after March 1, 
     2000, in order to effectuate the competitive restructuring of 
     the electric industry in such State.
       ``(B) Consumer benefit.--The State provides that the 
     benefit from a deferral of tax under this subsection shall 
     inure solely to utility customers.
       ``(C) Covered sales.--Such sale is consummated after April 
     1, 1999, and before March 2, 2000.
       ``(3) Similar or related property.--For purposes of 
     subsection (a), property is similar or related in service or 
     use to electric generation property so converted if it is--

[[Page 18549]]

       ``(A) electric generation property not required by a State 
     to be divested, or electric transmission or distribution 
     property,
       ``(B) other electric industry property,
       ``(C) natural gas utility property, or
       ``(D) steam industry property.
       ``(4) One item of property.--Any sale of electric 
     generation property under paragraph (2) shall be treated as a 
     sale of a single item of property, and any property described 
     in paragraph (3) shall be treated as property similar or 
     related in use to such single item of property.
       ``(5) Ten-year replacement period.--In the case of an 
     involuntary conversion described in paragraph (1), subsection 
     (a)(2)(B)(i) shall be applied by substituting `10 years' for 
     `2 years.'
       ``(6) Gain recognized in year conversion is realized.--In 
     the case of an involuntary conversion under paragraph (1)--
       ``(A) the gain shall be recognized in the year the 
     conversion is realized, except to the extent that the 
     property is replaced under subsection (a),
       ``(B) during the replacement period under paragraph (5), 
     the taxpayer may use a one-year life for all assets described 
     in paragraph (3) that are placed in service subject to the 
     limitation in subparagraph (C), and
       ``(C) the total amount of similar or related property 
     additions subject to such one-year life shall not exceed the 
     total gain recognized under subparagraph (A).
       ``(7) Normalization rules.--With respect to public utility 
     property described in 168(i)(10), the Secretary shall 
     prescribe the requirements of a normalization method of 
     accounting for this subsection.''
       Beginning on page 285, strike line 21 and all that follows 
     through page 286, line 6.
                                  ____


                           Amendment No. 1449

       On page 378, between lines 14 and 15, insert:

     SEC. 1205A. TECHNICAL AMENDMENT.

       (a) In General.--Section 45(c)(3)(C), as amended by section 
     1205(a) of this Act, is amended by inserting ``or leased'' 
     after ``owned''.
       (b) Revenue Offset.--The Secretary of the Treasury shall 
     adjust the effective dates of the phase-in of the applicable 
     dollar amounts in section 2503(b)(2), as amended by section 
     721(a)(2) of this Act, as necessary to offset the decrease in 
     revenues to the Treasury resulting from the amendment made by 
     subsection (a).
                                 ______
                                 

                   SANTORUM AMENDMENTS NOS. 1450-1451

  (Ordered to lie on the table.)
  Mr. SANTORUM submitted two amendments intended to be proposed by him 
to the bill, S. 1429, supra; as follows:

                           Amendment No. 1450

       On page 140, between lines 15 and 16, insert the following:

     SEC. __ TRANSFER OF EXCESS PENSION ASSETS TO STOCK BONUS 
                   PLANS.

       (a) In General.--Subpart E of part I of subchapter D of 
     chapter 1 (relating to treatment of transfers to retiree 
     health accounts) is amended by adding at the end the 
     following new section:

     ``SEC. 420A. TRANSFER OF EXCESS PENSION ASSETS TO STOCK BONUS 
                   PLAN.

       ``(a) General Rule.--If there is a qualified stock bonus 
     transfer of any excess pension assets of a defined benefit 
     plan (other than a multiemployer plan)--
       ``(1) a trust which is part of such plan shall not be 
     treated as failing to meet the requirements of section 401(a) 
     solely by reason of such transfer (or any action authorized 
     under this section),
       ``(2) no amount shall be includible in the gross income of 
     the employer maintaining the plan solely by reason of such 
     transfer,
       ``(3) no deduction shall be allowed to the employer by 
     reason of such transfer, and
       ``(4) such transfer shall not be treated--
       ``(A) as an employer reversion for purposes of section 
     4980, or
       ``(B) as a prohibited transaction for purposes of section 
     4975.
       ``(b) Qualified Stock Bonus Transfer.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified stock bonus 
     transfer' means a transfer after the date of the enactment of 
     this section and before January 1, 2001--
       ``(A) of excess pension assets of a defined benefit plan 
     maintained by an employer to a stock bonus plan maintained by 
     such employer,
       ``(B) which does not contravene any other provision of law, 
     and
       ``(C) with respect to which the requirements of subsections 
     (c) and (d) are met.
       ``(2) Only 1 transfer.--No more than 1 transfer with 
     respect to any plan may be treated as a qualified stock bonus 
     transfer for purposes of this section.
       ``(c) Requirements Relating to Stock Bonus Plan.--For 
     purposes of subsection (b)(1)(C), the requirements of this 
     subsection are met if the stock bonus plan to which the 
     excess pension assets are transferred--
       ``(1) covers at least 95 percent of the active participants 
     in the defined benefit plan immediately before the date of 
     the transfer,
       ``(2) uses the entire amount transferred (and any income 
     allocable to such amount) to purchase employer securities (as 
     defined in section 409(l)) of the employer maintaining the 
     stock bonus plan, and
       ``(3) allocates such securities in a uniform manner to the 
     accounts of participants in the stock bonus plan who were 
     active participants in the defined benefit plan immediately 
     before the date of the transfer, but only if such allocation 
     is made--
       ``(A) no less rapidly than ratably over the 7-plan year 
     period beginning with the plan year in which the transfer was 
     made, and
       ``(B) on the basis of the ratio which the nonforfeitable 
     accrued benefit of each such participant bears to the sum of 
     such benefits for all such participants.
       ``(d) Requirements for Defined Benefit Plan.--For purposes 
     of subsection (b)(1)(C), the requirements of this subsection 
     are met if the defined benefit plan from which the excess 
     pension assets are transferred--
       ``(1) provides that the accrued pension benefits of any 
     participant or beneficiary under the plan become 
     nonforfeitable in the same manner which would be required if 
     the plan had terminated immediately before the qualified 
     stock bonus transfer, and
       ``(2) provides that it may not be terminated before the 
     close of the 5th plan year following the plan year in which 
     the transfer occurred.
       ``(e) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Excess pension assets.--The term `excess pension 
     assets' has the meaning given such term by section 420(e)(2).
       ``(2) Coordination with section 412.--A rule similar to the 
     rule of section 420(e)(4) shall apply.''
       (b) Conforming Amendments.--
       (1) The heading for subpart E of part I of subchapter D of 
     chapter 1 is amended by striking ``to Retiree Health 
     Accounts'' and inserting ``of Excess Pension Assets''.
       (2) The table of sections for subpart E of part I of 
     subchapter D is amended by adding at the end the following 
     new item:

``Sec. 420A. Transfer of excess pension assets to stock bonus plan.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers after the date of the enactment of 
     this Act.
                                  ____


                           Amendment No. 1451

       At the end, add the following:

              DIVISION B--EMPLOYEE WELFARE BENEFIT EQUITY

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS; AMENDMENT TO 1986 
                   CODE.

       (a) Short Title.--This division may be cited as the 
     ``Employee Welfare Benefit Equity Act of 1999''.
       (b) Table of Contents.--
       Sec. 1. Short title; table of contents; amendment to 1986 
     Code.

                 TITLE I--CERTAIN WELFARE BENEFIT PLANS

       Sec. 101. Modification Of Definition Of Ten-Or-More 
     Employer Plan
       Sec. 102. Clarification Of Deduction Limits For Certain 
     Collectively Bargained Plans
       Sec. 103. Clarifications of Standards for Section 501(c)(9) 
     approval
       Sec. 104. Effective Date.

                    TITLE II--ENFORCEMENT PROVISIONS

       Sec. 201. Clarification Of Section 4976
       Sec. 202. Effective Date.
       (c) AMENDMENT OF 1986 CODE.--Except as otherwise expressly 
     provided, whenever in this title an amendment to or repeal is 
     expressed in terms of an amendment to, or a repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

                TITLE I--CERTAIN WELFARE BENEFITS PLANS

     SEC. 101. MODIFICATION OF DEFINITION OF TEN-OR-MORE EMPLOYER 
                   PLAN

       (a) ADDITIONAL REQUIREMENTS.--Paragraph (6)(B) of section 
     419A(f) (relating to the exception for 10 or more employer 
     plans) is hereby amended by substituting ``employers, and'' 
     for ``employers.'' at the end of clause (ii), and adding the 
     following clauses:
       ``(iii) which complies with the requirements of section 
     505(b)(1) with respect to all benefits provided by the plan, 
     and
       (iv) which has obtained a favorable determination from the 
     Internal Revenue Service that such plan (or a predecessor 
     plan) is an organization described in section 501(c)(9), and
       (v) which does not permit any severance pay benefit.
       (b) CLARIFICATION OF EXPERIENCE RATING.--Paragraph (6)(A) 
     of section 419A (relating to the exception for 10 or more 
     employer plans) is hereby amended by striking the second 
     sentence thereof, and inserting the following:
       ``The preceding sentence shall not apply to any plan which 
     is an experience-rated plan. A guaranteed benefit plan shall 
     not be considered an experience-rated plan.
       (i) For purposes of this subparagraph, the term 
     ``experience-rated plan'' is a plan which determines 
     contributions by individual employers on the basis of 
     experience-rating.
       (ii) For purposes of this subparagraph, the term 
     ``experience-rating'' means calculating contributions on the 
     basis of actual gain or loss experience.
       (iii) the term ``guaranteed benefit plan'' means a plan 
     whose benefits are funded with

[[Page 18550]]

     insurance contracts or are otherwise determinable and payable 
     to a participant without reference to, or limitation by, the 
     amount of contributions to the plan attributable to any 
     contributing employer; provided, however, that a plan shall 
     not fail to be a guaranteed benefit plan if benefits may be 
     limited or denied in the event a contributing employer fails 
     to pay premiums or assessments demanded by the plan as a 
     condition of continued participation.''

     SEC. 102. CLARIFICATION OF DEDUCTION LIMITS FOR CERTAIN 
                   COLLECTIVELY BARGAINED PLANS

       (a) ADDITIONAL REQUIREMENTS.--Paragraphs (5)(B) of section 
     419A(f) (relating to the deductions limits for certain 
     collectively bargained plans) is hereby amended by adding 
     thereto the following clauses:
       ``(iii) Paragraph (5)(B) shall not apply to any plan 
     maintained pursuant to an agreement between employee 
     representatives and I or more employers unless and until the 
     taxpayer applies for and the Secretary issues a determination 
     that such agreement is a bona fide collective bargaining 
     agreement and that the welfare benefits provided thereunder 
     were the subject of good faith bargaining between employee 
     representatives and such employer or employers. The Secretary 
     is authorized to promulgate regulations designed to carry out 
     the intention of this provision.

     SEC. 103. CLARIFICATION OF STANDARDS FOR SECTION 501(C)(9) 
                   APPROVAL.

       (a) Section 505 is amended by adding thereto the following 
     subsection.
       ``(d) CLARIFICATION OF STANDARDS FOR EXEMPTION.--
       (1) MEMBERSHIP.--An organization shall not fail to be 
     treated as an organization described in paragraph (9) of 
     section 501(c) if its membership includes employees or other 
     allowable participants who--
       (a) reside or work in different geographic locales, or
       (b) do not work in the same industrial or employment 
     classification.
       (2) FUNDING.--Life insurance and other benefits provided by 
     an organization described paragraph (9) of section 501(c) or 
     other welfare benefit fund shall not be deemed discriminatory 
     merely because they are funded with different types of 
     products contracts, investments, or other funding methods of 
     varying costs; provided, that such benefits otherwise comply 
     with subsection (b).

     SEC. 104. EFFECTIVE DATE.

       (a) The amendments to be made by this Act are effective 
     with respect to contributions to a welfare benefit fund made 
     after June 9, 1999.

                    TITLE II--ENFORCEMENT PROVISIONS

     SEC. 201. CLARIFICATION OF SECTION 4976

       (a) ANTI-ABUSE PROVISIONS.--Section 4976 (relating to 
     excise taxes with respect to funded welfare benefit plans) is 
     amended to read as follows:
       ``(a) General rule--If--
       (1) an employer maintains a welfare benefit fund, and
       (2) there is a disqualified benefit provided or funded 
     during any taxable year, or
       (3) there is a premature termination of such plan,
     there is hereby imposed on such employer a tax equal to (i) 
     100 percent of such disqualified benefit, or (ii) 100 percent 
     of the amount deemed to fund the disqualified benefit, or 
     (iii) 100 percent of all amounts contributed to such plan 
     prior to the date of premature termination.
       (b) Disqualified benefit--For purposes of subsection (a)--
       (1) In general--The term ``disqualified benefit'' means--
       (A) any post-retirement medical benefit or life insurance 
     benefit provided with respect to a key employee if a separate 
     account is required to be established for such employee under 
     section 419A(d) and such payment is not from such account,
       (B) any post-retirement medical benefit or life insurance 
     benefit provided or funded with respect to an individual in 
     whose favor discrimination is prohibited unless the plan 
     meets the requirements of section 505(b) with respect to such 
     benefit (whether or not such requirements apply to such 
     plan), and
       (C) any portion of a welfare benefit fund reverting to the 
     benefit of the employer.
       (2) Exception for collective bargaining plans--Paragraph 
     (1)(b) shall not apply to any plan maintained pursuant to an 
     agreement between employee representatives and 1 or more 
     employers if the Secretary finds that such agreement is a 
     collective bargaining agreement and that the benefits 
     referred to in paragraph (1)(B) were the subject of good 
     faith bargaining between such employee representatives and 
     such employer or employers.
       (3) Exception for nondeductible contributions--Paragraph 
     (1)(C) shall not apply to any amount attributable to a 
     contribution to the fund which is not allowable as a 
     deduction under section 419 for the taxable year or any prior 
     taxable year (and such contribution shall not be included in 
     any carryover under section 419(d)).
       (4) Exception for certain amounts charged against existing 
     reserve--Subparagraphs (A) and (B) of paragraph (1) shall not 
     apply to post-retirement benefits charged against an existing 
     reserve for post-retirement medical or life insurance 
     benefits (as defined in section 512(a)(3)(E)) or charged 
     against the income on such reserve.
       (c) Premature termination--For purposes of subsectioin 
     (a)--
       (1) In general--The term ``premature termination'' means a 
     termination event which occurs on or before 6 years after 
     adoption, creation, or the first contribution to a welfare 
     benefit fund which benefits any highly compensated employee.
       (2) Exception for insolvency, etc.--Paragraph (1) shall not 
     apply to any termination event which occurs by reason of the 
     insolvency of the employer or for such other reasons as the 
     Secretary may by regulation determine are not likely to 
     result in abuse.
       (d) Termination event--For purposes of this section--
       (1) In general--The term ``termination event'' means--
       (A) the termination of a welfare benefit fund,
       (B) the withdrawal of an employer from a welfare benefit 
     fund to which more than one employer contributes, or
       (C) any other action which is designed to cause, directly 
     or indirectly, a distribution of any asset from a welfare 
     benefit fund to a highly compensated employee.
       (2) Exception for bona fide benefits--Paragraph (1) shall 
     not apply to any bona fide benefit paid from a welfare 
     benefit fund which is available to all employees on a 
     nondiscriminatory basis and payable pursuant to the terms of 
     a written plan.
       (3) No severance benefit.--Paragraph (2) shall not apply to 
     a severance benefit.
       (d) Definitions--For purposes of this section--
       (1) In general--Except as otherwise provided, for purposes 
     of this section, the terms used in this section shall have 
     the same respective meanings as when used in subpart D of 
     part I of subchapter D of chapter 1.
       (2) Post-retirement benefit. The term ``post-retirement 
     benefit'' means any benefit or distribution which is 
     reasonably determined to be paid, provided, or made available 
     to a participant on or after normal retirement age.
       (3) Normal retirement age. The term ``normal retirement 
     age'' shall have the same meaning as defined in section 3(24) 
     of the Employee Retirement Income Security Act of 1974, but 
     in no event shall such date be later than the latest normal 
     retirement age defined in any qualified retirement plan which 
     benefits such individual.
       (4) Presumption in the case of permanent life insurance. In 
     the event a welfare benefit fund provides a life insurance 
     benefit, it shall be presumed that any amount contributed to 
     the fund in excess of the cumulative projected cost of group 
     term insurance for any period prior to normal retirement age 
     is funding a post-retirement benefit.

     SEC. 202. EFFECTIVE DATE.

       (a) CLARIFICATION--The amendments to Section 4976 made by 
     this Act are clarifications of the statute and shall be 
     applied and enforced as if originally enacted as part of 
     section 511(c) of the Deficit Reduction Act of 1984.

                       TITLE III--REVENUE OFFSET

       Section 1312 of Division A of this Act is null and void and 
     the Internal Revenue Code of 1986 shall be applied and 
     administered as if such section had not been enacted.
                                 ______
                                 

                 DODD (AND JEFFORDS) AMENDMENT NO. 1452

  (Ordered to lie on the table.)
  Mr. DODD (for himself and Mr. Jeffords) submitted an amendment 
intended to be proposed by them to the bill. S. 1429, supra; as 
follows:

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. INCREASE IN MANDATORY SPENDING FOR CHILD CARE AND 
                   DEVELOPMENT BLOCK GRANT.

       Section 418(a)(3) of the Social Security Act (42 U.S.C. 
     618(a)(3)) is amended--
       (1) in subparagraph (E), by striking ``and'' at the end;
       (2) in subparagraph (F), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(E) $3,918,000,000 for fiscal year 2002;
       ``(F) $3,979,000,000 for fiscal year 2003;
       ``(G) $4,010,000,000 for fiscal year 2004;
       ``(H) $3,860,000,000 for fiscal year 2005;
       ``(I) $3,954,000,000 for fiscal year 2006;
       ``(J) $4,004,000,000 for fiscal year 2007;
       ``(K) $4,073,000,000 for fiscal year 2008; and
       ``(L) $4,075,000,000 for fiscal year 2009.''.
       On page 226, strike lines 8 through 17, and insert the 
     following:
       (a) Maximum Rate of Tax Reduced to 53 Percent.--The table 
     contained in section 2001(c)(1) is amended by striking the 2 
     highest brackets and inserting the following:

$1,025,800, plus 53% of the excess over $2,500,000.''..................

       (b) Repeal of Phaseout of Graduated Rates.--Subsection (c) 
     of section 2001 is amended by striking paragraph (2).
       (c) Effective Dates.--
       (1) Subsection (a).--The amendment made by subsection (a) 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2000.

[[Page 18551]]

       (2) Subsection (b).--The amendment made by subsection (b) 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2003.
                                 ______
                                 

                        BURNS AMENDMENT NO. 1453

  (Ordered to lie on the table.)
  Mr. BURNS submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       Beginning on page 374, line 1, strike all through page 378, 
     line 14, and insert:

     SEC. 1205. MODIFICATIONS TO BUSINESS CREDIT FOR ELECTRICITY 
                   AND FUELS PRODUCED FROM CERTAIN RENEWABLE 
                   SOURCES.

       (a) In General.--Section 45 (relating to credit for 
     electricity produced from certain renewable resources) is 
     amended by adding at the end the following new subsection--
       ``(e) Production of Clean Energy Fuel.--
       ``(1) In general.-- In the case of the production of clean 
     energy fuel, the credit determined under subsection (a) for 
     any taxable year is an amount equal to the product of--
       ``(A) one half of the amount described in subsection (a)(l) 
     (taking into account any adjustments under subsection (b)), 
     multiplied by
       ``(B) the kilowatt hour equivalent of clean energy fuel--
       ``(i) produced by the taxpayer,
       ``(ii) at a qualified facility during the 5-year period 
     beginning on the date the facility was originally placed in 
     service, and
       ``(iii) sold by the taxpayer to an unrelated person during 
     the taxable year.
       ``(2) Other definitions.--For purposes of this subsection--
       ``(A) Clean energy fuel.--The term `clean energy fuel' 
     means liquid, gaseous, or solid synthetic fuel produced from 
     coal, when the production of such fuel uses technology 
     resulting in a qualified emissions reduction.
       ``(B) Kilowatt hour equivalent.--The term `kilowatt hour 
     equivalent' means the amount of kilowatt hours of electricity 
     equal to the quotient of the Btu content of a domestic clean 
     energy fuel divided by 10,000 Btus.
       ``(C) Qualified emissions reduction.--The term `qualified 
     emissions reduction' includes--
       ``(i) a reduction of at least 25 percent of sulfur dioxide, 
     nitrogen oxide, and volatile organic compound emission rates 
     (measured in pounds per ton of metallurgical coke produced) 
     from the following 1997 industry average baseline rates for 
     coke oven batteries: 4.6 pounds for sulfur dioxide, 2.98 
     pounds for nitrogen oxide, and 3.89 pounds for volatile 
     organic compounds, or
       ``(ii) a reduction of at least 25 percent of the total fuel 
     emissions, including sulfur and nitrogen oxide, released when 
     burning a clean energy fuel (excluding any dilution caused by 
     materials combined or added during the production process), 
     as compared to the emissions released when burning the 
     feedstock coal or comparable conventional fuel predominantly 
     available in the marketplace as of January 1, 1999.

     The taxpayer shall maintain records sufficient to 
     substantiate whether its technology results in a qualified 
     emission reduction.
       ``(D) Qualified facility.--The term `qualified facility' 
     means any facility owned by the taxpayer which is originally 
     placed in service after December 31, 2001, and before July 1, 
     2005.
       (b) Conforming Amendments.--
       (1) Section 45(d) of the Internal Revenue Code of 1986 is 
     amended--
       (A) by inserting ``or kilowatt hour equivalent'' after 
     ``electricity'' in paragraph (1),
       (B) by inserting ``or kilowatt hour equivalent of clean 
     energy fuel produced'' after ``qualified energy resource'' in 
     subparagraph (C) of paragraph (2), and
       (C) by inserting ``or kilowatt hour equivalent'' after 
     ``electricity'' in both places it appears in paragraph (4).
       (2) Subsection (d)(3) of section 39 of such Code is amended 
     to read as follows:
       ``(3) No carryback of renewable electricity production 
     credit before effective date.--No portion of the unused 
     business credit for any taxable year which is attributable to 
     the credit determined under section 45 (relating to 
     electricity produced from certain renewable resources) may be 
     carried back to any taxable year ending before--
       ``(A) except as provided in subparagraph (B) or (C), 
     January 1, 1993,
       ``(B) January 1, 1994, to the extent such credit is 
     attributable to wind as a qualified energy resource, or
       ``(C) January 1, 2001, to the extent such credit is 
     attributable to the production of clean energy fuel.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.
                                 ______
                                 

                 HARKIN (AND OTHERS) AMENDMENT NO. 1454

  (Ordered to lie on the table.)
  Mr. HARKIN (for himself, Mr. Leahy, and Mr. Reid) submitted an 
amendment intended to be proposed by them to the bill, S. 1429, supra; 
as follows:

       Amend page 159, line 9, by adding at the end the following 
     new sections:

     SECTION   . SHORT TITLE.

       This Act may be cited as the ``Older Workers Pension 
     Protection Act of 1999''.

     SEC.   . PREVENTION OF WEARING AWAY OF EMPLOYEE'S ACCRUED 
                   BENEFIT.

       (a) Amendment to Internal Revenue Code.--Section 411(d)(6) 
     of the Internal Revenue Code of 1986 (relating to accrued 
     benefit may not be decreased by amendment) is amended by 
     adding at the end the following new subparagraph:
       ``(D) Treatment of plan amendments wearing away accrued 
     benefit.--
       ``(i) In general.--For purposes of subparagraph (A), a plan 
     amendment adopted by a large defined benefit plan shall be 
     treated as reducing accrued benefits of a participant if, 
     under the terms of the plan after the adoption of the 
     amendment, the accrued benefit of the participant may at any 
     time be less than the sum of--

       ``(I) the participant's accrued benefit for years of 
     service before the effective date of the amendment, 
     determined under the terms of the plan as in effect 
     immediately before the effective date, plus
       ``(II) the participant's accrued benefit determined under 
     the formula applicable to benefit accruals under the current 
     plan as applied to years of service after such effective 
     date.

       ``(ii) Large defined benefit plan.--For purposes of this 
     subparagraph, the term `large defined benefit plan' means any 
     defined benefit plan which had 100 or more participants who 
     had accrued a benefit under the plan (whether or not vested) 
     as of the last day of the plan year preceding the plan year 
     in which the plan amendment becomes effective.
       ``(iii) Protected accrued benefit.--For purposes of this 
     subparagraph, an accrued benefit shall include any early 
     retirement benefit or retirement-type subsidy (within the 
     meaning of subparagraph (B)(i)), but only with respect to a 
     participant who satisfies (either before or after the 
     effective date of the amendment) the conditions for the 
     benefit or subsidy under the terms of the plan as in effect 
     immediately before such date.''
       (b) Amendment of ERISA.--Section 204(g) of the Employee 
     Retirement Income Security Act of 1974 is amended by adding 
     at the end the following new paragraph:
       ``(4)(A) For purposes of paragraph (1), a plan amendment 
     adopted by a large defined benefit plan shall be treated as 
     reducing accrued benefits of a participant if, under the 
     terms of the plan after the adoption of the amendment, the 
     accrued benefit of the participant may at any time be less 
     than the sum of--
       ``(i) the participant's accrued benefit for years of 
     service before the effective date of the amendment, 
     determined under the terms of the plan as in effect 
     immediately before the effective date, plus
       ``(ii) the participant's accrued benefit determined under 
     the formula applicable to benefit accruals under the current 
     plan as applied to years of service after such effective 
     date.
       ``(B) For purposes of this paragraph, the term `large 
     defined benefit plan' means any defined benefit plan which 
     had 100 or more participants who had accrued a benefit under 
     the plan (whether or not vested) as of the last day of the 
     plan year preceding the plan year in which the plan amendment 
     becomes effective.
       ``(C) For purposes of this paragraph, an accrued benefit 
     shall include any early retirement benefit or retirement-type 
     subsidy (within the meaning of paragraph (2)(A)), but only 
     with respect to a participant who satisfies (either before or 
     after the effective date of the amendment) the conditions for 
     the benefit or subsidy under the terms of the plan as in 
     effect immediately before such date.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan amendments adopted after June 29, 1999.

                 ABRAHAM (AND WYDEN) AMENDMENT NO. 1455

  Mr. ABRAHAM (for himself and Mr. Wyden) proposed an amendment to the 
bill, S. 1429, supra; as follows:

       On page 371, between lines 16 and 17, insert:

     SEC. __. EXPANSION OF DEDUCTION FOR COMPUTER DONATIONS TO 
                   SCHOOLS.

       (a) Extension of Age of Eligible Computers.--Section 
     170(e)(6)(B)(ii) (defining qualified elementary or secondary 
     educational contribution) is amended--
       (1) by striking ``2 years'' and inserting ``3 years'', and
       (2) by inserting ``for the taxpayer's own use'' after 
     ``constructed by the taxpayer''.
       (b) Reacquired Computers Eligible for Donation.--
       (1) In general.--Section 170(e)(6)(B)(iii) (defining 
     qualified elementary or secondary educational contribution) 
     is amended by inserting ``, the person from whom the donor 
     reacquires the property,'' after ``the donor''.
       (2) Conforming amendment.--Section 170(e)(6)(B)(ii) is 
     amended by inserting ``or reaquired'' after ``acquired''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions made in taxable years ending 
     after the date of the enactment of this Act.

[[Page 18552]]



     SEC. __. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS AND SENIOR 
                   CENTERS.

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

     ``SEC. 45E. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS AND 
                   SENIOR CENTERS.

       ``(a) General Rule.--For purposes of section 38, the 
     computer donation credit determined under this section is an 
     amount equal to 30 percent of the qualified computer 
     contributions made by the taxpayer during the taxable year.
       ``(b) Qualified Computer Contribution.--For purposes of 
     this section, the term `qualified computer contribution' has 
     the meaning given the term `qualified elementary or secondary 
     educational contribution' by section 170(e)(6)(B), except 
     that--
       ``(1) such term shall include the contribution of a 
     computer (as defined in section 168(i)(2)(B)(ii)) only if 
     computer software (as defined in section 197(e)(3)(B)) that 
     serves as a computer operating system has been lawfully 
     installed in such computer, and
       ``(2) for purposes of clauses (i) and (iv) of section 
     170(e)(6)(B), such term shall include the contribution of 
     computer technology or equipment to multipurpose senior 
     centers (as defined in section 102(35) of the Older Americans 
     Act of 1965 (42 U.S.C. 3002(35)) to be used by individuals 
     who have attained 60 years of age to improve job skills in 
     computers.
       ``(c) Increased Percentage for Contributions to Entities in 
     Empowerment Zones, Enterprise Communities, and Indian 
     Reservations.--In the case of a qualified computer 
     contribution to an entity located in an empowerment zone or 
     enterprise community designated under section 1391 or an 
     Indian reservation (as defined in section 168(j)(6)), 
     subsection (a) shall be applied by substituting `50 percent' 
     for `30 percent'.
       ``(d) Certain Rules Made Applicable.--For purposes of this 
     section, rules similar to the rules of paragraphs (1) and (2) 
     of section 41(f) and of section 170(e)(6)(A) shall apply.
       ``(e) Termination.--This section shall not apply to taxable 
     years beginning on or after the date which is 3 years after 
     the date of the enactment of the New Millennium Classrooms 
     Act.''
       (b) Current Year Business Credit Calculation.--Section 
     38(b) (relating to current year business credit), as amended 
     by this Act, is amended by striking ``plus'' at the end of 
     paragraph (12), by striking the period at the end of 
     paragraph (13) and inserting ``, plus'', and by adding at the 
     end the following:
       ``(14) the computer donation credit determined under 
     section 45E(a).''
       (c) Disallowance of Deduction by Amount of Credit.--Section 
     280C (relating to certain expenses for which credits are 
     allowable) is amended by adding at the end the following:
       ``(d) Credit for Computer Donations.--No deduction shall be 
     allowed for that portion of the qualified computer 
     contributions (as defined in section 45E(b)) made during the 
     taxable year that is equal to the amount of credit determined 
     for the taxable year under section 45E(a). In the case of a 
     corporation which is a member of a controlled group of 
     corporations (within the meaning of section 52(a)) or a trade 
     or business which is treated as being under common control 
     with other trades or businesses (within the meaning of 
     section 52(b)), this subsection shall be applied under rules 
     prescribed by the Secretary similar to the rules applicable 
     under subsections (a) and (b) of section 52.''
       (d) Limitation on Carryback.--Subsection (d) of section 39 
     (relating to carryback and carryforward of unused credits) is 
     amended by adding at the end the following:
       ``(9) No carryback of computer donation credit before 
     effective date.--No amount of unused business credit 
     available under section 45E may be carried back to a taxable 
     year beginning on or before the date of the enactment of this 
     paragraph.''
       (e) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1, as amended by this 
     Act, is amended by inserting after the item relating to 
     section 45D the following:

``Sec. 45E. Credit for computer donations to schools and senior 
              centers.''
       (f) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to contributions 
     made in taxable years beginning after the date of the 
     enactment of this Act.
       (2) Certain contributions.--The amendments made by this 
     section shall apply to contributions made to an organization 
     or entity not described in section 45E(c) of the Internal 
     Revenue Code of 1986, as added by subsection (a), in taxable 
     years beginning after the date that is one year after the 
     date of the enactment of this Act.
                                 ______
                                 

                      ASHCROFT AMENDMENT NO. 1456

  (Ordered in lie on the table.)
  Mr. ASHCROFT submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       Beginning on page 375, line 1, strike all through line 2, 
     page 378, line 6, and insert the following:
       ``(D) Landfill gas facility.--
       ``(i) In general.--In the case of a facility using landfill 
     gas to produce electricity, the term `qualified facility' 
     mans any facility of the taxpayer which is originally placed 
     in service after December 31, 1999, and before July 1, 2004.
       ``(ii) Landfill gas.--In the case of a facility using 
     landfill gas, such term shall include equipment and housing 
     (not including wells and related systems required to collect 
     and transmit gas to the production facility) required to 
     generate electricity which are owned by the taxpayer and so 
     placed in service.
       ``(E) Special rule.--In the case of a qualified facility 
     described in subparagraph (C), the 10-year period referred to 
     in subsection (a) shall be treated as beginning no earlier 
     than January 1, 2000.''
       (b) Expansion of Qualified Energy Resources.--
       (1) In general.--Section 45(c)(1) (defining qualified 
     energy resources) is amended by striking `and' at the end of 
     subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting a comma, and by adding at the 
     end the following new subparagraphs:
       ``(C) biomass (other than closed-loop biomass), and
       ``(B) landfill gas.
       ``(2) Definitions.--Section 45(c) is amended by 
     redesignating paragraph (3) as paragraph (6) and inserting 
     after paragraph (2) the following new paragraphs:
       ``(3) Biomass.--The term `biomass' means any solid, 
     nonhazardous, cellulosic waste material which is segregated 
     from other waste materials and which is derived from--
       ``(A) any of the following forest-related resources: mill 
     residues, precommercial thinnings, slash, and brush, but not 
     including old-growth timber,
       ``(B) urban sources, including waste pallets, crates, and 
     dunnage, manufacturing and construction wood wastes, and 
     landscape or right-of-way tree trimmings, but not including 
     unsegregated municipal solid waste (garbage) or paper that is 
     commonly recycled, or
       ``(C) agriculture sources, including orchard tree crops, 
     vineyard, grain, legumes, sugar, and other crop by-products 
     or residues.
       ``(4) Landfill gas.--The term `landfill gas' means gas from 
     the decomposition of any household solid waste, commercial 
     solid waste, and industrial solid waste disposed of in a 
     municipal solid waste landfill unit (as such terms are 
     defined in regulations promulgated under subtitle D of the 
     Solid Waste Disposal Act (42 U.S.C. 6941 et seq.)).
       ``(c) Special Rules.--Section 45(d) (relating to 
     definitions and special rules) is amended by adding at the 
     end of the following new paragraph:
       ``(6) Proportional credit for facility using coal to co-
     fire with certain biomass.--In the case of a qualified 
     facility as defined in subsection (c)(3)(C) using coal to co-
     fire with biomass (other than closed-loop biomass), the 
     amount of the credit determined under subsection (a) for the 
     taxable year shall be reduced by the percentage coal 
     comprises (on a Btu basis) of the average fuel input of the 
     facility for the taxable year.''
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.
                                 ______
                                 

                      ASHCROFT AMENDMENT NO. 1457

  Ordered to lie on the table.)
  Mr. ASHCROFT submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       At the appropriate place, insert:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Social Security and Medicare 
     Safe Deposit Box Act of 1999''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--The Congress finds that--
       (1) the Congress and the President joined together to enact 
     the Balanced Budget Act of 1997 to end decades of deficit 
     spending;
       (2) strong economic growth and fiscal discipline have 
     resulted in strong revenue growth into the Treasury;
       (3) the combination of these factors is expected to enable 
     the Government to balance its budget without the Social 
     Security surpluses;
       (4) the Congress has chosen to allocate in this Act all 
     Social Security surpluses toward saving Social Security and 
     Medicare;
       (5) amounts so allocated are even greater than those 
     reserved for Social Security and Medicare in the President's 
     budget, will not require an increase in the statutory debt 
     limit, and will reduce debt held by the public until Social 
     Security and Medicare reform is enacted; and
       (6) this strict enforcement is needed to lock away the 
     amounts necessary for legislation to save Social Security and 
     Medicare.
       (b) Purpose--It is the purpose of this Act to prohibit the 
     use of Social Security surpluses for any purpose other than 
     reforming Social Security and Medicare.

     SEC. 3. PROTECTION OF SOCIAL SECURITY SURPLUSES.

       (a) Points of Order To Protect Social Security Surpluses.--
     Section 312 of the Congressional Budget Act of 1974 is 
     amended by adding at the end the following new subsection:

[[Page 18553]]

       ``(g) Points of Order To Protect Social Security 
     Surpluses.--
       ``(1) Concurrent resolutions on the budget.--It shall not 
     be in order in the House of Representatives or the Senate to 
     consider any concurrent resolution on the budget, or 
     conference report thereon or amendment thereto, that would 
     set forth an on-budget deficit for any fiscal year.
       ``(2) Subsequent legislation.--It shall not be order in the 
     House of Representatives or the Senate to consider any bill, 
     joint resolution, amendment, motion, or conference report 
     if--
       ``(A) the enactment of that bill or resolution as reported;
       ``(B) the adoption and enactment of that amendment; or
       ``(C) the enactment of that bill or resolution in the form 
     recommended in that conference report,

     would cause or increase an on-budget deficit for any fiscal 
     year.
       ``(3) Exception.--The point of order set forth in paragraph 
     (2) shall not apply to Social Security reform legislation or 
     Medicare reform legislation as defined by section 5(c) of the 
     Social Security and Medicare Safe Deposit Box Act of 1999.
       ``(4) Definition.--For purposes of this section, the term 
     `on-budget deficit', when applied to a fiscal year, means the 
     deficit in the budget as set forth in the most recently 
     agreed to concurrent resolution on the budget pursuant to 
     section 301(a)(3) for that fiscal year.''.
       (b) Content of Concurrent Resolution on the Budget.--
     Section 301(a) of the Congressional Budget Act of 1974 is 
     amended by redesignating paragraphs (6) and (7) as paragraphs 
     (7) and (8), respectively, and by inserting after paragraph 
     (5) the following new paragraph:
       ``(6) the receipts, outlays, and surplus or deficit in the 
     Federal Old-Age and Survivors Insurance Trust Fund and the 
     Federal Disability Insurance Trust Fund, combined, 
     established by title II of the Social Security Act,''.
       (c) Super Majority Requirement.--(1) Section 904(c)(1) of 
     the Congressional Budget Act of 1974 is amended by inserting 
     ``312(g),'' and ``310(d)(2),''.
       (2) Section 904(d)(2) of the Congressional Budget Act of 
     1974 is amended by inserting ``312(g),'' after 
     ``310(d)(2),''.

     SEC. 4. REMOVING SOCIAL SECURITY FROM BUDGET PRONOUNCEMENTS.

       (a) In General.--Any official statement issued by the 
     Office of Management and Budget, the Congressional Budget 
     Office, or any other agency or instrumentality of the Federal 
     Government of surplus or deficit totals of the budget of the 
     United States Government as submitted by the President or of 
     the surplus or deficit totals of the congressional budget, 
     and any description of, or reference to, such totals in any 
     official publication or material issued by either of such 
     Offices or any other such agency or instrumentality, shall 
     exclude the outlays and receipts of the old-age, survivors, 
     and disability insurance program under title II of the Social 
     Security Act (including the Federal Old-Age and Survivors 
     Insurance Trust Fund and the Federal Disability Insurance 
     Trust Fund) and the related provisions of the Internal 
     Revenue Code of 1986.
       (b) Separate Social Security Budget Documents.--The 
     excluded outlays and receipts of the old-age, survivors, and 
     disability insurance program under title II of the Social 
     Security Act shall be submitted in separate Social Security 
     budget documents.

     SEC. 5. EFFECTIVE DATE.

       (a) In General.--This Act shall take effect upon the date 
     of its enactment and the amendments made by this Act shall 
     apply only to fiscal year 2000 and subsequent fiscal years.
       (b) Expiration.--Sections 301(a)(6) and 312(g) shall expire 
     upon the enactment of Social Security reform legislation and 
     Medicare reform legislation.
       (c) Definitions.--
       (1) Social security reform legislation.--The term ``Social 
     Security reform legislation'' means a bill or a joint 
     resolution that is enacted into law and includes a provision 
     stating the following: ``For purposes of the Social Security 
     and Medicare Safe Deposit Box Act of 1999, this Act 
     constitutes Social Security reform legislation.''.
       (2) The term ``Medicare reform legislation'' means a bill 
     or a joint resolution that is enacted into law and includes a 
     provision stating the following: ``For purposes of the Social 
     Security and Medicare Safe Deposit Box Act of 1999, this Act 
     constitutes Medicare reform legislation.''.
                                 ______
                                 

             COVERDELL (AND TORRICELLI) AMENDMENT NO. 1458

  (Ordered to lie on the table.)
  Mr. COVERDELL (for himself and Mr. Torricelli) submitted an amendment 
intended to be proposed by them to the bill, S. 1429, supra; as 
follows:

       At the end of title XI, insert the following:

     SEC.    . SENSE OF THE SENATE REGARDING SAVINGS INCENTIVES.

       It is the sense of the Senate that before December 31, 
     1999, Congress should pass legislation that creates savings 
     incentives by providing a partial Federal income tax 
     exclusion for income derived from interest and dividends of 
     no less than $400 for married taxpayers and $200 for single 
     taxpayers.
                                 ______
                                 

                     FITZGERALD AMENDMENT NO. 1459

  (Ordered to lie on the table.)
  Mr. FITZGERALD submitted an amendment intended to be proposed by him 
to the bill, S. 1429, supra; as follows:

       At the appropriate place, insert the following:
       Section 162(o) of the Internal Revenue Code of 1986 is 
     revised to read as follows:
       (o) Treatment of Certain Reimbursed Expenses of Delivery 
     Employees.--
       (1) General rule.--In the case of any qualified employee 
     who receives qualified reimbursement for the expenses 
     incurred by such employee for the use of a vehicle in 
     performing such services--
       (A) The amount allowable as a deduction under this chapter 
     for the use of a vehicle in performing such services shall be 
     equal to the amount of such qualified reimbursements; and
       (B) Such qualified reimbursements shall be treated as paid 
     under a reimbursement or other expense allowance for purposes 
     of Section 62(a)(2)(A) (and Section 62(c) shall not apply to 
     such qualified reimbursements).
       (2) Definitions.--For purposes of this subsection--
       (A) Qualified employee.--The term ``qualified employee'' 
     means--
       (i) Rural mail carrier.--Any employee of the United States 
     Postal Service who performs services involving the collection 
     and delivery of mail on a rural route; and
       (ii) Private courier.--Any individual who--
       (a) is employed by a person that is engaged in the trade or 
     business of transporting property belonging to third parties 
     and that is neither the seller, lessor, or licensor, not the 
     buyer, lessee, or licensee of the property;
       (b) operates a qualified vehicle to transport property to 
     perform the duties of his employment; and
       (c) does not transport passengers.
       (B) Qualified reimbursements.--The term ``qualified 
     reimbursements'' means--
       (i) Rural mail carrier.--In the case of a rural mail 
     carrier, the amounts paid by the United States Postal Service 
     to an employee as an equipment maintenance allowance under 
     the 1991 Collective Bargaining Agreement between the United 
     States Postal Service and the National Rural Letter Carrier 
     Association and amounts paid as an equipment maintenance 
     allowance by such Postal Service under later collective 
     bargaining agreements that supersede the 1991 agreement, 
     provided such amounts do not exceed the amounts that would 
     have been paid under the 1991 agreement, adjusted for changes 
     in the Consumer Price Index (as defined in Section 1(f)(5)) 
     since 1991; and
       (ii) Private couriers.--In the case of a private courier, 
     54 percent of the amounts paid by the employer as a part of a 
     commission payment arrangement, as reimbursement for business 
     expenses incurred in operating a qualified vehicle.
       (C) Qualified vehicle.--The term ``Qualified vehicle'' 
     means any automobile, light truck, or van whose gross vehicle 
     weight rating does not exceed 23,500 pounds.
       (D) Commission payment arrangement.--The term ``commission 
     payment arrangement'' means the compensation agreement under 
     which a private courier is paid an amount for each delivery 
     equal to a specified percentage of the amount paid by the 
     customer with respect to that delivery, and is not separately 
     reimbursed for any expenses described in subparagraph (2)(B).
                                 ______
                                 

                   STEVENS AMENDMENTS NOS. 1460-1461

  (Ordered to lie on the table.)
  Mr. STEVENS submitted two amendments intended to be proposed by him 
to the bill, S. 1429, supra; as follows:

                           Amendment No. 1460

       On page 216, line 6 after ``FARM'' insert ``, FISHING,''.
       On page 216, line 15, after ``eligible farming business'' 
     insert ``or commercial fishing''.
       On page 216, line 18, strike ``Farm and Ranch Risk 
     Management Account'' and insert in lieu thereof ``Farm, 
     Fishing, and Ranch Risk Management Account''.
       On page 216, line 19 strike ``FARRM'' and insert in lieu 
     thereof ``FFARRM''.
       On page 216, line 20, strike ``(b)'' and insert in lieu 
     thereof ``(b)(1)''.
       On page 217, line 2, insert ``or commercial fishing'' 
     before the period.
       On line 217, between lines 2 and 3 insert the following new 
     paragraph:
       ``(2) Distributions from a FFARRM Account may not be used 
     to purchase, lease, or finance any new fishing vessel, add 
     capacity to any fishery, or otherwise contribute to the 
     overcapitalization of any fishery. The Secretary of Commerce 
     shall implement regulations to enforce this paragraph.''.
       On page 217, line 3, strike ``(c)'' and insert in lieu 
     thereof ``(c)(1)''.
       On page 217, between lines 7 and 8 insert the following new 
     paragraph:
       ``(2) Commercial fishing.--For purposes of this section, 
     the term `commercial fishing' is

[[Page 18554]]

     defined under Section (3) of the Magnuson-Stevens Fishery 
     Conservation and Management Act (16 U.S.C. 1802).''.
       On page 221, line 5, strike ``FARMING''.
       On page 221, line 8, insert ``or commercial fishing'' 
     before the comma.
       On page 221, line 15, insert ``or commercial fishing'' 
     before the period.
       On page 225, strike line 21, and insert in lieu thereof:
     ``468B the following:

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


                           Amendment No. 1461

       At the appropriate place, insert the following new section.

     SEC.  . EXTENSION OF ACCELERATED COST RECOVERY TREATMENT FOR 
                   QUALIFIED PROPERTY ON INDIAN RESERVATIONS.

       (a) Section 168(j) of the Internal Revenue Code of 1986 
     (relating to property on Indian reservations) is amended by 
     striking ``December 31, 2003'' at the end of paragraph (1) 
     and inserting ``December 31, 2009''.
                                 ______
                                 

                      BINGAMAN AMENDMENT NO. 1462

  (Ordered to lie on the table.)
  Mr. BINGAMAN submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. SENSE OF THE SENATE REGARDING INVESTMENT IN 
                   EDUCATION.

       (a) Findings.--The Senate finds the following:
       (1) The Republican tax plan requires cuts in discretionary 
     spending of $775,000,000,000 over the next 10 years.
       (2) If defense programs are funded at the level requested 
     by the President, funding for domestic programs, including 
     those providing funds for public schools, will have to be cut 
     by at least 38 percent by 2009.
       (3) Such cuts in funding for public schools would deny--
       (A) access to critical early education services to 430,000 
     of the 835,000 young children who would otherwise be served 
     by Head Start in fiscal year 2009;
       (B) services to 5,900,000 children under the program for 
     disadvantaged children under title I of the Elementary and 
     Secondary Education Act of 1965, almost \1/2\ of those who 
     would otherwise be served;
       (C) access to Reading Excellence programs to 480,000 
     children, making those children less likely to reach the goal 
     of being able to read by the end of the third grade; and
       (D) the opportunity to learn in smaller classes in the 
     earlier grades to 1,000,000 children.
       (4) If discretionary cuts are applied across the board, 
     funding under the Individuals With Disabilities Education Act 
     (IDEA) would be cut by $3,400,000,000 by the year 2009, 
     resulting in a reduction in the Federal share of funding, 
     rather than the increase in funding requested by school 
     boards and administrators across the Nation.
       (5) If the Federal share under IDEA is increased from its 
     current level of 10 percent, then other education programs 
     would experience even deeper reductions, denying more 
     children access to services.
       (6) The Pell grant, which benefits nearly 4,000,000 
     students, would have the maximum grant level reduced to 
     $2175, from the current level of $3850.
       (7) Such a level in Pell grants would be the lowest level 
     since 1987, and would deny low and middle income students 
     critical financial aid, increasing the cost of attending 
     college.
       (8) Nearly 500,000 students would be denied the opportunity 
     to work their way through college with the help of the work-
     study program.
       (9) Nearly 500,000 disadvantaged students would be denied 
     extra help in preparing for college through the TRIO and 
     Gear-up programs.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that $132 million should be shifted from tax breaks that 
     disproportionately benefit upper income taxpayers to sustain 
     our investment in public education and prepare children for 
     the 21st Century, including our investment in programs such 
     as IDEA special education, Pell grant, and Head Start, and to 
     fully fund the class size initiative.
                                 ______
                                 

                       STEVENS AMENDMENT NO. 1463

  (Ordered to lie on the table.)
  Mr. STEVENS submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       On page 375, redesignate existing subparagraph (E) as 
     subparagraph (F) and insert the following new subparagraph:
       ``(E) Fishing operation.--In the case of a fishing 
     operation using fish oil to generate heat, the term 
     `qualified facility' means any facility of the taxpayer 
     placed in service before July 1, 2004.
       On page 376, line 9 strike ``and''.
       On page 376, line 10 insert at the end ``; and''
       ``(D) fish oil.''.
       On page 377, line 17 after the period insert the following 
     new paragraph:
       ``(6) Fish oil.--The term `fish oil' means fish oil used as 
     an energy source by a taxpayer in connection with the fishing 
     operation of the taxpayer.''.
       On page 378, between lines 11 and 12 insert the following 
     new subsections:
       ``(d) Determination of Credit for Fish Oil.--Section 45(a) 
     of the Internal Revenue Code of 1986 is amended to read as 
     follows:
       ``(a) General Rule.--For the purposes of section 38, the 
     renewable energy production credit for any taxable year is an 
     amount equal to the sum of--
       ``(1) the product of--
       ``(A) 1.5 cents, multiplied by
       ``(B) the kilowatt hours of electricity--
       ``(i) produced by the taxpayer--
       ``(I) from qualified energy resources, and
       ``(II) at a qualified facility during the 10 year period 
     beginning on the date the facility was originally placed in 
     service, and
       ``(ii) sold by the taxpayer to an unrelated person during 
     the taxable year, and
       ``(2) the product of--
       ``(A) .0004967 cents, multiplied by
       ``(B) the Btus of heat generated and used by the taxpayer--
       ``(i) from qualified energy resources described in 
     subsection (c)(1)(E), and
       ``(ii) at a qualified facility (including a fishing boat 
     used in the fishing operation of the taxpayer).
       ``(e) Conforming Amendments.--
       (1) Section 38(b)(8) and section 39(d)(3) of the Internal 
     Revenue Code of 1986 are each amended by striking 
     ``electricity'' each place it appears and inserting 
     ``energy''.
       (2) The table of contents for subpart D of part IV of 
     subchapter A of chapter 1 of such Code is amended by striking 
     the item relating to section 45 and inserting the following:

``Sec. 45. energy produced for certain renewable resources.''
       (3) The heading of section 45 of such Code is amended by 
     striking ``ELECTRICITY'' and inserting ``ENERGY''.''.
       On page 378, line 12 strike ``(d) and insert in lieu 
     thereof ``(f)''.
                                 ______
                                 

                 HATCH (AND OTHERS) AMENDMENT NO. 1464

  (Ordered to lie on the table.)
  Mr. HATCH (for himself, Mr. Mack, and Mr. Coverdell) submitted an 
amendment intended to be proposed by them to the bill, S. 1429, supra; 
as follows:

       At the appropriate place, insert:

     SECTION 1. DETERMINING RENTS FROM REAL PROPERTY.

       (a) Section 1022(b) is amended by adding after paragraph 
     (2):
       (3) Determining rents from real property.--
       (A)(i) Paragraph (1) of section 856(d) is amended by 
     striking ``adjusted bases'' in each place that it occurs and 
     inserting ``fair market values'' in each such place.
       (ii) The amendment made by this paragraph shall apply to 
     taxable years beginning after December 31, 1999.
       (B)(i) Clause (i) of section 856(d)(2)(B) is amended by 
     striking ``number'' and inserting ``value.''
       (ii) The amendment made by this paragraph shall apply to 
     amounts received or accrued in taxable years beginning after 
     December 31, 1999, except for amounts paid pursuant to leases 
     in effect on July 12, 1999 or pursuant to a binding contract 
     in effect on such date and at all times thereafter.
       (b) Section 1026(b)(1) is amended by adding after 
     subparagraph (B):
       (C) Limitation on transition rules.--Subparagraph (A) shall 
     cease to apply to securities of a corporation held, acquired, 
     or received, directly or indirectly, by a real estate 
     investment trust as of the first day after July 12, 1999, on 
     which such trust acquires any additional securities of such 
     corporation other than--
       (i) pursuant to a binding contract in effect on such date 
     and at all times thereafter, or
       (ii) in a reorganization (as so defined) with another 
     corporation the securities of which are described in 
     paragraph (1)(A) of this subsection.
                                 ______
                                 

              SANTORUM (AND FEINSTEIN) AMENDMENT NO. 1465

  (Ordered to lie on the table.)
  Mr. SANTORUM (for himself and Mrs. Feinstein) submitted an amendment 
intended to be proposed by them to the bill, S. 1429, supra; as 
follows:

       On page 286, line 18, strike ``2004'' and insert ``2005''.
       On page 288, strike line 5 and insert:
       (c) Adjustment of State Ceiling for Increases in Cost-of-
     Living.--Paragraph (3) of section 42(h) (relating to housing 
     credit dollar amount for agencies), as amended by subsection 
     (b), is amended by adding at the end the following new 
     subparagraph:
       ``(I) Cost-of-living adjustment.--
       ``(i) In general.--In the case of a calendar year after 
     2005, the $1.75 amount in subparagraph (H) 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

[[Page 18555]]

     year by substituting `calendar year 2004' for `calendar year 
     1992' in subparagraph (B) thereof.

       ``(ii) Rounding.--Any increase under clause (i) which is 
     not a multiple of 5 cents shall be rounded to the next lowest 
     multiple of 5 cents.''.
       (d) Conforming Amendments.--
       On page 288, line 19, strike ``(d)'' and insert ``(e)''.
       On page 347, line 13, strike ``2003'' and insert ``2004''.
                                 ______
                                 

                      HOLLINGS AMENDMENT NO. 1466

  (Ordered to lie on the table.)
  Mr. HOLLINGS submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       Strike all after line 5 on page 1.
                                 ______
                                 

                        FRIST AMENDMENT NO. 1467

  (Ordered to lie on the table.)
  Mr. FRIST submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       At the end of the bill, add the following:

     SEC. __. SENSE OF THE SENATE ON MEDICARE RESERVE FUND.

       (a) Findings.--The Senate finds that--
       (1) the Congressional budget plan has $505,000,000,000 over 
     ten years in unallocated budget surpluses that could be used 
     for long-term medicare reform, other priorities, or debt 
     reduction;
       (2) the Congressional budget resolution for fiscal year 
     2000 already has set aside $90,000,000,000 over ten years 
     through a reserve fund for long-term medicare reform 
     including prescription drug coverage;
       (3) the President estimates that his medicare proposal will 
     cost $46,000,000,000 over 10 years; and
       (4) thus the Congressional budget resolution provides more 
     than adequate resources for medicare reform, including 
     prescription drugs.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) the unallocated on-budget surpluses over the next 10 
     years provide adequate resources and that the Congressional 
     budget resolution for fiscal year 2000 provides a sound 
     framework for allocating resources to medicare to modernize 
     medicare benefits, improve the solvency of the program, and 
     improve coverage of prescription drugs; and
       (2) Congress should act to accomplish these goals for the 
     medicare program.
                                 ______
                                 

                        SNOWE AMENDMENT NO. 1468

  (Ordered to lie on the table.)
  Ms. SNOWE submitted an amendment intended to be proposed by her to 
the bill, S. 1429, supra; as follows:

       On page 32, strike lines 12 through 14, and insert:
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2005.

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

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

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

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year an amount equal to the 
     interest paid by the taxpayer during the taxable year on any 
     qualified education loan.
       ``(b) Maximum Credit.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     credit allowed by subsection (a) for the taxable year shall 
     not exceed $1,500.
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--If the modified adjusted gross income of 
     the taxpayer for the taxable year exceeds $50,000 ($80,000 in 
     the case of a joint return), the amount which would (but for 
     this paragraph) be allowable as a credit under this section 
     shall be reduced (but not below zero) by the amount which 
     bears the same ratio to the amount which would be so 
     allowable as such excess bears to $20,000.
       ``(B) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income determined 
     without regard to sections 911, 931, and 933.
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning after 2005, the $50,000 and $80,000 amounts 
     referred to in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `2004' for `1992'.
       ``(D) Rounding.--If any amount as adjusted under 
     subparagraph (C) is not a multiple of $50, such amount shall 
     be rounded to the nearest multiple of $50.
       ``(c) Dependents Not Eligible for Credit.--No credit shall 
     be allowed by this section to an individual for the taxable 
     year if a deduction under section 151 with respect to such 
     individual is allowed to another taxpayer for the taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins.
       ``(d) Limit on Period Credit Allowed.--A credit shall be 
     allowed under this section only with respect to interest paid 
     on any qualified education loan during the first 60 months 
     (whether or not consecutive) in which interest payments are 
     required. For purposes of this paragraph, any loan and all 
     refinancings of such loan shall be treated as 1 loan.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Qualified education loan.--The term `qualified 
     education loan' has the meaning given such term by section 
     221(e)(1).
       ``(2) Dependent.--The term `dependent' has the meaning 
     given such term by section 152.
       ``(f) Special Rules.--
       ``(1) Denial of double benefit.--No credit shall be allowed 
     under this section for any amount taken into account for any 
     deduction under any other provision of this chapter.
       ``(2) Married couples must file joint return.--If the 
     taxpayer is married at the close of the taxable year, the 
     credit shall be allowed under subsection (a) only if the 
     taxpayer and the taxpayer's spouse file a joint return for 
     the taxable year.
       ``(3) Marital status.--Marital status shall be determined 
     in accordance with section 7703.''
       (b) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 25A the 
     following new item:

``Sec. 25B. Interest on higher education loans.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to any qualified education loan (as defined in 
     section 25B(e)(1) of the Internal Revenue Code of 1986, as 
     added by this section) incurred on, before, or after the date 
     of the enactment of this Act, but only with respect to any 
     loan interest payment due after December 31, 2004.
                                 ______
                                 

                         KYL AMENDMENT NO. 1469

  (Ordered to lie on the table.)
  Mr. KYL submitted an amendment intended to be proposed by him to the 
bill, S. 1429, supra; as follows:

       Beginning on page 226, line 1, strike through page 237, 
     line 5, and insert:

            TITLE VII--ESTATE AND GIFT TAX RELIEF PROVISIONS

  Subtitle A--Repeal of Estate, Gift, and Generation-Skipping Taxes; 
                  Repeal of Step Up in Basis At Death

     SEC. 701. REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING 
                   TAXES.

       (a) In General.--Subtitle B is hereby repealed.
       (b) Effective Date.--The repeal made by subsection (a) 
     shall apply to the estates of decedents dying, and gifts and 
     generation-skipping transfers made, after December 31, 2007.

     SEC. 702. TERMINATION OF STEP UP IN BASIS AT DEATH.

       (a) Termination of Application of Section 1014.--Section 
     1014 (relating to basis of property acquired from a decedent) 
     is amended by adding at the end the following:
       ``(f) Termination.--In the case of a decedent dying after 
     December 31, 2007, this section shall not apply to property 
     for which basis is provided by section 1022.''
       (b) Conforming Amendment.--Subsection (a) of section 1016 
     (relating to adjustments to basis) is amended by striking 
     ``and'' at the end of paragraph (26), by striking the period 
     at the end of paragraph (27) and inserting ``; and'', and by 
     adding at the end the following:
       ``(28) to the extent provided in section 1022 (relating to 
     basis for certain property acquired from a decedent dying 
     after December 31, 2007).''

     SEC. 703. CARRYOVER BASIS AT DEATH.

       (a) General Rule.--Part II of subchapter O of chapter 1 
     (relating to basis rules of general application) is amended 
     by inserting after section 1021 the following:

     ``SEC. 1022. CARRYOVER BASIS FOR CERTAIN PROPERTY ACQUIRED 
                   FROM A DECEDENT DYING AFTER DECEMBER 31, 2007.

       ``(a) Carryover Basis.--Except as otherwise provided in 
     this section, the basis of carryover basis property in the 
     hands of a person acquiring such property from a decedent 
     shall be determined under section 1015.
       ``(b) Carryover Basis Property Defined.--
       ``(1) In general.--For purposes of this section, the term 
     `carryover basis property' means any property--
       ``(A) which is acquired from or passed from a decedent who 
     died after December 31, 2007, and
       ``(B) which is not excluded pursuant to paragraph (2).
     The property taken into account under subparagraph (A) shall 
     be determined under section 1014(b) without regard to 
     subparagraph (A) of the last sentence of paragraph (9) 
     thereof.
       ``(2) Certain property not carryover basis property.--The 
     term `carryover basis property' does not include--

[[Page 18556]]

       ``(A) any item of gross income in respect of a decedent 
     described in section 691,
       ``(B) property which was acquired from the decedent by the 
     surviving spouse of the decedent, the value of which would 
     have been deductible from the value of the taxable estate of 
     the decedent under section 2056, as in effect on the day 
     before the date of enactment of the Taxpayer Refund Act of 
     1999, and
       ``(C) any includible property of the decedent if the 
     aggregate adjusted fair market value of such property does 
     not exceed $2,000,000.
     For purposes of this paragraph and paragraph (3), the term 
     `adjusted fair market value' means, with respect to any 
     property, fair market value reduced by any indebtedness 
     secured by such property.
       ``(3) Phasein of carryover basis if includible property 
     exceeds $1,300,000.--
       ``(A) In general.--If the adjusted fair market value of the 
     includible property of the decedent exceeds $1,300,000, but 
     does not exceed $2,000,000, the amount of the increase in the 
     basis of such property which would (but for this paragraph) 
     result under section 1014 shall be reduced by the amount 
     which bears the same ratio to such increase as such excess 
     bears to $700,000.
       ``(B) Allocation of reduction.--The reduction under 
     subparagraph (A) shall be allocated among only the includible 
     property having net appreciation and shall be allocated in 
     proportion to the respective amounts of such net 
     appreciation. For purposes of the preceding sentence, the 
     term `net appreciation' means the excess of the adjusted fair 
     market value over the decedent's adjusted basis immediately 
     before such decedent's death.
       ``(4) Includible property.--
       ``(A) In general.--For purposes of this subsection, the 
     term `includible property' means property which would be 
     included in the gross estate of the decedent under any of the 
     following provisions as in effect on the day before the date 
     of the enactment of the Taxpayer Refund Act of 1999:
       ``(i) Section 2033.
       ``(ii) Section 2038.
       ``(iii) Section 2040.
       ``(iv) Section 2041.
       ``(v) Section 2042(a)(1).
       ``(B) Exclusion of property acquired by spouse.--Such term 
     shall not include property described in paragraph (2)(B).
       ``(c) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this section.''
       (b) Miscellaneous Amendments Related To Carryover Basis.--
       (1) Capital gain treatment for inherited art work or 
     similar property.--
       (A) In general.--Subparagraph (C) of section 1221(3) 
     (defining capital asset) is amended by inserting ``(other 
     than by reason of section 1022)'' after ``is determined''.
       (B) Coordination with section 170.--Paragraph (1) of 
     section 170(e) (relating to certain contributions of ordinary 
     income and capital gain property) is amended by adding at the 
     end the following: ``For purposes of this paragraph, the 
     determination of whether property is a capital asset shall be 
     made without regard to the exception contained in section 
     1221(3)(C) for basis determined under section 1022.''
       (2) Definition of Executor.--Section 7701(a) (relating to 
     definitions) is amended by adding at the end the following:
       ``(47) Executor.--The term `executor' means the executor or 
     administrator of the decedent, or, if there is no executor or 
     administrator appointed, qualified, and acting within the 
     United States, then any person in actual or constructive 
     possession of any property of the decedent.''
       (3) Clerical amendment.--The table of sections for part II 
     of subchapter O of chapter 1 is amended by adding at the end 
     the following new item:

``Sec. 1022. Carryover basis for certain property acquired from a 
              decedent dying after December 31, 2007.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after December 31, 
     2007.

    Subtitle B--Reductions of Estate, Gift, and Generation-Skipping 
                             Transfer Taxes

     SEC. 711. REDUCTIONS OF ESTATE, GIFT, AND GENERATION-SKIPPING 
                   TRANSFER TAXES.

       (a) Maximum Rate of Tax Reduced to 50 Percent.--The table 
     contained in section 2001(c)(1) is amended by striking the 2 
     highest brackets and inserting the following:
$1,025,800, plus 50% of the excess over $2,500,000.''..................
       (b) Repeal of Phaseout of Graduated Rates.--Subsection (c) 
     of section 2001 is amended by striking paragraph (2).
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after December 31, 2000.

     SEC. 712. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES 
                   REPLACED WITH UNIFIED EXEMPTION AMOUNT.

       (a) In General.--
       (1) Estate tax.--Part IV of subchapter A of chapter 11 is 
     amended by inserting after section 2051 the following new 
     section:

     ``SEC. 2052. EXEMPTION.

       ``(a) In general.--For purposes of the tax imposed by 
     section 2001, the value of the taxable estate shall be 
     determined by deducting from the value of the gross estate an 
     amount equal to the excess (if any) of--
       ``(1) the exemption amount for the calendar year in which 
     the decedent died, over
       ``(2) the sum of--
       ``(A) the aggregate amount allowed as an exemption under 
     section 2521 with respect to gifts made by the decedent after 
     December 31, 2004, and
       ``(B) the aggregate amount of gifts made by the decedent 
     for which credit was allowed by section 2505 (as in effect on 
     the day before the date of the enactment of the Taxpayer 
     Refund Act of 1999).
     Gifts which are includible in the gross estate of the 
     decedent shall not be taken into account in determining the 
     amounts under paragraph (2).
       ``(b) Exemption Amount.--For purposes of subsection (a), 
     the term `exemption amount' means the amount determined in 
     accordance with the following table:

                                                       ``IThe exemption
                                                         caleamount is:
      2004....................................................$850,000 
      2005....................................................$950,000 
      2006 or thereafter..................................$1,000,000.''
       (2) Gift tax.--Subchapter C of chapter 12 (relating to 
     deductions) is amended by inserting before section 2522 the 
     following new section:

     ``SEC. 2521. EXEMPTION.

       ``(a) In General.--In computing taxable gifts for any 
     calendar year, there shall be allowed as a deduction in the 
     case of a citizen or resident of the United States an amount 
     equal to the excess of--
       ``(1) the exemption amount determined under section 2052 
     for such calendar year, over
       ``(2) the sum of--
       ``(A) the aggregate amount allowed as an exemption under 
     this section for all preceding calendar years after 2004, and
       ``(B) the aggregate amount of gifts for which credit was 
     allowed by section 2505 (as in effect on the day before the 
     date of the enactment of the Taxpayer Refund Act of 1999).''
       (b) Repeal of Unified Credits.--
       (1) Section 2010 (relating to unified credit against estate 
     tax) is hereby repealed.
       (2) Section 2505 (relating to unified credit against gift 
     tax) is hereby repealed.
       (c) Conforming Amendments.--
       (1)(A) Subparagraph (B) of section 2001(b)(1) is amended by 
     inserting before the comma ``reduced by the amount described 
     in section 2052(a)(2)''.
       (B) Subsection (b) of section 2001 is amended by adding at 
     the end the following new sentence: ``For purposes of 
     paragraph (2), the amount of the tax payable under chapter 12 
     shall be determined without regard to the credit provided by 
     section 2505 (as in effect on the day before the date of the 
     enactment of the Taxpayer Refund Act of 1999).''
       (2) Subsection (f) of section 2011 is amended by striking 
     ``, reduced by the amount of the unified credit provided by 
     section 2010''.
       (3) Subsection (a) of section 2012 is amended by striking 
     ``and the unified credit provided by section 2010''.
       (4) Subsection (b) of section 2013 is amended by inserting 
     before the period at the end of the first sentence ``and 
     increased by the exemption allowed under section 2052 or 
     2106(a)(4) (or the corresponding provisions of prior law) in 
     determining the taxable estate of the transferor for purposes 
     of the estate tax''.
       (5) Subparagraph (A) of section 2013(c)(1) is amended by 
     striking ``2010,''.
       (6) Paragraph (2) of section 2014(b) is amended by striking 
     ``2010,''.
       (7) Clause (ii) of section 2056A(b)(12)(C) is amended to 
     read as follows:
       ``(ii) to treat any reduction in the tax imposed by 
     paragraph (1)(A) by reason of the credit allowable under 
     section 2010 (as in effect on the day before the date of the 
     enactment of the Taxpayer Refund Act of 1999) or the 
     exemption allowable under section 2052 with respect to the 
     decedent as such a credit or exemption (as the case may be) 
     allowable to such surviving spouse for purposes of 
     determining the amount of the exemption allowable under 
     section 2521 with respect to taxable gifts made by the 
     surviving spouse during the year in which the spouse becomes 
     a citizen or any subsequent year,''.
       (8) Section 2102 is amended by striking subsection (c).
       (9) Subsection (a) of section 2106 is amended by adding at 
     the end the following new paragraph:
       ``(4) Exemption.--
       ``(A) In general.--An exemption of $60,000.
       ``(B) Residents of possessions of the United States.--In 
     the case of a decedent who is considered to be a nonresident 
     not a citizen of the United States under section 2209, the 
     exemption under this paragraph shall be the greater of--
       ``(i) $60,000, or
       ``(ii) that proportion of $175,000 which the value of that 
     part of the decedent's gross estate which at the time of his 
     death is situated in the United States bears to the value of 
     his entire gross estate wherever situated.
       ``(C) Special rules.--
       ``(i) Coordination with treaties.--To the extent required 
     under any treaty obligation of the United States, the 
     exemption allowed

[[Page 18557]]

     under this paragraph shall be equal to the amount which bears 
     the same ratio to the exemption amount under section 2052 
     (for the calendar year in which the decedent died) as the 
     value of the part of the decedent's gross estate which at the 
     time of his death is situated in the United States bears to 
     the value of his entire gross estate wherever situated. For 
     purposes of the preceding sentence, property shall not be 
     treated as situated in the United States if such property is 
     exempt from the tax imposed by this subchapter under any 
     treaty obligation of the United States.
       ``(ii) Coordination with gift tax exemption and unified 
     credit.--If an exemption has been allowed under section 2521 
     (or a credit has been allowed under section 2505 as in effect 
     on the day before the date of the enactment of the Taxpayer 
     Refund Act of 1999) with respect to any gift made by the 
     decedent, each dollar amount contained in subparagraph (A) or 
     (B) or the exemption amount applicable under clause (i) of 
     this subparagraph (whichever applies) shall be reduced by the 
     exemption so allowed under 2521 (or, in the case of such a 
     credit, by the amount of the gift for which the credit was so 
     allowed).''
       (10) Subsection (c) of section 2107 is amended--
       (A) by striking paragraph (1) and by redesignating 
     paragraphs (2) and (3) as paragraphs (1) and (2), 
     respectively, and
       (B) by striking the second sentence of paragraph (2) (as so 
     redesignated).
       (11) Section 2206 is amended by striking ``the taxable 
     estate'' in the first sentence and inserting ``the sum of the 
     taxable estate and the amount of the exemption allowed under 
     section 2052 or 2106(a)(4) in computing the taxable estate''.
       (12) Section 2207 is amended by striking ``the taxable 
     estate'' in the first sentence and inserting ``the sum of the 
     taxable estate and the amount of the exemption allowed under 
     section 2052 or 2106(a)(4) in computing the taxable estate''.
       (13) Subparagraph (B) of section 2207B(a)(1) is amended to 
     read as follows:
       ``(B) the sum of the taxable estate and the amount of the 
     exemption allowed under section 2052 or 2106(a)(4) in 
     computing the taxable estate.''
       (14) Subsection (a) of section 2503 is amended by striking 
     ``section 2522'' and inserting ``section 2521''.
       (15) Paragraph (1) of section 6018(a) is amended by 
     striking ``the applicable exclusion amount'' and inserting 
     ``the exemption amount under section 2052 for the calendar 
     year which includes the date of death''.
       (16) Subparagraph (A) of section 6601(j)(2) is amended to 
     read as follows:
       ``(A)(i) the amount of the tax which would be imposed by 
     chapter 11 on an amount of taxable estate equal to the sum of 
     $1,000,000 and the exemption amount allowable under section 
     2052, reduced by
       ``(ii) the amount of tax which would be so imposed if the 
     taxable estate equaled such exemption amount, or''.
       (17) The table of sections for part II of subchapter A of 
     chapter 11 is amended by striking the item relating to 
     section 2010.
       (18) The table of sections for subchapter A of chapter 12 
     is amended by striking the item relating to section 2505.
       (d) Effective Date.--The amendments made by this section--
       (1) insofar as they relate to the tax imposed by chapter 11 
     of the Internal Revenue Code of 1986, shall apply to estates 
     of decedents dying after December 31, 2004, and
       (2) insofar as they relate to the tax imposed by chapter 12 
     of such Code, shall apply to gifts made after December 31, 
     2004.

     Subtitle C--Simplification of Generation-Skipping Transfer Tax

                                 ______
                                 

                   ABRAHAM AMENDMENTS NOS. 1470-1471

  (Ordered to lie on the table.)
  Mr. ABRAHAM submitted two amendments intended to be proposed by him 
to the bill, S. 1429, supra; as follows:

                           Amendment No. 1470

       At the appropriate place, insert the following:

     ``SECTION   . SENSE OF THE SENATE ON CAPITAL GAINS TAX CUTS.

       It is the Sense of the Senate that the Senate Conferees to 
     any Conference Committee considering H.R. 2488, shall recede 
     to the House position providing for Capital Gains tax cuts, 
     specifically the capital gains tax cuts provided for in 
     Section 202 of H.R. 2488.
                                  ____


                           Amendment No. 1471

       Replace the current language with the following provisions:
       (1) Raise the 15% income tax rate upper income limit by 
     $10,000 for joint filers, $5,000 for non-joint filers, 
     phased-in as quickly as possible within the limits of the 
     reconciliation instructions, but so as to allow for the 
     inclusion the other proposed provisions;
       (2) Allow married couples filing jointly to file single 
     returns on a combined form where income follows ownership, as 
     well as adjusting upwards by at least $2,000 the income 
     bracket for EITC for married couples filing jointly;
       (3) Phase-out the estate and gift taxes with a full repeal 
     no later than December 31, 2009;
       (4) Exclude the first $500 of interest and dividend income 
     from income taxes, phased-in as quickly as possible within 
     the limits of the reconciliation instructions, but so as to 
     allow for the inclusion the other proposed provisions;
       (5) Cut capital gains tax rates from 20% and 10% to 15% and 
     7.5%, respectively;
       (6) Raise the contribution limitation on all Individual 
     Retirement Accounts to $5,000 per year;
       (7) Raise the contribution limits for Education Savings 
     Accounts to $2,000 per year;
       (8) Increase student loan interest deductibility income 
     limits by at least $10,000, adjust the income limits for 
     married couples filing jointly to twice that of a single 
     taxpayer, use a phase-out range of at least $15,000 for both, 
     and repeal the 60-month rule;
       (9) Exclude from taxation distributions for educational 
     expenses from state-sponsored Prepaid Educational Savings 
     Plans, allow tax-deferral on income from private Prepaid 
     Educational Savings plans, phase-in an exclusion of 
     distributions from all plans for educational expenses, and 
     allow tax-free education withdrawals from Prepaid Savings 
     Plans and Education IRAs;
       (10) Provide a phased-in, above-the-line, deduction for 
     health insurance expenses for which the taxpayer pays at 
     least 50% of the premium;
       (11) Provide an Additional Dependency Deduction to 
     Caretakers to Elderly Family Members;
       (12) Provide a phased-in, above-the-line, deduction for 
     long-term care insurance expenses for which the taxpayer pays 
     at least 50% of the premium;
       (13) Make the Medical Savings Account program permanent, 
     repeal the $750,000 income cap, allow any employer to provide 
     these accounts, lower the minimum deductible to at least 
     $1,000, $2,000 for family coverage, allow MSA contributions 
     equal to 100% of the deductible, allow both employer and 
     employee contributions, and allow MSAs to be part of 
     cafeteria health plans;
       (14) Accelerate the 100% deductibility of health insurance 
     expenses for the self-employed;
       (15) Increase small business equipment expensing 
     limitations to $30,000 per year;
       (16) Provide a permanent extension of the Research and 
     Development Tax Credit;
       (17) Allow farmers and ranchers to contribute up to at 
     least 20% of their annual income to tax-deferred risk 
     management accounts, taxed as regular if withdrawn within no 
     more than five years, and subject to at least a 10% penalty 
     after that, and provide that self-employment taxes are paid 
     upon receipt of the income;
       (18) Not exceed the revenue reduction reconciliation 
     instructions contained in H. Con. Res. 68;
       (19) Sunset all provisions on some day in 2009.
                                 ______
                                 

               HUTCHISON (AND OTHERS) AMENDMENT NO. 1472

  Mrs. HUTCHISON (for herself, Mr. Ashcroft, and Mr. Brownback) 
proposed an amendment to the bill, S. 1429, supra; as follows:

       (1) On page 15, line 14, insert the following to paragraph 
     (c):
       (A) Twice the dollar amount in effect under subparagraph 
     (C) in the case of--
       (i) a joint return for married individuals not filing a 
     combined return under 6013A, or
       (ii) a surviving spouse (as defined in section 2(a)),
       On page 15, line 14, insert the following new paragraph (d) 
     and reorder the remaining paragraphs accordingly:
       (d) Phase-In.--In the case of taxable years before January 
     1, 2004--
       (A) paragraph (2)(A) shall be applied by substituting for 
     ``twice''--
       (i) ``1.778 times'' in the case of taxable years beginning 
     during 2001 and 2002.
       (ii) ``1.889 times'' in the case of the taxable year 2003.
       (2) Alternative Minimum Tax: Modifications to Section 206:
       On page 32, line 3--
       Strike ``1998'' and insert ``2000''.
       On page 32, line 14--
       Strike ``2004'' and insert ``2006.''
       (3) AGI Limitations on Contributions to the Roth IRA: 
     Modification to Sections 302:
       On page 38, line 18, strike ``2000'' and insert ``2002.
       (4) Gift Tax Exclusion: Modification to Section 721:
       On page 236, line 11, strike all of Section 721 and insert 
     the following new section;

     SEC. 721. INCREASE IN ANNUAL GIFT EXCLUSION.

       (a) In General.--Section 2503(b) (relating to exclusions 
     from gifts) is amended--
       (1) by striking ``$10,000'' and inserting ``$20,000.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to gifts made after December 31, 2004.''
       (5) Charitable Contributions for Individuals Who Do Not 
     Itemize; Modifications to Section 808:
       On page 262, strike lines 15 through 17 and insert the 
     following new paragraph:

[[Page 18558]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001 and ending before January 1, 2004.
       (6) International Tax Provisions: Modifications to Sections 
     901 and 902:
       On page 275, line 12, strike ``2003'' and insert ``2004''.
       On page 278, line 13, strike ``2002'' and insert ``2004''.

                  TORRICELLI AMENDMENTS NOS. 1473-1474

  (Ordered to lie on the table.)
  Mr. TORRICELLI submitted two amendments intended to be proposed by 
him to the bill, S. 1429, supra; as follows:

                           Amendment No. 1473

       At the end of subtitle B of title III, insert:

     SEC. __NO EXCISE TAX ON SIMPLE PENSION CONTRIBUTIONS ON 
                   BEHALF OF DOMESTIC WORKERS.

       (a) In General.--Section 4972(c) (defining nondeductible 
     contributions) is amended by adding at the end the following 
     new paragraph:
       ``(7) Simple contributions on behalf of domestic workers.--
     The term `nondeductible contribution' shall not include a 
     contribution to any simplified employee pension or any simple 
     retirement account with respect to which a deduction is not 
     allowable under section 404 solely because such contribution 
     constitutes remuneration paid for domestic services (within 
     the meaning of section 3510) in a private home of the 
     employer for which a deduction is not allowable under section 
     162.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to contributions in taxable years beginning after 
     December 31, 1999.
                                  ____


                           Amendment No. 1474

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. EXCLUSION FROM INCOME OF SEVERANCE PAYMENT AMOUNTS.

       (a) In General.--Part III of subchapter B of chapter 1 
     (relating to items specifically excluded from gross income) 
     is amended by redesignating section 139 as section 140 and by 
     inserting after section 138 the following new section:

     ``SEC. 139. SEVERANCE PAYMENTS.

       ``(a) In General.--In the case of an individual, gross 
     income shall not include any qualified severance payment.
       ``(b) Limitation.--The amount to which the exclusion under 
     subsection (a) applies shall not exceed $2,000 with respect 
     to any separation from employment.
       ``(c) Qualified Severance Payment.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified severance payment' 
     means any payment received by an individual if--
       ``(A) such payment was paid by such individual's employer 
     on account of such individual's separation from employment,
       ``(B) such separation was in connection with a reduction in 
     the work force of the employer, and
       ``(C) such individual does not attain employment within 6 
     months of the date of such separation in which the amount of 
     compensation is equal to or greater than 95 percent of the 
     amount of compensation for the employment that is related to 
     such payment.
       ``(2) Limitation.--Such term shall not include any payment 
     received by an individual if the aggregate payments received 
     with respect to the separation from employment exceed 
     $75,000.''
       (b) Clerical Amendment.--The table of sections for part III 
     of subchapter B of chapter 1 is amended by striking the item 
     relating to section 139 and inserting the following new 
     items:

``Sec. 139. Severance payments.
``Sec. 140. Cross references to other Acts.''
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply to taxable years beginning after December 
     31, 1999.
       Beginning on page 98, strike all through page 103, line 3, 
     and insert:

     SEC. 321. CATCHUP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR 
                   OVER.

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

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

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

``For taxable years                                      The applicable
beginning in:                                            percentage is:
    2002....................................................10 percent 
    2003....................................................20 percent 
    2004....................................................30 percent 
    2005....................................................40 percent 
    2006 and thereafter.....................................50 percent.
       ``(3) Treatment of contributions.--In the case of any 
     contribution to a plan under paragraph (1)--
       ``(A) such contribution shall not, with respect to the year 
     in which the contribution is made--
       ``(i) be subject to any otherwise applicable limitation 
     contained in section 402(g), 402(h), 403(b), 404(a), 404(h), 
     408, 415, or 457, or
       ``(ii) be taken into account in applying such limitations 
     to other contributions or benefits under such plan or any 
     other such plan, and
       ``(B) such plan shall not be treated as failing to meet the 
     requirements of section 401(a)(4), 401(a)(26), 401(k)(3), 
     401(k)(11), 401(k)(12), 401(m), 403(b)(12), 408(k), 408(p), 
     408B, 410(b), or 416 by reason of the making of (or the right 
     to make) such contribution.
       ``(4) Eligible participant.--For purposes of this 
     subsection, the term `eligible participant' means, with 
     respect to any plan year, a participant in a plan--
       ``(A) who has attained the age of 50 before the close of 
     the plan year, and
       ``(B) with respect to whom no other elective deferrals may 
     (without regard to this subsection) be made to the plan for 
     the plan year by reason of the application of any limitation 
     or other restriction described in paragraph (3) or contained 
     in the terms of the plan.
       ``(5) Other definitions and rules.--For purposes of this 
     subsection--
       ``(A) Applicable dollar amount.--The term `applicable 
     dollar amount' means, with respect to any year, the amount in 
     effect under section 402(g)(1)(B), 408(p)(2)(E)(i), or 
     457(e)(15)(A), whichever is applicable to an applicable 
     employer plan, for such year.
       ``(B) Applicable employer plan.--The term `applicable 
     employer plan' means--
       ``(i) an employees' trust described in section 401(a) which 
     is exempt from tax under section 501(a),
       ``(ii) a plan under which amounts are contributed by an 
     individual's employer for an annuity contract described in 
     section 403(b),
       ``(iii) an eligible deferred compensation plan under 
     section 457 of an eligible employer as defined in section 
     457(e)(1)(A), and
       ``(iv) an arrangement meeting the requirements of section 
     408 (k) or (p).
       ``(C) Elective deferral.--The term `elective deferral' has 
     the meaning given such term by subsection (u)(2)(C).
       ``(D) Exception for section 457 plans.--This subsection 
     shall not apply to an applicable employer plan described in 
     paragraph (5)(B)(iii) for any year to which section 457(b)(3) 
     applies.''
       (b) Individual Retirement Plans.--Section 219(b), as 
     amended by sections 301 and 318, is amended by adding at the 
     end the following new paragraph:
       ``(7) Catchup contributions.--
       ``(A) In general.--In the case of an individual who has 
     attained the age of 50 before the close of the taxable year, 
     the dollar amount in effect under paragraph (1)(A) for such 
     taxable year shall be equal to the applicable percentage of 
     such amount determined without regard to this paragraph.
       ``(B) Applicable percentage.--For purposes of this 
     paragraph, the applicable percentage shall be determined in 
     accordance with the following table:

``For taxable years                                      The applicable
beginning in:                                            percentage is:
    2002...................................................110 percent 
    2003...................................................120 percent 
    2004...................................................130 percent 
    2005...................................................140 percent 
    2006 and thereafter..................................150 percent.''
       (c) Effective Date.--The amendment made by this section 
     shall apply to contributions in taxable years beginning after 
     December 31, 2001.
       On page 195, strike lines 4 through 9, and insert:

     SEC. 404. EXTENSION OF EXCLUSION FOR EMPLOYER-PROVIDED 
                   EDUCATIONAL ASSISTANCE.

       (a) In General.--Section 127(d) (relating to termination of 
     exclusion for educational assistance programs), as amended by 
     this Act, is amended by striking ``May 31, 2000'' and 
     inserting ``December 31, 2008''.
                                 ______
                                 

               TORRICELLI (AND OTHERS) AMENDMENT NO. 1475

  (Ordered to lie on the table.)
  Mr. TORRICELLI (for himself, Mr. Lieberman, Mr. Lautenberg, and Mr. 
Dodd) submitted an amendment intended to be proposed by them to the 
bill, S. 1429, supra; as follows:

       On page 371, between lines 16 and 17, insert the following:

[[Page 18559]]



     SEC. __. PROHIBITION ON IMPOSITION OF DISCRIMINATORY COMMUTER 
                   TAXES BY POLITICAL SUBDIVISIONS OF STATES.

       (a) In General.--Chapter 4 of title 4, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 116. Prohibition on imposition of discriminatory 
       commuter taxes by political subdivisions of States

       ``Except to the extent otherwise provided in any voluntary 
     compact between or among States, a political subdivision of a 
     State may not impose a tax on income earned within such 
     political subdivision by nonresidents of the political 
     subdivision unless the effective rate of such tax imposed on 
     such nonresidents who are residents of such State is not less 
     than such rate imposed on such nonresidents who are not 
     residents of such State.''.
       (b) Conforming Amendment.--The table of sections for 
     chapter 4 of title 4, United States Code, is amended by 
     adding at the end the following:

``116. Prohibition on imposition of discriminatory commuter taxes by 
              political subdivisions of States.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of 
     enactment of this Act.
                                 ______
                                 

            SANTORUM (AND OTHERS) AMENDMENTS NOS. 1476-1478

  (Ordered to lie on the table.)
  Mr. SANTORUM (for himself, Mr. Abraham, and Mr. DeWine) submitted 
three amendments intended to be proposed by him to the bill, S. 1429, 
supra; as follows:

                           Amendment No. 1476

       On page 371, between lines 16 and 17, insert the following:

 TITLE __--DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL COMMUNITIES, 
 PROVIDING ASSISTANCE TO STATES IN PROVIDING CHARITY TAX CREDITS, AND 
                             REVENUE OFFSET

 Subtitle A--Designation of and Tax Incentives for Renewal Communities

     SEC. __01. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL 
                   COMMUNITIES.

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

                  ``Subchapter X--Renewal Communities

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

                         ``PART I--DESIGNATION

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

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

       ``(a) Designation.--
       ``(1) Definitions.--For purposes of this title, the term 
     `renewal community' means any area--
       ``(A) which is nominated by one or more local governments 
     and the State or States in which it is located for 
     designation as a renewal community (hereinafter in this 
     section referred to as a `nominated area'); and
       ``(B) which the Secretary of Housing and Urban Development 
     designates as a renewal community, after consultation with--
       ``(i) the Secretaries of Agriculture, Commerce, Labor, and 
     the Treasury; the Director of the Office of Management and 
     Budget; and the Administrator of the Small Business 
     Administration; and
       ``(ii) in the case of an area on an Indian reservation, the 
     Secretary of the Interior.
       ``(2) Number of designations.--
       ``(A) In general.--The Secretary of Housing and Urban 
     Development may designate not more than 100 nominated areas 
     as renewal communities.
       ``(B) Minimum designation in rural areas.--Of the areas 
     designated under paragraph (1), at least 20 percent must be 
     areas--
       ``(i) which are within a local government jurisdiction or 
     jurisdictions with a population of less than 50,000,
       ``(ii) which are outside of a metropolitan statistical area 
     (within the meaning of section 143(k)(2)(B)), or
       ``(iii) which are determined by the Secretary of Housing 
     and Urban Development, after consultation with the Secretary 
     of Commerce, to be rural areas.
       ``(3) Areas designated based on degree of poverty, etc.--
       ``(A) In general.--Except as otherwise provided in this 
     section, the nominated areas designated as renewal 
     communities under this subsection shall be those nominated 
     areas with the highest average ranking with respect to the 
     criteria described in subparagraphs (B), (C), and (D) of 
     subsection (c)(3). For purposes of the preceding sentence, an 
     area shall be ranked within each such criterion on the basis 
     of the amount by which the area exceeds such criterion, with 
     the area which exceeds such criterion by the greatest amount 
     given the highest ranking.
       ``(B) Exception where inadequate course of action, etc.--An 
     area shall not be designated under subparagraph (A) if the 
     Secretary of Housing and Urban Development determines that 
     the course of action described in subsection (d)(2) with 
     respect to such area is inadequate.
       ``(C) Priority for empowerment zones and enterprise 
     communities with respect to first half of designations.--With 
     respect to the first 50 percent of the designations made 
     under this section--
       ``(i) half shall be chosen from nominated areas which are 
     empowerment zones or enterprise communities (and are 
     otherwise eligible for designation under this section); and
       ``(ii) 20 percent shall be areas described in paragraph 
     (2)(B).
       ``(4) Limitation on designations.--
       ``(A) Publication of regulations.--The Secretary of Housing 
     and Urban Development shall prescribe by regulation no later 
     than 4 months after the date of the enactment of this 
     section, after consultation with the officials described in 
     paragraph (1)(B)--
       ``(i) the procedures for nominating an area under paragraph 
     (1)(A);
       ``(ii) the parameters relating to the size and population 
     characteristics of a renewal community; and
       ``(iii) the manner in which nominated areas will be 
     evaluated based on the criteria specified in subsection (d).
       ``(B) Time limitations.--The Secretary of Housing and Urban 
     Development may designate nominated areas as renewal 
     communities only during the 24-month period beginning on the 
     first day of the first month following the month in which the 
     regulations described in subparagraph (A) are prescribed.
       ``(C) Procedural rules.--The Secretary of Housing and Urban 
     Development shall not make any designation of a nominated 
     area as a renewal community under paragraph (2) unless--
       ``(i) the local governments and the States in which the 
     nominated area is located have the authority--

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

       ``(ii) a nomination regarding such area is submitted in 
     such a manner and in such form, and contains such 
     information, as the Secretary of Housing and Urban 
     Development shall by regulation prescribe; and
       ``(iii) the Secretary of Housing and Urban Development 
     determines that any information furnished is reasonably 
     accurate.
       ``(5) Nomination process for indian reservations.--For 
     purposes of this subchapter, in the case of a nominated area 
     on an Indian reservation, the reservation governing body (as 
     determined by the Secretary of the Interior) shall be treated 
     as being both the State and local governments with respect to 
     such area.
       ``(b) Period for Which Designation Is in Effect.--
       ``(1) In general.--Any designation of an area as a renewal 
     community shall remain in effect during the period beginning 
     on the date of the designation and ending on the earliest 
     of--
       ``(A) December 31, 2007,
       ``(B) the termination date designated by the State and 
     local governments in their nomination, or
       ``(C) the date the Secretary of Housing and Urban 
     Development revokes such designation.
       ``(2) Revocation of designation.--The Secretary of Housing 
     and Urban Development may revoke the designation under this 
     section of an area if such Secretary determines that the 
     local government or the State in which the area is located--
       ``(A) has modified the boundaries of the area, or
       ``(B) is not complying substantially with, or fails to make 
     progress in achieving, the State or local commitments, 
     respectively, described in subsection (d).
       ``(c) Area and Eligibility Requirements.--
       ``(1) In general.--The Secretary of Housing and Urban 
     Development may designate a nominated area as a renewal 
     community under subsection (a) only if the area meets the 
     requirements of paragraphs (2) and (3) of this subsection.
       ``(2) Area requirements.--A nominated area meets the 
     requirements of this paragraph if--
       ``(A) the area is within the jurisdiction of one or more 
     local governments;
       ``(B) the boundary of the area is continuous; and
       ``(C) the area--
       ``(i) has a population, of at least--

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

       ``(ii) is entirely within an Indian reservation (as 
     determined by the Secretary of the Interior).
       ``(3) Eligibility requirements.--A nominated area meets the 
     requirements of this paragraph if the State and the local 
     governments in which it is located certify (and the

[[Page 18560]]

     Secretary of Housing and Urban Development, after such review 
     of supporting data as he deems appropriate, accepts such 
     certification) that--
       ``(A) the area is one of pervasive poverty, unemployment, 
     and general distress;
       ``(B) the unemployment rate in the area, as determined by 
     the most recent available data, was at least 1\1/2\ times the 
     national unemployment rate for the period to which such data 
     relate;
       ``(C) the poverty rate for each population census tract 
     within the nominated area is at least 20 percent; and
       ``(D) in the case of an urban area, at least 70 percent of 
     the households living in the area have incomes below 80 
     percent of the median income of households within the 
     jurisdiction of the local government (determined in the same 
     manner as under section 119(b)(2) of the Housing and 
     Community Development Act of 1974).
       ``(4) Consideration of high incidence of crime.--The 
     Secretary of Housing and Urban Development shall take into 
     account, in selecting nominated areas for designation as 
     renewal communities under this section, the extent to which 
     such areas have a high incidence of crime.
       ``(5) Consideration of communities identified in gao 
     study.--The Secretary of Housing and Urban Development shall 
     take into account, in selecting nominated areas for 
     designation as renewal communities under this section, if the 
     area has census tracts identified in the May 12, 1998, report 
     of the Government Accounting Office regarding the 
     identification of economically distressed areas.
       ``(d) Required State and Local Commitments.--
       ``(1) In general.--The Secretary of Housing and Urban 
     Development may designate any nominated area as a renewal 
     community under subsection (a) only if--
       ``(A) the local government and the State in which the area 
     is located agree in writing that, during any period during 
     which the area is a renewal community, such governments will 
     follow a specified course of action which meets the 
     requirements of paragraph (2) and is designed to reduce the 
     various burdens borne by employers or employees in such area; 
     and
       ``(B) the economic growth promotion requirements of 
     paragraph (3) are met.
       ``(2) Course of action.--
       ``(A) In general.--A course of action meets the 
     requirements of this paragraph if such course of action is a 
     written document, signed by a State (or local government) and 
     neighborhood organizations, which evidences a partnership 
     between such State or government and community-based 
     organizations and which commits each signatory to specific 
     and measurable goals, actions, and timetables. Such course of 
     action shall include at least five of the following:
       ``(i) A reduction of tax rates or fees applying within the 
     renewal community.
       ``(ii) An increase in the level of efficiency of local 
     services within the renewal community.
       ``(iii) Crime reduction strategies, such as crime 
     prevention (including the provision of such services by 
     nongovernmental entities).
       ``(iv) Actions to reduce, remove, simplify, or streamline 
     governmental requirements applying within the renewal 
     community.
       ``(v) Involvement in the program by private entities, 
     organizations, neighborhood organizations, and community 
     groups, particularly those in the renewal community, 
     including a commitment from such private entities to provide 
     jobs and job training for, and technical, financial, or other 
     assistance to, employers, employees, and residents from the 
     renewal community.
       ``(vi) State or local income tax benefits for fees paid for 
     services performed by a nongovernmental entity which were 
     formerly performed by a governmental entity.
       ``(vii) The gift (or sale at below fair market value) of 
     surplus real property (such as land, homes, and commercial or 
     industrial structures) in the renewal community to 
     neighborhood organizations, community development 
     corporations, or private companies.
       ``(B) Recognition of past efforts.--For purposes of this 
     section, in evaluating the course of action agreed to by any 
     State or local government, the Secretary of Housing and Urban 
     Development shall take into account the past efforts of such 
     State or local government in reducing the various burdens 
     borne by employers and employees in the area involved.
       ``(3) Economic growth promotion requirements.--The economic 
     growth promotion requirements of this paragraph are met with 
     respect to a nominated area if the local government and the 
     State in which such area is located certify in writing that 
     such government and State, respectively, have repealed or 
     otherwise will not enforce within the area, if such area is 
     designated as a renewal community--
       ``(A) licensing requirements for occupations that do not 
     ordinarily require a professional degree;
       ``(B) zoning restrictions on home-based businesses which do 
     not create a public nuisance;
       ``(C) permit requirements for street vendors who do not 
     create a public nuisance;
       ``(D) zoning or other restrictions that impede the 
     formation of schools or child care centers; and
       ``(E) franchises or other restrictions on competition for 
     businesses providing public services, including but not 
     limited to taxicabs, jitneys, cable television, or trash 
     hauling,

     except to the extent that such regulation of businesses and 
     occupations is necessary for and well-tailored to the 
     protection of health and safety.
       ``(e) Coordination With Treatment of Empowerment Zones and 
     Enterprise Communities.--For purposes of this title, if there 
     are in effect with respect to the same area both--
       ``(1) a designation as a renewal community; and
       ``(2) a designation as an empowerment zone or enterprise 
     community,

     both of such designations shall be given full effect with 
     respect to such area.
       ``(f) Definitions and Special Rules.--For purposes of this 
     subchapter--
       ``(1) Governments.--If more than one government seeks to 
     nominate an area as a renewal community, any reference to, or 
     requirement of, this section shall apply to all such 
     governments.
       ``(2) State.--The term `State' includes Puerto Rico, the 
     Virgin Islands of the United States, Guam, American Samoa, 
     the Northern Mariana Islands, and any other possession of the 
     United States.
       ``(3) Local government.--The term `local government' 
     means--
       ``(A) any county, city, town, township, parish, village, or 
     other general purpose political subdivision of a State;
       ``(B) any combination of political subdivisions described 
     in subparagraph (A) recognized by the Secretary of Housing 
     and Urban Development; and
       ``(C) the District of Columbia.
       ``(4) Application of rules relating to census tracts and 
     census data.--The rules of sections 1392(b)(4) and 1393(a)(9) 
     shall apply.

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

``Sec. 1400F. Renewal community capital gain.
``Sec. 1400G. Renewal community business defined.

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

       ``(a) General Rule.--Gross income does not include any 
     qualified capital gain recognized on the sale or exchange of 
     a qualified community asset held for more than 5 years.
       ``(b) Qualified Community Asset.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified community asset' 
     means--
       ``(A) any qualified community stock;
       ``(B) any qualified community partnership interest; and
       ``(C) any qualified community business property.
       ``(2) Qualified community stock.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `qualified community stock' means any stock in a 
     domestic corporation if--
       ``(i) such stock is acquired by the taxpayer after December 
     31, 2000, and before January 1, 2008, at its original issue 
     (directly or through an underwriter) from the corporation 
     solely in exchange for cash;
       ``(ii) as of the time such stock was issued, such 
     corporation was a renewal community business (or, in the case 
     of a new corporation, such corporation was being organized 
     for purposes of being a renewal community business); and
       ``(iii) during substantially all of the taxpayer's holding 
     period for such stock, such corporation qualified as a 
     renewal community business.
       ``(B) Redemptions.--A rule similar to the rule of section 
     1202(c)(3) shall apply for purposes of this paragraph.
       ``(3) Qualified community partnership interest.--The term 
     `qualified community partnership interest' means any interest 
     in a partnership if--
       ``(A) such interest is acquired by the taxpayer after 
     December 31, 2000, and before January 1, 2008;
       ``(B) as of the time such interest was acquired, such 
     partnership was a renewal community business (or, in the case 
     of a new partnership, such partnership was being organized 
     for purposes of being a renewal community business); and
       ``(C) during substantially all of the taxpayer's holding 
     period for such interest, such partnership qualified as a 
     renewal community business.

     A rule similar to the rule of paragraph (2)(B) shall apply 
     for purposes of this paragraph.
       ``(4) Qualified community business property.--
       ``(A) In general.--The term `qualified community business 
     property' means tangible property if--
       ``(i) such property was acquired by the taxpayer by 
     purchase (as defined in section 179(d)(2)) after December 31, 
     2000, and before January 1, 2008;
       ``(ii) the original use of such property in the renewal 
     community commences with the taxpayer; and

[[Page 18561]]

       ``(iii) during substantially all of the taxpayer's holding 
     period for such property, substantially all of the use of 
     such property was in a renewal community business of the 
     taxpayer.
       ``(B) Special rule for substantial improvements.--The 
     requirements of clauses (i) and (ii) of subparagraph (A) 
     shall be treated as satisfied with respect to--
       ``(i) property which is substantially improved (within the 
     meaning of section 1400B(b)(4)(B)(ii)) by the taxpayer before 
     January 1, 2008; and
       ``(ii) any land on which such property is located.
       ``(c) Certain Rules To Apply.--Rules similar to the rules 
     of paragraphs (5), (6), and (7) of subsection (b), and 
     subsections (e), (f), and (g), of section 1400B shall apply 
     for purposes of this section.

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

       ``For purposes of this part, the term `renewal community 
     business' means any entity or proprietorship which would be a 
     qualified business entity or qualified proprietorship under 
     section 1397B if--
       ``(1) references to renewal communities were substituted 
     for references to empowerment zones in such section; and
       ``(2) `80 percent' were substituted for `50 percent' in 
     subsections (b)(2) and (c)(1) of such section.

                ``PART III--FAMILY DEVELOPMENT ACCOUNTS

``Sec. 1400H. Family development accounts for renewal community EITC 
              recipients.
``Sec. 1400I. Demonstration program to provide matching contributions 
              to family development accounts in certain renewal 
              communities.
``Sec. 1400J. Designation of earned income tax credit payments for 
              deposit to family development account.

     ``SEC. 1400H. FAMILY DEVELOPMENT ACCOUNTS FOR RENEWAL 
                   COMMUNITY EITC RECIPIENTS.

       ``(a) Allowance of Deduction.--
       ``(1) In general.--There shall be allowed as a deduction--
       ``(A) in the case of a qualified individual, the amount 
     paid in cash for the taxable year by such individual to any 
     family development account for such individual's benefit; and
       ``(B) in the case of any person other than a qualified 
     individual, the amount paid in cash for the taxable year by 
     such person to any family development account for the benefit 
     of a qualified individual but only if the amount so paid is 
     designated for purposes of this section by such individual.

     No deduction shall be allowed under this paragraph for any 
     amount deposited in a family development account under 
     section 1400I (relating to demonstration program to provide 
     matching amounts in renewal communities).
       ``(2) Limitation.--
       ``(A) In general.--The amount allowable as a deduction to 
     any individual for any taxable year by reason of paragraph 
     (1)(A) shall not exceed the lesser of--
       ``(i) $2,000, or
       ``(ii) an amount equal to the compensation includible in 
     the individual's gross income for such taxable year.
       ``(B) Persons donating to family development accounts of 
     others.--The amount which may be designated under paragraph 
     (1)(B) by any qualified individual for any taxable year of 
     such individual shall not exceed $1,000.
       ``(3) Special rules for certain married individuals.--Rules 
     similar to rules of section 219(c) shall apply to the 
     limitation in paragraph (2)(A).
       ``(4) Coordination with ira's.--No deduction shall be 
     allowed under this section to any person by reason of a 
     payment to an account for the benefit of a qualified 
     individual if any amount is paid into an individual 
     retirement account (including a Roth IRA) for the benefit of 
     such individual.
       ``(5) Rollovers.--No deduction shall be allowed under this 
     section with respect to any rollover contribution.
       ``(b) Tax Treatment of Distributions.--
       ``(1) Inclusion of amounts in gross income.--Except as 
     otherwise provided in this subsection, any amount paid or 
     distributed out of a family development account shall be 
     included in gross income by the payee or distributee, as the 
     case may be.
       ``(2) Exclusion of qualified family development 
     distributions.--Paragraph (1) shall not apply to any 
     qualified family development distribution.
       ``(c) Qualified Family Development Distribution.--For 
     purposes of this section--
       ``(1) In general.--The term `qualified family development 
     distribution' means any amount paid or distributed out of a 
     family development account which would otherwise be 
     includible in gross income, to the extent that such payment 
     or distribution is used exclusively to pay qualified family 
     development expenses for the holder of the account or the 
     spouse or dependent (as defined in section 152) of such 
     holder.
       ``(2) Qualified family development expenses.--The term 
     `qualified family development expenses' means any of the 
     following:
       ``(A) Qualified higher education expenses.
       ``(B) Qualified first-time homebuyer costs.
       ``(C) Qualified business capitalization costs.
       ``(D) Qualified medical expenses.
       ``(E) Qualified rollovers.
       ``(3) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' has the meaning given such term by section 
     72(t)(7), determined by treating postsecondary vocational 
     educational schools as eligible educational institutions.
       ``(B) Postsecondary vocational education school.--The term 
     `postsecondary vocational educational school' means an area 
     vocational education school (as defined in subparagraph (C) 
     or (D) of section 521(4) of the Carl D. Perkins Vocational 
     and Applied Technology Education Act (20 U.S.C. 2471(4))) 
     which is in any State (as defined in section 521(33) of such 
     Act), as such sections are in effect on the date of the 
     enactment of this section.
       ``(C) Coordination with other benefits.--The amount of 
     qualified higher education expenses for any taxable year 
     shall be reduced as provided in section 25A(g)(2).
       ``(4) Qualified first-time homebuyer costs.--The term 
     `qualified first-time homebuyer costs' means qualified 
     acquisition costs (as defined in section 72(t)(8) without 
     regard to subparagraph (B) thereof) with respect to a 
     principal residence (within the meaning of section 121) for a 
     qualified first-time homebuyer (as defined in such section).
       ``(5) Qualified business capitalization costs.--
       ``(A) In general.--The term `qualified business 
     capitalization costs' means qualified expenditures for the 
     capitalization of a qualified business pursuant to a 
     qualified plan.
       ``(B) Qualified expenditures.--The term `qualified 
     expenditures' means expenditures included in a qualified 
     plan, including capital, plant, equipment, working capital, 
     and inventory expenses.
       ``(C) Qualified business.--The term `qualified business' 
     means any business that does not contravene any law.
       ``(D) Qualified plan.--The term `qualified plan' means a 
     business plan which meets such requirements as the Secretary 
     may specify.
       ``(6) Qualified medical expenses.--The term `qualified 
     medical expenses' means any amount paid during the taxable 
     year, not compensated for by insurance or otherwise, for 
     medical care (as defined in section 213(d)) of the taxpayer, 
     his spouse, or his dependent (as defined in section 152).
       ``(7) Qualified rollovers.--The term `qualified rollover' 
     means any amount paid from a family development account of a 
     taxpayer into another such account established for the 
     benefit of--
       ``(A) such taxpayer, or
       ``(B) any qualified individual who is--
       ``(i) the spouse of such taxpayer, or
       ``(ii) any dependent (as defined in section 152) of the 
     taxpayer.
     Rules similar to the rules of section 408(d)(3) shall apply 
     for purposes of this paragraph.
       ``(d) Tax Treatment of Accounts.--
       ``(1) In general.--Any family development account is exempt 
     from taxation under this subtitle unless such account has 
     ceased to be a family development account by reason of 
     paragraph (2). Notwithstanding the preceding sentence, any 
     such account is subject to the taxes imposed by section 511 
     (relating to imposition of tax on unrelated business income 
     of charitable, etc., organizations). Notwithstanding any 
     other provision of this title (including chapters 11 and 12), 
     the basis of any person in such an account is zero.
       ``(2) Loss of exemption in case of prohibited 
     transactions.--For purposes of this section, rules similar to 
     the rules of section 408(e) shall apply.
       ``(3) Other rules to apply.--Rules similar to the rules of 
     paragraphs (4), (5), and (6) of section 408(d) shall apply 
     for purposes of this section.
       ``(e) Family Development Account.--For purposes of this 
     title, the term `family development account' means a trust 
     created or organized in the United States for the exclusive 
     benefit of a qualified individual or his beneficiaries, but 
     only if the written governing instrument creating the trust 
     meets the following requirements:
       ``(1) Except in the case of a qualified rollover (as 
     defined in subsection (c)(7))--
       ``(A) no contribution will be accepted unless it is in 
     cash; and
       ``(B) contributions will not be accepted for the taxable 
     year in excess of $3,000 (determined without regard to any 
     contribution made under section 1400I (relating to 
     demonstration program to provide matching amounts in renewal 
     communities)).
       ``(2) The requirements of paragraphs (2) through (6) of 
     section 408(a) are met.
       ``(f) Qualified Individual.--For purposes of this section, 
     the term `qualified individual' means, for any taxable year, 
     an individual--
       ``(1) who is a bona fide resident of a renewal community 
     throughout the taxable year; and
       ``(2) to whom a credit was allowed under section 32 for the 
     preceding taxable year.
       ``(g) Other Definitions and Special Rules.--

[[Page 18562]]

       ``(1) Compensation.--The term `compensation' has the 
     meaning given such term by section 219(f)(1).
       ``(2) Married individuals.--The maximum deduction under 
     subsection (a) shall be computed separately for each 
     individual, and this section shall be applied without regard 
     to any community property laws.
       ``(3) Time when contributions deemed made.--For purposes of 
     this section, a taxpayer shall be deemed to have made a 
     contribution to a family development account on the last day 
     of the preceding taxable year if the contribution is made on 
     account of such taxable year and is made not later than the 
     time prescribed by law for filing the return for such taxable 
     year (not including extensions thereof).
       ``(4) Employer payments; custodial accounts.--Rules similar 
     to the rules of sections 219(f)(5) and 408(h) shall apply for 
     purposes of this section.
       ``(5) Reports.--The trustee of a family development account 
     shall make such reports regarding such account to the 
     Secretary and to the individual for whom the account is 
     maintained with respect to contributions (and the years to 
     which they relate), distributions, and such other matters as 
     the Secretary may require under regulations. The reports 
     required by this paragraph--
       ``(A) shall be filed at such time and in such manner as the 
     Secretary prescribes in such regulations; and
       ``(B) shall be furnished to individuals--
       ``(i) not later than January 31 of the calendar year 
     following the calendar year to which such reports relate; and
       ``(ii) in such manner as the Secretary prescribes in such 
     regulations.
       ``(6) Investment in collectibles treated as 
     distributions.--Rules similar to the rules of section 408(m) 
     shall apply for purposes of this section.
       ``(h) Penalty for Distributions Not Used for Qualified 
     Family Development Expenses.--
       ``(1) In general.--If any amount is distributed from a 
     family development account and is not used exclusively to pay 
     qualified family development expenses for the holder of the 
     account or the spouse or dependent (as defined in section 
     152) of such holder, the tax imposed by this chapter for the 
     taxable year of such distribution shall be increased by the 
     sum of--
       ``(A) 100 percent of the portion of such amount which is 
     includible in gross income and is attributable to amounts 
     contributed under section 1400I (relating to demonstration 
     program to provide matching amounts in renewal communities); 
     and
       ``(B) 10 percent of the portion of such amount which is 
     includible in gross income and is not described in 
     subparagraph (A).

     For purposes of this subsection, distributions which are 
     includible in gross income shall be treated as attributable 
     to amounts contributed under section 1400I to the extent 
     thereof. For purposes of the preceding sentence, all family 
     development accounts of an individual shall be treated as one 
     account.
       ``(2) Exception for certain distributions.--Paragraph (1) 
     shall not apply to distributions which are--
       ``(A) made on or after the date on which the account holder 
     attains age 59\1/2\,
       ``(B) made to a beneficiary (or the estate of the account 
     holder) on or after the death of the account holder, or
       ``(C) attributable to the account holder's being disabled 
     within the meaning of section 72(m)(7).
       ``(i) Termination.--No deduction shall be allowed under 
     this section for any amount paid to a family development 
     account for any taxable year beginning after December 31, 
     2007.

     ``SEC. 1400I. DEMONSTRATION PROGRAM TO PROVIDE MATCHING 
                   CONTRIBUTIONS TO FAMILY DEVELOPMENT ACCOUNTS IN 
                   CERTAIN RENEWAL COMMUNITIES.

       ``(a) Designation.--
       ``(1) Definitions.--For purposes of this section, the term 
     `FDA matching demonstration area' means any renewal 
     community--
       ``(A) which is nominated under this section by each of the 
     local governments and States which nominated such community 
     for designation as a renewal community under section 
     1400E(a)(1)(A); and
       ``(B) which the Secretary of Housing and Urban Development 
     designates as an FDA matching demonstration area after 
     consultation with--
       ``(i) the Secretaries of Agriculture, Commerce, Labor, and 
     the Treasury, the Director of the Office of Management and 
     Budget, and the Administrator of the Small Business 
     Administration; and
       ``(ii) in the case of a community on an Indian reservation, 
     the Secretary of the Interior.
       ``(2) Number of designations.--
       ``(A) In general.--The Secretary of Housing and Urban 
     Development may designate not more than 5 communities as FDA 
     matching demonstration areas.
       ``(B) Minimum designation in rural areas.--Of the areas 
     designated under subparagraph (A), at least 2 must be areas 
     described in section 1400E(a)(2)(B).
       ``(3) Limitations on designations.--
       ``(A) Publication of regulations.--The Secretary of Housing 
     and Urban Development shall prescribe by regulation no later 
     than 4 months after the date of the enactment of this 
     section, after consultation with the officials described in 
     paragraph (1)(B)--
       ``(i) the procedures for nominating a renewal community 
     under paragraph (1)(A) (including procedures for coordinating 
     such nomination with the nomination of an area for 
     designation as a renewal community under section 1400E); and
       ``(ii) the manner in which nominated renewal communities 
     will be evaluated for purposes of this section.
       ``(B) Time limitations.--The Secretary of Housing and Urban 
     Development may designate renewal communities as FDA matching 
     demonstration areas only during the 24-month period beginning 
     on the first day of the first month following the month in 
     which the regulations described in subparagraph (A) are 
     prescribed.
       ``(4) Designation based on degree of poverty, etc.--The 
     rules of section 1400E(a)(3) shall apply for purposes of 
     designations of FDA matching demonstration areas under this 
     section.
       ``(b) Period for Which Designation Is in Effect.--Any 
     designation of a renewal community as an FDA matching 
     demonstration area shall remain in effect during the period 
     beginning on the date of such designation and ending on the 
     date on which such area ceases to be a renewal community.
       ``(c) Matching Contributions to Family Development 
     Accounts.--
       ``(1) In general.--Not less than once each taxable year, 
     the Secretary shall deposit (to the extent provided in 
     appropriation Acts) into a family development account of each 
     qualified individual (as defined in section 1400H(f))--
       ``(A) who is a resident throughout the taxable year of an 
     FDA matching demonstration area; and
       ``(B) who requests (in such form and manner as the 
     Secretary prescribes) such deposit for the taxable year,

     an amount equal to the sum of the amounts deposited into all 
     of the family development accounts of such individual during 
     such taxable year (determined without regard to any amount 
     contributed under this section).
       ``(2) Limitations.--
       ``(A) Annual limit.--The Secretary shall not deposit more 
     than $1000 under paragraph (1) with respect to any individual 
     for any taxable year.
       ``(B) Aggregate limit.--The Secretary shall not deposit 
     more than $2000 under paragraph (1) with respect to any 
     individual for all taxable years.
       ``(3) Exclusion from income.--Except as provided in section 
     1400H, gross income shall not include any amount deposited 
     into a family development account under paragraph (1).
       ``(d) Notice of Program.--The Secretary shall provide 
     appropriate notice to residents of FDA matching demonstration 
     areas of the availability of the benefits under this section.
       ``(e) Termination.--No amount may be deposited under this 
     section for any taxable year beginning after December 31, 
     2007.

     ``SEC. 1400J. DESIGNATION OF EARNED INCOME TAX CREDIT 
                   PAYMENTS FOR DEPOSIT TO FAMILY DEVELOPMENT 
                   ACCOUNT.

       ``(a) In General.--With respect to the return of any 
     qualified individual (as defined in section 1400H(f)) for the 
     taxable year of the tax imposed by this chapter, such 
     individual may designate that a specified portion (not less 
     than $1) of any overpayment of tax for such taxable year 
     which is attributable to the earned income tax credit shall 
     be deposited by the Secretary into a family development 
     account of such individual. The Secretary shall so deposit 
     such portion designated under this subsection.
       ``(b) Manner and Time of Designation.--A designation under 
     subsection (a) may be made with respect to any taxable year--
       ``(1) at the time of filing the return of the tax imposed 
     by this chapter for such taxable year, or
       ``(2) at any other time (after the time of filing the 
     return of the tax imposed by this chapter for such taxable 
     year) specified in regulations prescribed by the Secretary.

     Such designation shall be made in such manner as the 
     Secretary prescribes by regulations.
       ``(c) Portion Attributable to Earned Income Tax Credit.--
     For purposes of subsection (a), an overpayment for any 
     taxable year shall be treated as attributable to the earned 
     income tax credit to the extent that such overpayment does 
     not exceed the credit allowed to the taxpayer under section 
     32 for such taxable year.
       ``(d) Overpayments Treated as Refunded.--For purposes of 
     this title, any portion of an overpayment of tax designated 
     under subsection (a) shall be treated as being refunded to 
     the taxpayer as of the last date prescribed for filing the 
     return of tax imposed by this chapter (determined without 
     regard to extensions) or, if later, the date the return is 
     filed.
       ``(e) Termination.--This section shall not apply to any 
     taxable year beginning after December 31, 2007.

                    ``PART IV--ADDITIONAL INCENTIVES

``Sec. 1400K. Commercial revitalization credit.
``Sec. 1400L. Increase in expensing under section 179.

[[Page 18563]]



     ``SEC. 1400K. COMMERCIAL REVITALIZATION CREDIT.

       ``(a) General Rule.--For purposes of section 46, except as 
     provided in subsection (e), the commercial revitalization 
     credit for any taxable year is an amount equal to the 
     applicable percentage of the qualified revitalization 
     expenditures with respect to any qualified revitalization 
     building.
       ``(b) Applicable Percentage.--For purposes of this 
     section--
       ``(1) In general.--The term `applicable percentage' means--
       ``(A) 20 percent for the taxable year in which a qualified 
     revitalization building is placed in service, or
       ``(B) at the election of the taxpayer, 5 percent for each 
     taxable year in the credit period.

     The election under subparagraph (B), once made, shall be 
     irrevocable.
       ``(2) Credit period.--
       ``(A) In general.--The term `credit period' means, with 
     respect to any building, the period of 10 taxable years 
     beginning with the taxable year in which the building is 
     placed in service.
       ``(B) Applicable rules.--Rules similar to the rules under 
     paragraphs (2) and (4) of section 42(f) shall apply.
       ``(c) Qualified Revitalization Buildings and 
     Expenditures.--For purposes of this section--
       ``(1) Qualified revitalization building.--The term 
     `qualified revitalization building' means any building (and 
     its structural components) if--
       ``(A) such building is located in a renewal community and 
     is placed in service after December 31, 2000;
       ``(B) a commercial revitalization credit amount is 
     allocated to the building under subsection (e); and
       ``(C) depreciation (or amortization in lieu of 
     depreciation) is allowable with respect to the building.
       ``(2) Qualified revitalization expenditure.--
       ``(A) In general.--The term `qualified revitalization 
     expenditure' means any amount properly chargeable to capital 
     account--
       ``(i) for property for which depreciation is allowable 
     under section 168 and which is--

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

       ``(ii) in connection with the construction of any qualified 
     revitalization building which was not previously placed in 
     service or in connection with the substantial rehabilitation 
     (within the meaning of section 47(c)(1)(C)) of a building 
     which was placed in service before the beginning of such 
     rehabilitation.
       ``(B) Dollar limitation.--The aggregate amount which may be 
     treated as qualified revitalization expenditures with respect 
     to any qualified revitalization building for any taxable year 
     shall not exceed the excess of--
       ``(i) $10,000,000, reduced by
       ``(ii) any such expenditures with respect to the building 
     taken into account by the taxpayer or any predecessor in 
     determining the amount of the credit under this section for 
     all preceding taxable years.
       ``(C) Certain expenditures not included.--The term 
     `qualified revitalization expenditure' does not include--
       ``(i) Straight line depreciation must be used.--Any 
     expenditure (other than with respect to land acquisitions) 
     with respect to which the taxpayer does not use the straight 
     line method over a recovery period determined under 
     subsection (c) or (g) of section 168. The preceding sentence 
     shall not apply to any expenditure to the extent the 
     alternative depreciation system of section 168(g) applies to 
     such expenditure by reason of subparagraph (B) or (C) of 
     section 168(g)(1).
       ``(ii) Acquisition costs.--The costs of acquiring any 
     building or interest therein and any land in connection with 
     such building to the extent that such costs exceed 30 percent 
     of the qualified revitalization expenditures determined 
     without regard to this clause.
       ``(iii) Other credits.--Any expenditure which the taxpayer 
     may take into account in computing any other credit allowable 
     under this title unless the taxpayer elects to take the 
     expenditure into account only for purposes of this section.
       ``(d) When Expenditures Taken Into Account.--
       ``(1) In general.--Qualified revitalization expenditures 
     with respect to any qualified revitalization building shall 
     be taken into account for the taxable year in which the 
     qualified revitalization building is placed in service. For 
     purposes of the preceding sentence, a substantial 
     rehabilitation of a building shall be treated as a separate 
     building.
       ``(2) Progress expenditure payments.--Rules similar to the 
     rules of subsections (b)(2) and (d) of section 47 shall apply 
     for purposes of this section.
       ``(e) Limitation on Aggregate Credits Allowable With 
     Respect to Buildings Located in a State.--
       ``(1) In general.--The amount of the credit determined 
     under this section for any taxable year with respect to any 
     building shall not exceed the commercial revitalization 
     credit amount (in the case of an amount determined under 
     subsection (b)(1)(B), the present value of such amount as 
     determined under the rules of section 42(b)(2)(C)) allocated 
     to such building under this subsection by the commercial 
     revitalization credit agency. Such allocation shall be made 
     at the same time and in the same manner as under paragraphs 
     (1) and (7) of section 42(h).
       ``(2) Commercial revitalization credit amount for 
     agencies.--
       ``(A) In general.--The aggregate commercial revitalization 
     credit amount which a commercial revitalization credit agency 
     may allocate for any calendar year is the amount of the State 
     commercial revitalization credit ceiling determined under 
     this paragraph for such calendar year for such agency.
       ``(B) State commercial revitalization credit ceiling.--The 
     State commercial revitalization credit ceiling applicable to 
     any State--
       ``(i) for each calendar year after 2000 and before 2008 is 
     $2,000,000 for each renewal community in the State; and
       ``(ii) zero for each calendar year thereafter.
       ``(C) Commercial revitalization credit agency.--For 
     purposes of this section, the term `commercial revitalization 
     credit agency' means any agency authorized by a State to 
     carry out this section.
       ``(f) Responsibilities of Commercial Revitalization Credit 
     Agencies.--
       ``(1) Plans for allocation.--Notwithstanding any other 
     provision of this section, the commercial revitalization 
     credit amount with respect to any building shall be zero 
     unless--
       ``(A) such amount was allocated pursuant to a qualified 
     allocation plan of the commercial revitalization credit 
     agency which is approved (in accordance with rules similar to 
     the rules of section 147(f)(2) (other than subparagraph 
     (B)(ii) thereof)) by the governmental unit of which such 
     agency is a part; and
       ``(B) such agency notifies the chief executive officer (or 
     its equivalent) of the local jurisdiction within which the 
     building is located of such allocation and provides such 
     individual a reasonable opportunity to comment on the 
     allocation.
       ``(2) Qualified allocation plan.--For purposes of this 
     subsection, the term `qualified allocation plan' means any 
     plan--
       ``(A) which sets forth selection criteria to be used to 
     determine priorities of the commercial revitalization credit 
     agency which are appropriate to local conditions;
       ``(B) which considers--
       ``(i) the degree to which a project contributes to the 
     implementation of a strategic plan that is devised for a 
     renewal community through a citizen participation process;
       ``(ii) the amount of any increase in permanent, full-time 
     employment by reason of any project; and
       ``(iii) the active involvement of residents and nonprofit 
     groups within the renewal community; and
       ``(C) which provides a procedure that the agency (or its 
     agent) will follow in monitoring compliance with this 
     section.
       ``(g) Termination.--This section shall not apply to any 
     building placed in service after December 31, 2007.

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

       ``(a) General Rule.--In the case of a renewal community 
     business (as defined in section 1400G), for purposes of 
     section 179--
       ``(1) the limitation under section 179(b)(1) shall be 
     increased by the lesser of--
       ``(A) $35,000; or
       ``(B) the cost of section 179 property which is qualified 
     renewal property placed in service during the taxable year; 
     and
       ``(2) the amount taken into account under section 179(b)(2) 
     with respect to any section 179 property which is qualified 
     renewal property shall be 50 percent of the cost thereof.
       ``(b) Recapture.--Rules similar to the rules under section 
     179(d)(10) shall apply with respect to any qualified renewal 
     property which ceases to be used in a renewal community by a 
     renewal community business.
       ``(c) Qualified Renewal Property.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified renewal property' 
     means any property to which section 168 applies (or would 
     apply but for section 179) if--
       ``(A) such property was acquired by the taxpayer by 
     purchase (as defined in section 179(d)(2)) after December 31, 
     2000, and before January 1, 2008; and
       ``(B) such property would be qualified zone property (as 
     defined in section 1397C) if references to renewal 
     communities were substituted for references to empowerment 
     zones in section 1397C.
       ``(2) Certain rules to apply.--The rules of subsections 
     (a)(2) and (b) of section 1397C shall apply for purposes of 
     this section.''.

     SEC. __02. EXTENSION OF EXPENSING OF ENVIRONMENTAL 
                   REMEDIATION COSTS TO RENEWAL COMMUNITIES.

       (a) Extension.--Paragraph (2) of section 198(c) (defining 
     targeted area) is amended by redesignating subparagraph (C) 
     as subparagraph (D) and by inserting after subparagraph (B) 
     the following new subparagraph:
       ``(C) Renewal communities included.--Except as provided in 
     subparagraph (B), such term shall include a renewal community 
     (as defined in section 1400E).''.
       (b) Extension of Termination Date for Renewal 
     Communities.--Subsection (h) of section 198 is amended by 
     inserting before the period ``(December 31, 2007, in the case 
     of

[[Page 18564]]

     a renewal community, as defined in section 1400E).''.

     SEC. __03. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR 
                   RENEWAL COMMUNITIES

       (a) Extension.--Subsection (c) of section 51 (relating to 
     termination) is amended by adding at the end the following 
     new paragraph:
       ``(5) Extension of credit for renewal communities.--
       ``(A) In general.--In the case of an individual who begins 
     work for the employer after the date contained in paragraph 
     (4)(B), for purposes of section 38--
       ``(i) in lieu of applying subsection (a), the amount of the 
     work opportunity credit determined under this section for the 
     taxable year shall be equal to--

       ``(I) 15 percent of the qualified first-year wages for such 
     year; and
       ``(II) 30 percent of the qualified second-year wages for 
     such year;

       ``(ii) subsection (b)(3) shall be applied by substituting 
     `$10,000' for `$6,000';
       ``(iii) paragraph (4)(B) shall be applied by substituting 
     for the date contained therein the last day for which the 
     designation under section 1400E of the renewal community 
     referred to in subparagraph (B)(i) is in effect; and
       ``(iv) rules similar to the rules of section 51A(b)(5)(C) 
     shall apply.
       ``(B) Qualified first- and second-year wages.--For purposes 
     of subparagraph (A)--
       ``(i) In general.--The term `qualified wages' means, with 
     respect to each 1-year period referred to in clause (ii) or 
     (iii), as the case may be, the wages paid or incurred by the 
     employer during the taxable year to any individual but only 
     if--

       ``(I) the employer is engaged in a trade or business in a 
     renewal community throughout such 1-year period;

       ``(II) the principal place of abode of such individual is 
     in such renewal community throughout such 1-year period; and
       ``(III) substantially all of the services which such 
     individual performs for the employer during such 1-year 
     period are performed in such renewal community.

       ``(ii) Qualified first-year wages.--The term `qualified 
     first-year wages' means, with respect to any individual, 
     qualified wages attributable to service rendered during the 
     1-year period beginning with the day the individual begins 
     work for the employer.
       ``(iii) Qualified second-year wages.--The term `qualified 
     second-year wages' means, with respect to any individual, 
     qualified wages attributable to service rendered during the 
     1-year period beginning on the day after the last day of the 
     1-year period with respect to such individual determined 
     under clause (ii).''.
       (b) Congruent Treatment of Renewal Communities and 
     Enterprise Zones for Purposes of Youth Residence 
     Requirements.--
       (1) High-risk youth.--Subparagraphs (A)(ii) and (B) of 
     section 51(d)(5) are each amended by striking ``empowerment 
     zone or enterprise community'' and inserting ``empowerment 
     zone, enterprise community, or renewal community''.
       (2) Qualified summer youth employee.--Clause (iv) of 
     section 51(d)(7)(A) is amended by striking ``empowerment zone 
     or enterprise community'' and inserting ``empowerment zone, 
     enterprise community, or renewal community''.
       (3) Headings.--Paragraphs (5)(B) and (7)(C) of section 
     51(d) are each amended by inserting ``or community'' in the 
     heading after ``zone''.

     SEC. __04. CONFORMING AND CLERICAL AMENDMENTS.

       (a) Deduction for Contributions to Family Development 
     Accounts Allowable Whether or Not Taxpayer Itemizes.--
     Subsection (a) of section 62 (relating to adjusted gross 
     income defined) is amended by inserting after paragraph (17) 
     the following new paragraph:
       ``(18) Family development accounts.--The deduction allowed 
     by section 1400H(a)(1)(A).''.
       (b) Tax on Excess Contributions.--
       (1) Tax imposed.--Subsection (a) of section 4973 is amended 
     by striking ``or'' at the end of paragraph (3), adding ``or'' 
     at the end of paragraph (4), and inserting after paragraph 
     (4) the following new paragraph:
       ``(5) a family development account (within the meaning of 
     section 1400H(e)),''.
       (2) Excess contributions.--Section 4973 is amended by 
     adding at the end the following new subsection:
       ``(g) Family Development Accounts.--For purposes of this 
     section, in the case of a family development account, the 
     term `excess contributions' means the sum of--
       ``(1) the excess (if any) of--
       ``(A) the amount contributed for the taxable year to the 
     account (other than a qualified rollover, as defined in 
     section 1400H(c)(7), or a contribution under section 1400I), 
     over
       ``(B) the amount allowable as a deduction under section 
     1400H for such contributions; and
       ``(2) the amount determined under this subsection for the 
     preceding taxable year reduced by the sum of--
       ``(A) the distributions out of the account for the taxable 
     year which were included in the gross income of the payee 
     under section 1400H(b)(1);
       ``(B) the distributions out of the account for the taxable 
     year to which rules similar to the rules of section 408(d)(5) 
     apply by reason of section 1400H(d)(3); and
       ``(C) the excess (if any) of the maximum amount allowable 
     as a deduction under section 1400H for the taxable year over 
     the amount contributed to the account for the taxable year 
     (other than a contribution under section 1400I).

     For purposes of this subsection, any contribution which is 
     distributed from the family development account in a 
     distribution to which rules similar to the rules of section 
     408(d)(4) apply by reason of section 1400H(d)(3) shall be 
     treated as an amount not contributed.''.
       (c) Tax on Prohibited Transactions.--Section 4975 is 
     amended--
       (1) by adding at the end of subsection (c) the following 
     new paragraph:
       ``(6) Special rule for family development accounts.--An 
     individual for whose benefit a family development account is 
     established and any contributor to such account shall be 
     exempt from the tax imposed by this section with respect to 
     any transaction concerning such account (which would 
     otherwise be taxable under this section) if, with respect to 
     such transaction, the account ceases to be a family 
     development account by reason of the application of section 
     1400H(d)(2) to such account.''; and
       (2) in subsection (e)(1), by striking ``or'' at the end of 
     subparagraph (E), by redesignating subparagraph (F) as 
     subparagraph (G), and by inserting after subparagraph (E) the 
     following new subparagraph:
       ``(F) a family development account described in section 
     1400H(e), or''.
       (d) Information Relating to Certain Trusts and Annuity 
     Plans.--Subsection (c) of section 6047 is amended--
       (1) by inserting ``or section 1400H'' after ``section 
     219''; and
       (2) by inserting ``, of any family development account 
     described in section 1400H(e),'', after ``section 408(a)''.
       (e) Inspection of Applications for Tax Exemption.--Clause 
     (i) of section 6104(a)(1)(B) is amended by inserting ``a 
     family development account described in section 1400H(e),'' 
     after ``section 408(a),''.
       (f) Failure To Provide Reports on Family Development 
     Accounts.--Paragraph (2) of section 6693(a) is amended by 
     striking ``and'' at the end of subparagraph (C), by striking 
     the period and inserting ``, and'' at the end of subparagraph 
     (D), and by adding at the end the following new subparagraph:
       ``(E) section 1400H(g)(6) (relating to family development 
     accounts).''.
       (g) Conforming Amendments Regarding Commercial 
     Revitalization Credit.--
       (1) Section 46 (relating to investment credit) is amended 
     by striking ``and'' at the end of paragraph (2), by striking 
     the period at the end of paragraph (3) and inserting ``, 
     and'', and by adding at the end the following new paragraph:
       ``(4) the commercial revitalization credit provided under 
     section 1400K.''.
       (2) Section 39(d) is amended by adding at the end the 
     following new paragraph:
       ``(9) No carryback of section 1400k credit before date of 
     enactment.--No portion of the unused business credit for any 
     taxable year which is attributable to any commercial 
     revitalization credit determined under section 1400K may be 
     carried back to a taxable year ending before the date of the 
     enactment of section 1400K.''.
       (3) Subparagraph (B) of section 48(a)(2) is amended by 
     inserting ``or commercial revitalization'' after 
     ``rehabilitation'' each place it appears in the text and 
     heading.
       (4) Subparagraph (C) of section 49(a)(1) is amended by 
     striking ``and'' at the end of clause (ii), by striking the 
     period at the end of clause (iii) and inserting ``, and'', 
     and by adding at the end the following new clause:
       ``(iv) the portion of the basis of any qualified 
     revitalization building attributable to qualified 
     revitalization expenditures.''.
       (5) Paragraph (2) of section 50(a) is amended by inserting 
     ``or 1400K(d)(2)'' after ``section 47(d)'' each place it 
     appears.
       (6) Subparagraph (A) of section 50(a)(2) is amended by 
     inserting ``or qualified revitalization building 
     (respectively)'' after ``qualified rehabilitated building''.
       (7) Subparagraph (B) of section 50(a)(2) is amended by 
     adding at the end the following new sentence: ``A similar 
     rule shall apply for purposes of section 1400K.''.
       (8) Paragraph (2) of section 50(b) is amended by striking 
     ``and'' at the end of subparagraph (C), by striking the 
     period at the end of subparagraph (D) and inserting ``; 
     and'', and by adding at the end the following new 
     subparagraph:
       ``(E) a qualified revitalization building (as defined in 
     section 1400K) to the extent of the portion of the basis 
     which is attributable to qualified revitalization 
     expenditures (as defined in section 1400K).''.
       (9) The last sentence of section 50(b)(3) is amended to 
     read as follows: ``If any qualified rehabilitated building or 
     qualified revitalization building is used by the tax-exempt 
     organization pursuant to a lease, this paragraph shall not 
     apply for purposes of determining the amount of the 
     rehabilitation credit or the commercial revitalization 
     credit.''.

[[Page 18565]]

       (10) Subparagraph (C) of section 50(b)(4) is amended--
       (A) by inserting ``or commercial revitalization'' after 
     ``rehabilitated'' in the text and heading; and
       (B) by inserting ``or commercial revitalization'' after 
     ``rehabilitation''.
       (11) Subparagraph (C) of section 469(i)(3) is amended--
       (A) by inserting ``or section 1400K'' after ``section 42''; 
     and
       (B) by striking ``credit'' in the heading and inserting 
     ``and commercial revitalization credits''.
       (h) Clerical Amendments.--The table of subchapters for 
     chapter 1 is amended by adding at the end the following new 
     item:

``Subchapter X. Renewal Communities.''.

     SEC. __05. EVALUATION AND REPORTING REQUIREMENTS.

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

     SEC. __06. EXCLUSION OF EFFECTS OF THIS ACT FROM PAYGO 
                   SCORECARD.

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

     SEC. __07. REVENUE OFFSET.

       (a) In General.--Notwithstanding any provision of, or 
     amendment made by sections 1102 through 1114 and section 1116 
     of this Act, such sections shall only take effect for taxable 
     years beginning after December 31, 2006.
       (b) Additional Offset.--The Secretary of the Treasury shall 
     adjust the effective dates of the phase-in of the applicable 
     dollar amounts in section 2503(b)(2), as amended by section 
     721(a)(2) of this Act, as necessary to offset the decrease in 
     revenues to the Treasury resulting from the enactment of this 
     title, taking into account the revenue effect of subsection 
     (a).
       (c) Phase-In of Designations of Renewal Communities.--For 
     purposes of section 1400E(a)(2)(A) of the Internal Revenue 
     Code of 1986 (as added by this title) the Secretary of 
     Housing and Urban Development shall take into account the 
     availability of revenues in the Treasury resulting from the 
     application of subsection (a) in making any designation of a 
     renewal community under such section.

   Subtitle B--Assistance to States in Providing Charity Tax Credits

     SEC. __11. AUTHORITY TO USE CERTAIN FEDERAL GRANT FUNDS FOR 
                   STATE CHARITY TAX CREDIT.

       (a) In General.--Notwithstanding any other provision of 
     law, if there is in effect under State law a charity tax 
     credit, then the State may use for any purpose not more than 
     50 percent of each total amount paid to the State during the 
     fiscal year under each of the provisions of law specified in 
     subsection (d).
       (b) Limitation.--The aggregate amount a State may use under 
     subsection (a) during a fiscal year shall not exceed an 
     amount equal to 100 percent of the revenue loss of the State 
     during the fiscal year that is attributable to the charity 
     tax credit, as determined by the Secretary of the Treasury 
     without regard to any such revenue loss occurring before 
     January 1, 2000.
       (c) Certain Credit Amounts Treated as State Payment for 
     Temporary Assistance for Needy Families.--For purposes of 
     title IV of the Social Security Act, an amount equal to the 
     excess (if any) of--
       (1) the amount of the revenue loss of a State (not to 
     exceed 100 percent) during a fiscal year that is attributable 
     to the charity tax credit, as determined under subsection 
     (b); over
       (2) the aggregate amount used by the State under subsection 
     (a) during the fiscal year,
     shall be treated as an amount used during the fiscal year by 
     the State to carry out a State program funded under part A of 
     such title.
       (d) Provisions of Law.--The provisions of law specified in 
     this subsection are the following:
       (1) Paragraphs (1) through (4) of section 403(a) of the 
     Social Security Act (42 U.S.C. 603(a)).
       (2) The Child Care and Development Block Grant Act of 1990 
     (42 U.S.C. 9858-9858q) and section 418 of the Social Security 
     Act (42 U.S.C. 618).
       (3) Sections 2002 and 2007 of the Social Security Act (42 
     U.S.C. 1397a and 1397f).
       (4) The Community Services Block Grant Act (42 U.S.C. 9901-
     9912).
       (5) The Low-Income Home Energy Assistance Act of 1981 (42 
     U.S.C. 8621 et seq.).
       (6) The Job Training Partnership Act (29 U.S.C. 1501 et 
     seq.).
       (7) Title I of the Housing and Community Development Act of 
     1974 (42 U.S.C. 5301 et seq.).

     SEC. __12. DEFINITIONS.

       (a) Charity Tax Credit.--For purposes of this subtitle, the 
     term ``charity tax credit'' means a nonrefundable credit 
     against State income tax (or, in the case of a State which 
     does not impose an income tax, a comparable benefit)--
       (1) which is allowable only to an individual for a cash 
     contribution to a qualified charity; and
       (2) of which the maximum amount allowable to an individual 
     for any taxable year does not exceed $50 ($100 in the case of 
     a joint or combined return of individuals who are married to 
     each other) in the first year the credit is available and 
     such amount is increased by not more than $50 ($100 in the 
     case of a joint or combined return of individuals who are 
     married to each other) for each subsequent year (but not to 
     exceed $250 ($500, if applicable)).
       (b) Qualified Charity.--For purposes of this subtitle--
       (1) In general.--The term ``qualified charity'' means any 
     organization--
       (A) which is described in section 501(c)(3) of the Internal 
     Revenue Code of 1986 and exempt from tax under section 501(a) 
     of such Code;
       (B) which is certified by the appropriate State authority 
     as meeting the requirements of paragraphs (3) and (4); and
       (C) which annually reports the information required to be 
     furnished under paragraph (5) and if such organization is 
     otherwise required to file a return under section 6033 of 
     such Code, which elects to treat the information required to 
     be furnished under paragraph (5) as the information specified 
     in section 6033(b) of such Code.
       (2) Certain contributions to collection organizations 
     treated as contributions to qualified charity.--
       (A) In general.--A contribution to a collection 
     organization shall be treated as a contribution to a 
     qualified charity if the donor designates in writing that the 
     contribution is for the qualified charity.
       (B) Collection organization.--The term ``collection 
     organization'' means an organization described in section 
     501(c)(3) of the Internal Revenue Code of 1986 and exempt 
     from tax under section 501(a) of such Code--
       (i) which solicits and collects gifts and grants which, by 
     agreement, are distributed to qualified charities described 
     in paragraph (1);
       (ii) which distributes to qualified charities described in 
     paragraph (1) at least 90 percent of the gifts and grants 
     received that are designated for such qualified charities; 
     and
       (iii) which meets the requirements of paragraph (6).
       (3) Charity must primarily assist poor individuals.--
       (A) In general.--An organization meets the requirements of 
     this paragraph only if the appropriate State authority 
     reasonably expects that the predominant activity of such 
     organization will be the provision of direct services within 
     the United States to individuals and families whose annual 
     incomes generally do not exceed 185 percent of the official 
     poverty line (as defined by the Office of Management and 
     Budget) in order to prevent or alleviate poverty among such 
     individuals and families.
       (B) No recordkeeping in certain cases.--An organization 
     shall not be required to establish or maintain records with 
     respect to the incomes of individuals and families for 
     purposes of subparagraph (A) if such individuals or families 
     are members of groups which are generally recognized as 
     including substantially only individuals and families 
     described in subparagraph (A).
       (C) Food aid and homeless shelters.--Except as otherwise 
     provided by the appropriate State authority, for purposes of 
     subparagraph (A), services to individuals in the form of--
       (i) donations of food or meals; or
       (ii) temporary shelter to homeless individuals,

     shall be treated as provided to individuals described in 
     subparagraph (A) if the location and operation of such 
     services are such that the service provider may reasonably 
     conclude that the beneficiaries of such services are 
     predominantly individuals described in subparagraph (A).
       (4) Minimum expense requirement.--
       (A) In general.--An organization meets the requirements of 
     this paragraph only if the appropriate State authority 
     reasonably expects that the annual poverty program expense of 
     such organization will not be less than 75 percent of the 
     annual aggregate expenses of such organization.
       (B) Poverty program expense.--For purposes of subparagraph 
     (A)--
       (i) In general.--The term ``poverty program expense'' means 
     any expense paid or incurred in providing program services 
     described in paragraph (3).
       (ii) Exceptions.--Such term shall not include--

       (I) any management or general expense;
       (II) any expense for the purpose of influencing legislation 
     (as defined in section 4911(d) of the Internal Revenue Code 
     of 1986);

       (III) any expense for the purpose of fundraising;

[[Page 18566]]

       (IV) any expense for a legal service provided on behalf of 
     any individual described in paragraph (3); and

       (V) any expense which consists of a payment to an affiliate 
     of the organization.

       (5) Reporting requirement.--The information required to be 
     furnished under this paragraph is--
       (A) each category of services (including food, shelter, 
     education, substance abuse, job training, or otherwise) which 
     constitutes the predominant activities of the organization; 
     and
       (B) the percentages determined by dividing the categories 
     of the organization's expenses for the year by the total 
     expenses of the organization for the year, including--
       (i) program services;
       (ii) management expenses;
       (iii) general expenses;
       (iv) fundraising expenses; and
       (v) payments to affiliates.
       (6) Additional requirements for solicitation 
     organizations.--The requirements of this paragraph are met if 
     the organization--
       (A) maintains separate accounting for revenues and 
     expenses; and
       (B) makes available to the public administrative and 
     fundraising costs and information regarding any organization 
     receiving funds from the organization and the amount of such 
     funds.
       (7) Recommendations.--It is recommended, but not required, 
     that--
       (A) the definition of ``qualified charity'' be further 
     limited under State law to an organization--
       (i) which has been operating for at least 1 year or is 
     controlled by, or operated under the auspices of, an 
     organization which has been operating for at least 1 year; 
     and
       (ii) with expenses for the purpose of influencing 
     legislation, litigation on behalf of any individual described 
     in paragraph (3), voter registration, political organizing, 
     public policy advocacy, or public policy research in an 
     amount not in excess of 5 percent of the total expenses of 
     the organization;
       (B) except as provided in subsection (a)(2), the amount of 
     the charity tax credit be equal to at least 50 percent and 
     not more than 90 percent of the amount of the individual's 
     cash contribution to a qualified charity; and
       (C) contributions made not later than the time prescribed 
     by law for filing the return of the State income tax for a 
     taxable year (not including extensions thereof) be treated as 
     made (at the taxpayer's election) on the last day of such 
     year.
       (8) Special rule for states requiring tax uniformity.--In 
     the case of a State--
       (A) which has a constitutional requirement of tax 
     uniformity; and
       (B) which, as of December 31, 1997, imposed a tax on 
     personal income with--
       (i) a single flat rate applicable to all earned and 
     unearned income (except insofar as any amount is not taxed 
     pursuant to tax forgiveness provisions); and
       (ii) no generally available exemptions or deductions to 
     individuals,

     the requirement of subsection (a)(2) shall be treated as met 
     if the amount of the credit is limited to a uniform 
     percentage (but not greater than 25 percent) of State 
     personal income tax liability (determined without regard to 
     credits).
       (9) Coordination with federal charitable contribution 
     deduction.--The amount of the deduction allowed under the 
     Internal Revenue Code of 1986 for contributions which are 
     taken into account in determining any charity tax credit 
     shall be reduced by the amount of such credit which is 
     allowed.
       (c) State.--For purposes of this subtitle, the term 
     ``State'' means each of the several States, the District of 
     Columbia, the Commonwealth of Puerto Rico, the Virgin 
     Islands, Guam, American Samoa, the Northern Mariana Islands, 
     any other territory or possession of the United States.

     SEC. __13. STUDY AND REPORT.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study of the effects of the charity tax 
     credit under this subtitle, including--
       (1) the types of organizations which receive contributions 
     during the first year to which the credit applies; and
       (2) the types of services provided to the poor by such 
     organizations.
       (b) Report.--The Comptroller General shall report to 
     Congress the results of such study, including--
       (1) the geographical distribution of funding from charity 
     tax credit contributions, and an analysis of the information 
     provided on the annual returns required under section 6033 of 
     the Internal Revenue Code of 1986 with respect to qualified 
     charities to determine if the broad categories of services 
     provided to the poor (including food, shelter, education, 
     substance abuse, job training, or otherwise) match the 
     services that would otherwise be provided by Federal welfare 
     program funds without the enactment of the reductions in the 
     programs permitted by this legislation; and
       (2) any recommendations for legislative changes.

     SEC. __14. EFFECTIVE DATE.

       This subtitle shall take effect on January 1, 2000.

                       Subtitle C--Revenue Offset

     SEC. __21. REDUCTION OF EARNED INCOME CREDIT FOR INDIVIDUALS 
                   WITHOUT CHILDREN.

       (a) In General.--The table in subparagraph (A) of section 
     32(b)(1) (relating to percentages) is amended by striking the 
     item relating to no qualifying children and inserting the 
     following:

``No qualifying children.............................   3.825    7.65.''
 

       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2001.
                                  ____


                           Amendment No. 1477

       On page 371, between lines 16 and 17, insert the following:

  TITLE __--ASSISTANCE TO STATES IN PROVIDING CHARITY TAX CREDITS AND 
                             REVENUE OFFSET

   Subtitle A--Assistance to States in Providing Charity Tax Credits

     SEC. __01. AUTHORITY TO USE CERTAIN FEDERAL GRANT FUNDS FOR 
                   STATE CHARITY TAX CREDIT.

       (a) In General.--Notwithstanding any other provision of 
     law, if there is in effect under State law a charity tax 
     credit, then the State may use for any purpose not more than 
     50 percent of each total amount paid to the State during the 
     fiscal year under each of the provisions of law specified in 
     subsection (d).
       (b) Limitation.--The aggregate amount a State may use under 
     subsection (a) during a fiscal year shall not exceed an 
     amount equal to 100 percent of the revenue loss of the State 
     during the fiscal year that is attributable to the charity 
     tax credit, as determined by the Secretary of the Treasury 
     without regard to any such revenue loss occurring before 
     January 1, 2000.
       (c) Certain Credit Amounts Treated as State Payment for 
     Temporary Assistance for Needy Families.--For purposes of 
     title IV of the Social Security Act, an amount equal to the 
     excess (if any) of--
       (1) the amount of the revenue loss of a State (not to 
     exceed 100 percent) during a fiscal year that is attributable 
     to the charity tax credit, as determined under subsection 
     (b); over
       (2) the aggregate amount used by the State under subsection 
     (a) during the fiscal year,
     shall be treated as an amount used during the fiscal year by 
     the State to carry out a State program funded under part A of 
     such title.
       (d) Provisions of Law.--The provisions of law specified in 
     this subsection are the following:
       (1) Paragraphs (1) through (4) of section 403(a) of the 
     Social Security Act (42 U.S.C. 603(a)).
       (2) The Child Care and Development Block Grant Act of 1990 
     (42 U.S.C. 9858-9858q) and section 418 of the Social Security 
     Act (42 U.S.C. 618).
       (3) Sections 2002 and 2007 of the Social Security Act (42 
     U.S.C. 1397a and 1397f).
       (4) The Community Services Block Grant Act (42 U.S.C. 9901-
     9912).
       (5) The Low-Income Home Energy Assistance Act of 1981 (42 
     U.S.C. 8621 et seq.).
       (6) The Job Training Partnership Act (29 U.S.C. 1501 et 
     seq.).
       (7) Title I of the Housing and Community Development Act of 
     1974 (42 U.S.C. 5301 et seq.).

     SEC. __02. DEFINITIONS.

       (a) Charity Tax Credit.--For purposes of this subtitle, the 
     term ``charity tax credit'' means a nonrefundable credit 
     against State income tax (or, in the case of a State which 
     does not impose an income tax, a comparable benefit)--
       (1) which is allowable only to an individual for a cash 
     contribution to a qualified charity; and
       (2) of which the maximum amount allowable to an individual 
     for any taxable year does not exceed $50 ($100 in the case of 
     a joint or combined return of individuals who are married to 
     each other) in the first year the credit is available and 
     such amount is increased by not more than $50 ($100 in the 
     case of a joint or combined return of individuals who are 
     married to each other) for each subsequent year (but not to 
     exceed $250 ($500, if applicable)).
       (b) Qualified Charity.--For purposes of this subtitle--
       (1) In general.--The term ``qualified charity'' means any 
     organization--
       (A) which is described in section 501(c)(3) of the Internal 
     Revenue Code of 1986 and exempt from tax under section 501(a) 
     of such Code;
       (B) which is certified by the appropriate State authority 
     as meeting the requirements of paragraphs (3) and (4); and
       (C) which annually reports the information required to be 
     furnished under paragraph (5) and if such organization is 
     otherwise required to file a return under section 6033 of 
     such Code, which elects to treat the information required to 
     be furnished under paragraph (5) as the information specified 
     in section 6033(b) of such Code.
       (2) Certain contributions to collection organizations 
     treated as contributions to qualified charity.--
       (A) In general.--A contribution to a collection 
     organization shall be treated as a contribution to a 
     qualified charity if the donor designates in writing that the 
     contribution is for the qualified charity.

[[Page 18567]]

       (B) Collection organization.--The term ``collection 
     organization'' means an organization described in section 
     501(c)(3) of the Internal Revenue Code of 1986 and exempt 
     from tax under section 501(a) of such Code--
       (i) which solicits and collects gifts and grants which, by 
     agreement, are distributed to qualified charities described 
     in paragraph (1);
       (ii) which distributes to qualified charities described in 
     paragraph (1) at least 90 percent of the gifts and grants 
     received that are designated for such qualified charities; 
     and
       (iii) which meets the requirements of paragraph (6).
       (3) Charity must primarily assist poor individuals.--
       (A) In general.--An organization meets the requirements of 
     this paragraph only if the appropriate State authority 
     reasonably expects that the predominant activity of such 
     organization will be the provision of direct services within 
     the United States to individuals and families whose annual 
     incomes generally do not exceed 185 percent of the official 
     poverty line (as defined by the Office of Management and 
     Budget) in order to prevent or alleviate poverty among such 
     individuals and families.
       (B) No recordkeeping in certain cases.--An organization 
     shall not be required to establish or maintain records with 
     respect to the incomes of individuals and families for 
     purposes of subparagraph (A) if such individuals or families 
     are members of groups which are generally recognized as 
     including substantially only individuals and families 
     described in subparagraph (A).
       (C) Food aid and homeless shelters.--Except as otherwise 
     provided by the appropriate State authority, for purposes of 
     subparagraph (A), services to individuals in the form of--
       (i) donations of food or meals; or
       (ii) temporary shelter to homeless individuals,

     shall be treated as provided to individuals described in 
     subparagraph (A) if the location and operation of such 
     services are such that the service provider may reasonably 
     conclude that the beneficiaries of such services are 
     predominantly individuals described in subparagraph (A).
       (4) Minimum expense requirement.--
       (A) In general.--An organization meets the requirements of 
     this paragraph only if the appropriate State authority 
     reasonably expects that the annual poverty program expense of 
     such organization will not be less than 75 percent of the 
     annual aggregate expenses of such organization.
       (B) Poverty program expense.--For purposes of subparagraph 
     (A)--
       (i) In general.--The term ``poverty program expense'' means 
     any expense paid or incurred in providing program services 
     described in paragraph (3).
       (ii) Exceptions.--Such term shall not include--

       (I) any management or general expense;
       (II) any expense for the purpose of influencing legislation 
     (as defined in section 4911(d) of the Internal Revenue Code 
     of 1986);

       (III) any expense for the purpose of fundraising;
       (IV) any expense for a legal service provided on behalf of 
     any individual described in paragraph (3); and

       (V) any expense which consists of a payment to an affiliate 
     of the organization.

       (5) Reporting requirement.--The information required to be 
     furnished under this paragraph is--
       (A) each category of services (including food, shelter, 
     education, substance abuse, job training, or otherwise) which 
     constitutes the predominant activities of the organization; 
     and
       (B) the percentages determined by dividing the categories 
     of the organization's expenses for the year by the total 
     expenses of the organization for the year, including--
       (i) program services;
       (ii) management expenses;
       (iii) general expenses;
       (iv) fundraising expenses; and
       (v) payments to affiliates.
       (6) Additional requirements for solicitation 
     organizations.--The requirements of this paragraph are met if 
     the organization--
       (A) maintains separate accounting for revenues and 
     expenses; and
       (B) makes available to the public administrative and 
     fundraising costs and information regarding any organization 
     receiving funds from the organization and the amount of such 
     funds.
       (7) Recommendations.--It is recommended, but not required, 
     that--
       (A) the definition of ``qualified charity'' be further 
     limited under State law to an organization--
       (i) which has been operating for at least 1 year or is 
     controlled by, or operated under the auspices of, an 
     organization which has been operating for at least 1 year; 
     and
       (ii) with expenses for the purpose of influencing 
     legislation, litigation on behalf of any individual described 
     in paragraph (3), voter registration, political organizing, 
     public policy advocacy, or public policy research in an 
     amount not in excess of 5 percent of the total expenses of 
     the organization;
       (B) except as provided in subsection (a)(2), the amount of 
     the charity tax credit be equal to at least 50 percent and 
     not more than 90 percent of the amount of the individual's 
     cash contribution to a qualified charity; and
       (C) contributions made not later than the time prescribed 
     by law for filing the return of the State income tax for a 
     taxable year (not including extensions thereof) be treated as 
     made (at the taxpayer's election) on the last day of such 
     year.
       (8) Special rule for states requiring tax uniformity.--In 
     the case of a State--
       (A) which has a constitutional requirement of tax 
     uniformity; and
       (B) which, as of December 31, 1997, imposed a tax on 
     personal income with--
       (i) a single flat rate applicable to all earned and 
     unearned income (except insofar as any amount is not taxed 
     pursuant to tax forgiveness provisions); and
       (ii) no generally available exemptions or deductions to 
     individuals,
     the requirement of subsection (a)(2) shall be treated as met 
     if the amount of the credit is limited to a uniform 
     percentage (but not greater than 25 percent) of State 
     personal income tax liability (determined without regard to 
     credits).
       (9) Coordination with federal charitable contribution 
     deduction.--The amount of the deduction allowed under the 
     Internal Revenue Code of 1986 for contributions which are 
     taken into account in determining any charity tax credit 
     shall be reduced by the amount of such credit which is 
     allowed.
       (c) State.--For purposes of this subtitle, the term 
     ``State'' means each of the several States, the District of 
     Columbia, the Commonwealth of Puerto Rico, the Virgin 
     Islands, Guam, American Samoa, the Northern Mariana Islands, 
     any other territory or possession of the United States.

     SEC. __03. STUDY AND REPORT.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study of the effects of the charity tax 
     credit under this subtitle, including--
       (1) the types of organizations which receive contributions 
     during the first year to which the credit applies; and
       (2) the types of services provided to the poor by such 
     organizations.
       (b) Report.--The Comptroller General shall report to 
     Congress the results of such study, including--
       (1) the geographical distribution of funding from charity 
     tax credit contributions, and an analysis of the information 
     provided on the annual returns required under section 6033 of 
     the Internal Revenue Code of 1986 with respect to qualified 
     charities to determine if the broad categories of services 
     provided to the poor (including food, shelter, education, 
     substance abuse, job training, or otherwise) match the 
     services that would otherwise be provided by Federal welfare 
     program funds without the enactment of the reductions in the 
     programs permitted by this legislation; and
       (2) any recommendations for legislative changes.

     SEC. __04. EFFECTIVE DATE.

       This subtitle shall take effect on January 1, 2000.

                       Subtitle B--Revenue Offset

     SEC. __11. REDUCTION OF EARNED INCOME CREDIT FOR INDIVIDUALS 
                   WITHOUT CHILDREN.

       (a) In General.--The table in subparagraph (A) of section 
     32(b)(1) (relating to percentages) is amended by striking the 
     item relating to no qualifying children and inserting the 
     following:

 
 
 
``No qualifying children........  3.825                     7.65.''
 

       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2001.
                                  ____


                           Amendment No. 1478

       On page 371, between lines 16 and 17, insert the following:

  TITLE __--DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL COMMUNITIES

     SEC. __01. DESIGNATION OF AND TAX INCENTIVES FOR RENEWAL 
                   COMMUNITIES.

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

                  ``Subchapter X--Renewal Communities

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

                         ``PART I--DESIGNATION

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

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

       ``(a) Designation.--
       ``(1) Definitions.--For purposes of this title, the term 
     `renewal community' means any area--
       ``(A) which is nominated by one or more local governments 
     and the State or States in which it is located for 
     designation as a renewal community (hereinafter in this 
     section referred to as a `nominated area'); and
       ``(B) which the Secretary of Housing and Urban Development 
     designates as a renewal community, after consultation with--

[[Page 18568]]

       ``(i) the Secretaries of Agriculture, Commerce, Labor, and 
     the Treasury; the Director of the Office of Management and 
     Budget; and the Administrator of the Small Business 
     Administration; and
       ``(ii) in the case of an area on an Indian reservation, the 
     Secretary of the Interior.
       ``(2) Number of designations.--
       ``(A) In general.--The Secretary of Housing and Urban 
     Development may designate not more than 100 nominated areas 
     as renewal communities.
       ``(B) Minimum designation in rural areas.--Of the areas 
     designated under paragraph (1), at least 20 percent must be 
     areas--
       ``(i) which are within a local government jurisdiction or 
     jurisdictions with a population of less than 50,000,
       ``(ii) which are outside of a metropolitan statistical area 
     (within the meaning of section 143(k)(2)(B)), or
       ``(iii) which are determined by the Secretary of Housing 
     and Urban Development, after consultation with the Secretary 
     of Commerce, to be rural areas.
       ``(3) Areas designated based on degree of poverty, etc.--
       ``(A) In general.--Except as otherwise provided in this 
     section, the nominated areas designated as renewal 
     communities under this subsection shall be those nominated 
     areas with the highest average ranking with respect to the 
     criteria described in subparagraphs (B), (C), and (D) of 
     subsection (c)(3). For purposes of the preceding sentence, an 
     area shall be ranked within each such criterion on the basis 
     of the amount by which the area exceeds such criterion, with 
     the area which exceeds such criterion by the greatest amount 
     given the highest ranking.
       ``(B) Exception where inadequate course of action, etc.--An 
     area shall not be designated under subparagraph (A) if the 
     Secretary of Housing and Urban Development determines that 
     the course of action described in subsection (d)(2) with 
     respect to such area is inadequate.
       ``(C) Priority for empowerment zones and enterprise 
     communities with respect to first half of designations.--With 
     respect to the first 50 percent of the designations made 
     under this section--
       ``(i) half shall be chosen from nominated areas which are 
     empowerment zones or enterprise communities (and are 
     otherwise eligible for designation under this section); and
       ``(ii) 20 percent shall be areas described in paragraph 
     (2)(B).
       ``(4) Limitation on designations.--
       ``(A) Publication of regulations.--The Secretary of Housing 
     and Urban Development shall prescribe by regulation no later 
     than 4 months after the date of the enactment of this 
     section, after consultation with the officials described in 
     paragraph (1)(B)--
       ``(i) the procedures for nominating an area under paragraph 
     (1)(A);
       ``(ii) the parameters relating to the size and population 
     characteristics of a renewal community; and
       ``(iii) the manner in which nominated areas will be 
     evaluated based on the criteria specified in subsection (d).
       ``(B) Time limitations.--The Secretary of Housing and Urban 
     Development may designate nominated areas as renewal 
     communities only during the 24-month period beginning on the 
     first day of the first month following the month in which the 
     regulations described in subparagraph (A) are prescribed.
       ``(C) Procedural rules.--The Secretary of Housing and Urban 
     Development shall not make any designation of a nominated 
     area as a renewal community under paragraph (2) unless--
       ``(i) the local governments and the States in which the 
     nominated area is located have the authority--

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

       ``(ii) a nomination regarding such area is submitted in 
     such a manner and in such form, and contains such 
     information, as the Secretary of Housing and Urban 
     Development shall by regulation prescribe; and
       ``(iii) the Secretary of Housing and Urban Development 
     determines that any information furnished is reasonably 
     accurate.
       ``(5) Nomination process for indian reservations.--For 
     purposes of this subchapter, in the case of a nominated area 
     on an Indian reservation, the reservation governing body (as 
     determined by the Secretary of the Interior) shall be treated 
     as being both the State and local governments with respect to 
     such area.
       ``(b) Period for Which Designation Is in Effect.--
       ``(1) In general.--Any designation of an area as a renewal 
     community shall remain in effect during the period beginning 
     on the date of the designation and ending on the earliest 
     of--
       ``(A) December 31, 2007,
       ``(B) the termination date designated by the State and 
     local governments in their nomination, or
       ``(C) the date the Secretary of Housing and Urban 
     Development revokes such designation.
       ``(2) Revocation of designation.--The Secretary of Housing 
     and Urban Development may revoke the designation under this 
     section of an area if such Secretary determines that the 
     local government or the State in which the area is located--
       ``(A) has modified the boundaries of the area, or
       ``(B) is not complying substantially with, or fails to make 
     progress in achieving, the State or local commitments, 
     respectively, described in subsection (d).
       ``(c) Area and Eligibility Requirements.--
       ``(1) In general.--The Secretary of Housing and Urban 
     Development may designate a nominated area as a renewal 
     community under subsection (a) only if the area meets the 
     requirements of paragraphs (2) and (3) of this subsection.
       ``(2) Area requirements.--A nominated area meets the 
     requirements of this paragraph if--
       ``(A) the area is within the jurisdiction of one or more 
     local governments;
       ``(B) the boundary of the area is continuous; and
       ``(C) the area--
       ``(i) has a population, of at least--

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

       ``(ii) is entirely within an Indian reservation (as 
     determined by the Secretary of the Interior).
       ``(3) Eligibility requirements.--A nominated area meets the 
     requirements of this paragraph if the State and the local 
     governments in which it is located certify (and the Secretary 
     of Housing and Urban Development, after such review of 
     supporting data as he deems appropriate, accepts such 
     certification) that--
       ``(A) the area is one of pervasive poverty, unemployment, 
     and general distress;
       ``(B) the unemployment rate in the area, as determined by 
     the most recent available data, was at least 1\1/2\ times the 
     national unemployment rate for the period to which such data 
     relate;
       ``(C) the poverty rate for each population census tract 
     within the nominated area is at least 20 percent; and
       ``(D) in the case of an urban area, at least 70 percent of 
     the households living in the area have incomes below 80 
     percent of the median income of households within the 
     jurisdiction of the local government (determined in the same 
     manner as under section 119(b)(2) of the Housing and 
     Community Development Act of 1974).
       ``(4) Consideration of high incidence of crime.--The 
     Secretary of Housing and Urban Development shall take into 
     account, in selecting nominated areas for designation as 
     renewal communities under this section, the extent to which 
     such areas have a high incidence of crime.
       ``(5) Consideration of communities identified in gao 
     study.--The Secretary of Housing and Urban Development shall 
     take into account, in selecting nominated areas for 
     designation as renewal communities under this section, if the 
     area has census tracts identified in the May 12, 1998, report 
     of the Government Accounting Office regarding the 
     identification of economically distressed areas.
       ``(d) Required State and Local Commitments.--
       ``(1) In general.--The Secretary of Housing and Urban 
     Development may designate any nominated area as a renewal 
     community under subsection (a) only if--
       ``(A) the local government and the State in which the area 
     is located agree in writing that, during any period during 
     which the area is a renewal community, such governments will 
     follow a specified course of action which meets the 
     requirements of paragraph (2) and is designed to reduce the 
     various burdens borne by employers or employees in such area; 
     and
       ``(B) the economic growth promotion requirements of 
     paragraph (3) are met.
       ``(2) Course of action.--
       ``(A) In general.--A course of action meets the 
     requirements of this paragraph if such course of action is a 
     written document, signed by a State (or local government) and 
     neighborhood organizations, which evidences a partnership 
     between such State or government and community-based 
     organizations and which commits each signatory to specific 
     and measurable goals, actions, and timetables. Such course of 
     action shall include at least five of the following:
       ``(i) A reduction of tax rates or fees applying within the 
     renewal community.
       ``(ii) An increase in the level of efficiency of local 
     services within the renewal community.
       ``(iii) Crime reduction strategies, such as crime 
     prevention (including the provision of such services by 
     nongovernmental entities).
       ``(iv) Actions to reduce, remove, simplify, or streamline 
     governmental requirements applying within the renewal 
     community.
       ``(v) Involvement in the program by private entities, 
     organizations, neighborhood organizations, and community 
     groups, particularly those in the renewal community, 
     including a commitment from such private

[[Page 18569]]

     entities to provide jobs and job training for, and technical, 
     financial, or other assistance to, employers, employees, and 
     residents from the renewal community.
       ``(vi) State or local income tax benefits for fees paid for 
     services performed by a nongovernmental entity which were 
     formerly performed by a governmental entity.
       ``(vii) The gift (or sale at below fair market value) of 
     surplus real property (such as land, homes, and commercial or 
     industrial structures) in the renewal community to 
     neighborhood organizations, community development 
     corporations, or private companies.
       ``(B) Recognition of past efforts.--For purposes of this 
     section, in evaluating the course of action agreed to by any 
     State or local government, the Secretary of Housing and Urban 
     Development shall take into account the past efforts of such 
     State or local government in reducing the various burdens 
     borne by employers and employees in the area involved.
       ``(3) Economic growth promotion requirements.--The economic 
     growth promotion requirements of this paragraph are met with 
     respect to a nominated area if the local government and the 
     State in which such area is located certify in writing that 
     such government and State, respectively, have repealed or 
     otherwise will not enforce within the area, if such area is 
     designated as a renewal community--
       ``(A) licensing requirements for occupations that do not 
     ordinarily require a professional degree;
       ``(B) zoning restrictions on home-based businesses which do 
     not create a public nuisance;
       ``(C) permit requirements for street vendors who do not 
     create a public nuisance;
       ``(D) zoning or other restrictions that impede the 
     formation of schools or child care centers; and
       ``(E) franchises or other restrictions on competition for 
     businesses providing public services, including but not 
     limited to taxicabs, jitneys, cable television, or trash 
     hauling,

     except to the extent that such regulation of businesses and 
     occupations is necessary for and well-tailored to the 
     protection of health and safety.
       ``(e) Coordination With Treatment of Empowerment Zones and 
     Enterprise Communities.--For purposes of this title, if there 
     are in effect with respect to the same area both--
       ``(1) a designation as a renewal community; and
       ``(2) a designation as an empowerment zone or enterprise 
     community,

     both of such designations shall be given full effect with 
     respect to such area.
       ``(f) Definitions and Special Rules.--For purposes of this 
     subchapter--
       ``(1) Governments.--If more than one government seeks to 
     nominate an area as a renewal community, any reference to, or 
     requirement of, this section shall apply to all such 
     governments.
       ``(2) State.--The term `State' includes Puerto Rico, the 
     Virgin Islands of the United States, Guam, American Samoa, 
     the Northern Mariana Islands, and any other possession of the 
     United States.
       ``(3) Local government.--The term `local government' 
     means--
       ``(A) any county, city, town, township, parish, village, or 
     other general purpose political subdivision of a State;
       ``(B) any combination of political subdivisions described 
     in subparagraph (A) recognized by the Secretary of Housing 
     and Urban Development; and
       ``(C) the District of Columbia.
       ``(4) Application of rules relating to census tracts and 
     census data.--The rules of sections 1392(b)(4) and 1393(a)(9) 
     shall apply.

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

``Sec. 1400F. Renewal community capital gain.
``Sec. 1400G. Renewal community business defined.

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

       ``(a) General Rule.--Gross income does not include any 
     qualified capital gain recognized on the sale or exchange of 
     a qualified community asset held for more than 5 years.
       ``(b) Qualified Community Asset.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified community asset' 
     means--
       ``(A) any qualified community stock;
       ``(B) any qualified community partnership interest; and
       ``(C) any qualified community business property.
       ``(2) Qualified community stock.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `qualified community stock' means any stock in a 
     domestic corporation if--
       ``(i) such stock is acquired by the taxpayer after December 
     31, 2000, and before January 1, 2008, at its original issue 
     (directly or through an underwriter) from the corporation 
     solely in exchange for cash;
       ``(ii) as of the time such stock was issued, such 
     corporation was a renewal community business (or, in the case 
     of a new corporation, such corporation was being organized 
     for purposes of being a renewal community business); and
       ``(iii) during substantially all of the taxpayer's holding 
     period for such stock, such corporation qualified as a 
     renewal community business.
       ``(B) Redemptions.--A rule similar to the rule of section 
     1202(c)(3) shall apply for purposes of this paragraph.
       ``(3) Qualified community partnership interest.--The term 
     `qualified community partnership interest' means any interest 
     in a partnership if--
       ``(A) such interest is acquired by the taxpayer after 
     December 31, 2000, and before January 1, 2008;
       ``(B) as of the time such interest was acquired, such 
     partnership was a renewal community business (or, in the case 
     of a new partnership, such partnership was being organized 
     for purposes of being a renewal community business); and
       ``(C) during substantially all of the taxpayer's holding 
     period for such interest, such partnership qualified as a 
     renewal community business.

     A rule similar to the rule of paragraph (2)(B) shall apply 
     for purposes of this paragraph.
       ``(4) Qualified community business property.--
       ``(A) In general.--The term `qualified community business 
     property' means tangible property if--
       ``(i) such property was acquired by the taxpayer by 
     purchase (as defined in section 179(d)(2)) after December 31, 
     2000, and before January 1, 2008;
       ``(ii) the original use of such property in the renewal 
     community commences with the taxpayer; and
       ``(iii) during substantially all of the taxpayer's holding 
     period for such property, substantially all of the use of 
     such property was in a renewal community business of the 
     taxpayer.
       ``(B) Special rule for substantial improvements.--The 
     requirements of clauses (i) and (ii) of subparagraph (A) 
     shall be treated as satisfied with respect to--
       ``(i) property which is substantially improved (within the 
     meaning of section 1400B(b)(4)(B)(ii)) by the taxpayer before 
     January 1, 2008; and
       ``(ii) any land on which such property is located.
       ``(c) Certain Rules To Apply.--Rules similar to the rules 
     of paragraphs (5), (6), and (7) of subsection (b), and 
     subsections (e), (f), and (g), of section 1400B shall apply 
     for purposes of this section.

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

       ``For purposes of this part, the term `renewal community 
     business' means any entity or proprietorship which would be a 
     qualified business entity or qualified proprietorship under 
     section 1397B if--
       ``(1) references to renewal communities were substituted 
     for references to empowerment zones in such section; and
       ``(2) `80 percent' were substituted for `50 percent' in 
     subsections (b)(2) and (c)(1) of such section.

                ``PART III--FAMILY DEVELOPMENT ACCOUNTS

``Sec. 1400H. Family development accounts for renewal community EITC 
              recipients.
``Sec. 1400I. Demonstration program to provide matching contributions 
              to family development accounts in certain renewal 
              communities.
``Sec. 1400J. Designation of earned income tax credit payments for 
              deposit to family development account.

     ``SEC. 1400H. FAMILY DEVELOPMENT ACCOUNTS FOR RENEWAL 
                   COMMUNITY EITC RECIPIENTS.

       ``(a) Allowance of Deduction.--
       ``(1) In general.--There shall be allowed as a deduction--
       ``(A) in the case of a qualified individual, the amount 
     paid in cash for the taxable year by such individual to any 
     family development account for such individual's benefit; and
       ``(B) in the case of any person other than a qualified 
     individual, the amount paid in cash for the taxable year by 
     such person to any family development account for the benefit 
     of a qualified individual but only if the amount so paid is 
     designated for purposes of this section by such individual.

     No deduction shall be allowed under this paragraph for any 
     amount deposited in a family development account under 
     section 1400I (relating to demonstration program to provide 
     matching amounts in renewal communities).
       ``(2) Limitation.--
       ``(A) In general.--The amount allowable as a deduction to 
     any individual for any taxable year by reason of paragraph 
     (1)(A) shall not exceed the lesser of--
       ``(i) $2,000, or
       ``(ii) an amount equal to the compensation includible in 
     the individual's gross income for such taxable year.
       ``(B) Persons donating to family development accounts of 
     others.--The amount which may be designated under paragraph 
     (1)(B) by any qualified individual for any taxable year of 
     such individual shall not exceed $1,000.

[[Page 18570]]

       ``(3) Special rules for certain married individuals.--Rules 
     similar to rules of section 219(c) shall apply to the 
     limitation in paragraph (2)(A).
       ``(4) Coordination with ira's.--No deduction shall be 
     allowed under this section to any person by reason of a 
     payment to an account for the benefit of a qualified 
     individual if any amount is paid into an individual 
     retirement account (including a Roth IRA) for the benefit of 
     such individual.
       ``(5) Rollovers.--No deduction shall be allowed under this 
     section with respect to any rollover contribution.
       ``(b) Tax Treatment of Distributions.--
       ``(1) Inclusion of amounts in gross income.--Except as 
     otherwise provided in this subsection, any amount paid or 
     distributed out of a family development account shall be 
     included in gross income by the payee or distributee, as the 
     case may be.
       ``(2) Exclusion of qualified family development 
     distributions.--Paragraph (1) shall not apply to any 
     qualified family development distribution.
       ``(c) Qualified Family Development Distribution.--For 
     purposes of this section--
       ``(1) In general.--The term `qualified family development 
     distribution' means any amount paid or distributed out of a 
     family development account which would otherwise be 
     includible in gross income, to the extent that such payment 
     or distribution is used exclusively to pay qualified family 
     development expenses for the holder of the account or the 
     spouse or dependent (as defined in section 152) of such 
     holder.
       ``(2) Qualified family development expenses.--The term 
     `qualified family development expenses' means any of the 
     following:
       ``(A) Qualified higher education expenses.
       ``(B) Qualified first-time homebuyer costs.
       ``(C) Qualified business capitalization costs.
       ``(D) Qualified medical expenses.
       ``(E) Qualified rollovers.
       ``(3) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' has the meaning given such term by section 
     72(t)(7), determined by treating postsecondary vocational 
     educational schools as eligible educational institutions.
       ``(B) Postsecondary vocational education school.--The term 
     `postsecondary vocational educational school' means an area 
     vocational education school (as defined in subparagraph (C) 
     or (D) of section 521(4) of the Carl D. Perkins Vocational 
     and Applied Technology Education Act (20 U.S.C. 2471(4))) 
     which is in any State (as defined in section 521(33) of such 
     Act), as such sections are in effect on the date of the 
     enactment of this section.
       ``(C) Coordination with other benefits.--The amount of 
     qualified higher education expenses for any taxable year 
     shall be reduced as provided in section 25A(g)(2).
       ``(4) Qualified first-time homebuyer costs.--The term 
     `qualified first-time homebuyer costs' means qualified 
     acquisition costs (as defined in section 72(t)(8) without 
     regard to subparagraph (B) thereof) with respect to a 
     principal residence (within the meaning of section 121) for a 
     qualified first-time homebuyer (as defined in such section).
       ``(5) Qualified business capitalization costs.--
       ``(A) In general.--The term `qualified business 
     capitalization costs' means qualified expenditures for the 
     capitalization of a qualified business pursuant to a 
     qualified plan.
       ``(B) Qualified expenditures.--The term `qualified 
     expenditures' means expenditures included in a qualified 
     plan, including capital, plant, equipment, working capital, 
     and inventory expenses.
       ``(C) Qualified business.--The term `qualified business' 
     means any business that does not contravene any law.
       ``(D) Qualified plan.--The term `qualified plan' means a 
     business plan which meets such requirements as the Secretary 
     may specify.
       ``(6) Qualified medical expenses.--The term `qualified 
     medical expenses' means any amount paid during the taxable 
     year, not compensated for by insurance or otherwise, for 
     medical care (as defined in section 213(d)) of the taxpayer, 
     his spouse, or his dependent (as defined in section 152).
       ``(7) Qualified rollovers.--The term `qualified rollover' 
     means any amount paid from a family development account of a 
     taxpayer into another such account established for the 
     benefit of--
       ``(A) such taxpayer, or
       ``(B) any qualified individual who is--
       ``(i) the spouse of such taxpayer, or
       ``(ii) any dependent (as defined in section 152) of the 
     taxpayer.

     Rules similar to the rules of section 408(d)(3) shall apply 
     for purposes of this paragraph.
       ``(d) Tax Treatment of Accounts.--
       ``(1) In general.--Any family development account is exempt 
     from taxation under this subtitle unless such account has 
     ceased to be a family development account by reason of 
     paragraph (2). Notwithstanding the preceding sentence, any 
     such account is subject to the taxes imposed by section 511 
     (relating to imposition of tax on unrelated business income 
     of charitable, etc., organizations). Notwithstanding any 
     other provision of this title (including chapters 11 and 12), 
     the basis of any person in such an account is zero.
       ``(2) Loss of exemption in case of prohibited 
     transactions.--For purposes of this section, rules similar to 
     the rules of section 408(e) shall apply.
       ``(3) Other rules to apply.--Rules similar to the rules of 
     paragraphs (4), (5), and (6) of section 408(d) shall apply 
     for purposes of this section.
       ``(e) Family Development Account.--For purposes of this 
     title, the term `family development account' means a trust 
     created or organized in the United States for the exclusive 
     benefit of a qualified individual or his beneficiaries, but 
     only if the written governing instrument creating the trust 
     meets the following requirements:
       ``(1) Except in the case of a qualified rollover (as 
     defined in subsection (c)(7))--
       ``(A) no contribution will be accepted unless it is in 
     cash; and
       ``(B) contributions will not be accepted for the taxable 
     year in excess of $3,000 (determined without regard to any 
     contribution made under section 1400I (relating to 
     demonstration program to provide matching amounts in renewal 
     communities)).
       ``(2) The requirements of paragraphs (2) through (6) of 
     section 408(a) are met.
       ``(f) Qualified Individual.--For purposes of this section, 
     the term `qualified individual' means, for any taxable year, 
     an individual--
       ``(1) who is a bona fide resident of a renewal community 
     throughout the taxable year; and
       ``(2) to whom a credit was allowed under section 32 for the 
     preceding taxable year.
       ``(g) Other Definitions and Special Rules.--
       ``(1) Compensation.--The term `compensation' has the 
     meaning given such term by section 219(f)(1).
       ``(2) Married individuals.--The maximum deduction under 
     subsection (a) shall be computed separately for each 
     individual, and this section shall be applied without regard 
     to any community property laws.
       ``(3) Time when contributions deemed made.--For purposes of 
     this section, a taxpayer shall be deemed to have made a 
     contribution to a family development account on the last day 
     of the preceding taxable year if the contribution is made on 
     account of such taxable year and is made not later than the 
     time prescribed by law for filing the return for such taxable 
     year (not including extensions thereof).
       ``(4) Employer payments; custodial accounts.--Rules similar 
     to the rules of sections 219(f)(5) and 408(h) shall apply for 
     purposes of this section.
       ``(5) Reports.--The trustee of a family development account 
     shall make such reports regarding such account to the 
     Secretary and to the individual for whom the account is 
     maintained with respect to contributions (and the years to 
     which they relate), distributions, and such other matters as 
     the Secretary may require under regulations. The reports 
     required by this paragraph--
       ``(A) shall be filed at such time and in such manner as the 
     Secretary prescribes in such regulations; and
       ``(B) shall be furnished to individuals--
       ``(i) not later than January 31 of the calendar year 
     following the calendar year to which such reports relate; and
       ``(ii) in such manner as the Secretary prescribes in such 
     regulations.
       ``(6) Investment in collectibles treated as 
     distributions.--Rules similar to the rules of section 408(m) 
     shall apply for purposes of this section.
       ``(h) Penalty for Distributions Not Used for Qualified 
     Family Development Expenses.--
       ``(1) In general.--If any amount is distributed from a 
     family development account and is not used exclusively to pay 
     qualified family development expenses for the holder of the 
     account or the spouse or dependent (as defined in section 
     152) of such holder, the tax imposed by this chapter for the 
     taxable year of such distribution shall be increased by the 
     sum of--
       ``(A) 100 percent of the portion of such amount which is 
     includible in gross income and is attributable to amounts 
     contributed under section 1400I (relating to demonstration 
     program to provide matching amounts in renewal communities); 
     and
       ``(B) 10 percent of the portion of such amount which is 
     includible in gross income and is not described in 
     subparagraph (A).

     For purposes of this subsection, distributions which are 
     includible in gross income shall be treated as attributable 
     to amounts contributed under section 1400I to the extent 
     thereof. For purposes of the preceding sentence, all family 
     development accounts of an individual shall be treated as one 
     account.
       ``(2) Exception for certain distributions.--Paragraph (1) 
     shall not apply to distributions which are--
       ``(A) made on or after the date on which the account holder 
     attains age 59\1/2\,
       ``(B) made to a beneficiary (or the estate of the account 
     holder) on or after the death of the account holder, or
       ``(C) attributable to the account holder's being disabled 
     within the meaning of section 72(m)(7).
       ``(i) Termination.--No deduction shall be allowed under 
     this section for any amount

[[Page 18571]]

     paid to a family development account for any taxable year 
     beginning after December 31, 2007.

     ``SEC. 1400I. DEMONSTRATION PROGRAM TO PROVIDE MATCHING 
                   CONTRIBUTIONS TO FAMILY DEVELOPMENT ACCOUNTS IN 
                   CERTAIN RENEWAL COMMUNITIES.

       ``(a) Designation.--
       ``(1) Definitions.--For purposes of this section, the term 
     `FDA matching demonstration area' means any renewal 
     community--
       ``(A) which is nominated under this section by each of the 
     local governments and States which nominated such community 
     for designation as a renewal community under section 
     1400E(a)(1)(A); and
       ``(B) which the Secretary of Housing and Urban Development 
     designates as an FDA matching demonstration area after 
     consultation with--
       ``(i) the Secretaries of Agriculture, Commerce, Labor, and 
     the Treasury, the Director of the Office of Management and 
     Budget, and the Administrator of the Small Business 
     Administration; and
       ``(ii) in the case of a community on an Indian reservation, 
     the Secretary of the Interior.
       ``(2) Number of designations.--
       ``(A) In general.--The Secretary of Housing and Urban 
     Development may designate not more than 5 communities as FDA 
     matching demonstration areas.
       ``(B) Minimum designation in rural areas.--Of the areas 
     designated under subparagraph (A), at least 2 must be areas 
     described in section 1400E(a)(2)(B).
       ``(3) Limitations on designations.--
       ``(A) Publication of regulations.--The Secretary of Housing 
     and Urban Development shall prescribe by regulation no later 
     than 4 months after the date of the enactment of this 
     section, after consultation with the officials described in 
     paragraph (1)(B)--
       ``(i) the procedures for nominating a renewal community 
     under paragraph (1)(A) (including procedures for coordinating 
     such nomination with the nomination of an area for 
     designation as a renewal community under section 1400E); and
       ``(ii) the manner in which nominated renewal communities 
     will be evaluated for purposes of this section.
       ``(B) Time limitations.--The Secretary of Housing and Urban 
     Development may designate renewal communities as FDA matching 
     demonstration areas only during the 24-month period beginning 
     on the first day of the first month following the month in 
     which the regulations described in subparagraph (A) are 
     prescribed.
       ``(4) Designation based on degree of poverty, etc.--The 
     rules of section 1400E(a)(3) shall apply for purposes of 
     designations of FDA matching demonstration areas under this 
     section.
       ``(b) Period for Which Designation Is in Effect.--Any 
     designation of a renewal community as an FDA matching 
     demonstration area shall remain in effect during the period 
     beginning on the date of such designation and ending on the 
     date on which such area ceases to be a renewal community.
       ``(c) Matching Contributions to Family Development 
     Accounts.--
       ``(1) In general.--Not less than once each taxable year, 
     the Secretary shall deposit (to the extent provided in 
     appropriation Acts) into a family development account of each 
     qualified individual (as defined in section 1400H(f))--
       ``(A) who is a resident throughout the taxable year of an 
     FDA matching demonstration area; and
       ``(B) who requests (in such form and manner as the 
     Secretary prescribes) such deposit for the taxable year,

     an amount equal to the sum of the amounts deposited into all 
     of the family development accounts of such individual during 
     such taxable year (determined without regard to any amount 
     contributed under this section).
       ``(2) Limitations.--
       ``(A) Annual limit.--The Secretary shall not deposit more 
     than $1000 under paragraph (1) with respect to any individual 
     for any taxable year.
       ``(B) Aggregate limit.--The Secretary shall not deposit 
     more than $2000 under paragraph (1) with respect to any 
     individual for all taxable years.
       ``(3) Exclusion from income.--Except as provided in section 
     1400H, gross income shall not include any amount deposited 
     into a family development account under paragraph (1).
       ``(d) Notice of Program.--The Secretary shall provide 
     appropriate notice to residents of FDA matching demonstration 
     areas of the availability of the benefits under this section.
       ``(e) Termination.--No amount may be deposited under this 
     section for any taxable year beginning after December 31, 
     2007.

     ``SEC. 1400J. DESIGNATION OF EARNED INCOME TAX CREDIT 
                   PAYMENTS FOR DEPOSIT TO FAMILY DEVELOPMENT 
                   ACCOUNT.

       ``(a) In General.--With respect to the return of any 
     qualified individual (as defined in section 1400H(f)) for the 
     taxable year of the tax imposed by this chapter, such 
     individual may designate that a specified portion (not less 
     than $1) of any overpayment of tax for such taxable year 
     which is attributable to the earned income tax credit shall 
     be deposited by the Secretary into a family development 
     account of such individual. The Secretary shall so deposit 
     such portion designated under this subsection.
       ``(b) Manner and Time of Designation.--A designation under 
     subsection (a) may be made with respect to any taxable year--
       ``(1) at the time of filing the return of the tax imposed 
     by this chapter for such taxable year, or
       ``(2) at any other time (after the time of filing the 
     return of the tax imposed by this chapter for such taxable 
     year) specified in regulations prescribed by the Secretary.

     Such designation shall be made in such manner as the 
     Secretary prescribes by regulations.
       ``(c) Portion Attributable to Earned Income Tax Credit.--
     For purposes of subsection (a), an overpayment for any 
     taxable year shall be treated as attributable to the earned 
     income tax credit to the extent that such overpayment does 
     not exceed the credit allowed to the taxpayer under section 
     32 for such taxable year.
       ``(d) Overpayments Treated as Refunded.--For purposes of 
     this title, any portion of an overpayment of tax designated 
     under subsection (a) shall be treated as being refunded to 
     the taxpayer as of the last date prescribed for filing the 
     return of tax imposed by this chapter (determined without 
     regard to extensions) or, if later, the date the return is 
     filed.
       ``(e) Termination.--This section shall not apply to any 
     taxable year beginning after December 31, 2007.

                    ``PART IV--ADDITIONAL INCENTIVES

``Sec. 1400K. Commercial revitalization credit.
``Sec. 1400L. Increase in expensing under section 179.

     ``SEC. 1400K. COMMERCIAL REVITALIZATION CREDIT.

       ``(a) General Rule.--For purposes of section 46, except as 
     provided in subsection (e), the commercial revitalization 
     credit for any taxable year is an amount equal to the 
     applicable percentage of the qualified revitalization 
     expenditures with respect to any qualified revitalization 
     building.
       ``(b) Applicable Percentage.--For purposes of this 
     section--
       ``(1) In general.--The term `applicable percentage' means--
       ``(A) 20 percent for the taxable year in which a qualified 
     revitalization building is placed in service, or
       ``(B) at the election of the taxpayer, 5 percent for each 
     taxable year in the credit period.

     The election under subparagraph (B), once made, shall be 
     irrevocable.
       ``(2) Credit period.--
       ``(A) In general.--The term `credit period' means, with 
     respect to any building, the period of 10 taxable years 
     beginning with the taxable year in which the building is 
     placed in service.
       ``(B) Applicable rules.--Rules similar to the rules under 
     paragraphs (2) and (4) of section 42(f) shall apply.
       ``(c) Qualified Revitalization Buildings and 
     Expenditures.--For purposes of this section--
       ``(1) Qualified revitalization building.--The term 
     `qualified revitalization building' means any building (and 
     its structural components) if--
       ``(A) such building is located in a renewal community and 
     is placed in service after December 31, 2000;
       ``(B) a commercial revitalization credit amount is 
     allocated to the building under subsection (e); and
       ``(C) depreciation (or amortization in lieu of 
     depreciation) is allowable with respect to the building.
       ``(2) Qualified revitalization expenditure.--
       ``(A) In general.--The term `qualified revitalization 
     expenditure' means any amount properly chargeable to capital 
     account--
       ``(i) for property for which depreciation is allowable 
     under section 168 and which is--

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

       ``(ii) in connection with the construction of any qualified 
     revitalization building which was not previously placed in 
     service or in connection with the substantial rehabilitation 
     (within the meaning of section 47(c)(1)(C)) of a building 
     which was placed in service before the beginning of such 
     rehabilitation.
       ``(B) Dollar limitation.--The aggregate amount which may be 
     treated as qualified revitalization expenditures with respect 
     to any qualified revitalization building for any taxable year 
     shall not exceed the excess of--
       ``(i) $10,000,000, reduced by
       ``(ii) any such expenditures with respect to the building 
     taken into account by the taxpayer or any predecessor in 
     determining the amount of the credit under this section for 
     all preceding taxable years.
       ``(C) Certain expenditures not included.--The term 
     `qualified revitalization expenditure' does not include--
       ``(i) Straight line depreciation must be used.--Any 
     expenditure (other than with respect to land acquisitions) 
     with respect to which the taxpayer does not use the straight 
     line method over a recovery period determined under 
     subsection (c) or (g) of section

[[Page 18572]]

     168. The preceding sentence shall not apply to any 
     expenditure to the extent the alternative depreciation system 
     of section 168(g) applies to such expenditure by reason of 
     subparagraph (B) or (C) of section 168(g)(1).
       ``(ii) Acquisition costs.--The costs of acquiring any 
     building or interest therein and any land in connection with 
     such building to the extent that such costs exceed 30 percent 
     of the qualified revitalization expenditures determined 
     without regard to this clause.
       ``(iii) Other credits.--Any expenditure which the taxpayer 
     may take into account in computing any other credit allowable 
     under this title unless the taxpayer elects to take the 
     expenditure into account only for purposes of this section.
       ``(d) When Expenditures Taken Into Account.--
       ``(1) In general.--Qualified revitalization expenditures 
     with respect to any qualified revitalization building shall 
     be taken into account for the taxable year in which the 
     qualified revitalization building is placed in service. For 
     purposes of the preceding sentence, a substantial 
     rehabilitation of a building shall be treated as a separate 
     building.
       ``(2) Progress expenditure payments.--Rules similar to the 
     rules of subsections (b)(2) and (d) of section 47 shall apply 
     for purposes of this section.
       ``(e) Limitation on Aggregate Credits Allowable With 
     Respect to Buildings Located in a State.--
       ``(1) In general.--The amount of the credit determined 
     under this section for any taxable year with respect to any 
     building shall not exceed the commercial revitalization 
     credit amount (in the case of an amount determined under 
     subsection (b)(1)(B), the present value of such amount as 
     determined under the rules of section 42(b)(2)(C)) allocated 
     to such building under this subsection by the commercial 
     revitalization credit agency. Such allocation shall be made 
     at the same time and in the same manner as under paragraphs 
     (1) and (7) of section 42(h).
       ``(2) Commercial revitalization credit amount for 
     agencies.--
       ``(A) In general.--The aggregate commercial revitalization 
     credit amount which a commercial revitalization credit agency 
     may allocate for any calendar year is the amount of the State 
     commercial revitalization credit ceiling determined under 
     this paragraph for such calendar year for such agency.
       ``(B) State commercial revitalization credit ceiling.--The 
     State commercial revitalization credit ceiling applicable to 
     any State--
       ``(i) for each calendar year after 2000 and before 2008 is 
     $2,000,000 for each renewal community in the State; and
       ``(ii) zero for each calendar year thereafter.
       ``(C) Commercial revitalization credit agency.--For 
     purposes of this section, the term `commercial revitalization 
     credit agency' means any agency authorized by a State to 
     carry out this section.
       ``(f) Responsibilities of Commercial Revitalization Credit 
     Agencies.--
       ``(1) Plans for allocation.--Notwithstanding any other 
     provision of this section, the commercial revitalization 
     credit amount with respect to any building shall be zero 
     unless--
       ``(A) such amount was allocated pursuant to a qualified 
     allocation plan of the commercial revitalization credit 
     agency which is approved (in accordance with rules similar to 
     the rules of section 147(f)(2) (other than subparagraph 
     (B)(ii) thereof)) by the governmental unit of which such 
     agency is a part; and
       ``(B) such agency notifies the chief executive officer (or 
     its equivalent) of the local jurisdiction within which the 
     building is located of such allocation and provides such 
     individual a reasonable opportunity to comment on the 
     allocation.
       ``(2) Qualified allocation plan.--For purposes of this 
     subsection, the term `qualified allocation plan' means any 
     plan--
       ``(A) which sets forth selection criteria to be used to 
     determine priorities of the commercial revitalization credit 
     agency which are appropriate to local conditions;
       ``(B) which considers--
       ``(i) the degree to which a project contributes to the 
     implementation of a strategic plan that is devised for a 
     renewal community through a citizen participation process;
       ``(ii) the amount of any increase in permanent, full-time 
     employment by reason of any project; and
       ``(iii) the active involvement of residents and nonprofit 
     groups within the renewal community; and
       ``(C) which provides a procedure that the agency (or its 
     agent) will follow in monitoring compliance with this 
     section.
       ``(g) Termination.--This section shall not apply to any 
     building placed in service after December 31, 2007.

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

       ``(a) General Rule.--In the case of a renewal community 
     business (as defined in section 1400G), for purposes of 
     section 179--
       ``(1) the limitation under section 179(b)(1) shall be 
     increased by the lesser of--
       ``(A) $35,000; or
       ``(B) the cost of section 179 property which is qualified 
     renewal property placed in service during the taxable year; 
     and
       ``(2) the amount taken into account under section 179(b)(2) 
     with respect to any section 179 property which is qualified 
     renewal property shall be 50 percent of the cost thereof.
       ``(b) Recapture.--Rules similar to the rules under section 
     179(d)(10) shall apply with respect to any qualified renewal 
     property which ceases to be used in a renewal community by a 
     renewal community business.
       ``(c) Qualified Renewal Property.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified renewal property' 
     means any property to which section 168 applies (or would 
     apply but for section 179) if--
       ``(A) such property was acquired by the taxpayer by 
     purchase (as defined in section 179(d)(2)) after December 31, 
     2000, and before January 1, 2008; and
       ``(B) such property would be qualified zone property (as 
     defined in section 1397C) if references to renewal 
     communities were substituted for references to empowerment 
     zones in section 1397C.
       ``(2) Certain rules to apply.--The rules of subsections 
     (a)(2) and (b) of section 1397C shall apply for purposes of 
     this section.''.

     SEC. __02. EXTENSION OF EXPENSING OF ENVIRONMENTAL 
                   REMEDIATION COSTS TO RENEWAL COMMUNITIES.

       (a) Extension.--Paragraph (2) of section 198(c) (defining 
     targeted area) is amended by redesignating subparagraph (C) 
     as subparagraph (D) and by inserting after subparagraph (B) 
     the following new subparagraph:
       ``(C) Renewal communities included.--Except as provided in 
     subparagraph (B), such term shall include a renewal community 
     (as defined in section 1400E).''.
       (b) Extension of Termination Date for Renewal 
     Communities.--Subsection (h) of section 198 is amended by 
     inserting before the period ``(December 31, 2007, in the case 
     of a renewal community, as defined in section 1400E).''.

     SEC. __03. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR 
                   RENEWAL COMMUNITIES

       (a) Extension.--Subsection (c) of section 51 (relating to 
     termination) is amended by adding at the end the following 
     new paragraph:
       ``(5) Extension of credit for renewal communities.--
       ``(A) In general.--In the case of an individual who begins 
     work for the employer after the date contained in paragraph 
     (4)(B), for purposes of section 38--
       ``(i) in lieu of applying subsection (a), the amount of the 
     work opportunity credit determined under this section for the 
     taxable year shall be equal to--

       ``(I) 15 percent of the qualified first-year wages for such 
     year; and
       ``(II) 30 percent of the qualified second-year wages for 
     such year;

       ``(ii) subsection (b)(3) shall be applied by substituting 
     `$10,000' for `$6,000';
       ``(iii) paragraph (4)(B) shall be applied by substituting 
     for the date contained therein the last day for which the 
     designation under section 1400E of the renewal community 
     referred to in subparagraph (B)(i) is in effect; and
       ``(iv) rules similar to the rules of section 51A(b)(5)(C) 
     shall apply.
       ``(B) Qualified first- and second-year wages.--For purposes 
     of subparagraph (A)--
       ``(i) In general.--The term `qualified wages' means, with 
     respect to each 1-year period referred to in clause (ii) or 
     (iii), as the case may be, the wages paid or incurred by the 
     employer during the taxable year to any individual but only 
     if--

       ``(I) the employer is engaged in a trade or business in a 
     renewal community throughout such 1-year period;

       ``(II) the principal place of abode of such individual is 
     in such renewal community throughout such 1-year period; and
       ``(III) substantially all of the services which such 
     individual performs for the employer during such 1-year 
     period are performed in such renewal community.

       ``(ii) Qualified first-year wages.--The term `qualified 
     first-year wages' means, with respect to any individual, 
     qualified wages attributable to service rendered during the 
     1-year period beginning with the day the individual begins 
     work for the employer.
       ``(iii) Qualified second-year wages.--The term `qualified 
     second-year wages' means, with respect to any individual, 
     qualified wages attributable to service rendered during the 
     1-year period beginning on the day after the last day of the 
     1-year period with respect to such individual determined 
     under clause (ii).''.
       (b) Congruent Treatment of Renewal Communities and 
     Enterprise Zones for Purposes of Youth Residence 
     Requirements.--
       (1) High-risk youth.--Subparagraphs (A)(ii) and (B) of 
     section 51(d)(5) are each amended by striking ``empowerment 
     zone or enterprise community'' and inserting ``empowerment 
     zone, enterprise community, or renewal community''.
       (2) Qualified summer youth employee.--Clause (iv) of 
     section 51(d)(7)(A) is amended by striking ``empowerment zone 
     or enterprise community'' and inserting ``empowerment zone, 
     enterprise community, or renewal community''.
       (3) Headings.--Paragraphs (5)(B) and (7)(C) of section 
     51(d) are each amended by inserting ``or community'' in the 
     heading after ``zone''.

[[Page 18573]]



     SEC. __04. CONFORMING AND CLERICAL AMENDMENTS.

       (a) Deduction for Contributions to Family Development 
     Accounts Allowable Whether or Not Taxpayer Itemizes.--
     Subsection (a) of section 62 (relating to adjusted gross 
     income defined) is amended by inserting after paragraph (17) 
     the following new paragraph:
       ``(18) Family development accounts.--The deduction allowed 
     by section 1400H(a)(1)(A).''.
       (b) Tax on Excess Contributions.--
       (1) Tax imposed.--Subsection (a) of section 4973 is amended 
     by striking ``or'' at the end of paragraph (3), adding ``or'' 
     at the end of paragraph (4), and inserting after paragraph 
     (4) the following new paragraph:
       ``(5) a family development account (within the meaning of 
     section 1400H(e)),''.
       (2) Excess contributions.--Section 4973 is amended by 
     adding at the end the following new subsection:
       ``(g) Family Development Accounts.--For purposes of this 
     section, in the case of a family development account, the 
     term `excess contributions' means the sum of--
       ``(1) the excess (if any) of--
       ``(A) the amount contributed for the taxable year to the 
     account (other than a qualified rollover, as defined in 
     section 1400H(c)(7), or a contribution under section 1400I), 
     over
       ``(B) the amount allowable as a deduction under section 
     1400H for such contributions; and
       ``(2) the amount determined under this subsection for the 
     preceding taxable year reduced by the sum of--
       ``(A) the distributions out of the account for the taxable 
     year which were included in the gross income of the payee 
     under section 1400H(b)(1);
       ``(B) the distributions out of the account for the taxable 
     year to which rules similar to the rules of section 408(d)(5) 
     apply by reason of section 1400H(d)(3); and
       ``(C) the excess (if any) of the maximum amount allowable 
     as a deduction under section 1400H for the taxable year over 
     the amount contributed to the account for the taxable year 
     (other than a contribution under section 1400I).

     For purposes of this subsection, any contribution which is 
     distributed from the family development account in a 
     distribution to which rules similar to the rules of section 
     408(d)(4) apply by reason of section 1400H(d)(3) shall be 
     treated as an amount not contributed.''.
       (c) Tax on Prohibited Transactions.--Section 4975 is 
     amended--
       (1) by adding at the end of subsection (c) the following 
     new paragraph:
       ``(6) Special rule for family development accounts.--An 
     individual for whose benefit a family development account is 
     established and any contributor to such account shall be 
     exempt from the tax imposed by this section with respect to 
     any transaction concerning such account (which would 
     otherwise be taxable under this section) if, with respect to 
     such transaction, the account ceases to be a family 
     development account by reason of the application of section 
     1400H(d)(2) to such account.''; and
       (2) in subsection (e)(1), by striking ``or'' at the end of 
     subparagraph (E), by redesignating subparagraph (F) as 
     subparagraph (G), and by inserting after subparagraph (E) the 
     following new subparagraph:
       ``(F) a family development account described in section 
     1400H(e), or''.
       (d) Information Relating to Certain Trusts and Annuity 
     Plans.--Subsection (c) of section 6047 is amended--
       (1) by inserting ``or section 1400H'' after ``section 
     219''; and
       (2) by inserting ``, of any family development account 
     described in section 1400H(e),'', after ``section 408(a)''.
       (e) Inspection of Applications for Tax Exemption.--Clause 
     (i) of section 6104(a)(1)(B) is amended by inserting ``a 
     family development account described in section 1400H(e),'' 
     after ``section 408(a),''.
       (f) Failure To Provide Reports on Family Development 
     Accounts.--Paragraph (2) of section 6693(a) is amended by 
     striking ``and'' at the end of subparagraph (C), by striking 
     the period and inserting ``, and'' at the end of subparagraph 
     (D), and by adding at the end the following new subparagraph:
       ``(E) section 1400H(g)(6) (relating to family development 
     accounts).''.
       (g) Conforming Amendments Regarding Commercial 
     Revitalization Credit.--
       (1) Section 46 (relating to investment credit) is amended 
     by striking ``and'' at the end of paragraph (2), by striking 
     the period at the end of paragraph (3) and inserting ``, 
     and'', and by adding at the end the following new paragraph:
       ``(4) the commercial revitalization credit provided under 
     section 1400K.''.
       (2) Section 39(d) is amended by adding at the end the 
     following new paragraph:
       ``(9) No carryback of section 1400k credit before date of 
     enactment.--No portion of the unused business credit for any 
     taxable year which is attributable to any commercial 
     revitalization credit determined under section 1400K may be 
     carried back to a taxable year ending before the date of the 
     enactment of section 1400K.''.
       (3) Subparagraph (B) of section 48(a)(2) is amended by 
     inserting ``or commercial revitalization'' after 
     ``rehabilitation'' each place it appears in the text and 
     heading.
       (4) Subparagraph (C) of section 49(a)(1) is amended by 
     striking ``and'' at the end of clause (ii), by striking the 
     period at the end of clause (iii) and inserting ``, and'', 
     and by adding at the end the following new clause:
       ``(iv) the portion of the basis of any qualified 
     revitalization building attributable to qualified 
     revitalization expenditures.''.
       (5) Paragraph (2) of section 50(a) is amended by inserting 
     ``or 1400K(d)(2)'' after ``section 47(d)'' each place it 
     appears.
       (6) Subparagraph (A) of section 50(a)(2) is amended by 
     inserting ``or qualified revitalization building 
     (respectively)'' after ``qualified rehabilitated building''.
       (7) Subparagraph (B) of section 50(a)(2) is amended by 
     adding at the end the following new sentence: ``A similar 
     rule shall apply for purposes of section 1400K.''.
       (8) Paragraph (2) of section 50(b) is amended by striking 
     ``and'' at the end of subparagraph (C), by striking the 
     period at the end of subparagraph (D) and inserting ``; 
     and'', and by adding at the end the following new 
     subparagraph:
       ``(E) a qualified revitalization building (as defined in 
     section 1400K) to the extent of the portion of the basis 
     which is attributable to qualified revitalization 
     expenditures (as defined in section 1400K).''.
       (9) The last sentence of section 50(b)(3) is amended to 
     read as follows: ``If any qualified rehabilitated building or 
     qualified revitalization building is used by the tax-exempt 
     organization pursuant to a lease, this paragraph shall not 
     apply for purposes of determining the amount of the 
     rehabilitation credit or the commercial revitalization 
     credit.''.
       (10) Subparagraph (C) of section 50(b)(4) is amended--
       (A) by inserting ``or commercial revitalization'' after 
     ``rehabilitated'' in the text and heading; and
       (B) by inserting ``or commercial revitalization'' after 
     ``rehabilitation''.
       (11) Subparagraph (C) of section 469(i)(3) is amended--
       (A) by inserting ``or section 1400K'' after ``section 42''; 
     and
       (B) by striking ``credit'' in the heading and inserting 
     ``and commercial revitalization credits''.
       (h) Clerical Amendments.--The table of subchapters for 
     chapter 1 is amended by adding at the end the following new 
     item:

``Subchapter X. Renewal Communities.''.

     SEC. __05. EVALUATION AND REPORTING REQUIREMENTS.

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

     SEC. __06. EXCLUSION OF EFFECTS OF THIS ACT FROM PAYGO 
                   SCORECARD.

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

     SEC. __07. REVENUE OFFSET.

       (a) In General.--Notwithstanding any provision of, or 
     amendment made by sections 1102 through 1114 and section 1116 
     of this Act, such sections shall only take effect for taxable 
     years beginning after December 31, 2006.
       (b) Additional Offset.--The Secretary of the Treasury shall 
     adjust the effective dates of the phase-in of the applicable 
     dollar amounts in section 2503(b)(2), as amended by section 
     721(a)(2) of this Act, as necessary to offset the decrease in 
     revenues to the Treasury resulting from the enactment of this 
     title, taking into account the revenue effect of subsection 
     (a).
       (c) Phase-In of Designations of Renewal Communities.--For 
     purposes of section 1400E(a)(2)(A) of the Internal Revenue 
     Code of 1986 (as added by this title) the Secretary of 
     Housing and Urban Development shall take into account the 
     availability of revenues in the Treasury resulting from the 
     application of subsection (a) in making any designation of a 
     renewal community under such section.
                                 ______
                                 

                       JOHNSON AMENDMENT NO. 1479

  (Ordered to lie on the table.)
  Mr. JOHNSON submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       At the appropriate place, add the following:

     SECTION 1. CERTAIN NATIVE AMERICAN HOUSING ASSISTANCE 
                   DISREGARDED IN DETERMINING WHETHER BUILDING IS 
                   FEDERALLY SUBSIDIZED FOR PURPOSES OF THE LOW-
                   INCOME HOUSING CREDIT.

       (a) In General.--Subparagraph (E) of section 42(i)(2) of 
     the Internal Revenue Code of

[[Page 18574]]

     1986 (relating to determination of whether building is 
     federally subsidized) is amended--
       (1) in clause (i), by inserting ``or the Native American 
     Housing Assistance and Self-Determination Act of 1996 (25 
     U.S.C. 4101 et seq.) (as in effect on October 1, 1997)'' 
     after ``this subparagraph)'', and
       (2) in the subparagraph heading, by inserting ``OR NATIVE 
     AMERICAN HOUSING ASSISTANCE'' after ``HOME ASSISTANCE''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to periods after the date of the enactment of 
     this Act.
                                 ______
                                 

                   SHELBY AMENDMENTS NOS. 1480-148111

  (Ordered to lie on the table.)
  Mr. SHELBY submitted two amendments intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

                           Amendment No. 1480

       Section 1503(c) of the Internal Revenue Code of 1986 is 
     amended to add the following immediately after the first 
     sentence thereof:
       If--
       (1) the business activities of a common parent of an 
     affiliated group does not include any significant activities 
     other than those generally recognized in the business 
     community as related to the operations of a holding company, 
     and
       (2) such affiliated group includes members not taxed under 
     section 801 and members taxed under section 801 and no 
     members to which sections 831 through 835 applies, and
       (3) if the consolidated taxable income of the common parent 
     results in a net operating loss for the taxable year

     the limitation contained in the preceding sentence of this 
     subsection shall not apply to the portion of the consolidated 
     net operating loss that equals the common parent's loss for 
     the taxable year multiplied by the ratio of the taxable 
     income of the members of the group taxed under section 801 to 
     the taxable income of the affiliated group (such taxable 
     income of such member and such group shall be determined for 
     this purpose without deductions, and with such other 
     adjustments as provided under regulation prescribed by the 
     Secretary). For purposes of applying such limitation, the 
     taxable income of the members of the group taxed under 
     section 801 shall be reduced by the portion of such common 
     parent's loss to which the limitation does not apply.
                                  ____


                           Amendment No. 1481

       The provision amends section (b) of section 1321 of S. 1429 
     to read as follows:
       ``(b) Effective Dates.--
       ``(1) In general.--The amendment made by this section shall 
     apply to distributions made after July 14, 1999.
       ``(2) Transition rule.--The amendment made by this section 
     shall not apply to any distribution after July 14, 1999, if 
     such distribution is--
       ``(A) made pursuant to a written binding contract in effect 
     on such date and at all times thereafter.
       ``(B) made pursuant to a loan commitment made on or before 
     such date, provided that the distribution occurs not more 
     than two weeks after the date of enactment of this Act, or
       ``(C) described in a public announcement on or before such 
     date, provided that the distribution occurs not more than two 
     weeks after the date of enactment of this Act.''
                                 ______
                                 

                        CRAIG AMENDMENT NO. 1482

  (Ordered to lie on the table).
  Mr. CRAIG submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. CLARIFICATION OF NONRECOGNITION OF GAIN FOR CERTAIN 
                   SALES OF STOCK TO ELIGIBLE FARM COOPERATIVES.

       Section 1042(g) (relative to application of section to 
     sales of stock in agricultural refiners and processors to 
     eligible farm cooperatives) is amended by adding at the end 
     the following new paragraph:
       ``(5) Treatment of predecessor.--Any reference in this 
     subsection to stock in a qualified refiner or processor shall 
     be treated as including a reference to any controlling 
     interest in any predecessor or successor (including a 
     controlled partnership) of such refiner or processor.''
                                 ______
                                 

                        LOTT AMENDMENT NO. 1483

  (Ordered to lie on the table.)
  Mr. LOTT submitted an amendment intended to be propsoed by him to the 
bill, S. 1429, supra, as follows:

       In lieu of the matter proposed to be inserted, insert the 
     following:

     SEC. __. SENSE OF THE SENATE.

       It is the sense of the Senate that--
       (1) in 1975, the Federal Government promised to pay 40 
     percent of the costs associated with part B of the 
     Individuals with Disabilities Education Act (20 U.S.C. 1411 
     et seq.), which guarantees each special education child the 
     right to a free and appropriate public education;
       (2) the Administration's fiscal year 2000 budget request 
     provides a .07 percent increase in funding for part B of the 
     Individuals with Disabilities Education Act, which is less 
     than an adjustment for inflation, and the Administration's 
     budget request represents a decrease in real funding for 
     educating children with disabilities;
       (3) in the 3 years preceding 1999, Congress has increased 
     funding for part B of the Individuals with Disabilities 
     Education Act by nearly 80 percent, however, the increase is 
     still far short of the nearly $15,000,000,000 needed to live 
     up to the originally promised funding level for such part;
       (4) fulfilling the Federal obligation to fund part B of 
     Individuals with Disabilities Education Act at the originally 
     promised level will allow State and local governments, some 
     of whom spend up to 19 percent of their local dollars on 
     special education costs, to have more flexibility to spend 
     their local resources to meet the unique educational needs of 
     all of their students;
       (5) the recent United States Supreme Court decision Cedar 
     Rapids Community School District v. Garret F., 119 S. Ct. 
     992; (1999) will increase the amount of funding that school 
     districts will need to dedicate to educating, and providing 
     related services to, their special needs children; and
       (6) because the need for the Federal Government to fulfill 
     such obligation is so great, part B of the Individuals with 
     Disabilities Education Act should be fully funded at the 
     originally promised level of 40 percent before federal funds 
     are appropriated for any new federal education programs.
                                 ______
                                 

                        BAYH AMENDMENT NO. 1484

  (Ordered to lie on the table.)
  Mr. BAYH submitted an amendment intended to be proposed by him to the 
bill, S. 1429, supra; as follows:

       At the appropriate place, add the following:

     SECTION 1. CERTAIN EDUCATIONAL BENEFITS PROVIDED BY AN 
                   EMPLOYER TO CHILDREN OF EMPLOYEES EXCLUDABLE 
                   FROM GROSS INCOME AS A SCHOLARSHIP.

       (a) In General.--Section 117 of the Internal Revenue Code 
     of 1986 (relating to qualified scholarships) is amended by 
     adding at the end the following:
       ``(e) Employer-Provided Educational Benefits Provided to 
     Children of Employees.--
       ``(1) In general.--In determining whether any amount is a 
     qualified scholarship for purposes of subsection (a), the 
     fact that such amount is provided in connection with an 
     employment relationship shall be disregarded if--
       ``(A) such amount is provided by the employer to a child 
     (as defined in section 161(c)(3)) of an employee of such 
     employer,
       ``(B) such amount is provided pursuant to a plan which 
     meets the nondiscrimination requirements of subsection 
     (d)(3), and
       ``(C) amounts provided under such plan are in addition to 
     any other compensation payable to employees and such plan 
     does not provide employees with a choice between such amounts 
     and any other benefit.
       For purposes of subparagraph (C), the business practices of 
     the employer (as well as such plan) shall be taken into 
     account.
       ``(2) Dollar limitations.--
       ``(A) Per child.--The amount excluded from the gross income 
     of the employee by reason of paragraph (1) for a taxable year 
     with respect to amounts provided to each child of such 
     employee shall not exceed $2,000.
       ``(B) Aggregate limit.--The amount excluded from the gross 
     income of the employee by reason of paragraph (1) for a 
     taxable year (after the application of subparagraph (A)) 
     shall not exceed the excess of the dollar amount contained in 
     section 127(a)(2) over the amount excluded from the 
     employee's gross income under section 127 for such year.
       ``(3) Principal shareholders and owners.--Paragraph (1) 
     shall not apply to any amount provided to any child of any 
     individual if such individual (or such individual's spouse) 
     owns (on any day of the year) more than 5 percent of the 
     stock or of the capital or profits interest in the employer.
       ``(4) Degree requirement not to apply.--In the case of an 
     amount which is treated as a qualified scholarship by reason 
     of this subsection, subsection (a) shall be applied without 
     regard to the requirement that the recipient be a candidate 
     for a degree.
       ``(5) Certain other rules to apply.--Rules similar to the 
     rules of paragraphs (4), (5), and (7) of section 127(c) shall 
     apply for purposes of this subsection.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of 
     enactment of this Act.
                                 ______
                                 

                       MURRAY AMENDMENT NO. 1485

  (Ordered to lie on the table.)
  Mr. MURRAY submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. TREATMENT OF BONDS ISSUED TO ACQUIRE RENEWABLE 
                   RESOURCES ON LAND SUBJECT TO CONSERVATION 
                   EASEMENT.

       (a) In General.--Section 145 (defining qualified 501(c)(3) 
     bond) is amended by redesignating subsection (e) as 
     subsection (f) and

[[Page 18575]]

     by inserting after subsection (d) the following new 
     subsection:
       ``(e) Bonds Issued To Acquire Renewable Resources on Land 
     Subject to Conservation Easement.--
       ``(1) In general.--If--
       ``(A) the proceeds of any bond are used to acquire land (or 
     a long-term lease thereof) together with any renewable 
     resource associated with the land (including standing timber, 
     agricultural crops, or water rights) from an unaffiliated 
     person,
       ``(B) the land is subject to a conservation restriction--
       ``(i) which is granted in perpetuity to an unaffiliated 
     person that is--

       ``(I) a 501(c)(3) organization, or
       ``(II) a Federal, State, or local government conservation 
     organization,

       ``(ii) which meets the requirements of clauses (ii) and 
     (iii)(II) of section 170(h)(4)(A),
       ``(iii) which exceeds the requirements of relevant 
     environmental and land use statutes and regulations, and
       ``(iv) which obligates the owner of the land to pay the 
     costs incurred by the holder of the conservation restriction 
     in monitoring compliance with such restriction,
       ``(C) a management plan which meets the requirements of the 
     statutes and regulations referred to in subparagraph (B)(iii) 
     is developed for the conservation of the renewable resources, 
     and
       ``(D) such bond would be a qualified 501(c)(3) bond (after 
     the application of paragraph (2)) but for the failure to use 
     revenues derived by the 501(c)(3) organization from the sale, 
     lease, or other use of such resource as otherwise required by 
     this part,

     such bond shall not fail to be a qualified 501(c)(3) bond by 
     reason of the failure to so use such revenues if the revenues 
     which are not used as otherwise required by this part are 
     used in a manner consistent with the stated charitable 
     purposes of the 501(c)(3) organization.
       ``(2) Treatment of timber, etc.--
       ``(A) In general.--For purposes of subsection (a), the cost 
     of any renewable resource acquired with proceeds of any bond 
     described in paragraph (1) shall be treated as a cost of 
     acquiring the land associated with the renewable resource and 
     such land shall not be treated as used for a private business 
     use because of the sale or leasing of the renewable resource 
     to, or other use of the renewable resource by, an 
     unaffiliated person to the extent that such sale, leasing, or 
     other use does not constitute an unrelated trade or business, 
     determined by applying section 513(a).
       ``(B) Application of bond maturity limitation.--For 
     purposes of section 147(b), the cost of any land or renewable 
     resource acquired with proceeds of any bond described in 
     paragraph (1) shall have an economic life commensurate with 
     the economic and ecological feasibility of the financing of 
     such land or renewable resource.
       ``(C) Unaffiliated person.--For purposes of this 
     subsection, the term `unaffiliated person' means any person 
     who controls not more than 20 percent of the governing body 
     of another person.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to obligations issued after the date of the 
     enactment of this Act.

     SEC.  . AIRLINE MILEAGE AWARDS TO CERTAIN FOREIGN PERSONS.

       (a) In General.--The last sentence of section 4261(e)(3)(C) 
     (relating to regulations) is amended by inserting `and 
     mileage awards which are issued to individuals whose mailing 
     addresses on record with the person providing the right to 
     air transportation are outside the United States' before the 
     period at the end thereof.
       (b) Effective Date.--The amendment made by this section 
     shall apply to amounts paid after December 31, 2004.

     SEC.   . MODIFICATION OF ALTERNATIVE MINIMUM TAX FOR 
                   INDIVIDUALS.

       (a) Nonrefundable Personal Credits Fully Allowed Against 
     Regular Tax Liability.--
       (1) In general.--Subsection (a) of section 26 (relating to 
     limitation based on amount of tax) is amended to read as 
     follows:
       ``(a) Limitation Based on Amount of Tax.--The aggregate 
     amount of credits allowed by this subpart for the taxable 
     year shall not exceed the taxpayer's regular tax liability 
     for the taxable year.''
       (2) Child credit.--Subsection (d) of section 24 is amended 
     by striking paragraph (2) and by redesignating paragraph (3) 
     as paragraph (2).
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     1998.
       (b) Personal Exemptions Allowed in Computing Minimum Tax.--
       (1) In general.--Subparagraph (E) of section 56(b)(1) is 
     amended by striking `, the deduction for personal exemptions 
     under section 151.'.
       (A) The deduction for personal exemption for purposes of 
     this title shall be reduced by $10.00.
       (2) Conforming amendment.--The heading to section 
     56(b)(1)(E) is amended by striking `and deduction for 
     personal exemptions'.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2004.
                                 ______
                                 

                  BREAUX (AND LOTT) AMENDMENT NO. 1486

  (Ordered to lie on the table.)
  Mr. BREAUX (for himself and Mr. Lott) submitted an amendment intended 
to be proposed by them to the bill, S. 1429, supra; as follows:

       At the appropriate place, insert:
          TITLE   .--U.S.-FLAG MERCHANT MARINE REVITALIZATION

     SEC. 1. SHORT TITLE.

       This Act may be cited as the ``United States-Flag Merchant 
     Revitalization Act of 1999''.

     SEC. 2. AMENDMENTS OF MERCHANT MARINE ACT, 1936.

       (a) Changes in Vessels to Which Capital Construction Funds 
     Apply.--
       (1) The second sentence of subsection (a) of section 607 of 
     the Merchant Marine Act, 1936 is amended by striking ``for 
     operation in the United States foreign, Great Lakes, or 
     noncontiguous domestic trade or in the fisheries of the 
     United States'' and inserting ``for operation in the 
     fisheries of the United States, or in the United States 
     foreign, Great Lakes, noncontiguous domestic trade, or other 
     oceangoing domestic trade between two coastal points in the 
     United States or in support of operations conducted on the 
     Outer Continental Shelf.''
       (2) Paragraph (1) of section 607(k) of such Act (defining 
     eligible vessel) is amended to read as follows:
       ``(1) The term `eligible vessel' means any vessel--
       (A) documented under the laws of the United States, and
       (B) operated in the foreign or domestic commerce of the 
     United States or in the fisheries of the United States.''.
       (3) Paragraph (2)(C) of section 607(k) of such Act is 
     amended to read as follows:
       ``(C) which the person maintaining the fund agrees with the 
     Secretary of Commerce will be operated in the fisheries of 
     the United States, or in the United States foreign, Great 
     Lakes, noncontiguous domestic trade, or other oceangoing 
     domestic trade between two coastal points in the United 
     States or in support of operations conducted on the Outer 
     Continental Shelf.''.
       (4) Section 607(k) of such Act is amended by striking 
     paragraph (8) and redesignating paragraph (9) as paragraph 
     (8).
       (5) The last sentence of paragraph (1) of section 607(f) of 
     such Act is amended by striking `and containers' each place 
     it appears.
       (6) Paragraph (7) of section 607(k) of such Act is amended 
     by inserting `containers or trailers intended for use as part 
     of the complement of one or more eligible vessels and' before 
     `cargo handling'.
       (7) Subsection (k) of section 607 of such Act (as amended 
     by paragraph (4)) is amended by adding at the end the 
     following new paragraph:
       ``(9) The terms `foreign commerce' and `foreign trade' have 
     the meanings given such terms in section 905, except that 
     these terms shall include commerce or trade between foreign 
     ports.''.
       (b) Treatment of Certain Lease Payments.--
       (1) Paragraph (1) of section 607(f) of such Act is amended 
     by striking `or' at the end of subparagraph (B), by striking 
     the period at the end of subparagraph (C) and inserting `, 
     or' and by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) the payment of amounts which reduce the principal 
     amount (as determined under regulations promulgated by the 
     Secretary) of a qualified lease of a qualified vessel or 
     container which is part of the complement or an eligible 
     vessel.''.
       (2) Paragraph (4) of section 607(g) of such Act is amended 
     by inserting `or to reduce the principal amount of any 
     qualified lease' after indebtedness'.
       (3) Subsection (k) of section 607 of such Act is amended by 
     adding after paragraph (10) the following new paragraph:
       ``(11) The term `qualified lease' means any lease with a 
     term of at least 5 years.''.
       (c) Authority to Make Deposits Under the Tariff Act of 
     1930.--
       (1) Paragraph (1) of section 607(b) of such Act is amended 
     by striking `and' at the end of subparagraph (C), by striking 
     the period at the end of subparagraph (D) and inserting `, 
     and', and by adding at the end the following new 
     subparagraph:
       ``(E) the amount elected for deposit under subsection (i) 
     of section 466 of the Tariff Act of 1930 (19 U.S.C. 1466).''.
       (2) Subparagraph (A) of section 607(e)(2) of such Act is 
     amended to read as follows:
       (d) Authority to Make Deposits For Prior Years Based on 
     Audit Adjustments.--Subsection (b) of section 607 of such Act 
     is amended by adding at the end thereof the following new 
     paragraph:
       ``(4) To the extent permitted by joint regulations, 
     deposits may be made in excess of the limitation described in 
     paragraph (1) (and any limitation specified in the agreement) 
     for the taxable year if, by reason of a change in taxable 
     income for a prior taxable year that has become final 
     pursuant to a closing agreement or other similar agreement 
     entered into during the taxable year, the amount of the 
     deposit could have been made for such prior taxable year.''.

[[Page 18576]]

       (e) Treatment of Capital Gains and Losses.--
       (1) Paragraph (3) of section 607(e) of such Act as amended 
     to read as follows:
       ``(3) The capital gain account shall consist of--
       `(A) amounts representing long-term capital gains (as 
     defined in section 1222 of such Code) on assets held in the 
     fund, reduced by
       `(B) amounts representing long-term capital losses (as 
     defined in such section) on assets held in the fund.''.
       (2) Subparagraph (B) of section 607(e)(4) of such Act is 
     amended to read as follows:
       ``(B)(i) amounts representing short-term capital losses (as 
     defined in such section ) on assets held in the fund,''.
       (3) Subparagraph (B) of section (607)(h)(3) of such Act is 
     amended by striking `gain' and all that follows and inserting 
     `long-term capital gain (as defined in section 1222 of such 
     Code), and'.
       (4) The last sentence of subparagraph (A) of section 
     607(h)(6) of such Act is amended by striking `20 percent (34 
     percent in the case of a corporation)' and inserting `the 
     rate applicable to net capital gain under section 1(h)(1)(C) 
     or 1201(a) of such Code, as the case may be'.
       (f) Computation of Interest With Respect to Nonqualified 
     Withdrawal.--
       (1) Subparagraph (C) of section 607(h)(3) of such Act is 
     amended--
       (A) by striking clause (i) and inserting the following new 
     clause:
       `(i) no addition to the tax shall be payable under section 
     6651 of such Code, and', and
       (B) by striking `paid at the applicable rate (as defined in 
     paragraph (4))' in clause (ii) and inserting `paid in 
     accordance with section 6601 of such Code'.
       (2) Subsection (h) of section 607 of such Act is amended by 
     striking paragraph (4) and by redesignating paragraphs (5) 
     and (6) as paragraphs (4) and (5), respectively.
       (3) Subparagraph (A) of section 607(h)(5) of such Act, as 
     redesignated by paragraph (2), is amended by striking 
     `paragraph (5)' and inserting `paragraph (4)'.
       (g) Other Changes.--
       (1) Section 607 of such Act is amended by striking `the 
     Internal Revenue Code of 1954' each place it appears and 
     inserting `the Internal Revenue Code of 1986'.
       (2) Subsection (c) of section 607 of such Act is amended by 
     striking `interest-bearing securities approved by the 
     Secretary' and inserting `interest-bearing securities and 
     other income-producing assets (including accounts receivable) 
     approved by the Secretary'.

     SEC. 3. AMENDMENTS OF INTERNAL REVENUE CODE OF 1986.

       (a) Treatment of Certain Lease Payments.--
       (1) Paragraph (1) of section 7518(e) of the Internal 
     Revenue Code of 1986 is amended by striking `or' at the end 
     of subparagraph (B), by striking the period at the end of 
     subparagraph (C) and inserting `, or', and by inserting after 
     subparagraph (C) the following new subparagraph:
       `(D) the payments of amounts which reduce the principal 
     amount (as determined under regulations) of a qualified lease 
     of a qualified vessel or container which is part of the 
     complement of an eligible vessel.'.
       (2) Paragraph (4) of section 7518(f) of such Code is 
     amended by inserting `or to reduce the principal amount of 
     any qualified lease' after `indebtedness'.
       (b) Authority To Make Deposits Under the Tariff Act of 
     1930.--
       (1) Paragraph (1) of section 7518(a) of such Code is 
     amended by striking `and' at the end of subparagraph (C), by 
     striking the period at the end of subparagraph (D) and 
     inserting `, and', and by adding at the end the following new 
     subparagraph:
       `(E) the amount elected for deposit under subsection (i) of 
     section 466 of the Tariff Act of 1930 (19 U.S.C. 1466).'.
       (2) Subparagraph (A) of section 7518(d)(2) of such Code is 
     amended to read as follows:
       `(A) amounts referred to in subsections (a)(1)(B) and 
     (E).'.
       (c)  Authority To Make Deposits For Prior Years Based on 
     Audit Adjustments.--Subsection (a) of section 7518 of such 
     Code is amended by adding at the end thereof the following 
     new paragraph:
       `(4) To the extent permitted by joint regulations, deposits 
     may be made in excess of the limitation described in 
     paragraph (1) (and any limitation specified in the agreement) 
     for the taxable year if, by reason of a change in taxable 
     income for a prior taxable year that has become final 
     pursuant to a closing agreement or other similar agreement 
     entered into during the taxable year, the amount of the 
     deposit could have been made for such prior taxable year.'.
       (d) Treatment of Capital Gains and Losses.--
       (1) Paragraph (3) of section 7518(d) of such Code is 
     amended to read as follows:
       `(3) Capital gain account.--The capital gain account shall 
     consist of--
       `(A) amounts representing long-term capital gains (as 
     defined in section 1222) on assets held in the fund, reduced 
     by
       `(B) amounts representing long-term capital losses (as 
     defined in such section) on assets held in the fund'.
       (2) Subparagraph (B) of section 7518(d)(4) of such Code is 
     amended to read as follows:
       `(B)(i) amounts representing short-term capital gains (as 
     defined in section 1222) on assets held in the fund, reduced 
     by
       `(ii) amounts representing short-term capital losses (as 
     defined in such section) on assets held in the fund,'.
       (3) Subparagraph (B) of section 7518(g)(3) of such Code is 
     amended by striking `gain' and all that follows and inserting 
     `long-term capital gain (as defined in section 1222), and'.
       (4) The last sentence of subparagraph (A) of section 
     7518(g)(6) of such Code is amended by striking `20 percent 
     (34 percent in the case of a corporation)' and inserting `the 
     rate applicable to net capital gain under such section 
     1(h)(1)(C) or 1201(a), as the case may be'.
       (e) Computation of Interest With Respect to Nonqualified 
     Withdrawals.--
       (1) Subparagraph (C) of section 7518(g)(3) of such Code is 
     amended--
       (A) by striking clause (i) and inserting the following new 
     clause:
       `(i) no addition to the tax shall be payable under section 
     6651, and', and
       (B) by striking `paid at the applicable rate (as defined in 
     paragraph (4))' in clause (ii) and inserting `paid in 
     accordance with section 6601'.
       (2) Subsection (g) of section 7518 of such Code is amended 
     by striking paragraph (4) and by redesignating paragraphs (5) 
     and (6) as paragraphs (4) and (5), respectively.
       (3) Subparagraph (a) of section 7518(g)(5) of such Code, as 
     redesignated by paragraph (2), is amended by striking 
     `paragraph (5)' and inserting `paragraph (4)'.
       (f) Other Changes.--
       (1) Paragraph (2) of section 7518(b) of such Code is 
     amended by striking `interest-bearing securities approved by 
     the Secretary' and inserting `interest-bearing securities and 
     other income-producing assets (including accounts receivable) 
     approved by the Secretary'.
       (2) Paragraph (1) of section 7518(e) of such Code is 
     amended by striking `and containers' each place it appears.
       (3) Subsection (i) of section 7518 of such Code is amended 
     by striking `this section' and inserting `the United States-
     Flag Merchant Revitalization Act of 1999'.
       (4) Subparagraph (B) of section 543(a)(1) of such Code is 
     amended to read as follows:
       ``(B) interest on amounts set aside in a capital 
     construction fund under section 607 of the Merchant Marine 
     Act, 1936 (46 App. U.S.C. 1177), or in a construction reserve 
     fund under section 511 of such Act (46 App. U.S.C. 1161),''.
       (5) Subsection (c) of section 56 of such Code is amended by 
     striking paragraph (2) and by redesignating paragraph (5) as 
     paragraph (2).

     SEC. 4. AMENDMENT TO THE TARIFF ACT OF 1930.

       Section 466 of the Tariff Act of 1930 (19 U.S.C. 1466) is 
     amended by adding at the end the following new subsection.
       ``(i) Election to Deposit Duty Into a Capital Construction 
     Fund in Lieu of Payment to the Secretary of the Treasury.--At 
     the election of the owner or master of any vessel referred to 
     in subsection (a) of this section which is an eligible vessel 
     (as defined in section 607(k) of the Merchant Marine Act, 
     1936), the portion of any duty imposed by subsection (a) 
     which is deposited in a fund established under section 607 of 
     such Act shall be treated as paid to the Secretary of the 
     Treasury in satisfaction of the liability for such duty.''.

     SEC. 5. EFFECTIVE DATE.

       (a) In General.--Except as otherwise provided in this 
     section, the amendments made by this Act shall apply to 
     taxable years beginning after December 31, 2001, and shall 
     terminate on December 31, 2005.
       (b) Changes in Computation of Interest.--The amendments 
     made by sections 2(f) and 3(e) shall apply to withdrawals 
     made after December 31, 2001, including for purposes of 
     computing interest on such a withdrawal for periods on or 
     before such date.
       (c) Qualified Leases.--The amendments made by sections 2(b) 
     and 3(a) shall apply to leases in effect on, or entered 
     after, December 31, 2001.
       (d) Amendment to the Tariff Act of 1930.--The amendment 
     made by section 4 shall apply with respect to entries not yet 
     liquidated by December 31, 2001, and to entries made on or 
     after such date.

     SEC. 6. PENALTIES FOR FAILURE TO DISCLOSE POSITION THAT 
                   CERTAIN INTERNATIONAL SHIPPING INCOME IS NOT 
                   INCLUDIBLE IN GROSS INCOME.

       (a) In General.--Section 883 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     subsection:
       ``(d) Penalties for Failure to Disclose Position That 
     Certain International Shipping Income is Not Includible in 
     Gross Income.--
       ``(1) In General.--A taxpayer who, with respect to any tax 
     imposed by this title, takes the position that any of its 
     gross income derived from the international operation of a 
     ship or ships is not includible in gross income by reason of 
     subsection (a)(1) or section 872(b)(1) (or by reason of any 
     applicable treaty) shall be entitled to such treatment only 
     if such position is disclosed (in such manner as the 
     Secretary may prescribe) on the return for such tax (or any 
     statement attached to such return).
       ``(2) Additional Penalties for Failing to Disclose 
     Position.--If a taxpayer fails to meet the requirement of 
     paragraph (1) with respect to any taxable year--
       ``(A) the amount of the income from the international 
     operation of a ship or ships--

[[Page 18577]]

       ``(i) which is from sources without the United States, and
       ``(ii) which is attributable to a fixed place of business 
     in the United States, shall be treated for purposes of this 
     title as effectively connected with the conduct of a trade or 
     business within the United States, and
       ``(B) no deductions or credits shall be allowed which are 
     attributable to income from the international operation of a 
     ship or ships.
       ``(3) Reasonable cause exception.--This subsection shall 
     not apply to a failure to disclose a position if it is shown 
     that such failure is due to reasonable cause and not due to 
     willful neglect.''
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 872(b) of such Code is amended 
     by striking ``Gross income'' and inserting ``Except as 
     provided in section 883(d), gross income''.
       (2) Paragraph (1) of section 883(a) of such Code is amended 
     by striking ``Gross income'' and inserting ``Except as 
     provided in subsection (d), gross income''.
       (c) Coordination With Treaties.--The amendments made by 
     this section shall not apply in any case where their 
     application would be contrary to any treaty obligation of the 
     United States.
       (d) Information to be Provided by Customs Service.--The 
     United States Customs Service shall provide the Secretary of 
     the Treasury or his delegate with such information as may be 
     specified by such Secretary in order to enable such Secretary 
     to determine whether ships which are not registered in the 
     United States are engaged in transportation to or from the 
     United States.

     SEC. 7. MODIFICATION OF LIMITATIONS ON DEDUCTIONS FOR 
                   ATTENDANCE AT CONVENTIONS, ETC. ON CRUISE 
                   SHIPS.

       (a) Only Home Port of Cruise Ship Must be in United States 
     or Possessions.--Subparagraph (B) of section 274(h)(2) of the 
     Internal Revenue Code of 1986 (relating to conventions on 
     cruise ships) is amended to read as follows:
       ``(B) the home port of such cruise ship is located in the 
     United States or a possession of the United States.''
                                 ______
                                 

                       McCAIN AMENDMENT NO. 1487

  (Ordered to lie on the table.)
  Mr. McCAIN submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supre; as follows:

       Strike all after the first word and insert:

            . 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Middle 
     Class Tax Relief Act of 1999''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                    TITLE I--MIDDLE CLASS TAX RELIEF

Sec. 11. Increase in maximum taxable income for 15 percent rate 
              bracket.
Sec. 12. Elimination of marriage penalty in standard deduction.
Sec. 13. Exemption of certain interest and dividend income from tax.
Sec. 14. Phase-out of estate and gift taxes through increase in unified 
              estate and gift tax credit.
Sec. 15. Elimination of earnings test for individuals who have attained 
              retirement age.

                           TITLE II--OFFSETS

                   Subtitle A--Tax Loophole Closures

Sec. 31. Inclusion in gross income of contributions in aid of 
              construction.
Sec. 32. Elimination of nonexclusion of discharge of farm debt income.
Sec. 33. Elimination of U.S. possessions tax credit.
Sec. 34. Elimination of tax incentives relating to merchant marine 
              capital construction funds.
Sec. 35. Source rules for inventory property.
Sec. 36. Phaseout of oil, gas, and minerals expensing of drilling 
              exploration and development costs.
Sec. 37. Sunset of alcohol fuels incentives.
Sec. 38. Repeal of enhanced oil recovery credit.
Sec. 39. Repeal of unlimited passive loss deductions for oil and gas 
              properties.
Sec. 40. Uniform depreciation treatment of rental property.
Sec. 41. Elimination expensing of certain timber production costs.
Sec. 42. Excise tax on excludable non-retirement fringe benefits.
Sec. 43. Transfer pricing.
Sec. 44. Disallowance of deduction for advertising and promotion 
              expenditures.
Sec. 45. Elimination of private-purpose tax-exempt bonds.

                       Subtitle B--Spending Cuts

                     Chapter 1--General Provisions

Sec. 61. Elimination of free use of government owned takeoff and 
              landing slots.
Sec. 62. Elimination of foreign market development program.
Sec. 63. Elimination of highway demonstration projects.
Sec. 64. Elimination of Federal subsidies for AMTRAK.
Sec. 65. Elimination of funding to complete Appalachian Development 
              Highway System.
Sec. 66. Elimination of advanced technology program.
Sec. 67. Elimination of NASA's earth science program.
Sec. 68. Elimination of market access program.
Sec. 69. Elimination of below-cost sales of timber from national forest 
              system lands.
Sec. 70. Prohibition on certain research functions of Department of 
              Energy.
Sec. 71. Offset fee for the Federal capital costs savings provided to 
              the FNMA and FHLMC.
Sec. 72. Enhanced competition with the private sector regarding 
              military family housing.

            Chapter 2--Abolishment Of Department of Commerce

Sec. 81. Short title.

          Subchapter A--Abolishment of Department of Commerce

Sec. 101. Definitions.
Sec. 102. Abolishment of Department of Commerce.
Sec. 103. Resolution and termination of Department functions.
Sec. 104. Responsibilities of the Director of the Office of Management 
              and Budget.
Sec. 105. Personnel.
Sec. 106. Plans and reports.
Sec. 107. General Accounting Office audit and access to records.
Sec. 108. Conforming amendments.
Sec. 109. Privatization framework.
Sec. 110. Priority placement programs for Federal employees affected by 
              a reduction in force attributable to this chapter.
Sec. 111. Funding reductions for transferred functions.

   Subchapter B--Disposition of Programs, Functions, and Agencies of 
                         Department of Commerce

Sec. 201. Economic development.
Sec. 202. Technology Administration.
Sec. 203. Reorganization of the Bureau of the Census and the Bureau of 
              Economic Analysis.
Sec. 204. Terminated functions of National Telecommunications and 
              Information Administration.
Sec. 205. Terminations and transfers.
Sec. 206. National Oceanic and Atmospheric Administration.
Sec. 207. Miscellaneous terminations; moratorium on program activities.
Sec. 208. Effective date.

   Subchapter C--Establishment of United States Trade Administration

                       Part I--General Provisions

Sec. 301. Definitions.

              Part II--United States Trade Administration

                        Subpart A--Establishment

Sec. 311. Establishment of the United States Trade Administration.
Sec. 312. Functions of the Trade Representative.

                          Subpart B--Officers

Sec. 321. Deputy United States Trade Representatives.
Sec. 322. Assistant Administrators.
Sec. 323. General Counsel.
Sec. 324. Inspector General.
Sec. 325. Chief Financial Officer.

            Subpart C--Transfers to the Trade Administration

Sec. 331. Office of the United States Trade Representative.
Sec. 332. Transfers from the Department of Commerce.
Sec. 333. Trade and Development Agency.
Sec. 334. Export-Import Bank.
Sec. 335. Overseas Private Investment Corporation.
Sec. 336. Consolidation of export promotion and financing activities.
Sec. 337. Functions related to textile agreements.

                  Subpart D--Administrative Provisions

Sec. 341. Personnel provisions.
Sec. 342. Delegation and assignment.
Sec. 343. Succession.
Sec. 344. Reorganization.
Sec. 345. Rules.
Sec. 346. Funds transfer.
Sec. 347. Contracts, grants, and cooperative agreements.
Sec. 348. Use of facilities.
Sec. 349. Gifts and bequests.
Sec. 350. Working capital fund.
Sec. 351. Service charges.
Sec. 352. Seal of office.

                      Subpart E--Related Agencies

Sec. 361. Interagency trade organization.
Sec. 362. National Security Council.
Sec. 363. International Monetary Fund.

                    Subpart F--Conforming Amendments

Sec. 371. Amendments to general provisions.
Sec. 372. Repeals.
Sec. 373. Conforming amendments relating to Executive Schedule 
              positions.

                        Subpart G--Miscellaneous

Sec. 381. Effective date.
Sec. 382. Interim appointments.
Sec. 383. Funding reductions resulting from reorganization.

[[Page 18578]]

 Subchapter D--Establishment of the Office of Patents, Trademarks, and 
                               Standards

                         Part I--Establishment

Sec. 401. Definitions.
Sec. 402. Establishment of the Office of Patents, Trademarks, and 
              Standards.
Sec. 403. Functions.
Sec. 404. Transfers to the Office.
Sec. 405. Additional officers.

                   Part II--Administrative Provisions

Sec. 411. Rules.
Sec. 412. Delegation.
Sec. 413. Personnel and services.
Sec. 414. Contracts.
Sec. 415. Copyrights and patents.
Sec. 416. Gifts and bequests.
Sec. 417. Transfers of funds from other Federal agencies.
Sec. 418. Seal of Office.
Sec. 419. Status of Office under certain laws.

                    Part III--Conforming Amendments

Sec. 421. Patent and Trademark Office.
Sec. 422. National Institute of Standards and Technology.
Sec. 423. Federal laboratories under the Stevenson-Wydler Technology 
              Innovation Act of 1980.

                Subchapter E--Statistical Consolidation

                       Part I--General Provisions

Sec. 501. Findings.
Sec. 502. Sense of Congress.
Sec. 503. Definitions.

       Part II--Establishment of the Federal Statistical Service

Sec. 511. Establishment.
Sec. 512. Principal officers.
Sec. 513. Federal Council on Statistical Policy.

              Part III--Transfers of Functions and Offices

Sec. 521. Transfer of the Bureau of Labor Statistics.
Sec. 522. Transfer date.

                   Part IV--Administrative Provisions

Sec. 531. Officers and employees.
Sec. 532. Experts and consultants.
Sec. 533. Acceptance of voluntary services.
Sec. 534. General authority.
Sec. 535. Delegation.
Sec. 536. Reorganization.
Sec. 537. Contracts.
Sec. 538. Regulations.
Sec. 539. Seal.
Sec. 540. Annual report.

                         Part V--Miscellaneous

Sec. 541. Incidental transfers.
Sec. 542. References.
Sec. 543. Proposed changes in law.
Sec. 544. Transition.
Sec. 545. Interim appointments.
Sec. 546. Conforming amendments.

                 Subchapter F--Miscellaneous Provisions

Sec. 601. References.
Sec. 602. Exercise of authorities.
Sec. 603. Savings provisions.
Sec. 604. Transfer of assets.
Sec. 605. Delegation and assignment.
Sec. 606. Authority of Director of the Office of Management and Budget 
              with respect to functions transferred.
Sec. 607. Certain vesting of functions considered transfers.
Sec. 608. Availability of existing funds.
Sec. 609. Definitions.
Sec. 610. Conforming amendments.

          TITLE VII--COMPLIANCE WITH CONGRESSIONAL BUDGET ACT

Sec. 701. Sunset of provisions of Act.
                    TITLE I--MIDDLE CLASS TAX RELIEF

     SEC. 11. INCREASE IN MAXIMUM TAXABLE INCOME FOR 15 PERCENT 
                   RATE BRACKET.

       Section 1(f) of the Internal Revenue Code of 1986 (relating 
     to adjustments in tax tables so that inflation will not 
     result in tax increases) is amended--
       (1) in paragraph (2)--
       (A) by redesignating subparagraphs (B) and (C) as 
     subparagraphs (C) and (D),
       (B) by inserting after subparagraph (A) the following:
       ``(B) in the case of the tables contained in subsections 
     (a), (b), (c), and (d), by increasing the maximum taxable 
     income level for the 15 percent rate bracket and the minimum 
     taxable income level for the 28 percent rate bracket 
     otherwise determined under subparagraph (A) for taxable years 
     beginning in any calendar year after 1999, by the applicable 
     dollar amount for such calendar year,'', and
       (C) by striking ``subparagraph (A)'' in subparagraph (C) 
     (as so redesignated) and inserting ``subparagraphs (A) and 
     (B)'', and
       (2) by adding at the end the following:
       ``(8) Applicable dollar amount.--For purposes of paragraph 
     (2)(B), the applicable dollar amount for any calendar year 
     shall be determined as follows:
       ``(A) Joint returns and surviving spouses.--In the case of 
     the table contained in subsection (a)--

                                                             Applicable
``Calendar year:                                         Dollar Amount:
  2000......................................................$1,000 ....

  2001......................................................$2,000 ....

  2002......................................................$3,000 ....

  2003......................................................$4,000 ....

  2004 and thereafter.......................................$5,000.....

       ``(B) Other tables.--In the case of the table contained in 
     subsection (b), (c), or (d)--

                                                             Applicable
``Calendar year:                                         Dollar Amount:
  2000........................................................$500 ....

  2001......................................................$1,000 ....

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

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

  2004 and thereafter.....................................$2,500.''....

     SEC. 12. ELIMINATION OF MARRIAGE PENALTY IN STANDARD 
                   DEDUCTION.

       (a) In General.--Section 63(c) of the Internal Revenue Code 
     of 1986 (relating to standard deduction) is amended by adding 
     at the end the following:
       ``(7) Elimination of marriage penalty for joint filers.--
       ``(A) In general.--In the case of a joint return or a 
     surviving spouse (as defined in section 2(a)), the basic 
     standard deduction under paragraph (2)(A) shall be increased 
     by an amount equal to the applicable percentage of the excess 
     of--
       ``(i) 200 percent of the basic standard deduction in effect 
     for the taxable year under paragraph (2)(C), over
       ``(ii) the basic standard deduction in effect for the 
     taxable year under paragraph (2)(A) (without regard to this 
     paragraph).
       ``(B) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage shall be determined as 
     follows:

``For taxable years beginning in calendar The applicable percentage is:
  1999..........................................................20 ....

  2000..........................................................40 ....

  2001..........................................................60 ....

  2002..........................................................80 ....

  2003 and thereafter........................................100.''....

       (b) Conforming Amendment.--Section 63(c)(2)(A) of the 
     Internal Revenue Code of 1986 is amended by inserting 
     ``except as provided in paragraph (7),'' before ``$5,000''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

     SEC. 13. EXEMPTION OF CERTAIN INTEREST AND DIVIDEND INCOME 
                   FROM TAX.

       (a) In General.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to amounts 
     specifically excluded from gross income) is amended by 
     inserting after section 115 the following:

     ``SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS AND INTEREST 
                   RECEIVED BY INDIVIDUALS.

       ``(a) Exclusion From Gross Income.--Gross income does not 
     include the sum of the amounts received during the taxable 
     year by an individual as--
       ``(1) dividends from domestic corporations, or
       ``(2) interest.
       ``(b) Limitations.--
       ``(1) Maximum amount.--The aggregate amount excluded under 
     subsection (a) for any taxable year shall not exceed $200 
     ($400 in the case of a joint return).
       ``(2) Certain dividends excluded.--Subsection (a)(1) shall 
     not apply to any dividend from a corporation which, for the 
     taxable year of the corporation in which the distribution is 
     made, or for the next preceding taxable year of the 
     corporation, is a corporation exempt from tax under section 
     501 (relating to certain charitable, etc., organization) or 
     section 521 (relating to farmers' cooperative associations).
       ``(c) Interest.--For purposes of this section, the term 
     `interest' means--
       ``(1) interest on deposits with a bank (as defined in 
     section 581),
       ``(2) amounts (whether or not designated as interest) paid 
     in respect of deposits, investment certificates, or 
     withdrawable or repurchasable shares, by--
       ``(A) a mutual savings bank, cooperative bank, domestic 
     building and loan association, industrial loan association or 
     bank, or credit union, or
       ``(B) any other savings or thrift institution which is 
     chartered and supervised under Federal or State law,

     the deposits or accounts in which are insured under Federal 
     or State law or which are protected and guaranteed under 
     State law,
       ``(3) interest on--
       ``(A) evidences of indebtedness (including bonds, 
     debentures, notes, and certificates) issued by a domestic 
     corporation in registered form, and
       ``(B) to the extent provided in regulations prescribed by 
     the Secretary, other evidences of indebtedness issued by a 
     domestic corporation of a type offered by corporations to the 
     public,
       ``(4) interest on obligations of the United States, a 
     State, or a political subdivision of a State (not excluded 
     from gross income of the taxpayer under any other provision 
     of law), and
       ``(5) interest attributable to participation shares in a 
     trust established and maintained by a corporation established 
     pursuant to Federal law.
       ``(d) Special Rules.--For purposes of this section--
       ``(1) Distributions from regulated investment companies and 
     real estate investment trusts.--Subsection (a) shall apply 
     with respect to distributions by--
       ``(A) regulated investment companies to the extent provided 
     in section 854(c), and
       ``(B) real estate investment trusts to the extent provided 
     in section 857(c).

[[Page 18579]]

       ``(2) Distributions by a trust.--For purposes of subsection 
     (a), the amount of dividends and interest properly allocable 
     to a beneficiary under section 652 or 662 shall be deemed to 
     have been received by the beneficiary ratably on the same 
     date that the dividends and interest were received by the 
     estate or trust.
       ``(3) Certain nonresident aliens ineligible for 
     exclusion.--In the case of a nonresident alien individual, 
     subsection (a) shall apply only--
       ``(A) in determining the tax imposed for the taxable year 
     pursuant to section 871(b)(1) and only in respect of 
     dividends and interest which are effectively connected with 
     the conduct of a trade or business within the United States, 
     or
       ``(B) in determining the tax imposed for the taxable year 
     pursuant to section 877(b).''
       (b) Conforming Amendments.--
       (1) The table of sections for part III of subchapter B of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     inserting after the item relating to section 115 the 
     following:

``Sec. 116. Partial exclusion of dividends and interest received by 
              individuals.''
       (2) Paragraph (2) of section 265(a) of such Code is amended 
     by inserting before the period at the end the following: ``, 
     or to purchase or carry obligations or shares, or to make 
     deposits, to the extent the interest thereon is excludable 
     from gross income under section 116''.
       (3) Subsection (c) of section 584 of such Code is amended 
     by adding at the end the following new flush sentence:

     ``The proportionate share of each participant in the amount 
     of dividends or interest received by the common trust fund 
     and to which section 116 applies shall be considered for 
     purposes of such section as having been received by such 
     participant.''
       (4) Subsection (a) of section 643 of such Code is amended 
     by redesignating paragraph (7) as paragraph (8) and by 
     inserting after paragraph (6) the following:
       ``(7) Dividends or interest.--There shall be included the 
     amount of any dividends or interest excluded from gross 
     income pursuant to section 116.''
       (5) Section 854 of such Code is amended by adding at the 
     end the following:
       ``(c) Treatment Under Section 116.--
       ``(1) In general.--For purposes of section 116, in the case 
     of any dividend (other than a dividend described in 
     subsection (a)) received from a regulated investment company 
     which meets the requirements of section 852 for the taxable 
     year in which it paid the dividend--
       ``(A) the entire amount of such dividend shall be treated 
     as a dividend if the sum of the aggregate dividends and the 
     aggregate interest received by such company during the 
     taxable year equals or exceeds 75 percent of its gross 
     income, or
       ``(B) if subparagraph (A) does not apply, there shall be 
     taken into account under section 116 only the portion of such 
     dividend which bears the same ratio to the amount of such 
     dividend as the sum of the aggregate dividends received and 
     aggregate interest received bears to gross income.

     For purposes of the preceding sentence, gross income and 
     aggregate interest received shall each be reduced by so much 
     of the deduction allowable by section 163 for the taxable 
     year as does not exceed aggregate interest received for the 
     taxable year.
       ``(2) Notice to shareholders.--The amount of any 
     distribution by a regulated investment company which may be 
     taken into account as a dividend for purposes of the 
     exclusion under section 116 shall not exceed the amount so 
     designated by the company in a written notice to its 
     shareholders mailed not later than 60 days after the close of 
     its taxable year.
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) The term `gross income' does not include gain from 
     the sale or other disposition of stock or securities.
       ``(B) The term `aggregate dividends' includes only 
     dividends received from domestic corporations other than 
     dividends described in section 116(b)(2). In determining the 
     amount of any dividend for purposes of this subparagraph, the 
     rules provided in section 116(d)(1) (relating to certain 
     distributions) shall apply.
       ``(C) The term `interest' has the meaning given such term 
     by section 116(c).''
       (6) Subsection (c) of section 857 of such Code is amended 
     to read as follows:
       ``(c) Limitations Applicable to Dividends Received From 
     Real Estate Investment Trusts.--
       ``(1) In general.--For purposes of section 116 (relating to 
     an exclusion for dividends and interest received by 
     individuals) and section 243 (relating to deductions for 
     dividends received by corporations), a dividend received from 
     a real estate investment trust which meets the requirements 
     of this part shall not be considered as a dividend.
       ``(2) Treatment as interest.--For purposes of section 116, 
     in the case of a dividend (other than a capital gain 
     dividend, as defined in subsection (b)(3)(C)) received from a 
     real estate investment trust which meets the requirements of 
     this part for the taxable year in which it paid the 
     dividend--
       ``(A) such dividend shall be treated as interest if the 
     aggregate interest received by the real estate investment 
     trust for the taxable year equals or exceeds 75 percent of 
     its gross income, or
       ``(B) if subparagraph (A) does not apply, the portion of 
     such dividend which bears the same ratio to the amount of 
     such dividend as the aggregate interest received bears to 
     gross income shall be treated as interest.
       ``(3) Adjustments to gross income and aggregate interest 
     received.--For purposes of paragraph (2)--
       ``(A) gross income does not include the net capital gain,
       ``(B) gross income and aggregate interest received shall 
     each be reduced by so much of the deduction allowable by 
     section 163 for the taxable year (other than for interest on 
     mortgages on real property owned by the real estate 
     investment trust) as does not exceed aggregate interest 
     received by the taxable year, and
       ``(C) gross income shall be reduced by the sum of the taxes 
     imposed by paragraphs (4), (5), and (6) of section 857(b).
       ``(4) Interest.--The term `interest' has the meaning given 
     such term by section 116(c).
       ``(5) Notice to shareholders.--The amount of any 
     distribution by a real estate investment trust which may be 
     taken into account as interest for purposes of the exclusion 
     under section 116 shall not exceed the amount so designated 
     by the trust in a written notice to its shareholders mailed 
     not later than 60 days after the close of its taxable year.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

     SEC. 14. PHASE-OUT OF ESTATE AND GIFT TAXES THROUGH INCREASE 
                   IN UNIFIED ESTATE AND GIFT TAX CREDIT.

       (a) Phase-Out.--
       (1) In general.--The table in section 2010(c) of the 
     Internal Revenue Code of 1986 (relating to applicable credit 
     amount) is amended to read as follows:

``In the case of estates of decedentThe applicable exclusion amount is:
      2000..................................................$1,000,000 
      2001..................................................$1,500,000 
      2002..................................................$2,000,000 
      2003..................................................$2,500,000 
      2004................................................$5,000,000.''
       (2) Effective date.--The amendment made by this subsection 
     shall apply to the estates of decedents dying, and gifts 
     made, after December 31, 1999.
       (b) Repeal of Federal Transfer Taxes.--
       (1) In general.--Subtitle B of the Internal Revenue Code of 
     1986 is repealed.
       (2) Effective Date.--The repeal made by this subsection 
     shall apply to the estates of decedents dying, and gifts and 
     generation-skipping transfers made, after December 31, 2004.
       (c) Technical and Conforming Changes.--The Secretary of the 
     Treasury or the Secretary's delegate shall not later than 90 
     days after the effective date of subsection (b), submit to 
     the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate a 
     draft of any technical and conforming changes in the Internal 
     Revenue Code of 1986 which are necessary to reflect 
     throughout such Code the changes in the substantive 
     provisions of law made by this Act.

     SEC. 15. ELIMINATION OF EARNINGS TEST FOR INDIVIDUALS WHO 
                   HAVE ATTAINED RETIREMENT AGE.

       (a) In General.--Section 203 of the Social Security Act (42 
     U.S.C. 403) is amended--
       (1) in subsection (c)(1), by striking ``the age of 
     seventy'' and inserting ``retirement age (as defined in 
     section 216(l))'';
       (2) in paragraphs (1)(A) and (2) of subsection (d), by 
     striking ``the age of seventy'' each place it appears and 
     inserting ``retirement age (as defined in section 216(l))'';
       (3) in subsection (f)(1)(B), by striking ``was age seventy 
     or over'' and inserting ``was at or above retirement age (as 
     defined in section 216(l))'';
       (4) in subsection (f)(3)--
       (A) by striking ``33\1/3\ percent'' and all that follows 
     through ``any other individual,'' and inserting ``50 percent 
     of such individual's earnings for such year in excess of the 
     product of the exempt amount as determined under paragraph 
     (8),''; and
       (B) by striking ``age 70'' and inserting ``retirement age 
     (as defined in section 216(l))'';
       (5) in subsection (h)(1)(A), by striking ``age 70'' each 
     place it appears and inserting ``retirement age (as defined 
     in section 216(l))''; and
       (6) in subsection (j)--
       (A) in the heading, by striking ``Age Seventy'' and 
     inserting ``Retirement Age''; and
       (B) by striking ``seventy years of age'' and inserting 
     ``having attained retirement age (as defined in section 
     216(l))''.
       (b) Conforming Amendments Eliminating the Special Exempt 
     Amount for Individuals Who Have Attained Retirement Age.--
       (1) Uniform exempt amount.--Section 203(f)(8)(A) of the 
     Social Security Act (42 U.S.C. 403(f)(8)(A)) is amended by 
     striking ``the new exempt amounts (separately stated

[[Page 18580]]

     for individuals described in subparagraph (D) and for other 
     individuals) which are to be applicable'' and inserting ``a 
     new exempt amount which shall be applicable''.
       (2) Conforming amendments.--Section 203(f)(8)(B) of the 
     Social Security Act (42 U.S.C. 403(f)(8)(B)) is amended--
       (A) in the matter preceding clause (i), by striking 
     ``Except'' and all that follows through ``whichever'' and 
     inserting ``The exempt amount which is applicable for each 
     month of a particular taxable year shall be whichever'';
       (B) in clauses (i) and (ii), by striking ``corresponding'' 
     each place it appears; and
       (C) in the last sentence, by striking ``an exempt amount'' 
     and inserting ``the exempt amount''.
       (3) Repeal of basis for computation of special exempt 
     amount.--Section 203(f)(8)(D) of the Social Security Act (42 
     U.S.C. (f)(8)(D)) is repealed.
       (c) Additional Conforming Amendments.--
       (1) Elimination of redundant references to retirement 
     age.--Section 203 of the Social Security Act (42 U.S.C. 403) 
     is amended--
       (A) in subsection (c), in the last sentence, by striking 
     ``nor shall any deduction'' and all that follows and 
     inserting ``nor shall any deduction be made under this 
     subsection from any widow's or widower's insurance benefit if 
     the widow, surviving divorced wife, widower, or surviving 
     divorced husband involved became entitled to such benefit 
     prior to attaining age 60.''; and
       (B) in subsection (f)(1), by striking clause (D) and 
     inserting the following: ``(D) for which such individual is 
     entitled to widow's or widower's insurance benefits if such 
     individual became so entitled prior to attaining age 60,''.
       (2) Conforming amendment to provisions for determining 
     amount of increase on account of delayed retirement.--Section 
     202(w)(2)(B)(ii) of the Social Security Act (42 U.S.C. 
     402(w)(2)(B)(ii)) is amended--
       (A) by striking ``either''; and
       (B) by striking ``or suffered deductions under section 
     203(b) or 203(c) in amounts equal to the amount of such 
     benefit''.
       (3) Provisions relating to earnings taken into account in 
     determining substantial gainful activity of blind 
     individuals.--The second sentence of section 223(d)(4) of 
     such Act (42 U.S.C. 423(d)(4)) is amended by striking ``if 
     section 102 of the Senior Citizens' Right to Work Act of 1996 
     had not been enacted'' and inserting the following: ``if the 
     amendments to section 203 made by section 102 of the Senior 
     Citizens' Right to Work Act of 1996 and by section 106 of the 
     Middle Class Tax Relief Act of 1999 had not been enacted''.
       (d) Effective Date.--The amendments and repeals made by 
     this section shall apply with respect to taxable years ending 
     after December 31, 1998.
                           TITLE II--OFFSETS
                   Subtitle A--Tax Loophole Closures

     SEC. 31. INCLUSION IN GROSS INCOME OF CONTRIBUTIONS IN AID OF 
                   CONSTRUCTION.

       (a) In General.--Section 118 of the Internal Revenue Code 
     of 1986 (relating to contributions to the capital of a 
     corporation) is amended by striking subsections (c) and (d) 
     and by redesignating subsection (e) as subsection (c).
       (b) Conforming Amendment.--Section 118(b) of the Internal 
     Revenue Code of 1986 is amended by striking ``except as 
     provided in subsection (c),''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts received after December 31, 1999, in 
     taxable years ending after such date.

     SEC. 32. ELIMINATION OF NONEXCLUSION OF DISCHARGE OF FARM 
                   DEBT INCOME.

       (a) In General.--Section 108(a)(1) of the Internal Revenue 
     Code of 1986 (relating to exclusion from gross income) is 
     amended by adding ``or'' at the end of subparagraph (B), by 
     striking subparagraph (C), and by redesignating subparagraph 
     (D) as subparagraph (C).
       (b) Conforming Amendments.--
       (1) Section 108(a)(2) of the Internal Revenue Code of 1986 
     is amended by striking ``Subparagraphs (B), (C), and (D)'' 
     and inserting ``Subparagraphs (B) and (C)''.
       (2) Section 108(a)(2)(B) of such Code is amended to read as 
     follows:
       ``(B) Insolvency exclusion takes precedence over qualified 
     real property business exclusion.--Subparagraph (C) of 
     paragraph (1) shall not apply to a discharge to the extent 
     the taxpayer is insolvent.''
       (3) Section 108(b)(1) of such Code is amended by striking 
     ``(A), (B), or (C)'' and inserting ``(A) or (B)''.
       (4) Paragraphs (1)(A), (2)(A), and (2)(B) of section 108(c) 
     of such Code are each amended by striking ``(D)'' and 
     inserting ``(C)''.
       (5) Section 108(c)(3) of such Code is amended by striking 
     the second sentence.
       (6) Section 108(d)(7)(B) of such Code is amended by 
     striking ``subsection (a)(1)(D)'' and inserting ``subsection 
     (a)(1)(C)''.
       (7) Section 108 of such Code is amended by striking 
     subsection (g).
       (8) Section 1017(b) of such Code is amended by striking 
     paragraph (4).
       (c) Effective Date.--The amendments made by this section 
     shall apply to discharges after December 31, 1999.

     SEC. 33. ELIMINATION OF U.S. POSSESSIONS TAX CREDIT.

       (a) Section 936.--
       (1) Section 936(j)(2)(A) of the Internal Revenue Code of 
     1986 is amended by striking ``2002'' and inserting ``2000''.
       (2) Section 936(j)(3)(A)(i) of such Code is amended by 
     striking ``2006'' and inserting ``2000''.
       (3) Section 936(j)(8)(A) of such Code is amended by 
     striking ``2006'' and inserting ``2000''.
       (b) Section 30A.--
       (1) Section 30A(g) of such Code is amended by striking 
     ``2006'' and inserting ``2000''.
       (2) Section 30A(a)(1) of such Code is amended by striking 
     the last sentence.

     SEC. 34. ELIMINATION OF TAX INCENTIVES RELATING TO MERCHANT 
                   MARINE CAPITAL CONSTRUCTION FUNDS.

       Section 7518 of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following:
       ``(j) Termination.--This section shall not apply to taxable 
     years beginning after December 31, 1999.''

     SEC. 35. SOURCE RULES FOR INVENTORY PROPERTY.

       (a) In General.--Section 863(b) of the Internal Revenue 
     Code of 1986 (relating to income partly from within and 
     partly from without United States) is amended by adding at 
     the end the following new paragraph:
       ``(2) Certain sales for use in united states.--If--
       ``(A) a United States resident sells (directly or 
     indirectly) inventory property to another United States 
     resident for use, consumption, or disposition in the United 
     States, and
       ``(B) such sale is not attributable to an office or other 
     fixed place of business maintained by the seller outside the 
     United States,

     any income of such United States resident (or any related 
     person) from such sale shall be sourced in the United 
     States.''
       (b) Conforming Amendments.--Section 863(b) of the Internal 
     Revenue Code of 1986 is amended--
       (1) by striking ``In the case of'' and inserting:
       ``(1) In general.--In the case of'', and
       (2) by redesignating paragraphs (1), (2), and (3) as 
     subparagraphs (A), (B), and (C), respectively.
       (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. 36. PHASEOUT OF OIL, GAS, AND MINERALS EXPENSING OF 
                   DRILLING EXPLORATION AND DEVELOPMENT COSTS.

       (a) Oil and Gas and Mining Development Costs.--Sections 
     263(c) and 616(a) of the Internal Revenue Code of 1986 are 
     each amended by adding at the end the following new sentence: 
     ``This subsection shall not apply to the applicable 
     percentage of costs incurred in taxable years beginning after 
     December 31, 1999. For purposes of the preceding sentence, 
     the applicable percentage for any taxable year shall be 
     determined in accordance with the following table:

The applicable percentage is--ear beginning in--
  2000..........................................................20 ....

  2001..........................................................40 ....

  2002..........................................................60 ....

  2003..........................................................80 ....

  After 2003.................................................100.''....

       (b) Mining Exploration Costs.--Section 617(a)(1) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new sentence: ``This paragraph shall not apply 
     to the applicable percentage of costs incurred in taxable 
     years beginning after December 31, 1999. For purposes of the 
     preceding sentence, the applicable percentage for any taxable 
     year shall be determined in accordance with the following 
     table:

The applicable percentage is--ear beginning in--
  2000..........................................................20 ....

  2001..........................................................40 ....

  2002..........................................................60 ....

  2003..........................................................80 ....

  After 2003.................................................100.''....

     SEC. 37. SUNSET OF ALCOHOL FUELS INCENTIVES.

       (a) In General.--The following provisions of the Internal 
     Revenue Code of 1986 are each repealed:
       (1) Section 40 (relating to alcohol used as fuel).
       (2) Section 4041(b)(2) (relating to qualified methanol and 
     ethanol).
       (3) Section 4041(k) (relating to fuels containing alcohol).
       (4) Section 4081(c) (relating to taxable fuels mixed with 
     alcohol).
       (5) Section 4091(c) (relating to reduced rate of tax for 
     aviation fuel in alcohol mixture, etc.).
       (6) Section 6427(f) (relating to gasoline, diesel fuel, 
     kerosene, and aviation fuel used to produce certain alcohol 
     fuels).
       (7) The headings 9901.00.50 and 9901.00.52 of the 
     Harmonized Tariff Schedule of the United States (19 U.S.C. 
     3007).
       (b) Effective Date.--The repeals made by subsection (a) 
     shall take effect on October 1, 1999.

     SEC. 38. REPEAL OF ENHANCED OIL RECOVERY CREDIT.

       Section 43 of the Internal Revenue Code of 1986 is amended 
     by adding at the end the following:

[[Page 18581]]

       ``(f) Termination.--In the case of taxable years beginning 
     after December 31, 1999, the enhanced oil recovery credit is 
     zero.''.

     SEC. 39. REPEAL OF UNLIMITED PASSIVE LOSS DEDUCTIONS FOR OIL 
                   AND GAS PROPERTIES.

       Section 469(c)(3) of the Internal Revenue Code of 1986 
     (relating to working interests in oil and gas property) is 
     amended by adding at the end the following:
       ``(C) Termination.--This paragraph shall not apply with 
     respect to any taxable year beginning after December 31, 
     1999.''

     SEC. 40. UNIFORM DEPRECIATION TREATMENT OF RENTAL PROPERTY.

       (a) In General.--The table in section 168(c) is amended by 
     striking ``27.5 years'' and inserting ``39 years''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service after December 31, 
     1999.

     SEC. 41. ELIMINATION EXPENSING OF CERTAIN TIMBER PRODUCTION 
                   COSTS.

       (a) In General.--Section 263A(c) of the Internal Revenue 
     Code of 1986 (relating to general exceptions) is amended by 
     striking paragraph (5) and by redesignating paragraph (6) as 
     paragraph (5).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 42. EXCISE TAX ON EXCLUDABLE NON-RETIREMENT FRINGE 
                   BENEFITS.

       (a) In General.--Subtitle D of the Internal Revenue Code of 
     1986 (relating to miscellaneous excise taxes) is amended by 
     adding at the end the following:

        ``CHAPTER 48--EXCLUDABLE NON-RETIREMENT FRINGE BENEFITS

``Sec. 5000A. Tax on excludable non-retirement fringe benefits.

     ``SEC. 5000A. TAX ON EXCLUDABLE NON-RETIREMENT FRINGE 
                   BENEFITS.

       ``(a) Imposition of Tax.--There is hereby imposed on any 
     person who provides excludable non-retirement fringe benefits 
     to such person's employees, retired employees, or former 
     employees a tax equal to __ percent of the amount of 
     benefits.
       ``(b) Excludable Non-Retirement Fringe Benefits.--For 
     purposes of this section, the term `excludable non-retirement 
     fringe benefits' means any benefit (other than a pension 
     benefit) otherwise excludable from gross income of any 
     employee under any provision of this title.''
       (b) Conforming Amendment.--The table of chapters for 
     subtitle D of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following:

``Chapter 48. Excludable non-retirement fringe benefits.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to benefits paid or incurred after December 31, 
     1999, in taxable years ending after such date.

     SEC. 43. TRANSFER PRICING.

       (a) Authority of Secretary When Legal Limits on Transfer by 
     Taxpayer.--Section 482 (relating to allocation of income and 
     deductions among taxpayers) is amended by adding at the end 
     the following: ``The authority of the Secretary under this 
     section shall not be limited by any restriction (by any law 
     or agreement) on the ability of such interests, 
     organizations, trades, or businesses to transfer or receive 
     money or other property.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 44. DISALLOWANCE OF DEDUCTION FOR ADVERTISING AND 
                   PROMOTION EXPENDITURES.

       (a) In General.--Part IX of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to items not 
     deductible) is amended by adding at the end the following:

     ``SEC. 280I. ADVERTISING AND PROMOTION EXPENDITURES.

       No deduction otherwise allowable under this chapter shall 
     be allowed for any amount paid or incurred to advertise or 
     promote (by means of television, radio, other electronic 
     media, newspaper or other periodical, billboard, or any other 
     means).''
       (b) Conforming Amendment.--The table of sections for part 
     IX of subchapter B of chapter 1 of such Code is amended by 
     adding at the end the following:

``Sec. 280I. Advertising and promotion expenditures.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 1999.

     SEC. 45. ELIMINATION OF PRIVATE-PURPOSE TAX-EXEMPT BONDS.

       Section 141(e) of the Internal Revenue Code of 1986 
     (defining qualified bond) is amended by striking ``and'' at 
     the end of paragraph (2), by striking the period at the end 
     of paragraph (3) and inserting ``, and'', and by adding at 
     the end the following:
       ``(4) Issuance date.--Such bond is issued before January 1, 
     2000.''
                       Subtitle B--Spending Cuts

                     CHAPTER 1--GENERAL PROVISIONS

     SEC. 61. ELIMINATION OF FREE USE OF GOVERNMENT OWNED TAKEOFF 
                   AND LANDING SLOTS.

       (a) Definitions.--In this section:
       (1) Air carrier.--The term ``air carrier'' has the meaning 
     given that term in section 40102(a)(2) of title 49, United 
     States Code.
       (2) High density airport.--The term ``high density 
     airport'' has the meaning given that term in section 
     41714(h)(2) of title 49, United States Code.
       (3) Secretary.--The term ``Secretary'' means the Secretary 
     of Transportation.
       (4) Slot.--The term ``slot'' has the meaning given that 
     term in section 41714(h)(4) of title 49, United States Code.
       (5) Slot exemption.--The term ``slot exemption'' means an 
     exemption to the requirements of subparts K and S of part 93 
     of title 14, United States Code, that permits an air carrier 
     to conduct a takeoff or landing from an airport without 
     holding a slot.
       (b) Fees.--The Secretary shall establish a fee schedule and 
     assess fees for each slot held by, or slot exemption granted 
     to, an air carrier at a high density airport. The amount of 
     each such fee shall be the fair market value of the slot or 
     slot exemption involved.

     SEC. 62. ELIMINATION OF FOREIGN MARKET DEVELOPMENT PROGRAM.

       Title VII of the Agricultural Trade Act of 1978 (7 U.S.C. 
     5721 et seq.) is repealed.

     SEC. 63. ELIMINATION OF HIGHWAY DEMONSTRATION PROJECTS.

       (a) High Priority Projects Program.--Section 117 of title 
     23, United States Code, is repealed.
       (b) Projects.--Subtitle F of title I of the Transportation 
     Equity Act for the 21st Century (112 Stat. 255) is repealed.
       (c) Funding.--Section 1101(a) of the Transportation Equity 
     Act for the 21st Century (112 Stat. 111) is amended by 
     striking paragraph (13).
       (d) Conforming Amendments.--
       (1) The analysis for chapter 1 of title 23, United States 
     Code, is amended by striking the item relating to section 117 
     of title 23, United States Code.
       (2) Section 105 of title 23, United States Code, is 
     amended--
       (A) in the first sentence of subsection (a), by striking 
     ``high priority projects,''; and
       (B) in subsection (c)(1), by striking ``high priority 
     projects,'' each place it appears.
       (3) Section 145(b) of title 23, United States Code, is 
     amended--
       (A) by striking ``section 1602 of the Transportation Equity 
     Act for the 21st Century,'';
       (B) by striking ``seq.),'' and inserting ``seq.)'';
       (C) by striking ``section 1101(a)(13) of the Transportation 
     Equity Act for the 21st Century, 117 of title 23, United 
     States Code,''; and
       (D) by striking ``1991,'' and inserting ``1991''.
       (4) Section 1102(c)(4) of the Transportation Equity Act for 
     the 21st Century (112 Stat. 116) is amended by striking 
     ``section 117 of title 23, United States Code (relating to 
     high priority projects program),''.
       (5) Section 1212 of the Transportation Equity Act for the 
     21st Century is amended by striking subsections (g) and (h) 
     (112 Stat. 196, 840).
       (6) Section 1217(j) of the Transportation Equity Act for 
     the 21st Century (112 Stat. 216, 841) is amended by striking 
     the second sentence.
       (7) Section 5118 of the Transportation Equity Act for the 
     21st Century (112 Stat. 452) is amended--
       (A) by striking subsection (b); and
       (B) by redesignating subsections (c) and (d) as subsections 
     (b) and (c), respectively.

     SEC. 64. ELIMINATION OF FEDERAL SUBSIDIES FOR AMTRAK.

       (a) In General.--Notwithstanding any other provision of 
     law, including section 24104 of title 49, United States Code, 
     beginning with fiscal year 2000, the Secretary of 
     Transportation may not use any funds for the benefit of 
     Amtrak for--
       (1) capital expenditures, operating expenses, or payments 
     (including direct grants); or
       (2) loan guarantees.
       (b) Conforming Amendments.--
       (1) Section 24104(a) of title 49, United States Code, is 
     amended--
       (A) in paragraph (1), by adding ``and'' at the end;
       (B) in paragraph (2), by striking the semicolon and adding 
     a period;
       (C) by striking paragraphs (3) through (5); and
       (D) in the matter following paragraph (2), by striking the 
     last sentence.
       (2) Section 24909(a) of title 49, United States Code, is 
     amended--
       (A) in paragraph (1), by striking ``Not more'' and 
     inserting ``Except as provided in paragraph (3), not more'';
       (B) in paragraph (2), by striking ``Not more'' and 
     inserting ``Except as provided in paragraph (3), not more''; 
     and
       (C) by adding at the end the following:
       ``(3) Beginning with fiscal year 2000, no funds shall be 
     appropriated to Amtrak under this section.
       (3) Section 26104 of title 49, United States Code, is 
     amended by adding at the end the following:
       ``(i) Prohibition.--Beginning with fiscal year 2000, the 
     Secretary may not use any amounts made available under this 
     section to provide assistance to Amtrak.''.

[[Page 18582]]



     SEC. 65. ELIMINATION OF FUNDING TO COMPLETE APPALACHIAN 
                   DEVELOPMENT HIGHWAY SYSTEM.

       (a) Program.--Section 1117 of the Transportation Equity Act 
     for the 21st Century (112 Stat. 160) is amended--
       (1) by striking subsections (a) and (b); and
       (2) by redesignating subsections (c) and (d) as subsections 
     (a) and (b), respectively.
       (b) Funding.--Section 1101(a) of the Transportation Equity 
     Act for the 21st Century (112 Stat. 111) is amended by 
     striking paragraph (6).
       (c) Conforming Amendments.--
       (1) Section 104(a)(1) of title 23, United States Code, is 
     amended--
       (A) by inserting ``or'' after ``section 105,'';
       (B) by striking ``or the Appalachian development highway 
     system program under section 201 of the Appalachian Regional 
     Development Act of 1965 (40 U.S.C. App.),'';
       (C) by striking ``necessary'' and all that follows through 
     ``(A) to'' and inserting ``necessary to''; and
       (D) by striking ``chapter 2'' and all that follows and 
     inserting ``chapter 2.''.
       (2) Section 105 of title 23, United States Code, is 
     amended--
       (A) in the first sentence of subsection (a), by striking 
     ``Appalachian development highway system,''; and
       (B) in subsection (c)(1), by striking ``Appalachian 
     development highway system,'' each place it appears.
       (3) Section 1102(c) of the Transportation Equity Act for 
     the 21st Century (112 Stat. 116) is amended--
       (A) in paragraph (4), by striking ``section 201 of the 
     Appalachian Regional Development Act of 1965,''; and
       (B) in paragraph (6), by striking ``, and the Appalachian 
     development highway system program''.

     SEC. 66. ELIMINATION OF ADVANCED TECHNOLOGY PROGRAM.

       (a) In General.--
       (1) Repeal.--Section 28 of the National Institute of 
     Standards and Technology Act (15 U.S.C. 278n) is repealed, 
     effective October 1, 1999.
       (2) Moratorium.--Beginning on the date of enactment of this 
     section, neither the Secretary of Commerce or the Director of 
     the National Institute of Standards and Technology may enter 
     into any contract or agreement under section 28(b) of the 
     National Institute of Standards and Technology Act (15 U.S.C. 
     278n) or otherwise initiate any activity or joint venture 
     under the Advanced Technology Program.
       (b) Contracts and Cooperative Agreements.--Beginning on 
     October 1, 1999, any contract or cooperative agreement 
     entered into under section 28(b) of the National Institute of 
     Standards and Technology Act (15 U.S 278n(b)) shall be null 
     and void. To the extent necessary to carry out this 
     subsection, the Secretary of Commerce, from funds otherwise 
     available to carry out the Advanced Technology Program, shall 
     provide compensation to a party to such a contract or 
     agreement.

     SEC. 67. ELIMINATION OF NASA'S EARTH SCIENCE PROGRAM.

       The Earth Science Program of the National Aeronautics and 
     Space Administration is terminated, effective October 1, 
     1999. The Administrator of the National Areonautics and Space 
     Administration shall take such action as may be necessary to 
     carry out this section.

     SEC. 68. ELIMINATION OF MARKET ACCESS PROGRAM.

       (a) In General.--Section 203 of the Agricultural Trade Act 
     of 1978 (7 U.S.C. 5623) is repealed.
       (b) Conforming Amendments.--
       (1) Section 211 of the Agricultural Trade Act of 1978 (7 
     U.S.C. 5641) is amended by striking subsection (c).
       (2) Section 402(a)(1) of the Agricultural Trade Act of 1978 
     (7 U.S.C. 5662(a)(1)) is amended by striking ``203,''.
       (3) Section 1302 of the Omnibus Budget Reconciliation Act 
     of 1993 (7 U.S.C. 5623 note; Public Law 103-66) is repealed.

     SEC. 69. ELIMINATION OF BELOW-COST SALES OF TIMBER FROM 
                   NATIONAL FOREST SYSTEM LANDS.

       The National Forest Management Act of 1976 is amended by 
     inserting after section 14 (16 U.S.C. 472a) the following:

     ``SEC. 14A. ELIMINATION OF BELOW-COST TIMBER SALES FROM 
                   NATIONAL FOREST SYSTEM LANDS.

       ``(a) Definition of Below-Cost Timber Sale.--In this 
     section, the term `below-cost timber sale' means a sale of 
     timber in which the costs to be incurred by the Federal 
     Government exceed the cash returns to the United States 
     Treasury.
       ``(b) Requirement That Sale Revenues Exceed Costs.--
     Effective beginning October 1, 2003, in appraising timber and 
     setting a minimum bid for trees, portions of trees, or forest 
     products located on National Forest System land that are 
     proposed for sale under section 14 or any other provision of 
     law, the Secretary of Agriculture shall ensure that the 
     estimated cash returns to the United States Treasury from 
     each sale equal or exceed the estimated costs to be incurred 
     by the Federal Government in the preparation of the sale or 
     as a result of the sale.
       ``(c) Costs To Be Considered.--For purposes of estimating 
     under this section the costs to be incurred by the Federal 
     Government from each timber sale, the Secretary shall assign 
     to the sale the following costs:
       ``(1) The actual appropriated expenses for sale preparation 
     and harvest administration incurred or to be incurred by the 
     Federal Government from the sale and the payments to counties 
     to be made as a result of the sale.
       ``(2) A portion of the annual timber resource planning 
     costs, silvicultural examination costs, other resource 
     support costs, road design and construction costs, road 
     maintenance costs, transportation planning costs, 
     appropriated reforestation costs, timber stand improvement 
     costs, forest genetics research costs, general administrative 
     costs (including administrative costs of the national and 
     regional offices of the Forest Service), and facilities 
     construction costs of the Federal Government directly or 
     indirectly related to the timber harvest program conducted on 
     National Forest System land.
       ``(d) Method of Allocating Costs.--The Secretary shall 
     allocate the costs referred to in subsection (c)(2) to each 
     unit of the National Forest System, and each proposed timber 
     sale in the unit, on the basis of harvest volume.
       ``(e) Transitional Requirements.--To ensure the elimination 
     of all below-cost timber sales by the date specified in 
     subsection (b), the Secretary shall progressively reduce the 
     number and size of below-cost timber sales on National Forest 
     System land as follows:
       ``(1) In fiscal year 2000, the quantity of timber sold in 
     below-cost timber sales on National Forest System land shall 
     not exceed 75 percent of the quantity of timber sold in such 
     sales in the preceding fiscal year.
       ``(2) In fiscal year 2001, the quantity of timber sold in 
     below-cost timber sales on National Forest System land shall 
     not exceed 65 percent of the quantity of timber sold in such 
     sales in fiscal year 2000.
       ``(3) In fiscal year 2002, the quantity of timber sold in 
     below-cost timber sales on National Forest System land shall 
     not exceed 50 percent of the quantity of timber sold in such 
     sales in fiscal year 2001.''.

     SEC. 70. PROHIBITION ON CERTAIN RESEARCH FUNCTIONS OF 
                   DEPARTMENT OF ENERGY.

       Section 209 of the Department of Energy Organization Act 
     (42 U.S.C. 7139) is amended by adding at the end the 
     following:
       ``(c) Prohibition on Certain Research Functions.--
     Notwithstanding any other provision of law, the Secretary and 
     each other officer, employee, and office and agency of the 
     Department shall not carry out or support any--
       ``(1) general science research; or
       ``(2) applied research and development activity.''.

     SEC. 71. OFFSET FEE FOR THE FEDERAL CAPITAL COSTS SAVINGS 
                   PROVIDED TO THE FNMA AND FHLMC.

       (a) In General.--Notwithstanding any other provision of law 
     and on January 1 of each year, the Secretary of the Treasury 
     shall assess and collect from the Federal National Mortgage 
     Association and the Federal Home Loan Mortgage Corporation 
     (each referred to in this section as an ``enterprise'') an 
     annual fee to be deposited in the General Fund of the 
     Treasury that represents the savings in capital costs derived 
     by each enterprise from Federal affiliation in the preceding 
     year calculated as provided in subsection (b).
       (b) Fee calculation.--The Secretary of the Treasury shall 
     calculate a fee equal to an amount equal to 20 basis points 
     on the average debt outstanding of the enterprise at the end 
     of the preceding year.
       (c) Effective Date.--This section shall take effect on 
     January 1, 2000 with respect to calendar year 1999.

     SEC. 72. ENHANCED COMPETITION WITH THE PRIVATE SECTOR 
                   REGARDING MILITARY FAMILY HOUSING.

       (a) Payment of BAH to Members With Dependents Assigned to 
     Quarters.--Notwithstanding section 403 of title 37, United 
     States Code, or any other provision of law, each member of 
     the Armed Forces with dependents who is entitled to a basic 
     allowance for housing under that section shall be paid the 
     basic allowance for housing to which such member is entitled, 
     without regard to whether such member is assigned to quarters 
     of the United States or a housing facility under the 
     jurisdiction of a military department.
       (b) Payment for Quarters by Members With Dependents 
     Assigned to Quarters.--(1) Except as provided in paragraph 
     (2), a member of the Armed Forces described in subsection (a) 
     who is assigned to quarters of the United States or a housing 
     facility under the jurisdiction of a military department 
     shall pay to the Secretary concerned an amount of rent for 
     such quarters or facility determined by such Secretary under 
     subsection (c).
       (2) Paragraph (1) shall not apply in the case of any member 
     referred to in that paragraph who resides in quarters or a 
     housing facility for reasons of military necessity (as 
     determined by the Secretary concerned).
       (c) Determination of Rental Amounts.--(1) During the period 
     beginning on January 1, 2001, and ending on December 31, 
     2002, the rental amount for quarters of the United States, or 
     a housing facility under the jurisdiction of a military 
     department, in existence on the date of the enactment of this 
     Act shall be the amount (as determined by the Secretary 
     concerned) necessary to ensure

[[Page 18583]]

     that such quarters or facility is fully occupied without any 
     waiting list for occupancy of such quarters or facility.
       (2) After December 31, 2002, the rental amount of any 
     quarters or housing facility shall be the amount (as 
     determined by the Secretary concerned) equal to the amount 
     necessary--
       (A) to cover the costs of operation and maintenance of such 
     quarters or facility; and
       (B) to provide for the amortization of any capital costs 
     associated with the construction of such quarters or 
     facility.
       (3) The Secretary concerned may establish rental amounts 
     for quarters or facilities of a historic or unique character 
     that differ from the rental amounts that would otherwise be 
     established for such quarters or facilities under this 
     subsection if the Secretary concerned that such differing 
     amounts are required for purposes of preserving or 
     maintaining the character of such quarters or facilities.
       (d) Use of Rental Amounts Paid.--Amounts paid for quarters 
     or facilities under subsection (c) shall be the only amounts 
     available to the Secretary concerned--
       (1) in the case of quarters or facilities covered by 
     paragraph (1) of subsection (c), for purposes of defraying 
     the costs of such Secretary in operating and maintaining the 
     quarters or facilities; or
       (2) in the case of quarters or facilities covered by 
     paragraph (2) of subsection (c), for purposes of--
       (A) covering the costs of operation and maintenance of the 
     quarters or facilities; and
       (B) providing for the amortization of any capital costs 
     associated with the construction of the quarters or 
     facilities.

            CHAPTER 2--ABOLISHMENT OF DEPARTMENT OF COMMERCE

     SEC. 81. SHORT TITLE.

       This chapter may be cited as the ``Department of Commerce 
     Dismantling Act''.

          Subchapter A--Abolishment of Department of Commerce

     SEC. 101. DEFINITIONS.

       For purposes of this chapter, the following definitions 
     apply:
       (1) Department.--The term ``Department'' means the 
     Department of Commerce.
       (2) Director.--The term ``Director'' means the Director of 
     the Office of Management and Budget.
       (3) Office.--The term ``Office'' means the Office of 
     Management and Budget.

     SEC. 102. ABOLISHMENT OF DEPARTMENT OF COMMERCE.

       (a) Abolishment of Department.--Effective on the applicable 
     date specified in subsection (c), the Department of Commerce 
     is abolished.
       (b) Transfer of Department Functions to Office of 
     Management and Budget.--Except as otherwise provided in this 
     chapter, all functions that on the day before the applicable 
     date specified in subsection (c) are authorized to be 
     performed by the Secretary of Commerce, any other officer or 
     employee of the Department acting in that capacity, or any 
     agency or office of the Department, are transferred to the 
     Director effective on that date.
       (c) Abolishment Date.--The date of abolishment of the 
     Department is the earlier of--
       (1) the last day of the 6-month period beginning on the 
     date of enactment of this chapter; or
       (2) September 30, 1999.

     SEC. 103. RESOLUTION AND TERMINATION OF DEPARTMENT FUNCTIONS.

       (a) Resolution of Functions.--During the period beginning 
     on the date of enactment of this chapter and ending on the 
     date specified in subsection (c)--
       (1) the disposition and resolution of functions of the 
     Department shall be completed in accordance with this 
     chapter; and
       (2) the Director shall resolve all functions that are 
     transferred to the Director under section 102(b) and are not 
     otherwise continued under this chapter.
       (b) Termination of Functions.--All functions that are 
     transferred to the Director under section 102(b) that are not 
     otherwise continued by this chapter shall terminate on the 
     date specified in subsection (c).
       (c) Functions Termination Date.--The date of termination of 
     functions referred to in subsections (a) and (b) is the last 
     day of the 3-year period beginning on the date of enactment 
     of this chapter.

     SEC. 104. RESPONSIBILITIES OF THE DIRECTOR OF THE OFFICE OF 
                   MANAGEMENT AND BUDGET.

       (a) In General.--The Director shall be responsible for the 
     implementation of this title, including--
       (1) the administration, during the period specified in 
     section 103(c), of all functions transferred to the Director 
     under section 102(b);
       (2) the administration, during the period specified in 
     section 103(a), of any outstanding obligations of the Federal 
     Government under any programs terminated by this chapter; and
       (3) taking any other action that may be necessary to 
     complete any outstanding affairs of the Department before the 
     end of the period specified in section 103(a).
       (b) Delegation of Functions.--
       (1) In general.--Except as provided in paragraph (2), the 
     Director may, to the extent that the Director determines that 
     such delegation is appropriate to carry out this title, 
     delegate to any officer of the Office or to any other Federal 
     department or agency head the performance of the functions of 
     the Director under this title.
       (2) Exception.--The Director may not delegate the planning 
     and reporting responsibilities under section 106.
       (c) Transfer of Assets and Personnel.--In connection with 
     any delegation of functions under subsection (b), the 
     Director may transfer, within the Office or to the department 
     or agency concerned, such assets, funds, personnel, records, 
     and other property relating to the delegated function as the 
     Director determines to be appropriate.
       (d) Authorities of the Director.--For purposes of 
     performing the functions of the Director under this title, 
     the Director may--
       (1) enter into contracts;
       (2) employ experts and consultants in accordance with 
     section 3109 of title 5, United States Code, at rates for 
     individuals not to exceed the per diem rate equivalent to the 
     rate for level IV of the Executive Schedule; and
       (3) utilize, on a reimbursable basis, the services, 
     facilities, and personnel of other Federal agencies.

     SEC. 105. PERSONNEL.

       Effective on the date specified in section 102(c), there is 
     transferred to the Office any individual who--
       (1) on the day before that date, was an officer or employee 
     of the Department; and
       (2) in the capacity as an officer or employee of the 
     Department, performed functions that are transferred to the 
     Director under section 102(b).

     SEC. 106. PLANS AND REPORTS.

       (a) Initial Implementation Plan.--
       (1) In general.--Not later than 90 days after the date of 
     enactment of this chapter, the Director shall submit a report 
     to Congress and the President that specifies actions that 
     have been taken and actions that have not been taken but are 
     necessary--
       (A) to resolve the programs and functions terminated in 
     this chapter on the date of enactment of this chapter; and
       (B) to implement the additional transfers and other program 
     dispositions provided for in this chapter.
       (2) Contents.--The report in paragraph (1) shall include--
       (A) recommendations for any legislation necessary for the 
     implementation of the abolishments, transfers, terminations, 
     and other dispositions of programs and functions under this 
     chapter; and
       (B) a description of actions planned and taken to comply 
     with limitations imposed by this chapter on spending for 
     continued functions.
       (b) Annual Status Reports.--At the end of the first full 
     fiscal year following the date of enactment of this chapter 
     and at the end of each of the 2 following fiscal years, the 
     Director shall submit a report, through the President, to 
     Congress that--
       (1) specifies the status and progress of actions taken to 
     implement this chapter and to wind up the affairs of the 
     Department of Commerce by the functions termination date 
     specified in section 103(c);
       (2) includes any recommendations for legislation that the 
     Director considers appropriate; and
       (3) describes actions taken to comply with limitations 
     imposed by this chapter on spending for continued functions.
       (c) GAO Reports.--Not later than 60 days after the issuance 
     of a report under subsection (a) or (b), the Comptroller 
     General of the United States shall submit to Congress a 
     report that--
       (1) evaluates the report; and
       (2) includes any recommendations the Comptroller General 
     considers appropriate.

     SEC. 107. GENERAL ACCOUNTING OFFICE -AUDIT AND ACCESS TO 
                   RECORDS.

       (a) Audit of Persons Performing Functions Pursuant to This 
     Chapter.--All agencies, corporations, organizations, and 
     other persons of any description that, under the authority of 
     the United States, perform any function or activity covered 
     under this chapter shall be subject to an audit by the 
     Comptroller General of the United States with respect to that 
     function or activity.
       (b) Audit of Persons Providing Certain Goods or Services.--
     All persons and organizations that, by contract, grant, or 
     otherwise, provide goods or services to, or receive financial 
     assistance from, any agency or other person performing 
     functions or activities covered under this chapter shall be 
     subject to an audit by the Comptroller General of the United 
     States with respect to the provision of such goods or 
     services or the receipt of such financial assistance.
       (c) Provisions Applicable to Audits Under This Section.--
       (1) Nature and scope of audit.--The Comptroller General of 
     the United States shall determine the nature, scope, terms, 
     and conditions of audits conducted under this section.
       (2) Coordination with other provisions of law.--The 
     authority of the Comptroller General of the United States 
     under this section shall be in addition to any audit 
     authority available to the Comptroller General under any 
     other provision of law (including any other provision of this 
     chapter).
       (3) Rights of access, examination, and copying.--The 
     Comptroller General of the

[[Page 18584]]

     United States, and any duly authorized representative of the 
     Comptroller General, shall have access to, and the right to 
     examine and copy, all records and other recorded information 
     in any form, and to examine any property within the 
     possession or control of any agency or person that--
       (A) is subject to audit under this section; and
       (B) the Comptroller General considers relevant to an audit 
     conducted under this section.
       (4) Enforcement of right of access.--The right of access of 
     the Comptroller General of the United States to information 
     under this section shall be enforceable under section 716 of 
     title 31, United States Code.
       (5) Maintenance of confidential records.--Section 716(e) of 
     title 31, United States Code, shall apply to information 
     obtained by the Comptroller General under this section.

     SEC. 108. CONFORMING AMENDMENTS.

       (a) Presidential Succession.--Section 19(d)(1) of title 3, 
     United States Code, is amended by striking ``Secretary of 
     Commerce,''.
       (b) Executive Departments.--Section 101 of title 5, United 
     States Code, is amended by striking the following item:
       ``The Department of Commerce.''.
       (c) Secretary's Compensation.--Section 5312 of title 5, 
     United States Code, is amended by striking the following 
     item:
       ``Secretary of Commerce.''.
       (d) Compensation for Positions at Level III.--Section 5314 
     of title 5, United States Code, is amended--
       (1) by striking the following item:
       ``Under Secretary of Commerce, Under Secretary of Commerce 
     for Economic Affairs, Under Secretary of Commerce for Export 
     Administration and Under Secretary of Commerce for Travel and 
     Tourism.'';
       (2) by striking the following item:
       ``Under Secretary of Commerce for Oceans and Atmosphere, 
     the incumbent of which also serves as Administrator of the 
     National Oceanic and Atmospheric Administration.''; and
       (3) by striking the following item:
       ``Under Secretary of Commerce for Technology.''.
       (e) Compensation for Positions at Level IV.--Section 5315 
     of title 5, United States Code, is amended--
       (1) by striking the following item:
       ``Assistant Secretaries of Commerce (11).'';
       (2) by striking the following item:
       ``General Counsel of the Department of Commerce.'';
       (3) by striking the following item:
       ``Assistant Secretary of Commerce for Oceans and 
     Atmosphere, the incumbent of which also serves as Deputy 
     Administrator of the National Oceanic and Atmospheric 
     Administration.'';
       (4) by striking the following item:
       ``Director, National Institute of Standards and Technology, 
     Department of Commerce.'';
       (5) by striking the following item:
       ``Inspector General, Department of Commerce.'';
       (6) by striking the following item:
       ``Chief Financial Officer, Department of Commerce.'';
       (7) by striking the item relating to the Director of the 
     Bureau of the Census and inserting ``Director of the Census, 
     Federal Statistical Service''; and
       (8) by striking the following item:
       ``Chief Information Officer, Department of Commerce.''.
       (f) Compensation for Positions at Level V.--Section 5316 of 
     title 5, United States Code, is amended--
       (1) by striking the following item:
       ``Director, United States Travel Service, Department of 
     Commerce.''; and
       (2) by striking the following item:
       ``National Export Expansion Coordinator, Department of 
     Commerce.''.
       (g) Inspector General Act of 1978.--The Inspector General 
     Act of 1978 (5 U.S.C. App.) is amended--
       (1) in section 9(a)(1)--
       (A) by striking subparagraph (B); and
       (B) by redesignating subparagraphs (C) through (W) as 
     subparagraphs (B) through (V), respectively;
       (2) in section 11(1), by striking ``Commerce,''; and
       (3) in section 11(2), by striking ``Commerce,''.
       (h) Effective Date.--The amendments made by this section 
     shall be effective on the applicable date specified in 
     section 102(c).

     SEC. 109. PRIVATIZATION FRAMEWORK.

       (a) In General.--
       (1) Privatization.--Not later than 18 months after a 
     function designated for privatization under title II is 
     transferred to the Office, the Director shall privatize that 
     function. The Director shall pursue such forms of 
     privatization arrangements as the Director considers 
     appropriate to best serve the interests of the United States.
       (2) Report.--If, by the date specified in paragraph (1), 
     the Director is unable to privatize a function, the Director 
     shall submit a report that states that inability to Congress, 
     together with recommendations concerning the appropriate 
     disposition of the function involved and the assets of the 
     function.
       (b) Role of the Federal Government.--No privatization 
     arrangement made under subsection (a) shall include any role 
     for, or accountability to, the Federal Government unless the 
     role or accountability is necessary to ensure the continued 
     accomplishment of a specific Federal objective. The Federal 
     role should be the minimum role necessary to accomplish 
     Federal objectives.
       (c) Assets.--In privatizing a function, the Director shall 
     take any action necessary--
       (1) to preserve the value of the assets of a function 
     during the period during which the Office holds such assets; 
     and
       (2) to continue the performance of the function to the 
     extent necessary--
       (A) to preserve the value of the assets; or
       (B) to accomplish core Federal objectives (as that term is 
     defined by the Director).

     SEC. 110. PRIORITY PLACEMENT PROGRAMS FOR FEDERAL EMPLOYEES 
                   AFFECTED BY A REDUCTION IN FORCE ATTRIBUTABLE 
                   TO THIS CHAPTER.

       (a) In General.--Subchapter I of chapter 33 of title 5, 
     United States Code, is amended by inserting after section 
     3329 the following:

     ``Sec. 3329a. Priority placement programs for employees 
       affected by a reduction in force attributable to the 
       Department of Commerce Dismantling Act

       ``(a)(1) For the purpose of this section, the term 
     `affected agency'--
       ``(A) except as provided in subparagraph (B), means an 
     Executive agency to which personnel are transferred in 
     connection with a transfer of function under the Department 
     of Commerce Dismantling Act, and
       ``(B) with respect to employees of the Department of 
     Commerce in general administration, the Inspector General's 
     office, or the General Counsel's office, or who provided 
     overhead support to other components of the Department on a 
     reimbursable basis, means all agencies to which functions of 
     those employees are transferred under the Department of 
     Commerce Dismantling Act.
       ``(2) This section applies with respect to any reduction in 
     force that--
       ``(A) occurs within 12 months after the date of enactment 
     of this section; and
       ``(B) is due to--
       ``(i) the termination of any function of the Department of 
     Commerce; or
       ``(ii) the agency's having excess personnel as a result of 
     a transfer of function described in paragraph (1), as 
     determined by--
       ``(I) the Director of the Office of Management and Budget, 
     in the case of a function transferred to the Office of 
     Management and Budget; or
       ``(II) the head of the agency, in the case of any function 
     transferred to an agency other than the Office of Management 
     and Budget.
       ``(b) As soon as practicable after the date of enactment of 
     this section, each affected agency shall establish an 
     agencywide priority placement program to facilitate 
     employment placement for employees who, due to a reduction in 
     force described in subsection (a)(2)--
       ``(1) are scheduled to be separated from service; or
       ``(2) are separated from service.
       ``(c)(1) Each agencywide priority placement program shall 
     include provisions under which a vacant position shall not be 
     filled by the appointment or transfer of any individual from 
     outside of that agency if--
       ``(A) an individual described in paragraph (2) who is 
     qualified for the position is available for the position at 
     the time of the occurrence of the vacancy; and
       ``(B) the position--
       ``(i) is at the same grade (or pay level) or not more than 
     1 grade (or pay level) below that of the position last held 
     by such individual before placement in the new position; and
       ``(ii) is within the same commuting area as the 
     individual's last-held position (as referred to in clause 
     (i)) or residence.
       ``(2) For purposes of an agencywide priority placement 
     program, an individual shall be considered to be described in 
     this paragraph if the most recent performance evaluation of 
     the individual was at least fully successful (or the 
     equivalent), and such individual is either--
       ``(A) an employee of the agency who is scheduled to be 
     separated, as described in subsection (b)(1); or
       ``(B) an individual who became a former employee of the 
     agency as a result of a separation, as described in 
     subsection (b)(2).
       ``(d)(1) Nothing in this section shall affect any priority 
     placement program of the Department of Defense that is in 
     operation as of the date of enactment of this section.
       ``(2) Nothing in this section shall impair any placement 
     program within an agency subject to a reduction in force 
     resulting from a cause other than the Department of Commerce 
     Dismantling Act.
       ``(e) An individual shall cease to be eligible to 
     participate in a program under this section on the earlier 
     of--
       ``(1) the conclusion of the 12-month period beginning on 
     the date on which the individual first became eligible to 
     participate under subsection (c)(2); or
       ``(2) the date on which the individual declines a bona fide 
     offer (or if the individual does not act on the offer, the 
     last date on which the individual could accept the offer) 
     from the affected agency of a position described in 
     subsection (c)(1)(B).''.

[[Page 18585]]

       (b) Conforming Amendment.--The chapter analysis for chapter 
     33 of title 5, United States Code, is amended by inserting 
     after the item relating to section 3329 the following:

``3329a. Priority placement programs for employees affected by a 
              reduction in force attributable to the Department of 
              Commerce Dismantling Act.''.

     SEC. 111. FUNDING REDUCTIONS FOR TRANSFERRED FUNCTIONS.

       (a) Funding Reductions.--Except as provided in subsection 
     (b), the total amount obligated or expended by the United 
     States in performing functions transferred under this chapter 
     to the Director or to the Office from the Department, or any 
     of its officers or components, shall not exceed--
       (1) for the first fiscal year that begins after the date 
     specified in section 102(c), 75 percent of the total amount 
     appropriated to the Department for the performance of those 
     functions for fiscal year 1998; and
       (2) for the second fiscal year that begins after the date 
     specified in section 102(c) and for each fiscal year 
     thereafter, 65 percent of the total amount appropriated to 
     the Department for the performance of those functions for 
     fiscal year 1998.
       (b) Exception.--Subsection (a) shall not apply to 
     obligations or expenditures incurred as a direct consequence 
     of the termination, transfer, or other disposition of 
     functions described in subsection (a) pursuant to this 
     chapter.
       (c) Rule of Construction.--This section shall supersede any 
     other provision of law that does not explicitly--
       (1) refer to this section; and
       (2) create an exemption from this section.
       (d) Responsibilities of the Director.--The Director shall--
       (1) ensure compliance with the requirements of this 
     section; and
       (2) include in each report under subsections (a) and (b) of 
     section 106 a description of actions taken to comply with the 
     requirements referred to in paragraph (1).

   Subchapter B--Disposition of Programs, Functions, and Agencies of 
                         Department of Commerce

     SEC. 201. ECONOMIC DEVELOPMENT.

       (a) Terminated Functions.--The Public Works and Economic 
     Development Act of 1965 (42 U.S.C. 3121 et seq.) is repealed.
       (b) Transfer of Financial Obligations Owed to the 
     Department.--There are transferred to the Secretary of the 
     Treasury the loans, notes, bonds, debentures, securities, and 
     other financial obligations owned by the Department of 
     Commerce under the Public Works and Economic Development Act 
     of 1965, together with all assets or other rights (including 
     security interests) incident thereto, and all liabilities 
     related thereto. There are assigned to the Secretary of the 
     Treasury the functions, powers, and abilities vested in or 
     delegated to the Secretary of Commerce or the Department of 
     Commerce to manage, service, collect, sell, dispose of, or 
     otherwise realize proceeds on obligations owed to the 
     Department of Commerce under authority of such chapter with 
     respect to any loans, obligations, or guarantees made or 
     issued by the Department of Commerce pursuant to such 
     chapter.
       (c) Audit.--Not later than 18 months after the date of 
     enactment of this chapter, the Comptroller General shall--
       (1) conduct an audit of all grants made or issued by the 
     Department of Commerce under the Public Works and Economic 
     Development Act of 1965 in fiscal year 1998 and all loans, 
     obligations, and guarantees; and
       (2) transmit to Congress a report on the results of the 
     audit referred to in paragraph (1).

     SEC. 202. TECHNOLOGY ADMINISTRATION.

       (a) Technology Administration.--
       (1) General rule.--Except as otherwise provided in this 
     section, the Technology Administration of the Department of 
     Commerce is terminated.
       (2) Office of technology policy.--The Office of Technology 
     Policy of the Department of Commerce is terminated.
       (b) National Institute of Standards and Technology.--
       (1) Redesignation.--The National Institute of Standards and 
     Technology of the Department of Commerce is hereby 
     redesignated as the National Bureau of Standards, and all 
     references to the National Institute of Standards and 
     Technology in Federal law or regulations are deemed to be 
     references to the National Bureau of Standards.
       (2) General rule.--The National Bureau of Standards (in 
     this subsection referred to as the ``Bureau'') is transferred 
     from the Department of Commerce to the National Oceanic and 
     Atmospheric Administration, established in section 206.
       (3) Functions of director.--Except as otherwise provided in 
     this section or section 207, upon the transfer under 
     paragraph (2), the Director of the Bureau shall perform all 
     functions relating to the Bureau that, immediately before the 
     effective date specified in section 208(a), were functions of 
     the Secretary of Commerce or the Under Secretary of Commerce 
     for Technology.
       (c) National Technical Information Service.--
       (1) Privatization.--All functions of the National Technical 
     Information Service of the Department of Commerce are 
     transferred to the Director of the Office of Management and 
     Budget for privatization in accordance with section 109 by 
     the date specified in subsection (a) of that section.
       (2) Transfer to national oceanic and atmospheric 
     administration.--If, by the date specified in section 109(a), 
     an appropriate arrangement for the privatization of functions 
     of the National Technical Information Service under paragraph 
     (1) has not been made, the National Technical Information 
     Service shall be transferred to the National Oceanic and 
     Atmospheric Administration established in section 206.
       (3) Government corporation.--If, by the date specified in 
     section 109(a), an appropriate arrangement for the 
     privatization of functions of the National Technical 
     Information Service under paragraph (1) has not been made, 
     the Director of the Office of Management and Budget shall, 
     not later than 180 days after the date specified in section 
     109(a), submit to Congress recommended legislation to 
     establish the National Technical Information Service as a 
     wholly owned Government corporation. The recommended 
     legislation shall provide for the corporation to perform 
     substantially the same functions that, as of the date of 
     enactment of this chapter, are performed by the National 
     Technical Information Service.
       (4) Funding.--No funds are authorized to be appropriated 
     for the National Technical Information Service or any 
     successor corporation established pursuant to recommended 
     legislation under paragraph (3).
       (d) Amendments.--
       (1) National institute of standards and technology act.--
     The National Institute of Standards and Technology Act (15 
     U.S.C. 271 et seq.) is amended--
       (A) in section 2(b), by striking paragraph (1) and 
     redesignating paragraphs (2) through (11) as paragraphs (1) 
     through (10), respectively;
       (B) in section 2(d), by striking ``, including the programs 
     established under sections 25, 26, and 28 of this chapter'';
       (C) in section 10--
       (i) in the section heading, by striking ``Advanced'' and 
     inserting ``Standards and''; and
       (ii) in subsection (a), by striking ``Advanced'' and 
     inserting ``Standards and''; and
       (D) by striking sections 24, 25, 26, and 28.
       (2) Stevenson-wydler technology innovation act of 1980.--
     The Stevenson-Wydler Technology Innovation Act of 1980 (15 
     U.S.C. 3701 et seq.) is amended--
       (A) in section 3, by striking paragraph (2) and 
     redesignating paragraphs (3) through (5) as paragraphs (2) 
     through (4), respectively;
       (B) in section 4, by striking paragraphs (1), (4), and (13) 
     and redesignating paragraphs (2), (3), (5), (6), (7), (8), 
     (9), (10), (11), and (12) as paragraphs (1) through (10), 
     respectively;
       (C) by striking sections 5 through 10;
       (D) in section 11--
       (i) in subsection (c)(3), by striking ``, the Federal 
     Laboratory Consortium for Technology Transfer,'';
       (ii) in subsection (d)--

       (I) in paragraph (2), by striking ``and the Federal 
     Laboratory Consortium for Technology Transfer''; and
       (II) in paragraph (3), by striking ``, and refer such 
     requests'' and all that follows through ``available to the 
     Service''; and

       (iii) by striking subsection (e); and
       (E) in section 17--
       (i) in subsection (c)--

       (I) in paragraph (1), by striking ``Subject to paragraph 
     (2), separate'' and inserting ``Separate''; and
       (II) by striking paragraph (2) and redesignating paragraph 
     (3) as paragraph (2);

       (ii) in subsection (f), by striking ``funds to carry out'' 
     and inserting ``funds only to pay the salary of the Director 
     of the Office of Quality Programs, who shall be responsible 
     for carrying out''; and
       (iii) by adding at the end the following new subsection:
       ``(h) Voluntary and Uncompensated Services.--The Director 
     of the Office of Quality Programs may accept voluntary and 
     uncompensated services notwithstanding the provisions of 
     section 1342 of title 31, United States Code.''.
       (3) Miscellaneous amendments.--Section 3 of Public Law 94-
     168 (15 U.S.C. 205b) is amended--
       (A) by striking paragraph (2);
       (B) by redesignating paragraphs (3) and (4) as paragraphs 
     (2) and (3), respectively; and
       (C) in paragraph (3), as redesignated by subparagraph (B) 
     of this paragraph, by striking ``in nonbusiness activities''.

     SEC. 203. REORGANIZATION OF THE BUREAU OF THE CENSUS AND THE 
                   BUREAU OF ECONOMIC ANALYSIS.

       (a) Transfer of Functions.--All functions of the Secretary 
     of Commerce relating to the Bureau of the Census and the 
     Bureau of Economic Analysis of the Department of Commerce are 
     transferred to the Federal Statistical Service established 
     under title V.
       (b) Transfer of Bureaus.--The Bureau of the Census and 
     Bureau of Economic Analysis of the Department of Commerce are 
     transferred to the Federal Statistical Service established 
     under title V.
       (c) References to Secretary.--Section 1(2) of the title 13, 
     United States Code, is amended by striking ``Secretary of 
     Commerce'' and inserting ``Administrator of the Federal 
     Statistical Service''.

[[Page 18586]]

       (d) References to Department.--Section 2 of title 13, 
     United States Code, is amended by striking ``Department of 
     Commerce'' and inserting ``Federal Statistical Service''.
       (e) General References to Secretary and Department.--Title 
     13, United States Code, is further amended--
       (1) by striking ``Secretary of Commerce'' each place it 
     appears and inserting ``Administrator of the Federal 
     Statistical Service''; and
       (2) by striking ``Department of Commerce'' each place it 
     appears and inserting ``Federal Statistical Service''.

     SEC. 204. TERMINATED FUNCTIONS OF NATIONAL TELECOMMUNICATIONS 
                   AND INFORMATION ADMINISTRATION.

       (a) Repeals.--The following provisions of law are repealed:
       (1) Subpart A of part IV of title III of the Communications 
     Act of 1934 (47 U.S.C. 390 et seq.), relating to assistance 
     for public telecommunications facilities.
       (2) Subpart B of part IV of title III of the Communications 
     Act of 1934 (47 U.S.C. 394), relating to the Endowment for 
     Children's Educational Television.
       (3) Subpart C of part IV of title III of the Communications 
     Act of 1934 (47 U.S.C. 395), relating to Telecommunications 
     Demonstration grants.
       (b) Disposal of National Telecommunications and Information 
     Administration Laboratories.--
       (1) Privatization.--All laboratories of the National 
     Telecommunications and Information Administration are 
     transferred to the Director of the Office of Management and 
     Budget for privatization in accordance with section 109 by 
     the date specified in subsection (a) of that section.
       (2) Transfer to national oceanic and atmospheric 
     administration.--If an appropriate arrangement for the 
     privatization of functions of the laboratories of the 
     National Telecommunications and Information Administration 
     under paragraph (1) has not been made by the date specified 
     in section 109(a), the laboratories of the National 
     Telecommunications and Information Administration shall be 
     transferred as of the end of such period to the National 
     Oceanic and Atmospheric Administration established in section 
     206.
       (3) Transfer of functions.--The functions of the National 
     Telecommunications and Information Administration concerning 
     research and analysis of the electromagnetic spectrum 
     described in section 5112(b) of the Omnibus Trade and 
     Competitiveness Act of 1988 (15 U.S.C. 1532) are transferred 
     to the Director of the National Bureau of Standards.
       (c) Transfer of National Telecommunications and Information 
     Administration Functions.--
       (1) Transfer to federal communications commission.--Except 
     as provided in subsection (b)(2), the functions of the 
     National Telecommunications and Information Administration, 
     and of the Secretary of Commerce and the Assistant Secretary 
     for Communications and Information of the Department of 
     Commerce with respect to the National Telecommunications and 
     Information Administration, are transferred to the Federal 
     Communications Commission. The functions transferred by this 
     paragraph shall be placed in an organizational component that 
     is independent from all Federal Communications Commission 
     functions directly related to the negotiation of trade 
     agreements. Such functions shall be supervised by an 
     individual whose principal professional expertise is in the 
     area of telecommunications. The position to which such 
     individual is appointed shall be graded at a level 
     sufficiently high to attract a highly qualified individual, 
     while ensuring autonomy in the conduct of such functions from 
     all activities and influences associated with trade 
     negotiations.
       (2) References.--References in any provision of law 
     (including the National Telecommunications and Information 
     Administration Organization Act) to the Secretary of Commerce 
     or the Assistant Secretary for Communications and Information 
     of the Department of Commerce--
       (A) with respect to a function vested pursuant to this 
     section in the Federal Communications Commission shall be 
     deemed to refer to the United States Trade Representative; 
     and
       (B) with respect to a function vested pursuant to this 
     section in the Director of the National Bureau of Standards 
     shall be deemed to refer to the Director of the National 
     Bureau of Standards.
       (3) Termination of ntia.--Effective on the applicable date 
     specified in section 102(c), the National Telecommunications 
     and Information Administration is abolished.

     SEC. 205. TERMINATIONS AND TRANSFERS.

       (a) Termination of Miscellaneous Research Programs and 
     Accounts.--
       (1) In general.--No funds may be appropriated for any 
     fiscal year for the following programs and accounts of the 
     National Oceanic and Atmospheric Administration:
       (A) The National Undersea Research Program.
       (B) The Fleet Modernization Program.
       (C) The Charleston, South Carolina, Special Management 
     Plan.
       (D) Chesapeake Bay Observation Buoys (as of September 30, 
     1999).
       (E) Federal/State Weather Modification Grants.
       (F) The Southeast Storm Research Account.
       (G) The Southeast United States Caribbean Fisheries 
     Oceanographic Coordinated Investigations Program.
       (H) National Institute for Environmental Renewal.
       (I) The Lake Champlain Study.
       (J) The Maine Marine Research Center.
       (K) The South Carolina Cooperative Geodetic Survey Account.
       (L) Pacific Island Technical Assistance.
       (M) Sea Grant Oyster Disease Account.
       (N) Sea Grant Zebra Mussel Account.
       (O) National Weather Service non-Federal, non-wildfire 
     Weather Service.
       (P) National Weather Service Regional Climate Centers.
       (Q) National Weather Service Samoa Weather Forecast Office 
     Repair and Upgrade Account.
       (R) Dissemination of Weather Charts (Marine Facsimile 
     Service).
       (S) The Climate and Global Change Account.
       (T) The Global Learning and Observations to Benefit the 
     Environment Program.
       (U) Mussel watch.
       (2) Repeals.--The following provisions of law are repealed:
       (A) The Ocean Thermal Conversion Act of 1980 (42 U.S.C. 
     9101 et seq.).
       (B) Title IV of the Marine Protection, Research, and 
     Sanctuaries Act of 1972 (16 U.S.C. 1447 et seq.).
       (C) Title V of the Marine Protection, Research, and 
     Sanctuaries Act of 1972 (33 U.S.C. 2801 et seq.).
       (D) The Great Lakes Fish and Wildlife Tissue Bank Act (16 
     U.S.C. 943 et seq.).
       (E) Section 208(c) of the National Sea Grant College 
     Program Act (33 U.S.C. 1127(c)).
       (F) Section 305 of the Coastal Zone Management Act of 1972 
     (16 U.S.C. 1454) is repealed effective October 1, 2000.
       (G) The NOAA Fleet Modernization Act (33 U.S.C. 891 et 
     seq.).
       (H) Public Law 85-342 (72 Stat. 35; 16 U.S.C. 778 et seq.), 
     relating to fish research and experimentation.
       (I) The first section of the Act of August 8, 1956 (70 
     Stat. 1126, chapter 1039; 16 U.S.C. 760d), relating to grants 
     for commercial fishing education.
       (J) Public Law 86-359 (16 U.S.C. 760e et seq.), relating to 
     the study of migratory marine gamefish.
       (b) Aeronautical Mapping and Charting.--
       (1) In general.--The aeronautical mapping and charting 
     functions of the National Oceanic and Atmospheric 
     Administration are transferred to the Defense Mapping Agency.
       (2) Termination of certain functions.--The Defense Mapping 
     Agency shall terminate any functions transferred under 
     paragraph (1) that are performed by the private sector.
       (3) Functions requested by federal aviation 
     administration.--
       (A) In general.--Notwithstanding paragraph (2), the 
     Director of the Defense Mapping Agency (referred to in this 
     paragraph as the ``Director'') shall carry out such 
     aeronautical charting functions as may be requested by the 
     Administrator of the Federal Aviation Administration.
       (B) Aeronautical mapping.--In carrying out aeronautical 
     mapping functions requested by the Administrator under 
     subparagraph (A), the Director shall in such manner and 
     including such information as the Administrator determines is 
     necessary for, or will promote, the safe and efficient 
     movement of aircraft in air commerce--
       (i) publish and distribute to the public and to the 
     Administrator any aeronautical charts requested by the 
     Administrator; and
       (ii) provide to the Administrator such other air traffic 
     control products and services as may be requested by the 
     Administrator.
       (4) Continuing applicability.--
       (A) In general.--Except as provided in subparagraph (B), 
     the requirements of section 1307 of title 44, United States 
     Code, shall continue to apply with respect to all 
     aeronautical products created or published by the Director in 
     carrying out the functions transferred to the Director under 
     this paragraph.
       (B) Exceptions.--The prices for products referred to in 
     subparagraph (A) shall be established jointly by the Director 
     and the Secretary of Transportation on an annual basis.
       (c) Transfer of Mapping, Charting, and Geodesy Functions to 
     the Army Corps of Engineers.--
       (1) In general.--Except as provided in subsection (b), 
     there are transferred to the Army Corps of Engineers the 
     functions relating to mapping, charting, and geodesy 
     authorized under the Act of August 7, 1947 (61 Stat. 787, 
     chapter 504; 33 U.S.C. 883a).
       (2) Termination of certain functions.--The Secretary of the 
     Army, acting through the Chief of Engineers of Army Corps of 
     Engineers, shall terminate any functions transferred under 
     paragraph (1) that are performed by the private sector.

[[Page 18587]]

       (d) National Environmental Satellite, Data, and 
     Information.--There are transferred to the National Oceanic 
     and Atmospheric Administration established in section 206 all 
     functions and assets of the National Oceanic and Atmospheric 
     Administration that on the date immediately before the 
     effective date of this section are authorized to be performed 
     by the National Environmental Satellite, Data, and 
     Information System.
       (e) Oceanic and Atmospheric Administration.--There are 
     transferred to the National Oceanic and Atmospheric 
     Administration established in section 206 all functions and 
     assets of the National Oceanic and Atmospheric Administration 
     (including global programs) that on the date immediately 
     before the effective date of this section were authorized to 
     be performed by the Office of Oceanic and Atmospheric 
     Research.
       (f) National Weather Service.--
       (1) In general.--There are transferred to the National 
     Oceanic and Atmospheric Administration established in section 
     206 all functions and assets of the National Oceanic and 
     Atmospheric Administration that on the date immediately 
     before the effective date of this section are authorized to 
     be performed by the National Weather Service.
       (2) Duties.--Except as provided in paragraph (3), to 
     protect life and property and enhance the national economy, 
     the Administrator of Oceans and Atmosphere, through the 
     National Weather Service, shall be responsible for the 
     following:
       (A) Forecasts. (The Administrator shall serve as the sole 
     and official sources of weather and flood warnings for the 
     Federal Government.)
       (B) The issuance of storm warnings.
       (C) The collection, exchange, and distribution of 
     meteorological, hydrological, climatic, and oceanographic 
     data and information.
       (D) The preparation of hydro-meteorological guidance and 
     core forecast information.
       (3) Limitations on competition.--The National Weather 
     Service may not compete, or assist other entities in 
     competing, with the private sector to provide a service in 
     any case in which that service is provided by a private 
     sector commercial enterprise or a private sector commercial 
     enterprise is able to provide that service, unless--
       (A) the Administrator of Oceans and Atmosphere finds that 
     private sector commercial enterprises are unwilling or unable 
     to provide the service; and
       (B) the Administrator of Oceans and Atmosphere finds that 
     the service provides vital weather warnings and forecasts for 
     the protection of lives and property of the general public.
       (4) Organic act amendments.--The chapter entitled ``An Act 
     to increase the efficiency and reduce the expenses of the 
     Signal Corps of the Army, and to transfer the Weather Bureau 
     to the Department of Agriculture'', approved October 1, 1890 
     (26 Stat. 653, chapter 1266) is amended--
       (A) by striking section 3 (15 U.S.C. 313); and
       (B) in section 9 (15 U.S.C. 317), by striking ``Department 
     of'' and all that follows thereafter and inserting ``National 
     Oceanic and Atmospheric Administration.''.
       (5) Repeal.--Sections 706 and 707 of the Weather Service 
     Modernization Act (15 U.S.C. 313 note) are repealed.
       (6) Conforming amendments.--The Weather Service 
     Modernization Act (15 U.S.C. 313 note) is amended--
       (A) in section 702, by striking paragraph (3) and 
     redesignating paragraphs (4) through (10) as paragraphs (3) 
     through (9), respectively; and
       (B) in section 703--
       (i) by striking ``(a) National Implementation Plan.--'';
       (ii) by striking paragraph (3) and redesignating paragraphs 
     (4) through (6) as paragraphs (3) through (5), respectively; 
     and
       (iii) by striking subsections (b) and (c).
       (g) Termination of the National Oceanic and Atmospheric 
     Administration Corps of Commissioned Officers.--
       (1) Number of officers.--Notwithstanding section 8 of the 
     Act of June 3, 1948 (62 Stat. 298, chapter 390; 33 U.S.C. 
     853g), no funding may be provided for a commissioned officer 
     of the National Oceanic and Atmospheric Administration Corps 
     after fiscal year 1999 and no individual may serve as such a 
     commissioned officer after fiscal year 1999.
       (2) Separation pay.--
       (A) In general.--Commissioned officers may be separated 
     from the active list of the National Oceanic and Atmospheric 
     Administration. Any officer so separated because of paragraph 
     (1) shall, subject to subparagraph (B) and the availability 
     of appropriations, be eligible for separation pay under 
     section 9 of the chapter of June 3, 1948 (62 Stat. 299, 
     chapter 390; 33 U.S.C. 853h) to the same extent as if such 
     officer had been separated under section 8 of such chapter 
     (62 Stat. 298, chapter 390; 33 U.S.C. 853g).
       (B) Transferees.--Any officer who, under paragraph (4), 
     transfers to another of the uniformed services or becomes 
     employed in a civil service position shall not be eligible 
     for separation pay under this paragraph.
       (C) Repayment.--
       (i) In general.--Any officer who receives separation pay 
     under this paragraph shall be required to repay the amount 
     received if, within 1 year after the date of the separation 
     on which the payment is based, such officer is reemployed in 
     a civil service position in the National Oceanic and 
     Atmospheric Administration, the duties of which position 
     would formerly have been performed by a commissioned officer, 
     as determined by the Administrator of Oceans and Atmosphere.
       (ii) Lump sum.--A repayment under this subparagraph shall 
     be made in a lump sum or in such installments as the 
     Administrator may specify.
       (D) Repayments.--
       (i) In general.--In the case of any officer who makes a 
     repayment under subparagraph (C)--

       (I) the National Oceanic and Atmospheric Administration 
     shall pay into the Civil Service Retirement and Disability 
     Fund, on such officer's behalf, any deposit required under 
     section 8422(e)(1) of title 5, United States Code, with 
     respect to any prior service performed by that individual as 
     such an officer; and
       (II) if the amount paid under subclause (I) is less than 
     the amount of the repayment under subparagraph (C), the 
     National Oceanic and Atmospheric Administration shall pay 
     into the Government Securities Investment Fund (established 
     under section 8438(b)(1)(A) of title 5, United States Code), 
     on such individual's behalf, an amount equal to the 
     difference.

       (ii) Applicability.--The provisions of paragraph (5)(C)(iv) 
     shall apply with respect to any contribution to the Thrift 
     Savings Plan made under clause (ii).
       (3) Priority placement program.--A priority placement 
     program similar to the programs described in section 3329a of 
     title 5, United States Code (as added by section 110 of this 
     chapter) shall be established by the National Oceanic and 
     Atmospheric Administration to assist commissioned officers 
     who are separated from the active list of the National 
     Oceanic and Atmospheric Administration because of paragraph 
     (1).
       (4) Transfer.--
       (A) Transfers to armed forces.--Subject to the approval of 
     the Secretary of Defense and under terms and conditions 
     specified by the Secretary, commissioned officers subject to 
     paragraph (1) may transfer to the Armed Forces under section 
     716 of title 10, United States Code.
       (B) Transfers to united states coast guard.--Subject to the 
     approval of the Secretary of Transportation and under terms 
     and conditions specified by the Secretary, commissioned 
     officers subject to paragraph (1) may transfer to the United 
     States Coast Guard under section 716 of title 10, United 
     States Code.
       (C) Transfers to national oceanic and atmospheric 
     administration.--Subject to the approval of the Administrator 
     of Oceans and Atmosphere and under terms and conditions 
     specified by that Administrator, commissioned officers 
     subject to paragraph (1) may be employed by the National 
     Oceanic and Atmospheric Administration as members of the 
     civil service.
       (5) Retirement provisions.--
       (A) In general.--For commissioned officers who transfer 
     under paragraph (4)(A) to the Armed Forces, the National 
     Oceanic and Atmospheric Administration shall pay into the 
     Department of Defense Military Retirement Fund an amount, to 
     be calculated by the Secretary of Defense in consultation 
     with the Secretary of the Treasury, equal to the actuarial 
     present value of any retired or retainer pay they will draw 
     upon retirement, including full credit for service in the 
     National Oceanic and Atmospheric Administration (referred to 
     in this title as the ``NOAA Corps''). Any payment under this 
     subparagraph shall, for purposes of paragraph (2) of section 
     206(g), be considered to be an expenditure described in such 
     paragraph.
       (B) Other transfers.--For commissioned officers who 
     transfer under paragraph (4)(B) to the United States Coast 
     Guard, full credit for service in the NOAA Corps shall be 
     given for purposes of any annuity or other similar benefit 
     under the retirement system for members of the United States 
     Coast Guard, entitlement to which is based on the separation 
     of such officer.
       (C) Payment to certain commissioned officers who transfer 
     to civil service positions.--(i) For a commissioned officer 
     who becomes employed in a civil service position pursuant to 
     paragraph (4)(C) and thereupon becomes subject to the Federal 
     Employees' Retirement System, the National Oceanic and 
     Atmospheric Administration shall pay, on such officer's 
     behalf--
       (I) into the Civil Service Retirement and Disability Fund, 
     the amounts required under clause (ii); and
       (II) into the Government Securities Investment Fund, the 
     amount required under clause (iii).
       (ii)(I) The amount required under this subclause is the 
     amount of any deposit required under section 8422(e)(1) of 
     title 5, United States Code, with respect to any prior 
     service performed by the individual as a commissioned officer 
     of the National Oceanic and Atmospheric Administration.
       (II) To determine the amount required under this subclause, 
     first determine, for each year of service with respect to 
     which the deposit under subclause (I) relates, the product of 
     the normal-cost percentage for such year (as determined under 
     the last sentence of this subclause) multiplied by basic

[[Page 18588]]

     pay received by the individual for any such service performed 
     in such year. Second, take the sum of the amounts determined 
     for the respective years under the first sentence. Finally, 
     subtract from such sum the amount of the deposit under 
     subclause (I). For purposes of the first sentence, the 
     normal-cost percentage for any year shall be as determined 
     for such year under the provisions of section 8423(a)(1) of 
     title 5, United States Code, except that, in the case of any 
     year before the first year for which any normal-cost 
     percentage was determined under such provisions, the normal-
     cost percentage for such first year shall be used.
       (iii) The amount required under this clause is the amount 
     by which the separation pay to which the officer would have 
     been entitled under the second sentence of paragraph (2)(A) 
     (assuming the conditions for receiving such separation pay 
     have been met) exceeds the amount of the deposit under clause 
     (ii)(I), if at all.
       (iv)(I) Any contribution made under this subparagraph to 
     the Thrift Savings Plan shall not be subject to any otherwise 
     applicable limitation on contributions contained in the 
     Internal Revenue Code of 1986, and shall not be taken into 
     account in applying any such limitation to other 
     contributions or benefits under the Thrift Savings Plan, with 
     respect to the year in which the contribution is made.
       (II) A plan referred to in subclause (I) shall not be 
     treated as failing to meet any nondiscrimination requirement 
     by reason of the making of such contribution.
       (6) Repeals.--
       (A) In general.--The following provisions of law are 
     repealed:
       (i) The Coast and Geodetic Survey Commissioned Officers' 
     Act of 1948 (33 U.S.C. 853a-853o, 853p-853u).
       (ii) Section 5 of the Act of February 16, 1929 (45 Stat. 
     1187, chapter 221; 33 U.S.C. 852a).
       (iii) The Act of January 19, 1942 (56 Stat. 6, chapter 6).
       (iv) Section 9(c) of Public Law 87-649 (76 Stat. 495).
       (v) Section 16 of the Act of May 22, 1917 (40 Stat. 87, 
     chapter 20; 33 U.S.C. 854).
       (vi) The Act of December 3, 1942 (56 Stat. 1038, chapter 
     670).
       (vii) Sections 1 through 5 of Public Law 91-621 (33 U.S.C. 
     857-1 through 857-5).
       (viii) Section 3 of the Act of August 10, 1956 (70A Stat. 
     619, chapter 1041; 33 U.S.C. 857a).
       (ix) Section 11 of the Act of May 18, 1920 (41 Stat. 603, 
     chapter 190; 33 U.S.C. 864).
       (x) The Act of July 22, 1947 (61 Stat. 400, chapter 286; 33 
     U.S.C. 873 and 874).
       (xi) The Act of August 3, 1956 (70 Stat. 988, chapter 932; 
     33 U.S.C. 875 and 876).
       (B) Rule of construction.--No repeal under this 
     subparagraph shall affect any annuity or other similar 
     benefit payable, under any provision of law so repealed, 
     based on the separation of any individual from the NOAA Corps 
     on or before September 30, 2000. Any authority exercised by 
     the Secretary of Commerce or the designee of the Secretary 
     with respect to any such benefits shall be exercised by the 
     Administrator of Oceans and Atmosphere, and any authorization 
     of appropriations relating to those benefits, which is in 
     effect as of September 30, 2000, shall be considered to have 
     remained in effect.
       (C) Effective date of repeals.--The effective date of the 
     repeals under subparagraph (A) shall be October 1, 2000.
       (D) Applicability of retirement laws.--
       (i) In general.--All laws relating to the retirement of 
     commissioned officers of the Navy shall apply to commissioned 
     officers of the former Commissioned Officers Corps of the 
     National Oceanic and Atmospheric Administration and its 
     predecessors.
       (ii) Active military service.--Active service of officers 
     of the former Commissioned Officers Corps of the National 
     Oceanic and Atmospheric Administration and its predecessors 
     who have retired from the Commissioned Officers Corps shall 
     be deemed to be active military service in the United States 
     Navy for purposes of all rights, privileges, immunities, and 
     benefits provided to retired commissioned officers of the 
     Navy by the laws and regulations of the United States and any 
     agency thereof. In the Administration of those laws 
     (including regulations) with respect to retired officers of 
     the former Commissioned Officers Corps of the National 
     Oceanic and Atmospheric Administration and its predecessors, 
     the authority of the Secretary of the Navy shall be exercised 
     by the Administrator of Oceans and Atmosphere.
       (iii) Its predecessors defined.--For purposes of this 
     subparagraph, the term ``its predecessors'' means the former 
     Commissioned Officers Corps of the Environmental Science 
     Services Administration and the former Commissioned Officers 
     Corps of the Coast and Geodetic Survey.
       (7) Creditability of national oceanic and atmospheric 
     administration service for purposes relating to reductions in 
     force.--A commissioned officer who is separated from the 
     active list of the National Oceanic and Atmospheric 
     Administration or its successor by reason of paragraph (1) 
     shall, for purposes of any subsequent reduction in force, 
     receive credit for any period of service performed as such an 
     officer before separation from such list to the same extent 
     and in the same manner as if the period had been a period of 
     active service in the Armed Forces.
       (8) Abolition.--Effective September 30, 2000, the Office of 
     the National Oceanic and Atmospheric Administration Corps of 
     Operations or its successor and the Commissioned Personnel 
     Center are abolished.
       (h) National Oceanic and Atmospheric Administration 
     Fleet.--
       (1) Service contracts.--Notwithstanding any other provision 
     of law, the Administrator of Oceans and Atmosphere shall 
     enter into contracts, including multiyear contracts, subject 
     to paragraph (3), for the use of vessels to conduct 
     oceanographic research and fisheries research, monitoring, 
     enforcement, and management, and to acquire other data 
     necessary to carry out the missions of the National Oceanic 
     and Atmospheric Administration. The Administrator of Oceans 
     and Atmosphere shall enter into these contracts unless--
       (A) the cost of the contract is more than the cost 
     (including the cost of vessel operation, maintenance, and all 
     personnel) to the National Oceanic and Atmospheric 
     Administration of obtaining those services on vessels of the 
     National Oceanic and Atmospheric Administration;
       (B) the contract is for a period greater than 7 years; or
       (C) the data is acquired through a vessel agreement 
     pursuant to paragraph (4).
       (2) Vessels.--The Administrator of Oceans and Atmosphere 
     may not enter into any contract for the construction, lease-
     purchase, upgrade, or service life extension of any vessel.
       (3) Multiyear contracts.--
       (A) In general.--Subject to subparagraphs (B) and (C), and 
     notwithstanding section 1341 of title 31, United States Code, 
     and section 11 of title 41, United States Code, the 
     Administrator of Oceans and Atmosphere may acquire data under 
     multiyear contracts.
       (B) Required findings.--The Administrator of Oceans and 
     Atmosphere may not enter into a contract pursuant to this 
     paragraph unless the Administrator finds, with respect to 
     that contract, that there is a reasonable expectation that 
     throughout the contemplated contract period the Administrator 
     will request from Congress funding for the contract at the 
     level required to avoid the termination of that contract.
       (C) Required provisions.--The Administrator of Oceans and 
     Atmosphere may not enter into a contract under this paragraph 
     unless the contract includes--
       (i) a provision under which the obligation of the United 
     States to make payments under the contract for any fiscal 
     year is subject to the availability of appropriations 
     provided in advance for those payments;
       (ii) a provision that specifies the term of effectiveness 
     of the contract; and
       (iii) appropriate provisions under which, in case of any 
     termination of the contract before the end of the term 
     specified pursuant to clause (ii), the United States shall 
     only be liable for the lesser of--

       (I) an amount specified in the contract for such a 
     termination; or
       (II) amounts that were appropriated before the date of the 
     termination for the performance of the contract or for 
     procurement of the type of acquisition covered by the 
     contract and are unobligated on the date of the termination.

       (4) Vessel agreements.--The Administrator of Oceans and 
     Atmosphere--
       (A) shall, if appropriate, use excess capacity of 
     University National Oceanographic Laboratory System vessels; 
     and
       (B) may enter into memoranda of agreement with the 
     operators of the vessels referred to in subparagraph (A) to 
     carry out the requirement under that subparagraph.
       (5) Transfer of excess vessels.--The Administrator of 
     Oceans and Atmosphere shall transfer any vessel that weighs 
     more than 1,500 gross tons that are excess to the needs of 
     the National Oceanic and Atmospheric Administration to the 
     National Defense Reserve Fleet. Notwithstanding any other 
     provision of law, these vessels may be scrapped in accordance 
     with section 510(i) of the Merchant Marine Act, 1936 (46 
     U.S.C. App. 1160(i)).
       (i) National Marine Fisheries Service.--There are 
     transferred to the National Oceanic and Atmospheric 
     Administration all functions that on the day before the 
     effective date of this section are authorized by law to be 
     performed by the National Marine Fisheries Service.
       (j) National Ocean Service.--Except as otherwise provided 
     in this chapter, there are transferred to the National 
     Oceanic and Atmospheric Administration established under 
     section 206 all functions and assets of the National Oceanic 
     and Atmospheric Administration that on the date immediately 
     before the effective date of this section are authorized to 
     be performed by the National Ocean Service (including the 
     Coastal Ocean Program).
       (k) Transfer of Coastal Nonpoint Pollution Control 
     Functions.--There are transferred to the Administrator of the 
     Environmental Protection Agency the functions under section 
     6217 of the Omnibus Budget Reconciliation Act of 1990 (16 
     U.S.C. 1455b) that on the day before the effective date of 
     this section are vested in the Secretary of Commerce.

     SEC. 206. NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION.

       (a) Establishment.--

[[Page 18589]]

       (1) In general.--There is established as an independent 
     agency in the executive branch the National Oceanic and 
     Atmospheric Administration (in this section referred to as 
     ``NOAA''). NOAA, and all functions and offices transferred to 
     NOAA under this chapter, shall be administered under the 
     supervision and direction of an Administrator of Oceans and 
     Atmosphere.
       (2) Administrator of oceans and atmosphere.--The 
     Administrator of Oceans and Atmosphere shall--
       (A) be appointed by the President, by and with the advice 
     and consent of the Senate; and
       (B) receive basic pay at the rate payable for level II of 
     the Executive Schedule under section 5313 of title 5, United 
     States Code.
       (3) Functions.--The Administrator of Oceans and Atmosphere 
     shall perform the functions performed by the Administrator of 
     the National Oceanic and Atmospheric Administration, except 
     as otherwise provided in this chapter.
       (b) Principal Officer.--There shall be in NOAA, on the 
     transfer of functions and offices under this chapter, a 
     Director of the National Bureau of Standards, who--
       (1) shall be appointed by the President, by and with the 
     advice and consent of the Senate; and
       (2) shall receive basic pay at the rate payable for level 
     IV of the Executive Schedule under section 5315 of title 5, 
     United States Code.
       (c) Additional Officers.--
       (1) In general.--There shall be in NOAA--
       (A) a Chief Financial Officer, to be appointed by the 
     President, by and with the advice and consent of the Senate;
       (B) a Chief of External Affairs, to be appointed by the 
     President, by and with the advice and consent of the Senate;
       (C) a General Counsel, to be appointed by the President, by 
     and with the advice and consent of the Senate; and
       (D) an Inspector General, to be appointed in accordance 
     with the Inspector General Act of 1978 (5 U.S.C. App.).
       (2) Compensation.--Each Officer appointed under this 
     subsection shall receive basic pay at the rate payable for 
     level IV of the Executive Schedule under section 5315 of 
     title 5, United States Code.
       (d) Transfer of Functions and Offices.--Except as otherwise 
     provided in this chapter, there are transferred to NOAA--
       (1) the functions and offices of the National Oceanic and 
     Atmospheric Administration, as provided in section 205;
       (2) the National Bureau of Standards, along with its 
     functions and offices, as provided in section 202; and
       (3) the Office of Space Commerce, along with its functions 
     and offices.
       (e) Elimination of Positions.--The Administrator of Oceans 
     and Atmosphere may eliminate positions that are no longer 
     necessary because of the termination of functions under this 
     section and sections 202 and 205.
       (f) Agency Terminations.--
       (1) Terminations.--
       (A) In general.--On the date specified in section 208(a), 
     the following shall terminate:
       (i) The Office of the Deputy Administrator and Assistant 
     Secretary of the National Oceanic and Atmospheric 
     Administration.
       (ii) The Office of the Deputy Under Secretary of the 
     National Oceanic and Atmospheric Administration.
       (iii) The Office of the Chief Scientist of the National 
     Oceanic and Atmospheric Administration.
       (iv) The position of Deputy Assistant Secretary for Oceans 
     and Atmosphere.
       (v) The position of Deputy Assistant Secretary for 
     International Affairs.
       (vi) Any office of the National Oceanic and Atmospheric 
     Administration or the National Bureau of Standards whose 
     primary purpose is to perform high performance computing 
     communications, legislative, personnel, public relations, 
     budget, constituent, intergovernmental, international, policy 
     and strategic planning, sustainable development, 
     administrative, financial, educational, legal and 
     coordination functions.
       (vii) The position of Associate Director of the National 
     Institute of Standards and Technology.
       (B) Requirement.--The functions referred to in subparagraph 
     (A)(vi) shall be performed only by officers described in 
     subsection (c).
       (2) Termination of executive schedule positions.--Each 
     position that, before the effective date of this section, was 
     expressly authorized by law, or the incumbent of which is 
     authorized to receive compensation at the rate prescribed for 
     levels I through V of the Executive Schedule under sections 
     5312 through 5315 of title 5, United States Code, in an 
     office terminated pursuant to this section and sections 202 
     and 205 shall also terminate.
       (g) Funding Reductions Resulting From Reorganization.--
       (1) Funding reductions.--Notwithstanding the transfer of 
     functions under this title, the total amount appropriated by 
     the United States for the performance of all functions vested 
     in the National Oceanic and Atmospheric Administration 
     pursuant to this title shall not exceed--
       (A) for the first fiscal year that begins after the date 
     specified in section 102(c), 75 percent of the total amount 
     appropriated for fiscal year 1998 for the performance of all 
     functions vested in the National Oceanic and Atmospheric 
     Administration, the National Institute of Standards and 
     Technology, and the Office of Space Commerce, except for 
     those functions transferred under section 205 to agencies or 
     departments other than the National Oceanic and Atmospheric 
     Administration; and
       (B) for the second fiscal year that begins after the 
     abolishment date specified in section 102(c) and for each 
     fiscal year thereafter, 65 percent of the total amount 
     appropriated for fiscal year 1998 for the performance of all 
     functions vested in the National Oceanic and Atmospheric 
     Administration, the National Institute of Standards and 
     Technology, and the Office of Space Commerce, except for 
     those functions transferred under section 205 to agencies or 
     departments other than the National Oceanic and Atmospheric 
     Administration.
       (2) Exception.--Paragraph (1) shall not apply to 
     obligations or expenditures incurred as a direct consequence 
     of the termination, transfer, or other disposition of 
     functions described in paragraph (1) pursuant to this title.
       (3) Rule of construction.--This section shall supersede any 
     other provision of law that does not explicitly--
       (A) refer to this section; and
       (B) create an exemption from this section.
       (4) Responsibility of national oceanic and atmospheric 
     administration.--The National Oceanic and Atmospheric 
     Administration, in consultation with the Director of the 
     Office of Management and Budget, shall make such 
     modifications in programs as are necessary to carry out the 
     reductions in appropriations set forth in subparagraphs (A) 
     and (B) of paragraph (1).
       (5) Responsibilities of the director of the office of 
     management and budget.--The Director of the Office of 
     Management and Budget shall include in each report under 
     subsections (a) and (b) of section 106 a description of 
     actions taken to comply with the requirements of this 
     subsection.

     SEC. 207. MISCELLANEOUS TERMINATIONS; MORATORIUM ON PROGRAM 
                   ACTIVITIES.

       (a) Terminations.--The following agencies and programs of 
     the Department of Commerce are terminated:
       (1) The Minority Business Development Administration.
       (2) The programs and activities of the National 
     Telecommunications and Information Administration referred to 
     in section 204(a).
       (3) The Advanced Technology Program under section 28 of the 
     National Institute of Standards and Technology Act (15 U.S.C. 
     278n), as in effect on the day before the effective date of 
     section 202(d).
       (4) The Manufacturing Extension Programs under sections 25 
     and 26 of the National Institute of Standards and Technology 
     Act (15 U.S.C. 278k and 278l), as in effect on the day before 
     the effective date of section 202(d).
       (5) The National Institute of Standards and Technology 
     METRIC Program.
       (b) Moratorium on Program Activities.--The authority to 
     make grants, enter into contracts, provide assistance, incur 
     obligations, or provide commitments (including any 
     enlargement of existing obligations or commitments, except if 
     required by law) with respect to the agencies and programs 
     described in subsection (a) is terminated effective on the 
     date of enactment of this chapter.

     SEC. 208. EFFECTIVE DATE.

       (a) In General.--Except as provided in subsection (b), this 
     title shall take effect on the date specified in section 
     102(c).
       (b) Provisions Effective on Date of Enactment.--The 
     following provisions of this title shall take effect on the 
     date of enactment of this Act:
       (1) Section 201.
       (2) Section 205(g), except as otherwise provided in that 
     section.
       (3) Section 207(b).
       (4) This section.

   Subchapter C--Establishment of United States Trade Administration

                       PART I--GENERAL PROVISIONS

     SEC. 301. DEFINITIONS.

       In this title:
       (1) Federal agency.--The term ``Federal agency'' has the 
     meaning given to the term ``agency'' in section 551(1) of 
     title 5, United States Code.
       (2) Trade administration.--The term ``Trade 
     Administration'' means the United States Trade Administration 
     established by section 311 of this chapter.
       (3) Trade representative.--The term ``Trade 
     Representative'' means the United States Trade Representative 
     provided for under section 311 of this chapter.

              PART II--UNITED STATES TRADE ADMINISTRATION

                        Subpart A--Establishment

     SEC. 311. ESTABLISHMENT OF THE UNITED STATES TRADE 
                   ADMINISTRATION.

       (a) In General.--The Trade Administration is established in 
     the executive branch of Government as an independent 
     establishment as defined in section 104 of title 5, United 
     States Code. The Trade Representative shall be the head of 
     the Trade Administration and shall be appointed by the 
     President, by and with the advice and consent of the Senate.

[[Page 18590]]

       (b) Ambassador Status.--The Trade Representative shall have 
     the rank of Ambassador Extraordinary and Plenipotentiary and 
     shall represent the United States in all trade negotiations 
     conducted by the Trade Administration.
       (c) Continued Service of Current Trade Representative.--The 
     individual serving as Trade Representative on the date 
     immediately preceding the effective date of this title may 
     continue to serve as Trade Representative under this section 
     until such time as the Trade Representative is appointed 
     pursuant to subsection (a).
       (d) Successor to the Department of Commerce.--The Trade 
     Administration shall be the successor to the Department of 
     Commerce for purposes of protocol.

     SEC. 312. FUNCTIONS OF THE TRADE REPRESENTATIVE.

       (a) In General.--In addition to the functions transferred 
     to the Trade Representative by this title, such other 
     functions as the President may assign or delegate to the 
     Trade Representative, and such other functions as the Trade 
     Representative may, after the effective date of this title, 
     be required to carry out by law, the Trade Representative 
     shall--
       (1) serve as the principal advisor to the President on 
     international trade policy and advise the President on the 
     impact of other policies of the United States Government on 
     international trade;
       (2) exercise primary responsibility, with the advice of the 
     interagency organization established under section 242 of the 
     Trade Expansion Act of 1962 (19 U.S.C. 1872), for developing 
     and implementing international trade policy, including 
     commodity matters and, to the extent related to international 
     trade policy, direct investment matters and, in exercising 
     such responsibility, advance and implement, as the primary 
     mandate of the Trade Administration, the goals of the United 
     States to--
       (A) maintain United States leadership in international 
     trade liberalization and expansion efforts;
       (B) reinvigorate the ability of the United States economy 
     to compete in international markets and to respond flexibly 
     to changes in international competition; and
       (C) expand United States participation in international 
     trade through aggressive promotion and marketing of goods and 
     services that are products of the United States;
       (3) exercise lead responsibility for the conduct of 
     international trade negotiations, including negotiations 
     relating to commodity matters and, to the extent that such 
     negotiations are related to international trade, direct 
     investment negotiations;
       (4) exercise lead responsibility for the establishment of a 
     national export strategy, including policies designed to 
     implement such strategy;
       (5) with the advice of the interagency organization 
     established under section 242 of the Trade Expansion Act of 
     1962, issue policy guidance to other Federal agencies on 
     international trade, commodity, and direct investment 
     functions to the extent necessary to assure the coordination 
     of international trade policy;
       (6) seek and promote new opportunities for United States 
     products and services to compete in the world marketplace;
       (7) assist small businesses in developing export markets;
       (8) enforce the laws of the United States relating to 
     trade;
       (9) analyze economic trends and developments;
       (10) report directly to Congress--
       (A) on the administration of, and matters pertaining to, 
     the trade agreements program under the Omnibus Trade and 
     Competitiveness Act of 1988, the Trade Act of 1974, the Trade 
     Expansion Act of 1962, section 350 of the Tariff Act of 1930, 
     and any other law relating to trade agreements; and
       (B) with respect to other issues pertaining to 
     international trade;
       (11) keep each official adviser to the United States 
     delegations to international conferences, meetings, and 
     negotiation sessions relating to trade agreements who is 
     appointed from the Committee on Finance of the Senate or the 
     Committee on Ways and Means of the House of Representatives 
     under section 161 of the Trade Act of 1974 (19 U.S.C. 2211) 
     currently informed on United States negotiating objectives 
     with respect to--
       (A) trade agreements;
       (B) the status of negotiations in progress with respect to 
     such agreements; and
       (C) the nature of any changes in domestic law or the 
     administration thereof that the Trade Representative may 
     recommend to Congress to carry out any trade agreement;
       (12) consult and cooperate with State and local governments 
     and other interested parties on international trade matters 
     of interest to such governments and parties, and to the 
     extent related to international trade matters, on investment 
     matters, and, when appropriate, hold informal public 
     hearings;
       (13) serve as the principal advisor to the President on 
     Government policies designed to contribute to enhancing the 
     ability of United States industry and services to compete in 
     international markets;
       (14) develop recommendations for national strategies and 
     specific policies intended to enhance the productivity and 
     international competitiveness of United States industries;
       (15) serve as the principal advisor to the President in 
     identifying and assessing the consequences of any Government 
     policies that adversely affect, or have the potential to 
     adversely affect, the international competitiveness of United 
     States industries and services;
       (16) promote cooperation between business, labor, and 
     Government to improve industrial performance and the ability 
     of United States industries to compete in international 
     markets and to facilitate consultation and communication 
     between the Government and the private sector about domestic 
     industrial performance and prospects and the performance and 
     prospects of foreign competitors; and
       (17) monitor and enforce foreign government compliance with 
     international trade agreements to protect United States 
     interests.
       (b) Interagency Organization.--The Trade Representative 
     shall be the chairperson of the interagency organization 
     established under section 242 of the Trade Expansion Act of 
     1962.
       (c) National Security Council.--The Trade Representative 
     shall be a member of the National Security Council.
       (d) Advisory Council.--The Trade Representative shall be 
     Deputy Chairman of the National Advisory Council on 
     International Monetary and Financial Policies established 
     under Executive Order No. 11269, issued February 14, 1966.
       (e) Agriculture.--
       (1) Consultations.--The Trade Representative shall consult 
     with the Secretary of Agriculture or the designee of the 
     Secretary of Agriculture on all matters that potentially 
     involve international trade in agricultural products.
       (2) United states delegation.--If an international meeting 
     for negotiation or consultation includes discussion of 
     international trade in agricultural products, the Trade 
     Representative or the designee of the Trade Representative 
     shall be Chairman of the United States delegation to such 
     meeting and the Secretary of Agriculture or the designee of 
     such Secretary shall be Vice Chairman. The provisions of this 
     paragraph shall not limit the authority of the Trade 
     Representative under subsection (h) to assign to the 
     Secretary of Agriculture responsibility for the conduct of, 
     or participation in, any trade negotiation or meeting.
       (f) Trade Promotion.--The Trade Representative shall be the 
     chairperson of the Trade Promotion Coordinating Committee 
     established under section 2312 of the Export Enhancement Act 
     of 1988 (15 U.S.C. 4727).
       (g) National Economic Council.--The Trade Representative 
     shall be a member of the National Economic Council 
     established under Executive Order No. 12835, issued January 
     25, 1993.
       (h) International Trade Negotiations.--Except where 
     expressly prohibited by law, the Trade Representative, at the 
     request or with the concurrence of the head of any other 
     Federal agency, may assign the responsibility for conducting 
     or participating in any specific international trade 
     negotiation or meeting to the head of such agency whenever 
     the Trade Representative determines that the subject matter 
     of such international trade negotiation is related to the 
     functions carried out by such agency.

                          Subpart B--Officers

     SEC. 321. DEPUTY UNITED STATES TRADE REPRESENTATIVES.

       (a) Establishment.--There shall be in the Trade 
     Administration 3 Deputy United States Trade Representatives, 
     who shall be appointed by the President, by and with the 
     advice and consent of the Senate. The Deputy United States 
     Trade Representatives shall exercise all functions under the 
     direction of the Trade Representative, and shall include--
       (1) the Deputy United States Trade Representative for 
     Negotiations (referred to in this title as the ``Deputy Trade 
     Representative for Negotiations'');
       (2) the Deputy United States Trade Representative to the 
     World Trade Organization (referred to in this title as the 
     ``Deputy Trade Representative to the WTO''); and
       (3) the Deputy United States Trade Representative for 
     Administration (referred to in this title as the ``Deputy 
     Trade Representative for Administration'').
       (b) Functions of Deputy Trade Representatives.--
       (1) Deputy trade representative for negotiations.--The 
     Deputy Trade Representative for Negotiations shall exercise 
     all functions transferred under section 331 relating to trade 
     negotiations and such other functions as the Trade 
     Representative may direct and shall have the rank and status 
     of Ambassador.
       (2) Deputy trade representative to the wto.--The Deputy 
     Trade Representative to the WTO shall exercise all functions 
     relating to representation to the World Trade Organization 
     and shall have the rank and status of Ambassador.
       (3) Deputy trade representative for administration.--
       (A)  Absence, disability, or vacancy of trade 
     representative.--The Deputy Trade Representative for 
     Administration shall act for and exercise the functions of 
     the Trade Representative during the absence or disability of 
     the Trade Representative or in the

[[Page 18591]]

     event the office of the Trade Representative becomes vacant. 
     The Deputy Administrator shall act for and exercise the 
     functions of the Trade Representative until the absence or 
     disability of the Trade Representative no longer exists or a 
     successor to the Trade Representative has been appointed by 
     the President and confirmed by the Senate.
       (B) Functions.--The Deputy Trade Representative for 
     Administration shall exercise all functions, under the 
     direction of the Trade Representative, transferred to or 
     established in the Trade Administration, except those 
     functions exercised by the Deputy United States Trade 
     Representatives described in paragraphs (1) and (2), the 
     Assistant Administrator for Export Promotion, the Inspector 
     General of the Trade Administration, and the General Counsel 
     of the Trade Administration.

     SEC. 322. ASSISTANT ADMINISTRATORS.

       (a) Establishment.--There shall be in the Trade 
     Administration 4 Assistant Administrators, who shall be 
     appointed by the President, by and with the advice and 
     consent of the Senate. The Assistant Administrators shall 
     exercise all functions under the direction of the Deputy 
     Trade Representative for Administration and include--
       (1) the Assistant Administrator for Export Administration;
       (2) the Assistant Administrator for Import Administration;
       (3) the Assistant Administrator for Trade and Policy 
     Analysis; and
       (4) the Assistant Administrator for Export Promotion.
       (b) Functions of Assistant Administrators.--
       (1) Export administration.--The Assistant Administrator for 
     Export Administration shall exercise all functions 
     transferred under section 332(1)(C).
       (2) Import administration.--The Assistant Administrator for 
     Import Administration shall exercise all functions 
     transferred under section 332(1)(D).
       (3) Trade and policy analysis.--The Assistant Administrator 
     for Trade and Policy Analysis shall exercise all functions 
     transferred under section 332(1)(B) and all functions 
     transferred under section 332(2).
       (4) Export promotion.--The Assistant Administrator for 
     Export Promotion shall exercise all functions transferred 
     under sections 332(1)(A)(ii) and 333, and shall have the rank 
     and status of Ambassador.

     SEC. 323. GENERAL COUNSEL.

       There shall be in the Trade Administration a General 
     Counsel, who shall be appointed by the President, by and with 
     the advice and consent of the Senate. The General Counsel 
     shall provide legal assistance to the Trade Representative 
     concerning the activities, programs, and policies of the 
     Trade Administration.

     SEC. 324. INSPECTOR GENERAL.

       There shall be in the Trade Administration an Inspector 
     General who shall be appointed in accordance with the 
     Inspector General Act of 1978, as amended by section 371(a) 
     of this chapter.

     SEC. 325. CHIEF FINANCIAL OFFICER.

       There shall be in the Trade Administration a Chief 
     Financial Officer who shall be appointed in accordance with 
     section 901 of title 31, United States Code, as amended by 
     section 371(e) of this chapter. The Chief Financial Officer 
     shall perform all functions prescribed by the Deputy Trade 
     Representative for Administration, under the direction of the 
     Deputy Trade Representative.

            Subpart C--Transfers to the Trade Administration

     SEC. 331. OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE.

       (a) Abolishment of Office of the USTR.--Effective on the 
     applicable date specified in section 102(c), the Office of 
     the United States Trade Representative established by section 
     141 of the Trade Act of 1974 (19 U.S.C. 141) as in effect on 
     the day before the applicable date specified in section 
     102(c) is abolished.
       (b) Transfer of Functions.--Except as otherwise provided in 
     this chapter, all functions that on the day before the 
     applicable date specified in section 102(c) are authorized to 
     be performed by the United States Trade Representative, any 
     other officer or employee of the Office of the United States 
     Trade Representative acting in that capacity, or any agency 
     or office of the Office of the United States Trade 
     Representative, are transferred to the Trade Administration 
     established under this title effective on that date.
       (c) Determination of Certain Functions.--If necessary, the 
     Office of Management and Budget shall make any determination 
     of the functions that are transferred under this title.

     SEC. 332. TRANSFERS FROM THE DEPARTMENT OF COMMERCE.

       There are transferred to the Trade Administration the 
     following functions:
       (1) All functions of, and all functions performed under the 
     direction of, the following officers and employees of the 
     Department of Commerce:
       (A)(i) The Under Secretary of Commerce for International 
     Trade.
       (ii) The Director General of the United States and Foreign 
     Commercial Service, relating to all functions exercised by 
     the Service.
       (B) The Assistant Secretary of Commerce for International 
     Economic Policy and the Assistant Secretary of Commerce for 
     Trade Development.
       (C) The Under Secretary of Commerce for Export 
     Administration.
       (D) The Assistant Secretary of Commerce for Import 
     Administration.
       (2) All functions of the Secretary of Commerce relating to 
     the National Trade Data Bank.
       (3) All functions of the Secretary of Commerce under the 
     Tariff Act of 1930, the Uruguay Round Agreements Act, the 
     Trade Act of 1974, and other Acts relating to international 
     trade for which responsibility is not otherwise assigned 
     under this title.

     SEC. 333. TRADE AND DEVELOPMENT AGENCY.

       There are transferred to the Assistant Administrator for 
     Export Promotion all functions of the Trade and Development 
     Agency and all functions of the Director of the Trade and 
     Development Agency.

     SEC. 334. EXPORT-IMPORT BANK.

       (a) In General.--
       (1) Transfer of functions.--There are transferred to the 
     Trade Representative all functions of the Secretary of 
     Commerce relating to the Export-Import Bank of the United 
     States.
       (2) Conforming amendment.--Section 3(c)(1) of the Export-
     Import Bank Act of 1945 (12 U.S.C. 635a(c)(1)) is amended to 
     read as follows:
       ``(c)(1) There shall be a Board of Directors of the Bank 
     consisting of the United States Trade Representative (who 
     shall serve as Chairman), the President of the Export-Import 
     Bank of the United States (who shall serve as Vice Chairman), 
     the first Vice President, and 2 additional persons appointed 
     by the President of the United States, by and with the advice 
     and consent of the Senate.''.
       (b) Ex Officio Member of Export-Import Bank Board of 
     Directors.--The Assistant Administrator for Export Promotion 
     shall serve as an ex officio nonvoting member of the Board of 
     Directors of the Export-Import Bank.
       (c) Amendments to Related Banking and Trade Acts.--Section 
     2301(h) of the Omnibus Trade and Competitiveness Act of 1988 
     (15 U.S.C. 4721(h)) is amended to read as follows:
       ``(h) Assistance to Export-Import Bank.--The Commercial 
     Service shall provide such services as the Assistant 
     Administrator for Export Promotion of the United States Trade 
     Administration determines necessary to assist the Export-
     Import Bank of the United States to carry out the lending, 
     loan guarantee, insurance, and other activities of the 
     Bank.''.

     SEC. 335. OVERSEAS PRIVATE INVESTMENT CORPORATION.

       (a) Board of Directors.--The second and third sentences of 
     section 233(b) of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2193(b)) are amended to read as follows: ``The United 
     States Trade Representative shall be the Chairman of the 
     Board. The Administrator of the Agency for International 
     Development (who shall serve as Vice Chairman) shall serve on 
     the Board.''.
       (b) Ex Officio Member of Overseas Private Investment 
     Corporation Board of Directors.--The Assistant Administrator 
     for Export Promotion of the United States Trade 
     Administration shall serve as an ex officio nonvoting member 
     of the Board of Directors of the Overseas Private Investment 
     Corporation.

     SEC. 336. CONSOLIDATION OF EXPORT PROMOTION AND FINANCING 
                   ACTIVITIES.

       (a) Submission of Plan.--
       (1) In general.--Not later than 180 days after the date of 
     enactment of this chapter, the President shall transmit to 
     Congress a comprehensive plan--
       (A) to consolidate Federal nonagricultural export promotion 
     activities and export financing activities; and
       (B) to transfer those functions to the Trade 
     Administration.
       (2) Contents of plan.--The plan under paragraph (1) shall 
     provide for--
       (A) the elimination of overlap and duplication among all 
     Federal nonagricultural export promotion activities and 
     export financing activities;
       (B) a unified budget for all Federal nonagricultural export 
     promotion activities which eliminates funding for overlapping 
     and duplicative activities identified under subparagraph (A); 
     and
       (C) a long-term agenda for developing better cooperation 
     between local, State, and Federal programs and activities 
     designed to stimulate or assist United States businesses in 
     exporting nonagricultural goods or services that are products 
     of the United States, including sharing of facilities, costs, 
     and export market research data.
       (b) Plan Elements.--The plan under subsection (a) shall--
       (1) place all Federal nonagricultural export promotion 
     activities and export financing activities within the Trade 
     Administration;
       (2) achieve an overall 25 percent reduction in the amount 
     of funding for all Federal nonagricultural export promotion 
     activities by not later than 2 years after the date of 
     enactment of this chapter;

[[Page 18592]]

       (3) identify any function of the Department of Commerce or 
     of any other Federal department not transferred to the Trade 
     Administration by this title, which should be transferred to 
     the Trade Administration in order to ensure United States 
     competitiveness in international trade; and
       (4) assess the feasibility and potential savings resulting 
     from--
       (A) the consolidation of the Export-Import Bank of the 
     United States and the Overseas Private Investment 
     Corporation;
       (B) the consolidation of the Boards of Directors of the 
     Export-Import Bank and the Overseas Private Investment 
     Corporation; and
       (C) the consolidation of the Trade and Development Agency 
     with the consolidations described in subparagraphs (A) and 
     (B).
       (c) Definition.--As used in this section, the term 
     ``Federal nonagricultural export promotion activities'' means 
     all programs or activities of any department or agency of the 
     Federal Government (including trade missions, and departments 
     and agencies with representatives on the Trade Promotion 
     Coordinating Committee established under section 2312 of the 
     Export Enhancement Act of 1988 (15 U.S.C. 4727)), that are 
     designed to stimulate or assist United States businesses in 
     exporting nonagricultural goods or services that are products 
     of the United States.

     SEC. 337. FUNCTIONS RELATED TO TEXTILE AGREEMENTS.

       (a) Functions of CITA.--
       (1) In general.--Subject to paragraph (2), those functions 
     delegated to the Committee for the Implementation of Textile 
     Agreements established under Executive Order No. 11651 (7 
     U.S.C. 1854 note) (in this subsection referred to as 
     ``CITA'') are transferred to the Trade Administration.
       (2) Other functions.--Those functions delegated to CITA 
     that relate to the assessment of the impact of textile 
     imports on domestic industry are transferred to the 
     International Trade Commission. The International Trade 
     Commission shall make a determination and advise the 
     President of the determination not later than 60 days after 
     receiving a request for an investigation.
       (b) Abolition of CITA.--CITA is abolished.

                  Subpart D--Administrative Provisions

     SEC. 341. PERSONNEL PROVISIONS.

       (a) Appointments.--The Trade Representative may appoint and 
     fix the compensation of such officers and employees, 
     including investigators, attorneys, and administrative law 
     judges, as may be necessary to carry out the functions of the 
     Trade Representative and the Trade Administration. Except as 
     otherwise provided by law, such officers and employees shall 
     be appointed in accordance with the civil service laws and 
     their compensation fixed in accordance with title 5, United 
     States Code.
       (b) Positions Above GS-15.--
       (1) In general.--At the request of the Trade 
     Representative, the Director of the Office of Personnel 
     Management shall, under section 5108 of title 5, United 
     States Code, provide for the establishment in a grade level 
     above GS-15 of the General Schedule, and in the Senior 
     Executive Service, of a number of positions in the Trade 
     Administration equal to the number of positions in that grade 
     level which--
       (A) were used primarily for the performance of functions 
     and offices transferred by this title; and
       (B) were assigned and filled on the day before the 
     effective date of this title.
       (2) Appointments.--Appointments to positions provided for 
     under this subsection may be made without regard to the 
     provisions of section 3324 of title 5, United States Code, if 
     the individual appointed to such position is an individual 
     who is transferred in connection with the transfer of 
     functions and offices pursuant to this title and, on the day 
     before the effective date of this title, holds a position and 
     has duties comparable to those of the position to which 
     appointed pursuant to this subsection.
       (3) Termination of authority.--The authority under this 
     subsection with respect to any position established at a 
     grade level above GS-15 shall terminate when the person first 
     appointed to fill such position ceases to hold such position.
       (4) Exception to executive position limitation.--For 
     purposes of section 414(a)(3)(A) of the Civil Service Reform 
     Act of 1978, an individual appointed under this subsection 
     shall be deemed to occupy the same position as the individual 
     occupied on the day before the effective date of this title.
       (c) Experts and Consultants.--The Trade Representative may 
     obtain the services of experts and consultants in accordance 
     with section 3109 of title 5, United States Code, and 
     compensate such experts and consultants for each day 
     (including traveltime) at rates not in excess of the maximum 
     rate of pay for a position above GS-15 of the General 
     Schedule under section 5332 of such title. The Trade 
     Representative may pay experts and consultants who are 
     serving away from their homes or regular place of business 
     travel expenses and per diem in lieu of subsistence at rates 
     authorized by sections 5702 and 5703 of such title for 
     persons in Government service employed intermittently.
       (d) Voluntary Services.--
       (1) In general.--
       (A) Voluntary services under title 31.--The Trade 
     Representative is authorized to accept voluntary and 
     uncompensated services without regard to the provisions of 
     section 1342 of title 31, United States Code, if such 
     services will not be used to displace Federal employees 
     employed on a full-time, part-time, or seasonal basis.
       (B) Voluntary services under title 5.--The Trade 
     Representative is authorized to accept volunteer service in 
     accordance with the provisions of section 3111 of title 5, 
     United States Code.
       (2) Payment of expenses.--The Trade Representative is 
     authorized to provide for incidental expenses, including 
     transportation, lodging, and subsistence for individuals who 
     provide voluntary services under subparagraph (A) or (B) of 
     paragraph (1).
       (3) Limitation.--An individual who provides voluntary 
     services under paragraph (1)(A) shall not be considered a 
     Federal employee for any purpose other than for purposes of 
     chapter 81 of title 5, United States Code, relating to 
     compensation for work injuries, and chapter 171 of title 28, 
     United States Code, relating to tort claims.

     SEC. 342. DELEGATION AND ASSIGNMENT.

       Except as otherwise expressly prohibited by law or 
     otherwise provided by this title, the Trade Representative 
     may delegate any of the functions transferred to the Trade 
     Representative by this title and any function transferred or 
     granted to the Trade Representative after the effective date 
     of this title to such officers and employees of the Trade 
     Administration as the Trade Representative may designate, and 
     may authorize successive redelegations of such functions as 
     may be necessary or appropriate. No delegation of functions 
     by the Trade Representative under this section or under any 
     other provision of this title shall relieve the Trade 
     Representative of responsibility for the administration of 
     such functions.

     SEC. 343. SUCCESSION.

       (a) Order of Succession.--Subject to the authority of the 
     President, and except as provided in section 321(b), the 
     Trade Representative shall prescribe the order by which 
     officers of the Trade Administration who are appointed by the 
     President, by and with the advice and consent of the Senate, 
     shall act for, and perform the functions of, the Trade 
     Representative or any other officer of the Trade 
     Administration appointed by the President, by and with the 
     advice and consent of the Senate, during the absence or 
     disability of the Trade Representative or such other officer, 
     or in the event of a vacancy in the office of the Trade 
     Representative or such other officer.
       (b) Continuation.--Notwithstanding any other provision of 
     law, and unless the President directs otherwise, an 
     individual acting for the Trade Representative or another 
     officer of the Trade Administration pursuant to subsection 
     (a) shall continue to serve in that capacity until the 
     absence or disability of the Trade Representative or such 
     other officer no longer exists or a successor to the Trade 
     Representative or such other officer has been appointed by 
     the President and confirmed by the Senate.

     SEC. 344. REORGANIZATION.

       (a) In General.--Subject to subsection (b), the Trade 
     Representative is authorized to allocate or reallocate 
     functions among the officers of the Trade Administration, and 
     to establish, consolidate, alter, or discontinue such 
     organizational entities in the Trade Administration as may be 
     necessary or appropriate.
       (b) Exception.--The Trade Representative may not exercise 
     the authority under subsection (a) to establish, consolidate, 
     alter, or discontinue any organizational entity in the Trade 
     Administration or allocate or reallocate any function of an 
     officer or employee of the Trade Administration that is 
     inconsistent with any specific provision of this title.

     SEC. 345. RULES.

       The Trade Representative is authorized to prescribe, in 
     accordance with the provisions of chapters 5 and 6 of title 
     5, United States Code, such rules and regulations as the 
     Trade Representative determines necessary or appropriate to 
     administer and manage the functions of the Trade 
     Representative or the Trade Administration.

     SEC. 346. FUNDS TRANSFER.

       The Trade Representative may, when authorized in an 
     appropriation Act in any fiscal year, transfer funds from one 
     appropriation to another within the Trade Administration, 
     except that--
       (1) no appropriation for any fiscal year shall be either 
     increased or decreased by more than 10 percent; and
       (2) no such transfer shall result in increasing any such 
     appropriation above the amount authorized to be appropriated 
     for that purpose.

     SEC. 347. CONTRACTS, GRANTS, AND COOPERATIVE AGREEMENTS.

       (a) In General.--Subject to the provisions of the Federal 
     Property and Administrative Services Act of 1949, the Trade 
     Representative may make, enter into, and perform such 
     contracts, leases, cooperative agreements, grants, or other 
     similar transactions with public agencies, private 
     organizations, and persons, and make payments (in lump sum or 
     installments, and by way of advance or reimbursement, and, in 
     the case of any grant,

[[Page 18593]]

     with necessary adjustments on account of overpayments and 
     underpayments) as the Trade Representative considers 
     necessary or appropriate to carry out the functions of the 
     Trade Representative or the Trade Administration.
       (b) Exception.--Notwithstanding any other provision of this 
     title, the authority to enter into contracts or to make 
     payments under this chapter shall be effective only to such 
     extent, or in such amounts, as are provided in advance in 
     appropriation Acts. This subsection does not apply with 
     respect to the authority granted under section 349.

     SEC. 348. USE OF FACILITIES.

       (a) Use by Trade Representative.--In carrying out any 
     function of the Trade Representative or the Trade 
     Administration, the Trade Representative, with or without 
     reimbursement, may use the research, services, equipment, and 
     facilities of--
       (1) an individual;
       (2) any public or private nonprofit agency or organization, 
     including any agency or instrumentality of the United States 
     or of any State, the District of Columbia, the Commonwealth 
     of Puerto Rico, or any territory or possession of the United 
     States;
       (3) any political subdivision of any State, the District of 
     Columbia, the Commonwealth of Puerto Rico, or any territory 
     or possession of the United States; or
       (4) any foreign government.
       (b) Use of Trade Representative Facilities.--The Trade 
     Representative, under terms, at rates, and for periods that 
     the Trade Representative considers to be in the public 
     interest, may permit the use by public and private agencies, 
     corporations, associations or other organizations, or 
     individuals, of any real property, or any facility, structure 
     or other improvement thereon, under the custody of the Trade 
     Representative. The Trade Representative may require 
     permittees under this section to maintain or recondition, at 
     their own expense, the real property, facilities, structures, 
     and improvements used by such permittees.

     SEC. 349. GIFTS AND BEQUESTS.

       (a) In General.--The Trade Representative is authorized to 
     accept, hold, administer, and utilize gifts and bequests of 
     property, both real and personal, for the purpose of aiding 
     or facilitating the work of the Trade Administration. Gifts 
     and bequests of money and the proceeds from sales of other 
     property received as gifts or bequests shall be deposited in 
     the United States Treasury in a separate fund and shall be 
     disbursed on order of the Trade Representative. Property 
     accepted pursuant to this subsection, and the proceeds 
     thereof, shall be used as nearly as possible in accordance 
     with the terms of the gift or bequest.
       (b) Tax Treatment.--For the purpose of Federal income, 
     estate, and gift taxes, and State taxes, property accepted 
     under subsection (a) shall be considered a gift or bequest to 
     or for the use of the United States.
       (c) Investment.--
       (1) In general.--Upon the request of the Trade 
     Representative, the Secretary of the Treasury may invest and 
     reinvest in securities of the United States or in securities 
     guaranteed as to principal and interest by the United States 
     any moneys contained in the fund provided for in subsection 
     (a).
       (2) Treatment of income.--Income accruing from the 
     securities referred to in paragraph (1), and from any other 
     property held by the Trade Representative pursuant to 
     subsection (a), shall--
       (A) be deposited to the credit of the fund; and
       (B) be disbursed upon order of the Trade Representative.

     SEC. 350. WORKING CAPITAL FUND.

       (a) Establishment.--The Trade Representative is authorized 
     to establish for the Trade Administration a working capital 
     fund, to be available without fiscal year limitation, for 
     expenses necessary for the maintenance and operation of such 
     common administrative services as the Trade Representative 
     shall find to be desirable in the interest of economy and 
     efficiency, including--
       (1) a central supply service for stationery and other 
     supplies and equipment for which adequate stocks may be 
     maintained to meet in whole or in part the requirements of 
     the Trade Administration and its components;
       (2) central messenger, mail, and telephone service and 
     other communications services;
       (3) office space and central services for document 
     reproduction and for graphics and visual aids;
       (4) a central library service; and
       (5) such other services as may be approved by the Director 
     of the Office of Management and Budget.
       (b) Operation of Fund.--
       (1) In general.--The capital of the fund shall consist of 
     any appropriations made for the purpose of providing working 
     capital and the fair and reasonable value of such stocks of 
     supplies, equipment, and other assets and inventories on 
     order as the Trade Representative may transfer to the fund, 
     less the related liabilities and unpaid obligations.
       (2) Advance reimbursements.--The fund shall be reimbursed 
     in advance from available funds of agencies and offices in 
     the Trade Administration, or from other sources, for supplies 
     and services at rates which will approximate the expense of 
     operation, including the accrual of annual leave and the 
     depreciation of equipment.
       (3) Other credits.--In addition to the credits made under 
     paragraph (1), the fund shall be credited with receipts from 
     sale or exchange of property and receipts in payment for loss 
     or damage to property owned by the fund.
       (4) Surplus.--There shall be covered into the United States 
     Treasury as miscellaneous receipts any surplus of the fund 
     (all assets, liabilities, and prior losses considered) above 
     the amounts transferred or appropriated to establish and 
     maintain the fund.
       (5) Transfers to fund.--There shall be transferred to the 
     fund the stocks of supplies, equipment, other assets, 
     liabilities, and unpaid obligations relating to those 
     services which the Trade Representative determines will be 
     performed.

     SEC. 351. SERVICE CHARGES.

       (a) Authority.--Notwithstanding any other provision of law, 
     the Trade Representative may establish reasonable fees and 
     commissions with respect to applications, documents, awards, 
     loans, grants, research data, services, and assistance 
     administered by the Trade Administration. The Trade 
     Representative may change and abolish such fees and 
     commissions. Before establishing, changing, or abolishing any 
     schedule of fees or commissions under this section, the Trade 
     Representative may submit such schedule to Congress.
       (b) Deposits.--The Trade Representative is authorized to 
     require a deposit before the Trade Representative provides 
     any item, information, service, or assistance for which a fee 
     or commission is required under this section.
       (c) Deposit of Moneys.--Moneys received under this section 
     shall be deposited in the Treasury in a special account for 
     use by the Trade Representative and are authorized to be 
     appropriated and made available until expended.
       (d) Factors in Establishing Fees and Commissions.--In 
     establishing reasonable fees or commissions under this 
     section, the Trade Representative may take into account--
       (1) the actual costs which will be incurred in providing 
     the items, information, services, or assistance concerned;
       (2) the efficiency of the Government in providing such 
     items, information, services, or assistance;
       (3) the portion of the cost that will be incurred in 
     providing such items, information, services, or assistance 
     which may be attributed to benefits for the general public 
     rather than exclusively for the person to whom the items, 
     information, services, or assistance is provided;
       (4) any public service which occurs through the provision 
     of such items, information, services, or assistance; and
       (5) such other factors as the Trade Representative 
     considers appropriate.
       (e) Refunds of Excess Payments.--In any case in which the 
     Trade Representative determines that any person has made a 
     payment which is not required under this section or has made 
     a payment which is in excess of the amount required under 
     this section, the Trade Representative, upon application or 
     otherwise, may cause a refund to be made from applicable 
     funds.

     SEC. 352. SEAL OF OFFICE.

       The Trade Representative shall cause a seal of office to be 
     made for the Trade Administration of such design as the Trade 
     Representative shall approve. Judicial notice shall be taken 
     of such seal.

                      Subpart E--Related Agencies

     SEC. 361. INTERAGENCY TRADE ORGANIZATION.

       Section 242(a)(3) of the Trade Expansion Act of 1962 (19 
     U.S.C. 1872(a)(3)) is amended to read as follows:
       ``(3)(A) The interagency organization established under 
     subsection (a) shall be composed of--
       ``(i) the United States Trade Representative, who shall be 
     the chairperson,
       ``(ii) the Secretary of Agriculture,
       ``(iii) the Secretary of the Treasury,
       ``(iv) the Secretary of Labor,
       ``(v) the Secretary of State, and
       ``(vi) the representatives of such other departments and 
     agencies as the United States Trade Representative shall 
     designate.
       ``(B) The United States Trade Representative may invite 
     representatives from other agencies, as appropriate, to 
     attend particular meetings if subject matters of specific 
     functional interest to such agencies are under consideration. 
     It shall meet at such times and with respect to such matters 
     as the President or the chairperson shall direct.''.

     SEC. 362. NATIONAL SECURITY COUNCIL.

       The fourth paragraph of section 101(a) of the National 
     Security Act of 1947 (50 U.S.C. 402(a)) is amended--
       (1) by redesignating paragraphs (5), (6), and (7) as 
     paragraphs (6), (7), and (8), respectively; and
       (2) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) the United States Trade Representative;''.

     SEC. 363. INTERNATIONAL MONETARY FUND.

       Section 3 of the Bretton Woods Agreement Act (22 U.S.C. 
     286a) is amended by adding at the end the following new 
     subsection:
       ``(e) The United States executive director of the Fund 
     shall consult with the United

[[Page 18594]]

     States Trade Representative with respect to matters under 
     consideration by the Fund which relate to trade.''.

                    Subpart F--Conforming Amendments

     SEC. 371. AMENDMENTS TO GENERAL PROVISIONS.

       (a) Inspector General.--The Inspector General Act of 1978 
     (5 U.S.C. App. 1 et seq.) is amended--
       (1) in section 9(a)(1) by adding after subparagraph (W) the 
     following:
       ``(X) of the United States Trade Representative, all 
     functions of the Inspector General of the Department of 
     Commerce and the Office of the Inspector General of the 
     Department of Commerce relating to the functions transferred 
     to the United States Trade Representative by section 332 of 
     the Department of Commerce Dismantling Act; and''; and
       (2) in section 11--
       (A) in paragraph (1) by inserting ``the United States Trade 
     Representative;'' after ``the Attorney General;''; and
       (B) in paragraph (2) by inserting ``the United States Trade 
     Administration,'' after ``Treasury;''.
       (b) Amendment to the Trade Act of 1974.--
       (1) Trade negotiations.--Chapter 4 of title I of the Trade 
     Act of 1974 (19 U.S.C. 2171) is amended to read as follows:

  ``CHAPTER 4--ADMINISTRATION OF TRADE AGREEMENTS, REPRESENTATION IN 
              TRADE NEGOTIATIONS, AND OTHER TRADE MATTERS

     ``SEC. 141. FUNCTIONS OF THE UNITED STATES TRADE 
                   REPRESENTATIVE.

       ``The United States Trade Representative, established under 
     section 311 of the Department of Commerce Dismantling Act, 
     shall--
       ``(1) be the chief representative of the United States for 
     each trade negotiation under this title or chapter 1 of title 
     III of this Act, or subtitle A of title I of the Omnibus 
     Trade and Competitiveness Act of 1988, or any other provision 
     of law relating to international trade negotiations;
       ``(2) be responsible for the administration of trade 
     agreement programs under this Act, the Omnibus Trade and 
     Competitiveness Act of 1988, the Trade Expansion Act of 1962, 
     section 350 of the Tariff Act of 1930, and any other 
     provision of law relating to trade agreement programs;
       ``(3) advise the President and Congress with respect to 
     nontariff barriers to international trade, international 
     commodity agreements, and other matters which are related to 
     trade agreement programs; and
       ``(4) be responsible for making reports to the President 
     and Congress with respect to the matters set forth in 
     paragraphs (1) and (2).''.
       (2) Table of contents.--Title I of the table of contents of 
     the Trade Act of 1974 is amended by striking the items 
     relating to chapter 4 and section 141 and inserting:

  ``Chapter 4--Administration of Trade Agreements, Representation in 
              Trade Negotiations, and Other Trade Matters

``Sec. 141. Functions of the United States Trade Representative.''.

       (d) Foreign Service Personnel.--Section 202(a) of the 
     Foreign Service Act of 1980 (22 U.S.C. 3922(a)) is amended by 
     striking paragraph (3) and inserting:
       ``(3) The United States Trade Representative may utilize 
     the Foreign Service personnel system in accordance with this 
     Act--
       ``(A) with respect to the personnel performing functions--
       ``(i) which were transferred to the Department of Commerce 
     from the Department of State by Reorganization Plan No. 3 of 
     1979; and
       ``(ii) which were subsequently transferred to the United 
     States Trade Representative by section 332 of the Department 
     of Commerce Dismantling Act; and
       ``(B) with respect to other personnel of the United States 
     Trade Administration to the extent the President determines 
     to be necessary in order to enable the United States Trade 
     Administration to carry out functions which require service 
     abroad.''.
       (e) Chief Financial Officers.--Section 901(b)(1)(B) of 
     title 31, United States Code, is amended to read as follows:
       ``(B) The Trade Administration.''.

     SEC. 372. REPEALS.

       (a) Department of Commerce.--The first section of the Act 
     entitled ``An Act to establish the Department of Commerce and 
     Labor'', approved February 14, 1903 (15 U.S.C. 1501), is 
     repealed.
       (b) Under Secretary; Assistant Secretaries; Other 
     Positions.--
       (1) Subsection (a) of the first section of the Act entitled 
     ``An Act to authorize an Under Secretary of Commerce for 
     Economic Affairs'', approved June 16, 1982 (96 Stat. 115; 15 
     U.S.C. 1503a), is repealed.
       (2) The Act entitled ``An Act to provide for the 
     appointment of one additional Assistant Secretary of 
     Commerce, and for other purposes'', approved July 15, 1947 
     (15 U.S.C. 1505), is repealed.
       (3) The first sentence of section 304 of the Department of 
     Commerce Appropriation Act, 1955 (15 U.S.C. 1506), is 
     repealed.
       (4) The chapter entitled ``An Act to authorize an 
     additional Assistant Secretary of Commerce'', approved 
     February 16, 1962 (15 U.S.C. 1507), is repealed.
       (5) Subsection (a) of section 9 of the Maritime 
     Appropriation Authorization Act for Fiscal Year 1978 (15 
     U.S.C. 1507b), is repealed.
       (6)(A) The first section of the chapter of March 18, 1904 
     (33 Stat. 135, chapter 716; 15 U.S.C. 1508), is repealed.
       (B) Section 2 of the chapter of July 17, 1952 (66 Stat. 
     758, chapter 932; 15 U.S.C. 1508), is repealed.
       (c) Bureaus in Department.--
       (1) Sections 4 and 12 of the chapter entitled ``An Act to 
     Establish the Department of Commerce and Labor'', approved 
     February 14, 1903 (15 U.S.C. 1511), are repealed.
       (2) The first section of the chapter of January 5, 1923 (42 
     Stat. 1109, chapter 23; 15 U.S.C. 1511), is repealed.
       (3) The first section of the chapter of May 27, 1936 (49 
     Stat. 1380, chapter 463; 15 U.S.C. 1511), is repealed.
       (d) Annual Reports.--Section 8 of the Act entitled ``An Act 
     to establish the Department of Commerce and Labor'', approved 
     February 14, 1903 (15 U.S.C. 1519), is repealed.
       (e) Working Capital Fund.--Title III of the Act entitled 
     ``An Act making appropriations for the Departments of State, 
     Justice, and Commerce for the fiscal year ending June 30, 
     1945, and for other purposes'', approved June 28, 1944 (15 
     U.S.C. 1521), is amended by striking the paragraph relating 
     to the working capital fund of the Department of Commerce.
       (f) Gifts, Bequests, Investments.--Sections 1, 2, and 3 of 
     Public Law 88-611 (15 U.S.C. 1522, 1523, and 1524) are 
     repealed.

     SEC. 373. CONFORMING AMENDMENTS RELATING TO EXECUTIVE 
                   SCHEDULE POSITIONS.

       (a) Positions at Level II.--Section 5313 of title 5, United 
     States Code, is amended by adding at the end the following:
       ``Deputy United States Trade Representatives (3).''.
       (b) Positions at Level III.--Section 5314 of title 5, 
     United States Code, is amended by striking the item relating 
     to Deputy United States Trade Representatives and inserting 
     the following:
       ``Assistant Administrators, United States Trade 
     Administration (4).''.
       (c) Positions at Level IV.--Section 5315 of title 5, United 
     States Code, is amended by adding at the end the following:
       ``General Counsel, United States Trade Administration.
       ``Inspector General, United States Trade Administration.
       ``Chief Financial Officer, United States Trade 
     Administration.''.

                        Subpart G--Miscellaneous

     SEC. 381. EFFECTIVE DATE.

       (a) In General.--This title shall take effect on the 
     effective date specified in section 102(c), except that--
       (1) section 336 shall take effect on the date of enactment 
     of this chapter; and
       (2) at any time after the date of enactment of this chapter 
     the officers provided for in chapter 2 may be nominated and 
     appointed, as provided in such chapter.
       (b) Interim Compensation and Expenses.--Funds available to 
     the Department of Commerce or the Office of the United States 
     Trade Representative (or any official or component thereof), 
     with respect to the functions transferred by this title, may 
     be used, with approval of the Director of the Office of 
     Management and Budget, to pay the compensation and expenses 
     of an officer appointed under subsection (a) who will carry 
     out such functions until funds for that purpose are otherwise 
     available.

     SEC. 382. INTERIM APPOINTMENTS.

       (a) In General.--If one or more officers required by this 
     title to be appointed by and with the advice and consent of 
     the Senate have not entered upon office on the effective date 
     of this title and notwithstanding any other provision of law, 
     the President may designate any officer who was appointed by 
     and with the advice and consent of the Senate, and who was 
     such an officer on the day before the effective date of this 
     title, to act in the office until it is filled as provided by 
     this title.
       (b) Compensation.--Any officer acting in an office pursuant 
     to subsection (a) shall receive compensation at the rate 
     prescribed by this title for such office.

     SEC. 383. FUNDING REDUCTIONS RESULTING FROM REORGANIZATION.

       (a) Funding Reductions.--Notwithstanding the transfer of 
     functions under this title, and except as provided in 
     subsection (b), the total amount appropriated by the United 
     States in performing all functions vested in the Trade 
     Representative and the Trade Administration pursuant to this 
     title shall not exceed--
       (1) for the first fiscal year that begins after the date 
     specified in section 102(c), 75 percent of the total amount 
     appropriated in fiscal year 1999 for the performance of all 
     those functions; and
       (2) for the second fiscal year that begins after the date 
     specified in section 102(c) and for each fiscal year 
     thereafter, 65 percent of the total amount appropriated in 
     fiscal year 1999 for the performance of all those functions.
       (b) Exception.--Subsection (a) shall not apply to 
     obligations or expenditures incurred as a direct consequence 
     of the termination, transfer, or other disposition of 
     functions described in subsection (a) pursuant to this 
     chapter.

[[Page 18595]]

       (c) Rule of Construction.--This section shall supersede any 
     other provision of law that does not--
       (1) explicitly refer to this section, and
       (2) create an exemption from this section.
       (d) Responsibility of Trade Representative.--The Trade 
     Representative, in consultation with the Director of the 
     Office of Management and Budget, shall make such 
     modifications in programs as are necessary to carry out the 
     reductions in appropriations set forth in paragraphs (1) and 
     (2) of subsection (a).
       (e) Responsibilities of the Director of the Office of 
     Management and Budget.--The Director of the Office of 
     Management and Budget shall include in each report under 
     subsections (a) and (b) of section 106 a description of the 
     actions taken to comply with the requirements of this 
     section.

 Subchapter D--Establishment of the Office of Patents, Trademarks, and 
                               Standards

                         PART I--ESTABLISHMENT

     SEC. 401. DEFINITIONS.

       For purposes of this title--
       (1) the term ``Director'' means the Director of the Office 
     of Patents, Trademarks, and Standards; and
       (2) the term ``Office'' means the Office of Patents, 
     Trademarks, and Standards.

     SEC. 402. ESTABLISHMENT OF THE OFFICE OF PATENTS, TRADEMARKS, 
                   AND STANDARDS.

       There is established the Office of Patents, Trademarks, and 
     Standards which shall be an independent establishment in the 
     executive branch of Government as defined under section 104 
     of title 5, United States Code. There shall be a Director of 
     the Office of Patents, Trademarks, and Standards who shall 
     administer the Office and shall be appointed by the 
     President, by and with the advice and consent of the Senate.

     SEC. 403. FUNCTIONS.

       The Director shall perform all functions transferred under 
     section 404 and such other functions as the President may 
     assign or delegate.

     SEC. 404. TRANSFERS TO THE OFFICE.

       (a) Tranfer of Functions.--There are transferred to the 
     Director all functions of, and all functions performed under 
     the direction of, the following officers and employees of the 
     Department of Commerce:
       (1) The Director of the National Institute of Standards and 
     Technology.
       (2) The Assistant Secretary and Commissioner of Patents and 
     Trademarks.
       (3) The Under Secretary for Technology relating to 
     functions performed by the Office of Technology Policy 
     relating to the Baldridge Quality Award.
       (4) The Secretary of Commerce and Assistant Secretary for 
     Communications and Information with respect to only those 
     functions of the National Telecommunications and Information 
     Administration relating to telecommunication standards and 
     laboratories.
       (b) Tranfer of Offices.--
       (1) The Patent and Trademark Office of the Department of 
     Commerce is transferred to the Office. The Patent and 
     Trademark Office of the Office of Patents, Trademarks, and 
     Standards shall be administered through the Commissioner of 
     the Patent and Trademark Office.
       (2) The National Institute of Standards and Technology of 
     the Department of Commerce is transferred to the Office. The 
     National Institute of Standards and Technology shall be 
     administered through the Director of the National Institute 
     of Standards and Technology.

     SEC. 405. ADDITIONAL OFFICERS.

       (a) General Counsel.--There shall be in the Office a 
     General Counsel, who shall be appointed by the President, by 
     and with the advice and consent of the Senate. The General 
     Counsel shall provide legal assistance to the Director 
     concerning the activities, programs, and policies of the 
     Office.
       (b) Inspector General.--
       (1) There shall be in the Office an Inspector General who 
     shall be appointed in accordance with the Inspector General 
     Act of 1978, as amended by this subsection.
       (2) Section 11 of the Inspector General Act of 1978 (as 
     amended by this Act) is further amended--
       (A) in paragraph (1) by inserting ``the Director of the 
     Office of Patents, Trademarks, and Standards'' after ``the 
     Chief Executive Officer of the Corporation for National and 
     Community Service;''; and
       (B) in paragraph (2) by inserting ``the Office of Patents, 
     Trademarks, and Standards,'' after ``the Corporation for 
     National and Community Service,''.
       (c) Chief Financial Officer.--
       (1) There shall be in the Office a Chief Financial Officer 
     who shall be appointed in accordance with section 901 of 
     title 31, United States Code, as amended by this subsection.
       (2) Section 901(b) of title 31, United States Code, (as 
     amended by this Act) is further amended in paragraph (2) by 
     adding at the end thereof the following: ``(I) The Office of 
     Patents, Trademarks, and Standards.''.

                   PART II--ADMINISTRATIVE PROVISIONS

     SEC. 411. RULES.

       In the performance of the functions of the Director and the 
     Office, the Director is authorized to make, promulgate, 
     issue, rescind, and amend rules and regulations. The 
     promulgation of such rules and regulations--
       (1) Shall be governed by the provisions of chapter 5 of 
     title 5, United States Code; and
       (2) shall be after notice and opportunity for full 
     participation by relevant Federal agencies, State agencies, 
     local governments, regional organizations, authorities, 
     councils, and other interested public and private parties.

     SEC. 412. DELEGATION.

       Except as otherwise provided in this Act, the Director may 
     delegate any function to such officers and employees of the 
     Office as the Director may designate, and may authorize such 
     successive redelegations of such functions in the Office as 
     may be necessary or appropriate. No delegation of functions 
     by the Director under this section or under any other 
     provision of this Act shall relieve the Director of 
     responsibility for the administration of such functions.

     SEC. 413. PERSONNEL AND SERVICES.

       (a) Appointments.--In the performance of the functions of 
     the Director and in addition to the officers provided for 
     under subtitle A, the Director is authorized to appoint, 
     transfer, and fix the compensation of such officers and 
     employees, including attorneys, as may be necessary to carry 
     out the functions of the Director and the Office. Except as 
     otherwise provided by law, such officers and employees shall 
     be appointed in accordance with the civil service laws and 
     compensated in accordance with title 5, United States Code.
       (b) Experts and Consultants.--The Director is authorized to 
     obtain the services of experts and consultants in accordance 
     with section 3109 of title 5, United States Code.
       (c) Transportation Expenses.--The Director is authorized to 
     pay transportation expenses, and per diem in lieu of 
     subsistence expenses, in accordance with chapter 57 of title 
     5, United States Code.
       (d) Detail of Employees and Officers.--The Director is 
     authorized to utilize, on a reimbursable basis, the services 
     of personnel of any Federal agency.
       (e) Voluntary Services.--
       (1)(A) The Director is authorized to accept voluntary and 
     uncompensated services without regard to the provisions of 
     section 1342 of title 31, United States Code, if such 
     services will not be used to displace Federal employees 
     employed on a full-time, part-time, or seasonal basis.
       (B) The Director is authorized to accept volunteer service 
     in accordance with the provisions of section 3111 of title 5, 
     United States Code.
       (2) The Director is authorized to provide for incidental 
     expenses, including but not limited to transportation, 
     lodging, and subsistence for such volunteers.
       (3) An individual who provides voluntary services under 
     paragraph (1)(A) of this subsection shall not be considered a 
     Federal employee for any purpose other than for purposes of 
     chapter 81 of title 5, United States Code, relating to 
     compensation for work injuries, and chapter 171 of title 28, 
     United States Code, relating to tort claims.

     SEC. 414. CONTRACTS.

       The Director is authorized, without regard to the 
     provisions of section 3324 of title 31, United States Code, 
     to enter into and perform such contracts, leases, cooperative 
     agreements, or other transactions as may be necessary to 
     carry out the functions of the Director and the Office. The 
     Director may enter into such contracts, leases, agreements, 
     and transactions with any Federal agency or any 
     instrumentality of the United States, or with any State, 
     territory, or possession, or with any political subdivision 
     thereof, or with any person, firm, association, corporation, 
     or educational institution, on such terms and conditions as 
     the Director may consider appropriate. The authority of the 
     Director to enter into contracts and leases under this 
     section shall be to such extent or in such amounts as are 
     provided in appropriation Acts.

     SEC. 415. COPYRIGHTS AND PATENTS.

       The Director is authorized to acquire any of the following 
     described rights if the property acquired thereby is for use 
     in, or is useful to, the performance of functions of the 
     Director or the Office:
       (1) Copyrights, patents, and applications for patents, 
     designs, processes, specifications, and data.
       (2) Licenses under copyrights, patents, and applications 
     for patents.
       (3) Releases, before an action is brought, for past 
     infringement of patents of copyrights.

     SEC. 416. GIFTS AND BEQUESTS.

       The Director is authorized to accept, hold, administer and 
     utilize gifts, donations, or bequests of property, real or 
     personal, tangible or intangible, and contributions of money 
     for purposes of aiding or facilitating the work of the 
     Director or the Office. For the purposes of Federal income, 
     estate, and gift taxes, and State taxes, property accepted 
     under this subsection shall be considered a gift or bequest 
     to the United States.

     SEC. 417. TRANSFERS OF FUNDS FROM OTHER FEDERAL AGENCIES.

       The Director is authorized to accept transfers from other 
     Federal agencies of funds which are available to carry out 
     functions transferred by this Act to the Director or 
     functions assigned by law to the Director after the date of 
     enactment of this Act.

[[Page 18596]]



     SEC. 418. SEAL OF OFFICE.

       The Director shall cause a seal of office to be made for 
     the Office of such design as the Director shall approve. 
     Judicial notice shall be taken of such seal.

     SEC. 419. STATUS OF OFFICE UNDER CERTAIN LAWS.

       For purposes of section 552b of title 5, United States 
     Code, the Office is an agency.

                    PART III--CONFORMING AMENDMENTS

     SEC. 421. PATENT AND TRADEMARK OFFICE.

       (a) Establishment.--Section 1 of title 35, United State 
     Code, is amended by striking out ``Department of Commerce'' 
     and inserting in lieu thereof ``Office of Patents, 
     Trademarks, and Standards''.
       (b) Reference to Assistant Secretary of Commerce.--Section 
     3 of title 35, United States Code, is amended by striking out 
     subsection (d).
       (c) General References to Secretary and Department.--
       (1) Except as provided under paragraph (2), the provisions 
     of title 35, United States Code, are further amended--
       (A) by striking out ``Secretary of Commerce'' each place 
     such term appears and insert in lieu thereof ``Commissioner 
     of Patents and Trademarks''; and
       (B) by striking out ``Department of Commerce'' each place 
     such term appears and inserting in lieu thereof ``Office of 
     Patents, Trademarks and Standards''.
       (2)(A) Section 3(a) of title 35, United States Code, is 
     amended in the fourth sentence by striking out ``The 
     Secretary of Commerce, upon the nomination of the 
     Commissioner'' and inserting in lieu thereof ``The 
     Commissioner''.
       (B) Section 6(a) of title 35, United States Code, is 
     amended--
       (i) in the first sentence by striking out ``, under the 
     direction of the Secretary of Commerce,''; and
       (ii) in the second sentence by striking out ``, subject to 
     the approval of the Secretary of Commerce,''.
       (C) Section 31 of title 35, United States Code, is amended 
     by striking out ``, subject to the approval of the Secretary 
     of Commerce,''.

                Subchapter E--Statistical Consolidation

                       PART I--GENERAL PROVISIONS

     SEC. 501. FINDINGS.

       Congress, recognizing the importance of statistical 
     information in the development of national priorities and 
     policies and in the administration of public programs, finds 
     that--
       (1) improved coordination and planning among the 
     statistical programs of the Federal Government is necessary--
       (A) to strengthen and improve the quality and utility of 
     Federal statistics; and
       (B) to reduce duplication and waste in information 
     collected for statistical purposes;
       (2) while the demand for statistical information has grown 
     substantially over the 30-year period preceding the date of 
     enactment of this Act, the lack of coordinated planning 
     within the decentralized Federal statistical system has 
     limited the usefulness of statistics in defining problems and 
     determining national policies to deal with complex social and 
     economic issues;
       (3) the establishment of a unified statistical policy for 
     the Federal Government to ensure that--
       (A) data available from Federal statistical programs are 
     responsive to the information needs of the President and 
     Congress in developing national policies; and
       (B) necessary statistical information is collected with the 
     least reporting burden imposed on individuals, businesses, 
     and public entities;
       (4) a central statistical policy and coordination office is 
     necessary--
       (A) to develop and implement a Federal statistical policy;
       (B) to establish priorities for Federal statistical 
     programs;
       (C) to oversee and evaluate the statistical programs of the 
     Government; and
       (D) to ensure that data collected for statistical purposes 
     by the Government are collected and reported in accordance 
     with established standards; and
       (5) it is conducive and integral to a sound Federal policy 
     that the heads of major statistical agencies within a Federal 
     department or agency have direct access to the head of such 
     department or agency.

     SEC. 502. SENSE OF CONGRESS.

       (a) Chief Statistician.--It is the sense of Congress that--
       (1) a more centralized statistical system is integral to 
     efficiency;
       (2) with increased efficiency comes better integration of 
     research, methodology, survey design, and taking advantage of 
     economies of scale;
       (3) the Chief Statistician should have the authority, 
     personnel, and other resources necessary to carry out the 
     duties of that office effectively, including duties relating 
     to statistical forms clearance;
       (4) statistical forms clearance at the Office of Management 
     and Budget should be better distinguished from regulatory 
     forms clearance; and
       (5) recognizing that the Chief Statistician has numerous 
     responsibilities with respect to statistical policy and 
     coordination, the Chief Statistician should have a direct 
     reporting relationship with the Director of the Office of 
     Management and Budget.
       (b) Confidentiality.--It is the sense of Congress that--
       (1) entities of the Federal Government (including the 
     Federal Council on Statistical Policy and the Interagency 
     Council on Statistical Policy) and private entities should 
     examine the efficacy of replacing the individual 
     confidentiality provisions of statistical agencies with a 
     single, uniform standard that guarantees confidentiality 
     across the affected agencies; and
       (2) those entities should also examine the sharing of 
     confidential data for statistical purposes within the Federal 
     Statistical Service and special arrangements to permit the 
     sharing of confidential data for statistical purposes with 
     State agencies cooperating with Federal agencies in 
     statistical programs.
       (c) Decennial Censuses.--It is the sense of Congress that 
     the budget and functions of the Bureau of the Census relating 
     to any decennial census of population should be segregated 
     from the other budget and functions of the Bureau of the 
     Census.

     SEC. 503. DEFINITIONS.

       In this title:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Federal Statistical Service.
       (2) Census of population.--The term ``census of 
     population'' has the meaning given such term by section 
     141(g) of title 13, United States Code.
       (3) Chief statistician.--The term ``Chief Statistician'' 
     means the Chief Statistician of the Office of Management and 
     Budget.
       (4) Council.--The term ``Council'' means the Federal 
     Council on Statistical Policy under section 513.
       (5) Deputy administrator.--The term ``Deputy 
     Administrator'' means the Deputy Administrator of the Federal 
     Statistical Service.
       (6) Federal agency.--The term ``Federal agency'' has the 
     meaning provided the term ``agency'' in section 551(1) of 
     title 5, United States Code.
       (7) Function.--The term ``function'' includes any duty, 
     obligation, power, authority, responsibility, right, 
     privilege, activity, or program.
       (8) Office.--The term ``office'' includes any office, 
     bureau, institute, council, unit, or organizational entity, 
     or any component thereof.
       (9) Service.--The term ``Service'' means the Federal 
     Statistical Service.

       PART II--ESTABLISHMENT OF THE FEDERAL STATISTICAL SERVICE

     SEC. 511. ESTABLISHMENT.

       The Federal Statistical Service is established as an 
     independent establishment, as that term is defined in section 
     104 of title 5, United States Code, in the executive branch 
     of the Federal Government.

     SEC. 512. PRINCIPAL OFFICERS.

       (a) Administrator.--
       (1) In general.--There shall be at the head of the Service 
     an Administrator of the Federal Statistical Service, who 
     shall be appointed, from among individuals nominated for that 
     purpose by the Federal Council on Statistical Policy who are 
     experienced in the collection and utilization of statistical 
     data or survey research, by the President, by and with the 
     advice and consent of the Senate.
       (2) Administration.--The Service, including all functions 
     and offices transferred to the Service under this title, 
     shall be administered, in accordance with the provisions of 
     this title, under the supervision and direction of the 
     Administrator.
       (3) Compensation of administrator.--The Administrator shall 
     receive basic pay at the rate payable for level II of the 
     Executive Schedule under section 5313 of title 5, United 
     States Code.
       (b) Deputy Administrator.--
       (1) In general.--There shall be in the Service a Deputy 
     Administrator of the Federal Statistical Service who shall be 
     appointed, from among individuals nominated for that purpose 
     by the Federal Council on Statistical Policy who are 
     experienced in the collection and utilization of statistical 
     data or survey research, by the President, by and with the 
     advice and consent of the Senate.
       (2) Duties of deputy administrator.--During the absence or 
     disability of the Administrator, or in the event of a vacancy 
     in the office of the Administrator, the Deputy Administrator 
     shall act as Administrator. The Deputy Administrator shall 
     perform such other duties and exercise such powers as the 
     Administrator may from time to time prescribe.
       (3) Compensation of deputy administrator.--The Deputy 
     Administrator shall receive basic pay at the rate payable for 
     level III of the Executive Schedule under section 5314 of 
     title 5, United States Code.
       (c) Bureau Directors.--
       (1) In general.--There shall be in the Service--
       (A) a Director of the Census who shall, on the transfer of 
     functions and offices under section 203, serve as the head of 
     the Bureau of the Census; and
       (B) a Director of the Bureau of Economic Analysis who 
     shall, on the transfer of functions and offices under section 
     203, serve as the head of the Bureau of Economic Analysis; 
     and
       (C) a Director of the Bureau of Labor Statistics who shall, 
     on the transfer of functions

[[Page 18597]]

     and offices under subtitle C, serve as the head of the Bureau 
     of Labor Statistics.
       (2) Appointment.--Each of the Directors referred to in 
     paragraph (1) shall be appointed by the President, by and 
     with the advice and consent of the Senate.
       (4) Compensation of director of bureau of economic 
     analysis.--
       (A) In general.--The position of Director of the Bureau of 
     Economic Analysis shall be a Senior Executive Service 
     position.
       (B) Senior executive service defined.--For purposes of this 
     paragraph, the term ``Senior Executive Service position'' 
     shall have the same meaning as in section 3132(a) of title 5, 
     United States Code.
       (5) Terms.--The term of office for each Director referred 
     to in paragraph (1) shall be as specified in the predecessor 
     under the applicable provision of law in effect on the day 
     before the date of enactment of this Act, except that, 
     notwithstanding section 21 of title 13, United States Code, 
     the term of the Director of the Census shall be 4 years.
       (d) General Counsel.--There shall be in the Service a 
     General Counsel who shall administer the Office of General 
     Counsel of the Federal Statistical Service. The General 
     Counsel shall be appointed by the President, by and with the 
     advice and consent of the Senate.
       (e) Inspector General.--There shall be in the Service an 
     Inspector General appointed in accordance with the Inspector 
     General Act of 1978 (5 U.S.C. App.).

     SEC. 513. FEDERAL COUNCIL ON STATISTICAL POLICY.

       (a) Establishment.--A Federal Council on Statistical Policy 
     shall advise the Service.
       (b) Composition.--The Council shall be composed of 9 
     members as follows:
       (1) The Administrator of the Federal Statistical Service.
       (2) The Director of the Census.
       (3) The Director of the Bureau of Labor Statistics.
       (4) The Director of the Bureau of Economic Analysis.
       (5) The Chief Statistician of the Office of Management and 
     Budget.
       (6) Two members appointed by the Majority Leader of the 
     Senate from among individuals who--
       (A) are not officers or employees of the Government; and
       (B) are especially qualified to serve on the Council by 
     virtue of experience relating to 1 or more of the bureaus 
     referred to in title III.
       (7) Two members appointed by the Speaker of the House of 
     Representatives from among individuals who--
       (A) are not officers or employees of the Government; and
       (B) are especially qualified to serve on the Council by 
     virtue of experience relating to 1 or more of the bureaus 
     referred to in section 203 or subtitle C.
       (c) Terms.--
       (1) In general.--Each member under subsection (b)(6) shall 
     be appointed for a term of 5 years, except that, of the 
     members first appointed--
       (A) 1 shall be appointed for a term of 5 years; and
       (B) 1 shall be appointed for a term of 3 years.
       (2) Staggered terms.--Each member under subsection (b)(7) 
     shall be appointed for a term of 5 years, except that, of the 
     members first appointed--
       (A) 1 shall be appointed for a term of 5 years; and
       (B) 1 shall be appointed for a term of 2 years.
       (d) Functions.--
       (1) In general.--The Council shall--
       (A) make any nominations required under section 512(a)(1);
       (B) serve as an advisory body to the Chief Statistician on 
     confidentiality issues, such as those relating to--
       (i) the collection or sharing of data for statistical 
     purposes among Federal agencies; and
       (ii) the sharing of data, for statistical purposes, by 
     States and political subdivisions with the Federal 
     Government; and
       (C) establish a statistical policy as described in section 
     501(3).
       (2) Study and report as procedures.--
       (A) Study.--The Council shall study procedures for the 
     release of major economic and social indicators by the 
     Federal Government.
       (B) Report.--Not later than 18 months after the date of 
     enactment of this Act, the Council shall submit to Congress a 
     report on the findings of the study under subparagraph (A).
       (3) Study of functions.--
       (A) Study.--The Council shall study--
       (i) whether or not the functions of the Bureau of the 
     Census relating to decennial censuses of population could be 
     delineated from the other functions of the Bureau; and
       (ii) if the functions referred to in clause (i) could be 
     delineated from other functions of the Bureau, 
     recommendations on how such a delineation of functions might 
     be achieved.
       (B) Report.--Not later than 12 months after the date of 
     enactment of this Act, the Council shall submit to Congress a 
     report on the findings of the study conducted under 
     subparagraph (A).
       (4) Study and report on field offices.--
       (A) Study.--The Council shall study--
       (i) making as appropriate, the field offices of the Bureau 
     of the Census part of the field offices of the Bureau of 
     Labor Statistics; and
       (ii) any savings anticipated as a result of the 
     implementation of clause (i).
       (B) Report.--Not later than 12 months after the date of 
     enactment of this Act, the Council shall submit to Congress a 
     report on the findings of the study conducted under 
     subparagraph (A).
       (e) Compensation.--Members of the Council under subsection 
     (b)(6) shall be entitled to receive the daily equivalent of 
     the rate of basic pay for level IV of the Executive Schedule 
     under section 5315 of title 5, United States Code, for each 
     day (including travel time) during which they are engaged in 
     the actual performance of duties vested in the Council.
       (f) Chairperson.--The Chairperson of the Council shall be 
     elected by and from the members for a term of 1 year.

              PART III--TRANSFERS OF FUNCTIONS AND OFFICES

     SEC. 521. TRANSFER OF THE BUREAU OF LABOR STATISTICS.

       There is transferred to the Service the Bureau of Labor 
     Statistics of the Department of Labor, along with all of its 
     functions and offices.

     SEC. 522. TRANSFER DATE.

       The transfers of functions and offices under this title 
     shall be effective on the date specified in section 102(c).

                   PART IV--ADMINISTRATIVE PROVISIONS

     SEC. 531. OFFICERS AND EMPLOYEES.

       The Administrator may appoint and fix the compensation of 
     such officers and employees as may be necessary to carry out 
     the functions of the Administrator and the Service. Except as 
     otherwise provided by law, such officers and employees shall 
     be appointed in accordance with the civil service laws and 
     their compensation shall be fixed in accordance with title 5, 
     United States Code.

     SEC. 532. EXPERTS AND CONSULTANTS.

       The Administrator, as may be provided in appropriation 
     Acts, obtain the services of experts and consultants in 
     accordance with section 3109 of title 5, United States Code, 
     and may compensate such experts and consultants at rates not 
     to exceed the daily rate prescribed for level IV of the 
     Executive Schedule under section 5315 of title 5, United 
     States Code.

     SEC. 533. ACCEPTANCE OF VOLUNTARY SERVICES.

       (a) In General.--Notwithstanding section 1342 of title 31, 
     United States Code, the Administrator may accept, subject to 
     regulations issued by the Office of Personnel Management, 
     voluntary services if such services--
       (1) are to be uncompensated; and
       (2) are not used to displace any employee.
       (b) Treatment.--Any individual who provides voluntary 
     services under this section shall not be considered a Federal 
     employee for any purpose other than for purposes of chapter 
     81 of title 5, United States Code (relating to compensation 
     for injury) and sections 2671 through 2680 of title 28, 
     United States Code (relating to tort claims).

     SEC. 534. GENERAL AUTHORITY.

       In carrying out any function transferred by this Act, the 
     Administrator, or any officer or employee of the Service, may 
     exercise any authority available by law with respect to such 
     function to the official or agency from which such function 
     is transferred, and the actions of the Administrator in 
     exercising such authority shall have the same force and 
     effect as when exercised by such official or agency.

     SEC. 535. DELEGATION.

       Except as otherwise provided in this title, the 
     Administrator may delegate any function to such officers and 
     employees of the Service as the Administrator may designate, 
     and may authorize such successive redelegations of such 
     functions within the Service as may be necessary or 
     appropriate. No delegation of functions by the Administrator 
     under this section or under any other provision of this title 
     shall relieve the Administrator of responsibility for the 
     Administration of such functions.

     SEC. 536. REORGANIZATION.

       The Administrator may allocate or reallocate functions 
     among the officers of the Service, and to establish, 
     consolidate, alter, or abolish such offices or positions 
     within the Service as may be necessary or appropriate.

     SEC. 537. CONTRACTS.

       (a) In General.--Subject to the Federal Property and 
     Administrative Services Act of 1949 and other applicable 
     Federal law, the Administrator may make, enter into, and 
     perform such contracts, grants, leases, cooperative 
     agreements, and other similar transactions with Federal or 
     other public agencies (including State and local governments) 
     and private organizations and persons, and to make such 
     payments, by way of advance or reimbursement, as the 
     Administrator may determine necessary or appropriate to carry 
     out functions of the Administrator or the Service.
       (b) Appropriation Authority Required.--No authority to 
     enter into contracts or to make payments under this title 
     shall be effective except to such extent or in such amounts 
     as are provided in advance under appropriation Acts.

[[Page 18598]]



     SEC. 538. REGULATIONS.

       The Administrator may prescribe such rules and regulations 
     as the Administrator considers necessary or appropriate to 
     administer and manage the functions of the Administrator or 
     the Service, in accordance with chapter 5 of title 5, United 
     States Code.

     SEC. 539. SEAL.

       The Administrator shall cause a seal of office to be made 
     for the Service of such design as the Administrator shall 
     approve. Judicial notice shall be taken of such seal.

     SEC. 540. ANNUAL REPORT.

       The Administrator, in consultation with the Council, shall, 
     as soon as practicable after the close of each fiscal year, 
     make a single, comprehensive report to the President for 
     transmission to Congress on the activities of the Service 
     during such fiscal year.

                         PART V--MISCELLANEOUS

     SEC. 541. INCIDENTAL TRANSFERS.

       The Director of the Office of Management and Budget, in 
     consultation with the Administrator, shall make such 
     determinations as may be necessary with regard to the 
     functions, offices, or portions thereof transferred by this 
     title, and make such additional incidental dispositions of 
     personnel, assets, liabilities, grants, contracts, property, 
     records, and unexpended balances of appropriations, 
     authorizations, allocations, and other funds held, used, 
     arising from, available to, or to be made available in 
     connection with such functions, offices, or portions thereof, 
     as may be necessary to carry out this title. The Director 
     shall provide for the termination of the affairs of all 
     entities terminated by this title and, in consultation with 
     the Administrator, for such further measures and dispositions 
     as may be necessary to effectuate the purposes of this title.

     SEC. 542. REFERENCES.

       With respect to any function transferred by this title and 
     exercised on or after the date of such transfer, any 
     reference in any other Federal law to any department, 
     commission, or agency or any officer or office the functions 
     of which so transferred shall be deemed to refer to the 
     Administrator, other official, or component of the Service to 
     which this title transfers such functions.

     SEC. 543. PROPOSED CHANGES IN LAW.

       Not later than 90 days after the date of enactment of this 
     Act, the President shall submit to Congress a description of 
     any changes in Federal law necessary to reflect any transfers 
     or other measures under this title.

     SEC. 544. TRANSITION.

       (a) Use of Funds.--Funds available to any department or 
     agency (or any official or component thereof), the functions 
     or offices of which are transferred to the Administrator or 
     the Service by this title, may, with the approval of the 
     Director of the Office of Management and Budget, be used to 
     pay the compensation and expenses of any officer appointed 
     pursuant to this title and other transitional and planning 
     expenses associated with the establishment of the Service or 
     transfer of functions or offices thereto until such time as 
     funds for such purposes are otherwise available.
       (b) Use of Personnel.--With the consent of the appropriate 
     department or agency head concerned, the Administrator may 
     utilize the services of such officers, employees, and other 
     personnel of the departments and agencies from which 
     functions or offices have been transferred to the 
     Administrator or the Service, for such period of time as may 
     reasonably be needed to facilitate the orderly implementation 
     of this title.

     SEC. 545. INTERIM APPOINTMENTS.

       (a) Authority To Appoint.--Notwithstanding any other 
     provision of law, in the event that 1 or more officers 
     required by this title to be appointed by and with the advice 
     and consent of the Senate shall not have entered upon office 
     on the date of the transfer of functions and offices under 
     section 203 or subtitle C, the President may designate an 
     officer in the executive branch to act in such office for 120 
     days or until the office is filled as provided in this title, 
     whichever occurs first.
       (b) Compensation.--Any officer acting in an office in the 
     Department pursuant to the provisions of subsection (a) shall 
     receive compensation at the rate prescribed for such office 
     under this title.

     SEC. 546. CONFORMING AMENDMENTS.

       (a) Director, Bureau of Labor Statistics.--Section 5315 of 
     title 5, United States Code, as amended by this Act, is 
     further amended by adding at the end the following new item:
       ``Director, Bureau of Labor Statistics.''.
       (b) General Counsel; Inspector General.--Section 5315 of 
     title 5, United States Code, as amended by subsection (a), is 
     further amended by adding at the end the following new items:
       ``General Counsel, Bureau of Labor Statistics.
       ``Inspector General, Bureau of Labor Statistics.''.
       (c) Bureau Directors.--Section 5315 of title 5, United 
     States Code, as amended by subsection (b), is further 
     amended--
       (1) by striking ``The Commissioner of Labor Statistics, 
     Department of Labor''; and
       (2) by inserting after the item relating to the Director of 
     the Census, the following new items:
       ``Director of the Bureau of Labor Statistics, Federal 
     Statistical Service.
       ``Director of the Bureau of Economic Analysis, Federal 
     Statistical Service.''.
       (d) Deputy Administrator.--Section 5314 of title 5, United 
     States Code, is amended by adding at the end the following 
     new item:
       ``Deputy Administrator, Federal Statistical Service.''.
       (e) Administrator.--Section 5313 of title 5, United States 
     Code, is amended by adding at the end the following new item:
       ``Administrator, Federal Statistical Service.''.

                 Subchapter F--Miscellaneous Provisions

     SEC. 601. REFERENCES.

       Any reference in any other Federal law, Executive order, 
     rule, regulation, or delegation of authority, or any document 
     of or pertaining to a department or office from which a 
     function is transferred by this Act--
       (1) to the head of such department or office is deemed to 
     refer to the head of the department or office to which such 
     function is transferred; or
       (2) to such department or office is deemed to refer to the 
     department or office to which such function is transferred.

     SEC. 602. EXERCISE OF AUTHORITIES.

       Except as otherwise provided by law, a Federal official to 
     whom a function is transferred by this Act may, for purposes 
     of performing the function, exercise all authorities under 
     any other provision of law that were available with respect 
     to the performance of that function to the official 
     responsible for the performance of the function immediately 
     before the effective date of the transfer of the function 
     under this Act.

     SEC. 603. SAVINGS PROVISIONS.

       (a) Legal Documents.--All orders, determinations, rules, 
     regulations, permits, grants, loans, contracts, agreements, 
     certificates, licenses, and privileges--
       (1) that have been issued, made, granted, or allowed to 
     become effective by the President, the Secretary of Commerce, 
     the United States Trade Representative, any officer or 
     employee of any office transferred by this Act, or any other 
     Government official, or by a court of competent jurisdiction, 
     in the performance of any function that is transferred by 
     this Act; and
       (2) that are in effect on the effective date of such 
     transfer (or become effective after such date pursuant to 
     their terms as in effect on such effective date),

     shall continue in effect according to their terms until 
     modified, terminated, superseded, set aside, or revoked in 
     accordance with law by the President, any other authorized 
     official, a court of competent jurisdiction, or operation of 
     law.
       (b) Proceedings.--This Act shall not affect any proceedings 
     or any application for any benefits, service, license, 
     permit, certificate, or financial assistance pending on the 
     date of enactment of this Act before an office transferred by 
     this Act, but such proceedings and applications shall be 
     continued. Orders shall be issued in such proceedings, 
     appeals shall be taken therefrom, and payments shall be made 
     pursuant to such orders, as if this Act had not been enacted, 
     and orders issued in any such proceeding shall continue in 
     effect until modified, terminated, superseded, or revoked by 
     a duly authorized official, by a court of competent 
     jurisdiction, or by operation of law. Nothing in this 
     subsection shall be considered to prohibit the discontinuance 
     or modification of any such proceeding under the same terms 
     and conditions and to the same extent that such proceeding 
     could have been discontinued or modified if this Act had not 
     been enacted.
       (c) Suits.--This Act shall not affect suits commenced 
     before the date of enactment of this Act, and in all such 
     suits, proceeding shall be had, appeals taken, and judgments 
     rendered in the same manner and with the same effect as if 
     this Act had not been enacted.
       (d) Nonabatement of Actions.--No suit, action, or other 
     proceeding commenced by or against the Department of Commerce 
     or the Secretary of Commerce, or by or against any individual 
     in the official capacity of such individual as an officer or 
     employee of an office transferred by this Act, shall abate by 
     reason of the enactment of this Act.
       (e) Continuance of Suits.--If any Government officer in the 
     official capacity of such officer is party to a suit with 
     respect to a function of the officer, and under this Act such 
     function is transferred to any other officer or office, then 
     such suit shall be continued with the other officer or the 
     head of such other office, as applicable, substituted or 
     added as a party.
       (f) Administrative Procedure and Judicial Review.--Except 
     as otherwise provided by this Act, any statutory requirements 
     relating to notice, hearings, action upon the record, or 
     administrative or judicial review that apply to any function 
     transferred by this Act shall apply to the exercise of such 
     function by the head of the Federal agency, and other 
     officers of the agency, to which such function is transferred 
     by this Act.

     SEC. 604. TRANSFER OF ASSETS.

       Except as otherwise provided in this Act, so much of the 
     personnel, property, records, and unexpended balances of 
     appropriations, allocations, and other funds employed, used, 
     held, available, or to be made available in connection with a 
     function transferred to an

[[Page 18599]]

     official or agency by this Act shall be available to the 
     official or the head of that agency, respectively, at such 
     time or times as the Director of the Office of Management and 
     Budget directs for use in connection with the functions 
     transferred.

     SEC. 605. DELEGATION AND ASSIGNMENT.

       Except as otherwise expressly prohibited by law or 
     otherwise provided in this Act, an official to whom functions 
     are transferred under this Act (including the head of any 
     office to which functions are transferred under this Act) may 
     delegate any of the functions so transferred to such officers 
     and employees of the office of the official as the official 
     may designate, and may authorize successive redelegations of 
     such functions as may be necessary or appropriate. No 
     delegation of functions under this section or under any other 
     provision of this Act shall relieve the official to whom a 
     function is transferred under this Act of responsibility for 
     the administration of the function.

     SEC. 606. AUTHORITY OF DIRECTOR OF THE OFFICE OF MANAGEMENT 
                   AND BUDGET WITH RESPECT TO FUNCTIONS 
                   TRANSFERRED.

       (a) Determinations.--If necessary, the Director shall make 
     any determination of the functions that are transferred under 
     this Act.
       (b) Incidental Transfers.--The Director, at such time or 
     times as the Director shall provide, may make such 
     determinations as may be necessary with regard to the 
     functions transferred by this Act, and to make such 
     additional incidental dispositions of personnel, assets, 
     liabilities, grants, contracts, property, records, and 
     unexpended balances of appropriations, authorizations, 
     allocations, and other funds held, used, arising from, 
     available to, or to be made available in connection with such 
     functions, as may be necessary to carry out the provisions of 
     this Act. The Director shall provide for the termination of 
     the affairs of all entities terminated by this Act and for 
     such further measures and dispositions as may be necessary to 
     effectuate the purposes of this Act.

     SEC. 607. CERTAIN VESTING OF FUNCTIONS CONSIDERED TRANSFERS.

       For purposes of this Act, the vesting of a function in a 
     department or office pursuant to reestablishment of an office 
     shall be considered to be the transfer of the 
     function.

     SEC. 608. AVAILABILITY OF EXISTING FUNDS.

       Existing appropriations and funds available for the 
     performance of functions, programs, and activities terminated 
     pursuant to this Act shall remain available, for the duration 
     of their period of availability, for necessary expenses in 
     connection with the termination and resolution of such 
     functions, programs, and activities.

     SEC. 609. DEFINITIONS.

       For purposes of this Act--
       (1) the term ``function'' includes any duty, obligation, 
     power, authority, responsibility, right, privilege, activity, 
     or program; and
       (2) the term `office' includes any office, administration, 
     agency, bureau, institute, council, unit, organizational 
     entity, or component thereof.

     SEC. 610. CONFORMING AMENDMENTS.

       Section 11 of the Inspector General Act of 1978 (5 U.S.C. 
     App.) is amended--
       (1) in paragraph (1), by striking ``or the Commissioner of 
     the Social Security Administration;'' and inserting ``the 
     Commissioner of the Social Security Administration; the 
     Administrator of the National Oceanic and Atmospheric 
     Administration; or the Administrator of the Federal 
     Statistical Service;''; and
       (2) in paragraph (2), by striking ``or the Social Security 
     Administration'' and inserting ``the National Oceanic and 
     Atmospheric Administration, the Federal Statistical Service, 
     or the Social Security Administration''.
          TITLE VII--COMPLIANCE WITH CONGRESSIONAL BUDGET ACT

     SEC. 701. SUNSET OF PROVISIONS OF ACT.

       All provisions of, and amendments made by, this Act which 
     are in effect on September 30, 2009, shall cease to apply as 
     of the close of September 30, 2009.
                                 ______
                                 

                       STEVENS AMENDMENT NO. 1488

  (Ordered to lie on the table.)
  Mr. STEVENS submitted an amendment intended to be proposed by him to 
the bill, S. 1429, supra; as follows:

       On page 215, line 18 after ``FARMERS'' insert ``AND 
     FISHERMEN''.
       On page 215, line 26 insert ``AND FISHERMEN.'' before the 
     period.
       On page 216, line 1 after ``farm'' insert ``and fishing''.
       On page 216, insert the following new paragraph before 
     subsection (b) and redesignate subsection (b) as subsection 
     (c):
       ``(b) Allowing Income Averaging for Fishermen.--
       (1) Section 1301(a) of the Internal Revenue Code of 1986 is 
     amended by striking ``farming business'' and inserting 
     ``farming business or fishing business,''.
       (2) Section 1301(b)(1)(A)(i) is amended by striking ``and'' 
     and inserting ``or'', and by striking subsection 
     (b)(1)(A)(ii) and replacing it with ``(b)(1)(A)(ii) a fishing 
     business; and'' and by redesignating subsection 
     (b)(1)(A)((ii) as subsection (b)(1)(A)(iii).
       (3) Section 1301(b) is amended by inserting the following 
     paragraph after subsection (b)(3):
       ``(4) Fishing business.--The term fishing business means 
     the conduct of commercial fishing as defined in Section 3 of 
     the Magnuson-Stevens Fishery Conservation and Management Act 
     (16 U.S.C. 1802).''.

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