[Congressional Record (Bound Edition), Volume 147 (2001), Part 20]
[Senate]
[Pages 27717-27725]
[From the U.S. Government Publishing Office, www.gpo.gov]



                 UNANIMOUS CONSENT AGREEMENT--H.R. 2884

  Mr. DASCHLE. Mr. President, there is a matter that has some urgency 
associated with it only because I know the House is waiting to receive 
the language. So in the interest of expediting consideration of this 
particular piece of legislation, I now ask unanimous consent that the 
Chair lay before the Senate a message from the House on H.R. 2884, that 
the Senate concur in the amendment of the House with a further 
amendment which is at the desk.
  The PRESIDING OFFICER. Is there objection?
  Mr. McCAIN. Reserving the right to object, what is 2884?
  Mr. DASCHLE. Mr. President, 2884 is the Victims Relief Fund, the 
legislation dealing with victims of terrorism.

[[Page 27718]]


  Mr. GRAMM. What is the amendment, Mr. President?
  Mr. DASCHLE. I yield to the Senator from New Jersey.
  Mr. TORRICELLI. I thank the majority leader for yielding. When the 
Senate unanimously passed this legislation previously, we included 
waiving income taxes and payroll taxes for families of the victims of 
September 11. The House of Representatives in their bill included only 
income taxes and not payroll taxes.
  When the House repassed the bill and sent it to us, they included a 
provision that did not include payroll taxes but set a minimum of 
$10,000 so lower income people would receive some tax refund. The House 
wanted to retain the principle of not waiving payroll taxes but did 
want to give some refund to low-income families. This was seen as 
agreeable to both sides and fair.
  Mr. GRAMM. Mr. President, further reserving the right to object, it 
is my understanding there were additional provisions such as extended 
unemployment, provisions of that nature. Are they in this bill?
  Let me suggest the absence of a quorum so we could look at that.
  The PRESIDING OFFICER. The majority leader has the floor.
  Mr. DASCHLE. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DASCHLE. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DASCHLE. Mr. President, I have a unanimous consent request that 
is pending.
  The PRESIDING OFFICER. Is there objection to the request?
  Mr. BAUCUS. Reserving the right to object, is this the victims relief 
bill, I ask the majority leader?
  Mr. DASCHLE. I answer to the Senator from Montana it is the victims 
relief bill.
  Mr. BAUCUS. Reserving the right to object, and I shall not object, 
there is a disaster in the State of Montana and other higher plain 
States, which is a drought. I have been seeking agricultural disaster 
assistance. I see that is not going to happen. I ask my friend from 
South Dakota if he can assure me that at the first opportunity next 
year we will take up and consider the agricultural disaster assistance 
bill.
  Mr. DASCHLE. Mr. President, I commend the Senator from Montana for 
his efforts over the course of the last several months. I have been 
impressing the Senate to act on disaster relief. Many farmers in South 
Dakota share this problem, and I have applauded the efforts made by the 
Senator from Montana. I appreciate his interest and his determination 
to see that it adequately responds to the Great Plains, the Midwest, 
and elsewhere.
  I assure the Senator from Montana that at the first appropriate 
opportunity we will find a way to address the legislation and find a 
way in which to respond. As he recalls, we did some of that last 
summer. We had a good debate about how much was necessary. I think the 
Senator from Montana is correct in his observations that there is still 
a great deal more to be done. I will work with him to see that that 
happens.
  Mr. BAUCUS. Mr. President, I thank my good friend from South Dakota. 
I add that this bill is very necessary to the victims relief bill, as 
it was reported to the Committee on Finance. I will not belabor it by 
going through the provisions. According to the rules, there is not time 
to do so. Suffice to say, this bill must pass in the next several hours 
because it will give much-needed relief. I thank my friend.
  Mr. SCHUMER. Mr. President, reserving the right to object, and I will 
not object, I would like to just say that some of the provisions that 
are not in this bill--first, the victims relief part of the bill is 
very necessary. We did not want to stand in the way of that. 
Originally, when the victims relief bill came over to the House, it had 
provisions to benefit Lower Manhattan. We all know that Lower Manhattan 
is in real trouble because of what happened on September 11. The great 
fear is that businesses, large and small, will leave. The fear factor 
is enormous.
  Over on the House side, the chairman of the Ways and Means Committee 
worked out a package that would help bring some relief. On this side, 
Senator Clinton and I worked out a package that had tremendous support 
in our version of the stimulus bill from the majority leader, as well 
as the chairman of the Finance Committee. We had spent a great deal of 
time after it looked as though the stimulus bill was not going to 
happen, starting yesterday, and finishing about an hour and a half ago, 
trying to come to a compromise between the House version and the Senate 
version.
  The chairman of the Ways and Means Committee in the other body and 
our staffs worked long and hard to come up with the compromise we have 
come up with. There are a few changes here and there that he might 
like, I might like, and Senator Clinton might like, and others in New 
York might like, but we did come to an agreement. Unfortunately, the 
agreement we came to was not able to be reviewed by the Senators in 
this body. We just came up with it about an hour, hour and a half ago.
  Unfortunately, because time is late and because the victims package 
has achieved that agreement, we will not stand in the way and object to 
removing the New York part from the bill and bringing up this other 
bill.
  But I say this to my colleagues: We have a tremendous problem in 
downtown Manhattan. We are getting FEMA relief, and it is working well. 
The Senator from West Virginia has helped us in other areas. But tax 
relief to companies, big and small, to individuals, to nonprofits that 
don't have space right now, or that have space but are wondering 
whether they can stay in Lower Manhattan, is vital to New York's 
reblooming quickly.
  I am hopeful that when we come back in January, the package that has 
been agreed to and worked on by the chairman of the Ways and Means 
Committee and many of his people, Senator Baucus, Senator Grassley, 
Senator Clinton, and myself will serve as a basis for bringing 
something up quickly then.
  We had hoped to get something now. We have come really close--close 
but no cigar, they say. We are going to try to gain that cigar as soon 
as we come back. But make no mistake about it, we will be back. We very 
much need the help, and we appreciate everybody's cooperation to help 
us get there.
  Mr. LOTT. Has the unanimous consent request been agreed to?
  Mr. SCHUMER. I withdraw my objection.
  The PRESIDING OFFICER. Is there objection?
  Mr. ALLEN. Reserving the right to object.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. ALLEN. Mr. President, I say to the Members, this final victims 
package is a good package. I earlier introduced a measure to make sure 
we included the provisions of S. 1433,which is supported by Senator 
Warner, Senator Campbell, and Senator Craig. I am glad these ideas have 
been recognized, that this war we are fighting is against terrorists 
who target defenseless men, women, and children. The areas in which 
these attacks occur are combat zones.
  I am glad this package has been worked out, because the last thing 
the families of these victims need to be worrying about is paying 
taxes, whether income taxes or other types of taxes--this bill 
addresses those concerns.
  While my colleague from New York may want to add some other items to 
this measure--but at this late hour will not--I commend to my 
colleagues the fact that the police officers and firefighters who first 
responded to the World Trade Center attacks, as well as the Pentagon, 
risked their lives in hazardous conditions, breathing toxic gases, to 
save the lives of their fellow citizens.
  In my view, those who are serving in those terrorist attack zones 
ought to be looked upon as the same as those who work in combat zones, 
and the taxes of those first responders for that

[[Page 27719]]

month ought not be subject to income taxes. I am going to work next 
year to get this proper recognition for our firefighters, law 
enforcement officers, and rescue personnel, but I do not want to hold 
up this good victims' relief package which means a good deal to a lot 
of families who feel a very big hole in their hearts during this 
holiday season.
  I yield the floor.
  The PRESIDING OFFICER. Is there objection?
  Mr. NICKLES. Reserving the right to object, and I shall not object.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I thank my colleague, Senator Allen, for 
his comments. I also thank my colleague, Senator Torricelli, for his 
work and the work we did in the Finance Committee. We also included the 
victims from the Oklahoma City bombing disaster 6 years ago in which 
189 people lost their lives. Likewise, they should not have to pay 
taxes for that year or the preceding year. The amount of income is 
almost de minimis, but it is only fair.
  I thank my colleagues from New York and New Jersey for their 
cooperation. My colleagues from New York had many additional, very 
interesting items--accelerated depreciation and other ideas to 
stimulate the economy. We are happy to work with them to try to make 
that happen in the near future.
  I thank my colleagues for their support, and I shall not object.
  The PRESIDING OFFICER. Is there objection?
  If there is no objection, without objection, it is so ordered.
  The majority leader.
  Mr. DASCHLE. Mr. President, I ask unanimous consent that the vote on 
the conference report to accompany H.R. 3338 occur immediately 
following the remarks made by the senior Senator from West Virginia.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. TORRICELLI. Will the majority leader yield?
  The PRESIDING OFFICER. Is objection heard?
  Mr. LOTT. Mr. President, I seek recognition, but in view of what we 
have just agreed to, I know the Senator from New Jersey wants to be 
heard. I yield the floor to him.
  Mr. TORRICELLI. Mr. President, I thank the Republican leader for his 
courtesy. I want to say a word of thanks to all of my colleagues. I was 
proud to have offered this provision in the Finance Committee and again 
on the Senate floor.
  The PRESIDING OFFICER. The Chair needs to ascertain if there is 
objection to the preceding unanimous consent request.
  Mr. McCAIN. I withdraw my objection.
  The PRESIDING OFFICER. The objection is withdrawn. Without objection, 
it is so ordered.
  The Chair laid before the Senate a message from the House, as 
follows:
  The PRESIDING OFFICER laid before the Senate the following message 
from the House of Representatives:

  Resolved, That the House agree to the amendments of the Senate to the 
bill (H.R. 2884) entitled ``An Act to amend the Internal Revenue Code 
of 1986 to provide tax relief for victims of the terrorist attacks 
against the United States on September 11, 2001'', with the following 
House amendment to senate amendments:
       In lieu of the matter proposed to be inserted by the Senate 
     amendment to the text of the bill, insert the following:

     SECTION 1. SHORT TITLE; ETC.

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

Sec. 1. Short title; etc.

      TITLE I--RELIEF PROVISIONS FOR VICTIMS OF TERRORIST ATTACKS

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

                   TITLE II--OTHER RELIEF PROVISIONS

Sec. 201. Exclusion for disaster relief payments.
Sec. 202. Authority to postpone certain deadlines and required actions.
Sec. 203. Application of certain provisions to terroristic or military 
              actions.
Sec. 204. Clarification of due date for airline excise tax deposits.
Sec. 205. Treatment of certain structured settlement payments.
Sec. 206. Personal exemption deduction for certain disability trusts.

TITLE III--TAX BENEFITS FOR AREA OF NEW YORK CITY DAMAGED IN TERRORIST 
                     ATTACKS ON SEPTEMBER 11, 2001

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

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

Sec. 401. Disclosure of tax information in terrorism and national 
              security investigations.

           TITLE V--NO IMPACT ON SOCIAL SECURITY TRUST FUNDS

Sec. 501. No impact on social security trust funds.

      TITLE I--RELIEF PROVISIONS FOR VICTIMS OF TERRORIST ATTACKS

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

       (a) In General.--Section 692 (relating to income taxes of 
     members of Armed Forces on death) is amended by adding at the 
     end the following new subsection:
       ``(d) Individuals Dying as a Result of Certain Attacks.--
       ``(1) In general.--In the case of a specified terrorist 
     victim, any tax imposed by this chapter shall not apply--
       ``(A) with respect to the taxable year in which falls the 
     date of death, and
       ``(B) with respect to any prior taxable year in the period 
     beginning with the last taxable year ending before the 
     taxable year in which the wounds, injury, or illness referred 
     to in paragraph (2) were incurred.
       ``(2) Specified terrorist victim.--For purposes of this 
     subsection, the term `specified terrorist victim' means any 
     decedent--
       ``(A) who dies as a result of wounds or injury incurred as 
     a result of the terrorist attacks against the United States 
     on April 19, 1995, or September 11, 2001, or
       ``(B) who dies as a result of illness incurred as a result 
     of an attack involving anthrax occurring on or after 
     September 11, 2001, and before January 1, 2002.

     Such term shall not include any individual identified by the 
     Attorney General to have been a participant or conspirator in 
     any such attack or a representative of such an individual.''.
       (b) Conforming Amendments.--
       (1) Section 5(b)(1) is amended by inserting ``and victims 
     of certain terrorist attacks'' before ``on death''.
       (2) Section 6013(f)(2)(B) is amended by inserting ``and 
     victims of certain terrorist attacks'' before ``on death''.
       (c) Clerical Amendments.--
       (1) The heading of section 692 is amended to read as 
     follows:

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

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

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

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

     SEC. 102. EXCLUSION OF CERTAIN DEATH BENEFITS.

       (a) In General.--Section 101 (relating to certain death 
     benefits) is amended by adding at the end the following new 
     subsection:
       ``(i) Certain Employee Death Benefits Payable by Reason of 
     Death of Certain Terrorist Victims.--
       ``(1) In general.--Gross income does not include amounts 
     (whether in a single sum or otherwise) paid by an employer by 
     reason of the death of an employee who is a specified 
     terrorist victim (as defined in section 692(d)(2)).
       ``(2) Limitation.--Subject to such rules as the Secretary 
     may prescribe, paragraph (1) shall not apply to amounts which 
     would have been payable if the individual had died other than 
     as a specified terrorist victim (as so defined).
       ``(3) Treatment of self-employed individuals.--For purposes 
     of paragraph (1), the term `employee' includes a self-
     employed individual (as defined in section 401(c)(1)).''.
       (b) Effective Date; Waiver of Limitations.--

[[Page 27720]]

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

     SEC. 103. ESTATE TAX REDUCTION.

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

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

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

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

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

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

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

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

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

                   TITLE II--OTHER RELIEF PROVISIONS

     SEC. 201. EXCLUSION FOR DISASTER RELIEF PAYMENTS.

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

     ``SEC. 139. DISASTER RELIEF PAYMENTS.

       ``(a) General Rule.--Gross income shall not include any 
     amount received by an individual as a qualified disaster 
     relief payment.
       ``(b) Qualified Disaster Relief Payment Defined.--For 
     purposes of this section, the term `qualified disaster relief 
     payment' means any amount paid to or for the benefit of an 
     individual--
       ``(1) to reimburse or pay reasonable and necessary 
     personal, family, living, or funeral expenses incurred as a 
     result of a qualified disaster,
       ``(2) to reimburse or pay reasonable and necessary expenses 
     incurred for the repair or rehabilitation of a personal 
     residence or repair or replacement of its contents to the 
     extent that the need for such repair, rehabilitation, or 
     replacement is attributable to a qualified disaster,
       ``(3) by a person engaged in the furnishing or sale of 
     transportation as a common carrier by reason of the death or 
     personal physical injuries incurred as a result of a 
     qualified disaster, or
       ``(4) if such amount is paid by a Federal, State, or local 
     government, or agency or instrumentality thereof, in 
     connection with a qualified disaster in order to promote the 
     general welfare,

     but only to the extent any expense compensated by such 
     payment is not otherwise compensated for by insurance or 
     otherwise.
       ``(c) Qualified Disaster Defined.--For purposes of this 
     section, the term `qualified disaster' means--
       ``(1) a disaster which results from a terroristic or 
     military action (as defined in section 692(c)(2)),
       ``(2) a Presidentially declared disaster (as defined in 
     section 1033(h)(3)),
       ``(3) a disaster which results from an accident involving a 
     common carrier, or from any other event, which is determined 
     by the Secretary to be of a catastrophic nature, or
       ``(4) with respect to amounts described in subsection 
     (b)(4), a disaster which is determined by an applicable 
     Federal, State, or local authority (as determined by the 
     Secretary) to warrant assistance from the Federal, State, or 
     local government or agency or instrumentality thereof.
       ``(d) Coordination With Employment Taxes.--For purposes of 
     chapter 2 and subtitle C, a qualified disaster relief payment 
     shall not be treated as net earnings from self-employment, 
     wages, or compensation subject to tax.
       ``(e) No Relief for Certain Individuals.--Subsections (a) 
     and (f) shall not apply with respect to any individual 
     identified by the Attorney General to have been a participant 
     or conspirator in a terroristic action (as so defined), or a 
     representative of such individual.
       ``(f) Exclusion of Certain Additional Payments.--Gross 
     income shall not include any amount received as payment under 
     section 406 of the Air Transportation Safety and System 
     Stabilization Act.''
       (b) Conforming Amendments.--The table of sections for part 
     III of subchapter B of chapter 1 is amended by striking the 
     item relating to section 139 and inserting the following new 
     items:

``Sec. 139. Disaster relief payments.
``Sec. 140. Cross references to other Acts.''.

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

[[Page 27721]]



     SEC. 202. AUTHORITY TO POSTPONE CERTAIN DEADLINES AND 
                   REQUIRED ACTIONS.

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

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

       ``(a) In General.--In the case of a taxpayer determined by 
     the Secretary to be affected by a Presidentially declared 
     disaster (as defined in section 1033(h)(3)) or a terroristic 
     or military action (as defined in section 692(c)(2)), the 
     Secretary may specify a period of up to one year that may be 
     disregarded in determining, under the internal revenue laws, 
     in respect of any tax liability of such taxpayer--
       ``(1) whether any of the acts described in paragraph (1) of 
     section 7508(a) were performed within the time prescribed 
     therefor (determined without regard to extension under any 
     other provision of this subtitle for periods after the date 
     (determined by the Secretary) of such disaster or action),
       ``(2) the amount of any interest, penalty, additional 
     amount, or addition to the tax for periods after such date, 
     and
       ``(3) the amount of any credit or refund.
       ``(b) Special Rules Regarding Pensions, Etc.--In the case 
     of a pension or other employee benefit plan, or any sponsor, 
     administrator, participant, beneficiary, or other person with 
     respect to such plan, affected by a disaster or action 
     described in subsection (a), the Secretary may specify a 
     period of up to one year which may be disregarded in 
     determining the date by which any action is required or 
     permitted to be completed under this title. No plan shall be 
     treated as failing to be operated in accordance with the 
     terms of the plan solely as the result of disregarding any 
     period by reason of the preceding sentence.
       ``(c) Special Rules for Overpayments.--The rules of section 
     7508(b) shall apply for purposes of this section.''.
       (b) Clarification of Scope of Acts Secretary May 
     Postpone.--Section 7508(a)(1)(K) (relating to time to be 
     disregarded) is amended by striking ``in regulations 
     prescribed under this section''.
       (c) Conforming Amendments to ERISA.--
       (1) Part 5 of subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1131 et 
     seq.) is amended by adding at the end the following new 
     section:

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

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

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

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

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

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

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

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


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

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

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

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

     SEC. 203. APPLICATION OF CERTAIN PROVISIONS TO TERRORISTIC OR 
                   MILITARY ACTIONS.

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

     SEC. 204. CLARIFICATION OF DUE DATE FOR AIRLINE EXCISE TAX 
                   DEPOSITS.

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

     SEC. 205. TREATMENT OF CERTAIN STRUCTURED SETTLEMENT 
                   PAYMENTS.

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

       ``CHAPTER 55--STRUCTURED SETTLEMENT FACTORING TRANSACTIONS

``Sec. 5891. Structured settlement factoring transactions.

     ``SEC. 5891. STRUCTURED SETTLEMENT FACTORING TRANSACTIONS.

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

[[Page 27722]]

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

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

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

     SEC. 206. PERSONAL EXEMPTION DEDUCTION FOR CERTAIN DISABILITY 
                   TRUSTS.

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

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

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

       ``(I) such trust is a disability trust described in 
     subsection (c)(2)(B)(iv), (d)(4)(A), or (d)(4)(C) of section 
     1917 of the Social Security Act (42 U.S.C. 1396p), and
       ``(II) all of the beneficiaries of the trust as of the 
     close of the taxable year are determined to have been 
     disabled (within the meaning of section 1614(a)(3) of the 
     Social Security Act, 42 U.S.C. 1382c(a)(3)) for some portion 
     of such year.

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

TITLE III--TAX BENEFITS FOR AREA OF NEW YORK CITY DAMAGED IN TERRORIST 
                     ATTACKS ON SEPTEMBER 11, 2001

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

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

             ``Subchapter Y--New York Liberty Zone Benefits

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

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

       ``(a) Special Allowance for Certain Property Acquired After 
     September 10, 2001.--
       ``(1) Additional allowance.--In the case of any qualified 
     New York Liberty Zone property--
       ``(A) the depreciation deduction provided by section 167(a) 
     for the taxable year in which such property is placed in 
     service shall include an allowance equal to 30 percent of the 
     adjusted basis of such property, and
       ``(B) the adjusted basis of the qualified New York Liberty 
     Zone property shall be reduced by the amount of such 
     deduction before computing the amount otherwise allowable as 
     a depreciation deduction under this chapter for such taxable 
     year and any subsequent taxable year.
       ``(2) Qualified new york liberty zone property.--For 
     purposes of this subsection--
       ``(A) In general.--The term `qualified New York Liberty 
     Zone property' means property--
       ``(i)(I) to which section 168 applies (other than railroad 
     grading and tunnel bores), or
       ``(II) which is computer software (as defined in section 
     167(f)(1)(B)) for which a deduction is allowable under 
     section 167(a) without regard to this subsection,
       ``(ii) substantially all of the use of which is in the New 
     York Liberty Zone and is in the active conduct of a trade or 
     business by the taxpayer in such Zone,
       ``(iii) the original use of which in the New York Liberty 
     Zone commences with the taxpayer after September 10, 2001, 
     and
       ``(iv) which is acquired by the taxpayer by purchase (as 
     defined in section 179(d)) after

[[Page 27723]]

     September 10, 2001, and placed in service by the taxpayer on 
     or before the termination date, but only if no written 
     binding contract for the acquisition was in effect before 
     September 11, 2001.

     The term `termination date' means December 31, 2006 (December 
     31, 2009, in the case of nonresidential real property and 
     residential rental property).
       ``(B) Exceptions.--
       ``(i) Alternative depreciation property.--The term 
     `qualified New York Liberty Zone property' shall not include 
     any property to which the alternative depreciation system 
     under section 168(g) applies, determined--

       ``(I) without regard to paragraph (7) of section 168(g) 
     (relating to election to have system apply), and
       ``(II) after application of section 280F(b) (relating to 
     listed property with limited business use).

       ``(ii) Qualified leasehold improvement property.--Such term 
     shall not include qualified leasehold improvement property.
       ``(iii) Election out.--If a taxpayer makes an election 
     under this clause with respect to any class of property for 
     any taxable year, this subsection shall not apply to all 
     property in such class placed in service during such taxable 
     year.
       ``(C) Special rules relating to original use.--
       ``(i) Self-constructed property.--In the case of a taxpayer 
     manufacturing, constructing, or producing property for the 
     taxpayer's own use, the requirements of clause (iv) of 
     subparagraph (A) shall be treated as met if the taxpayer 
     begins manufacturing, constructing, or producing the property 
     after September 10, 2001, and before the termination date.
       ``(ii) Sale-leasebacks.--For purposes of subparagraph 
     (A)(iii), if property--

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

     such property shall be treated as originally placed in 
     service not earlier than the date on which such property is 
     used under the leaseback referred to in subclause (II).
       ``(D) Allowance against alternative minimum tax.--The 
     deduction allowed by this subsection shall be allowed in 
     determining alternative minimum taxable income under section 
     55.
       ``(b) 5-Year Recovery Period for Depreciation of Certain 
     Leasehold Improvements.--
       ``(1) In general.--For purposes of section 168, the term 
     `5-year property' includes any qualified leasehold 
     improvement property.
       ``(2) Qualified leasehold improvement property.--For 
     purposes of this section--
       ``(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 building is located in the New York Liberty 
     Zone,
       ``(ii) such improvement is made under or pursuant to a 
     lease (as defined in section 168(h)(7))--

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

       ``(iii) such portion is to be occupied exclusively by the 
     lessee (or any sublessee) of such portion,
       ``(iv) such improvement is placed in service--

       ``(I) after September 10, 2001, and more than 3 years after 
     the date the building was first placed in service, and
       ``(II) before January 1, 2007, and

       ``(v) no written binding contract for such improvement was 
     in effect before September 11, 2001.
       ``(B) Certain improvements not included.--Such term shall 
     not include any improvement for which the expenditure is 
     attributable to--
       ``(i) the enlargement of the building,
       ``(ii) any elevator or escalator,
       ``(iii) any structural component benefiting a common area, 
     and
       ``(iv) the internal structural framework of the building.
       ``(C) Definitions and special rules.--For purposes of this 
     paragraph--
       ``(i) Commitment to lease treated as lease.--A commitment 
     to enter into a lease shall be treated as a lease, and the 
     parties to such commitment shall be treated as lessor and 
     lessee, respectively.
       ``(ii) Related persons.--A lease between related persons 
     shall not be considered a lease. For purposes of the 
     preceding sentence, the term `related persons' means--

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

       ``(D) Improvements made by lessor.--
       ``(i) In general.--In the case of an improvement made by 
     the person who was the lessor of such improvement when such 
     improvement was placed in service, such improvement shall be 
     qualified leasehold improvement property (if at all) only so 
     long as such improvement is held by such person.
       ``(ii) Exception for changes in form of business.--Property 
     shall not cease to be qualified leasehold improvement 
     property under clause (i) by reason of--

       ``(I) death,
       ``(II) a transaction to which section 381(a) applies, or
       ``(III) a mere change in the form of conducting the trade 
     or business so long as the property is retained in such trade 
     or business as qualified leasehold improvement property and 
     the taxpayer retains a substantial interest in such trade or 
     business.

       ``(3) Requirement to use straight line method.--The 
     applicable depreciation method under section 168 shall be the 
     straight line method in the case of qualified leasehold 
     improvement property.
       ``(4) 9-year recovery period under alternative system.--For 
     purposes of section 168(g), the class life of qualified 
     leasehold improvement property shall be 9 years.
       ``(c) Increase in Expensing Under Section 179.--
       ``(1) In general.--For purposes of section 179--
       ``(A) the limitation under section 179(b)(1) shall be 
     increased by the lesser of--
       ``(i) $35,000, or
       ``(ii) the cost of section 179 property which is qualified 
     New York Liberty Zone property placed in service during the 
     taxable year, and
       ``(B) the amount taken into account under section 179(b)(2) 
     with respect to any section 179 property which is qualified 
     New York Liberty Zone property shall be 50 percent of the 
     cost thereof.
       ``(2) Recapture.--Rules similar to the rules under section 
     179(d)(10) shall apply with respect to any qualified New York 
     Liberty Zone property which ceases to be used in the New York 
     Liberty Zone.
       ``(d) Tax-Exempt Bond Financing.--
       ``(1) In general.--For purposes of this title, any 
     qualified New York Liberty Bond shall be treated as an exempt 
     facility bond.
       ``(2) Qualified new york liberty bond.--For purposes of 
     this subsection, the term `qualified New York Liberty Bond' 
     means any bond issued as part of an issue if--
       ``(A) 95 percent or more of the net proceeds (as defined in 
     section 150(a)(3)) of such issue are to be used for qualified 
     project costs,
       ``(B) such bond is issued by the State of New York or any 
     political subdivision thereof,
       ``(C) the Governor of New York designates such bond for 
     purposes of this section, and
       ``(D) such bond is issued during calendar year 2002, 2003, 
     or 2004.
       ``(3) Limitation on amount of bonds designated.--The 
     maximum aggregate face amount of bonds which may be 
     designated under this subsection shall not exceed 
     $15,000,000,000.
       ``(4) Qualified project costs.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified project costs' means 
     the cost of acquisition, construction, reconstruction, and 
     renovation of--
       ``(i) nonresidential real property and residential rental 
     property (including fixed tenant improvements associated with 
     such property) located in the New York Liberty Zone, and
       ``(ii) public utility property located in the New York 
     Liberty Zone.
       ``(B) Costs for certain property outside zone included.--
     Such term includes the cost of acquisition, construction, 
     reconstruction, and renovation of nonresidential real 
     property (including fixed tenant improvements associated with 
     such property) located outside the New York Liberty Zone but 
     within the City of New York, New York, if such property is 
     part of a project which consists of at least 100,000 square 
     feet of usable office or other commercial space located in a 
     single building or multiple adjacent buildings.
       ``(C) Limitations.--Such term shall not include--
       ``(i) costs for property located outside the New York 
     Liberty Zone to the extent such costs exceed $7,000,000,000,
       ``(ii) costs with respect to residential rental property to 
     the extent such costs exceed $3,000,000,000, and
       ``(iii) costs with respect to property used for retail 
     sales of tangible property to the extent such costs exceed 
     $1,500,000,000.
       ``(D) Movable fixtures and equipment.--Such term shall not 
     include costs with respect to movable fixtures and equipment.
       ``(5) Special rules.--In applying this title to any 
     qualified New York Liberty Bond, the following modifications 
     shall apply:
       ``(A) Section 146 (relating to volume cap) shall not apply.
       ``(B) Section 147(c) (relating to limitation on use for 
     land acquisition) shall be determined by reference to the 
     aggregate authorized face amount of all qualified New York 
     Liberty Bonds rather than the net proceeds of each issue.
       ``(C) Section 147(d) (relating to acquisition of existing 
     property not permitted) shall be applied by substituting `50 
     percent' for `15 percent' each place it appears.
       ``(D) Section 148(f)(4)(C) (relating to exception from 
     rebate for certain proceeds to be used to finance 
     construction expenditures) shall apply to construction 
     proceeds of bonds issued under this section.
       ``(E) Financing provided by such a bond shall not be taken 
     into account under section 168(g)(5)(A) with respect to 
     property substantially all of the use of which is in the New 
     York Liberty Zone and is in the active conduct of a trade or 
     business by the taxpayer in such Zone.
       ``(F) Repayments of principal on financing provided by the 
     issue--
       ``(i) may not be used to provide financing, and
       ``(ii) are used not later than the close of the 1st 
     semiannual period beginning after the date of the repayment 
     to redeem bonds which are part of such issue.


[[Page 27724]]


     The requirement of clause (ii) shall be treated as met with 
     respect to amounts received within 10 years after the date of 
     issuance of the issue (or, in the case of refunding bond, the 
     date of issuance of the original bond) if such amounts are 
     used by the close of such 10 years to redeem bonds which are 
     part of such issue.
       ``(G) Section 57(a)(5) shall not apply.
       ``(6) Separate issue treatment of portions of an issue.--
     This subsection shall not apply to the portion of the 
     proceeds of an issue which (if issued as a separate issue) 
     would be treated as a qualified bond or as a bond that is not 
     a private activity bond (determined without regard to 
     subsection (a)), if the issuer elects to so treat such 
     portion.
       ``(e) Extension of Replacement Period for Nonrecognition of 
     Gain.--Notwithstanding subsections (g) and (h) of section 
     1033, clause (i) of section 1033(a)(2)(B) shall be applied by 
     substituting `5 years' for `2 years' with respect to property 
     which is compulsorily or involuntarily converted as a result 
     of the terrorist attacks on September 11, 2001, in the New 
     York Liberty Zone but only if substantially all of the use of 
     the replacement property is in the City of New York, New 
     York.
       ``(f) New York Liberty Zone.--For purposes of this section, 
     the term `New York Liberty Zone' means the area located on or 
     south of Canal Street, East Broadway (east of its 
     intersection with Canal Street), or Grand Street (east of its 
     intersection with East Broadway) in the Borough of Manhattan 
     in the City of New York, New York.''
       (b) Clerical Amendment.--The table of subchapters for 
     chapter 1 is amended by adding at the end the following new 
     item:

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

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

     SEC. 401. DISCLOSURE OF TAX INFORMATION IN TERRORISM AND 
                   NATIONAL SECURITY INVESTIGATIONS.

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

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

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

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

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

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

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

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

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

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

     The head of such Federal agency may disclose such information 
     to officers and employees of such agency to the extent 
     necessary to investigate or respond to such terrorist 
     incident, threat, or activity.
       ``(E) Termination.--No disclosure may be made under this 
     paragraph after December 31, 2003.''.
       (c) Conforming Amendments.--
       (1) Section 6103(a)(2) is amended by inserting ``any local 
     law enforcement agency receiving information under subsection 
     (i)(7)(A),'' after ``State,''.
       (2) Section 6103(b) is amended by adding at the end the 
     following new paragraph:
       ``(11) Terrorist incident, threat, or activity.--The term 
     `terrorist incident, threat, or activity' means an incident, 
     threat, or activity involving an act of domestic terrorism 
     (as defined in section 2331(5) of title 18, United States 
     Code) or international terrorism (as defined in section 
     2331(1) of such title).''.

[[Page 27725]]

       (3) The heading of section 6103(i)(3) is amended by 
     inserting ``or terrorist'' after ``criminal''.
       (4) Paragraph (4) of section 6103(i) is amended--
       (A) in subparagraph (A) by inserting ``or (7)(C)'' after 
     ``paragraph (1)'', and
       (B) in subparagraph (B) by striking ``or (3)(A)'' and 
     inserting ``(3)(A) or (C), or (7)''.
       (5) Paragraph (6) of section 6103(i) is amended--
       (A) by striking ``(3)(A)'' and inserting ``(3)(A) or (C)'', 
     and
       (B) by striking ``or (7)'' and inserting ``(7), or (8)''.
       (6) Section 6103(p)(3) is amended--
       (A) in subparagraph (A) by striking ``(7)(A)(ii)'' and 
     inserting ``(8)(A)(ii)'', and
       (B) in subparagraph (C) by striking ``(i)(3)(B)(i)'' and 
     inserting ``(i)(3)(B)(i) or (7)(A)(ii)''.
       (7) Section 6103(p)(4) is amended--
       (A) in the matter preceding subparagraph (A)--
       (i) by striking ``or (5),'' the first place it appears and 
     inserting ``(5), or (7),'', and
       (ii) by striking ``(i)(3)(B)(i),'' and inserting 
     ``(i)(3)(B)(i) or (7)(A)(ii),'', and
       (B) in subparagraph (F)(ii) by striking ``or (5),'' the 
     first place it appears and inserting ``(5) or (7),''.
       (8) Section 6103(p)(6)(B)(i) is amended by striking 
     ``(i)(7)(A)(ii)'' and inserting ``(i)(8)(A)(ii)''.
       (9) Section 6105(b) is amended--
       (A) by striking ``or'' at the end of paragraph (2),
       (B) by striking ``paragraphs (1) or (2)'' in paragraph (3) 
     and inserting ``paragraph (1), (2), or (3)'',
       (C) by redesignating paragraph (3) as paragraph (4), and
       (D) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) to the disclosure of tax convention information on 
     the same terms as return information may be disclosed under 
     paragraph (3)(C) or (7) of section 6103(i), except that in 
     the case of tax convention information provided by a foreign 
     government, no disclosure may be made under this paragraph 
     without the written consent of the foreign government, or''.
       (10) Section 7213(a)(2) is amended by striking 
     ``(i)(3)(B)(i),'' and inserting ``(i)(3)(B)(i) or 
     (7)(A)(ii),''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to disclosures made on or after the date of the 
     enactment of this Act.

           TITLE V--NO IMPACT ON SOCIAL SECURITY TRUST FUNDS

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

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

  The amendment (No. 2689) was agreed to.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted and Proposed.'')
  Mr. TORRICELLI. I express my thanks to Senator Daschle, Senator Lott, 
Senator Baucus, Senator Grassley, Senator Nickles, and so many Members 
of the Senate who made this possible. I know during this Christmas 
season that the plight and distress of the families of those who lost 
their lives in Virginia, New York, New Jersey, and Pennsylvania will be 
in all of our thoughts. That really is not enough.
  Charities have raised an enormous amount of money, but it has not 
gotten to the victims' families. There is a victims' fund this 
Government has raised, but it has not yet gotten to these victims' 
families. This tax relief offers real and immediate benefits. It has 
the promise that as American citizens give funds to charities, the 
funds from those charities will not in turn be taxed as they get to the 
widows, the parents, or other relatives. It holds the promise that 
there will be a refund given to many of these families.
  Offering financial relief is little solace given such enormous pain, 
but it is of some help. Families who have buried their loved ones are 
also paying mortgages, tuition, and buying groceries. This is real 
help.
  I am grateful to the Members of the Senate who have helped pass this 
legislation. I am grateful to Chairman Thomas of the House Ways and 
Means Committee who has been with us as an architect in its passage.
  I express on behalf of all the families for whom this means so much 
in this holiday season their gratitude to all of you who have made this 
possible. I yield the floor.
  The PRESIDING OFFICER (Ms. Cantwell). The majority leader.
  Mr. DASCHLE. Madam President, I thank both Senators from New Jersey 
for their extraordinary work in getting us to this point. This was not 
easy, and I am grateful to them for their persistence, their 
leadership, and their efforts. This would not have happened were it not 
for their direct involvement to this moment. I say the same to the 
Senators from New York for the tremendous work they have done assisting 
us in getting to this point as well.
  The PRESIDING OFFICER. The Republican leader.
  Mr. LOTT. Madam President, I will be brief because I know we want to 
finish up the debate on the Defense appropriations conference report 
and get a recorded vote. There are Senators who would like that to 
occur sooner rather than later, so I will not belabor the point.
  I am glad we worked out the agreement on the victims' disaster of 
September 11. I appreciate the cooperation all the way around. One can 
tell by the discussion that one of the reasons some of these other 
meritorious items were not added is that once we had one, there would 
be two, three, four, and we could not get all those worked out in the 
short time we had, and we stood the chance of losing the victims' tax 
provisions. I am glad we did that.
  Also, I understand many of these provisions, including the New York 
provision, are in the stimulus package that has been voted on by the 
House. We are going to eventually get a stimulus package, and I hope 
and expect that provision will be in the bill.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. CORZINE. I thank the Chair.
  Madam President, I, too, thank the Senate and the leadership of 
Senator Daschle, Senator Lott, the chairman of the House Ways and Means 
Committee, Senator Baucus, and others who have worked with us to allow 
this victims' relief effort to come to pass.
  Nothing can be more sincere and heartfelt during this holiday season 
than to respond with this legislation for families who have lost so 
much.
  I thank the Senate for its efforts.

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