[Congressional Record (Bound Edition), Volume 147 (2001), Part 5]
[Senate]
[Pages 6501-6506]
[From the U.S. Government Publishing Office, www.gpo.gov]



          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. LIEBERMAN:
  S. 798. A bill to amend the Internal Revenue Code of 1986 to allow 
small business employers certain credits against income tax, and for 
other purposes; to the Committee on Finance.
  Mr. LIEBERMAN. Mr. President, I rise today to introduce legislation, 
the Productivity, Opportunity, and Prosperity Act of 2001, that I 
believe will add some needed POP to our economy and that must be an 
integral component of any strategy to extend our historic economic 
growth.
  The primary goal of the Productivity, Opportunity, and Prosperity Act 
is to protect, stimulate and expand economic growth. Government's role 
is not to create jobs but to help create the environment in which the 
private sector will create jobs. This legislation helps to create the 
right context for private sector growth by providing incentives for 
investment in training, technology, and small entrepreneurial firms. 
These investments are critical to economic growth and the creation of 
jobs and wealth.
  The Productivity, Opportunity, and Prosperity Act of 2001 is a tax 
package with a purpose. And that purpose is, above all else, to 
stimulate private sector economic growth, to raise the tide that lifts 
the lot of all Americans. In the spirit of the ``New Economy,'' where 
the fundamentals of our economy have changed through entrepreneurship 
and innovation, this package includes business tax incentives that will 
spur the real drivers of growth: innovation, investment, a skilled 
workforce, and productivity.
  The first component of this bill is a 30 percent tax credit for 
companies that invest in remedial education for their employees. Many 
companies today recognize that a skilled workforce is critical to 
success and they are eager to invest continuously in their employees. 
However, too often those companies seeking to upgrade worker skills are 
having to first make sizeable investments to simply make up for the 
skill deficits produced by the K-12 education system. For example, in 
my home state of Connecticut, I am aware of one small manufacturer with 
25 employees that will train 20 of them in English as a Second Language 
at a cost of up to $15,000. That is a significant investment and 
commitment by that company. Because too many workers did not learn the 
basic math, reading, and language skills in school, companies have to 
fix these deficiencies first, before they can train their workers on 
more advanced skills. This credit will help to offset those 
investments.
  The bill's second component is a Small Business Digital Divide Tax 
Credit. It would create a 10 percent tax credit for small businesses, 
those with fewer than 100 employees, to encourage investment in 
information technology, for example servers, network hardware, initial 
broadband hookup, PCs, and e-Business software. This credit is critical 
for two reasons. First, because there is truly a small business digital 
divide in this country. Small firms are lagging in the productivity 
growth that has driven the economic boom of the late 90s. While small 
businesses account for 40 percent of our economy and 60 percent of the 
new jobs, less than one-third of them are wired to the Internet today. 
Those that are wired have grown 46 percent faster than their 
counterparts who are unplugged. A recent study by the National 
Association of Manufacturers, NAM, shows that those small manufacturers 
surveyed averaged only about 2 percent of their sales over internet and 
less than 1 percent were in the advanced stages of e-commerce. Without 
expanding productivity improvements to small businesses, we cannot hope 
to sustain the economic growth of the last several years.
  The second reason this credit is so important, is that it provides an 
immediate stimulus to our slowing economy. We know today that there has 
been a sharp downturn in technology-related capital spending that has 
helped power our economic growth. For example, Cisco Systems, whose 
products provide the foundation for our digital environment, estimates 
that its sales for the current quarter would be about 30 percent lower 
than the previous quarter and that they would fall again next quarter. 
By some projections, PC sales in this country this year will slow 
dramatically to virtually zero growth. In order to spur near term 
investment and provide an economic stimulus, this credit would be 
available immediately after enactment and through the end of 2002.
  This bill's third component recognizes that entrepreneurship drives 
growth and that small, emerging companies need capital investment to 
innovate, create jobs, and create wealth. According to the National 
Commission on Entrepreneurship, a small subset of entrepreneurial firms 
that comprise only 5-15 percent of all U.S. businesses created about 
two-thirds of new jobs between 1993-96. Although venture capital is 
critical to the transition from a fledgling company to a growth 
company, only a small share of it is associated with small and new 
firms. In addition, we are currently experiencing a venture capital 
slow down that makes it even more difficult for small and new firms to 
attract capital. According to the National Venture Capital Association 
(NCVA), investment in the fourth quarter of last year slowed by more 
than 30 percent from the previous quarter.




  For these reasons, the bill creates a zero capital gains rate for 
new, direct, long term investments by individuals and corporations in 
the stock of small businesses, those emerging, entrepreneurial 
companies that are core to our economic growth. Specifically, this 
legislation excludes from capital gains taxes 100 percent of new, long-
term investments in these capital-intensive small businesses. It also 
changes the eligibility definition of a small business from $50 million 
in capitalization to $300 million while reducing the holding period for 
investments from 5 to 3 years. In addition, it also eliminates 
incentive stock options from the calculation of the Alternative Minimum

[[Page 6502]]

Tax to help high tech employers recruit and retain the skilled 
professionals that are critical to competitiveness in a knowledge 
economy.
  Finally, the bill's fourth component reduces the tax depreciation 
period for semiconductor manufacturing equipment from five years to 
three years, which more closely reflects the actual life of the 
equipment. I believe this component is essential because we know that 
advances in semiconductor technology improve productivity throughout 
the economy. The pace of innovation in the semiconductor industry is 
among the fastest of any U.S. or global industry. Following Moore's 
Law, the semiconductor industry has been quadrupling the number of 
transistors on a chip every three years and studies show that chip 
manufacturing equipment quickly becomes obsolete as these new 
generations of chips are introduced. Semiconductor companies spend a 
greater percentage of their sales on R&D and capital equipment than any 
other industry. Last year, the U.S. semiconductor industry spent 18 
percent of its sales on capital investment and 14 percent on R&D. More 
than 30 percent of this sector's revenue are invested in the future and 
building the New Economy. To promote economic strength, we can no 
longer afford to penalize the semiconductor manufacturing equipment 
industry with tax law that requires a five year cost recovery.
  Ten years from now we will be judged by the economic policy decisions 
we make today. People will ask, did we fully understand the awesome 
changes taking place in our economy and in our society? Did we give our 
industry and workers the environment and the tools they need to seize 
the opportunities an innovation economy offers? I believe that a true 
Prosperity Agenda is within our grasp. Never before has America been in 
a stronger position--economically, socially, or politically--to shape 
our future. But it will take strong and focused leadership. I am 
confident that if we in the public sector in Washington work in 
partnership with the private sector throughout our country, we can 
truly say of America's future that the best is yet to come. I believe 
that the Productivity, Opportunity, and Prosperity Act of 2001 is an 
important step toward that future.
                                 ______
                                 
      By Mr. DURBIN (for himself, Mr. Voinovich, Mr. Cleland, Mr. 
        Kerry, Mr. Reid, Mr. Feingold, and Ms. Mikulski):
  S. 799. A bill to prohibit the use of racial and other discriminatory 
profiling in connection with searches and detentions of individuals by 
the United States Customs Service personnel, and for other purposes; to 
the Committee on Finance.
  Mr. DURBIN. Mr. President, I rise today to reintroduce the Reasonable 
Search Standards Act. This Act prohibits racial or other discriminatory 
profiling by Customs Service personnel. I am please that Senator 
Voinovich is an original cosponsor of this bipartisan legislation.
  Last year, I released a study, conducted by GAO at my request, of the 
U.S. Customs Service's procedures for conducting inspections of airport 
passengers. The need for this study grew out of an investigative report 
by Renee Ferguson of WMAQ-TV in Chicago and several complaints from 
African-American women in my home state of Illinois who were strip-
searched at O'Hare Airport for suspicion of carrying drugs. No drugs 
were found and the women felt that they had been singled out for these 
highly intrusive searches because of their race. These women, 
approximately 100 of them, have filed a class action law suit in 
Chicago.
  The purpose of the GAO study was to review Customs' policies and 
procedures for conducting personal searches of airport passengers and 
to determine the internal controls in place to ensure that airline 
passengers are not inappropriately targeted or subjected to personal 
searches. Approximately 140 million passengers entered the United 
States on international flights during fiscal years 1997 and 1998. 
Because there is no data available on the gender, race and citizenship 
of this traveling population, GAO was not able to determine whether 
specific groups of passengers are disproportionately selected to be 
searched. However, once passengers are selected for searches, GAO was 
able to evaluate the likelihood that people with various race and 
gender characteristics would be subjected to searches that are more 
personally intrusive, such as strip-searches and x-rays, rather than 
simply being frisked or patted down.
  The GAO study revealed some very troubling patterns in the searches 
conducted by U.S. Customs Service inspectors. GAO found disturbing 
disparities in the likelihood that passengers from certain population 
groups, having been selected for some form of search, would be 
subjected to the more intrusive searches, including strip-searches and 
x-ray searches. Moreover, that increased likelihood of being 
intrusively searched did not always correspond to an increased 
likelihood of actual carrying contraband.
  Because of the intrusive nature of strip-searches and x-ray searches, 
it is important that the Customs Service avoid any discriminatory bias 
in forcing passengers to undergo these searches. GAO found that 
African-American women were much more likely to be strip-searched than 
most other passengers. This disproportionate treatment was not 
justified by the rate at which these women were found to be carrying 
contraband.
  Certain other groups also experienced a greater likelihood of being 
strip-searched relative to their likelihood of being found carrying 
contraband. Specifically, African-American women were nearly 3 times as 
likely as African-American men to be strip-searched, even though they 
were only half as likely to be found carrying contraband. Hispanic-
American and Asian-American women were also nearly 3 times as likely as 
Hispanic-American and Asian-American men to be strip-searched, even 
though they were 20 percent less likely to be found carrying 
contraband. In addition, African-American women were 73 percent more 
likely than White-American women to be strip-searched in 1998 and 
nearly 3 times as likely to be strip-searched in 1997, despite only a 
42 percent higher likelihood of being found carrying contraband. 
Moreover, among non-citizens, White men and women were more likely to 
be strip-searched than Black and Hispanic men and women, despite lower 
rates of being found carrying contraband.
  As with strip-searches, x-rays are personally intrusive and it is of 
particular concern that the Customs Service avoid any discriminatory 
bias in requiring x-ray searches of passengers suspected of carrying 
contraband. GAO found that African-Americans and Hispanic-Americans 
were much more likely to be x-rayed than other passengers. This 
disproportionate treatment was not justified by the rate at which these 
passengers were found to be carrying contraband. Specifically, GAO 
found that African-American women were nearly 9 times as likely as 
White-American women to be x-rayed even though they were half as likely 
to be carrying contraband. African-American men were nearly 9 times as 
likely as White-American men to be x-rayed, even though they were no 
more likely than White-American men to be carrying contraband. 
Moreover, Hispanic-American women and men were nearly 4 times as likely 
as White-American women and men to be x-rayed, even though they were 
only a little more than half as likely to be carrying contraband. And 
among non-citizens, Black women and men were more than 4 times as 
likely as White women and men to be x-rayed, even though Black women 
were only half as likely and Black men were no more likely to be found 
carrying contraband.
  For these reasons, we are reintroducing the Reasonable Search 
Standards Act. This bill is a direct response to the concerns raised by 
the GAO report. The bill prohibits Customs Service personnel from 
selecting passengers for searches based in whole or in part on the 
passenger's actual or perceived race, religion, gender, national 
origin, or sexual orientation. To ensure that a sound reason exists for 
selecting someone to be searched, the bill requires Customs Service 
personnel to document the reasons for searching a passenger before the 
passenger is searched.

[[Page 6503]]

The only exception to this requirement is when the Customs official 
suspects that the passenger is carrying a weapon.
  The bill also requires all Customs Service personnel to undergo 
periodic training on the procedures for searching passengers, with a 
particular emphasis on the prohibition of profiling. The training shall 
include a review of the reasons given for searches, the results of the 
searches and the effectiveness of the criteria used by Customs to 
select passengers for searches. Finally, the bill calls for an annual 
study and report on detentions and searches of individuals by Customs 
Service personnel. The report shall include the number of searches 
conducted by Customs Service personnel, the race and gender of 
travelers subjected to the searches, the type of searches conducted--
including pat down searches and intrusive non-routine searches--and the 
results of these searches.
  Since the release of the GAO report, the Customs Service has assured 
me that improvements have been made to ``. . . better gather and 
analyze data, and to improve search procedures and results.'' These 
changes, along with better training of Customs Service personnel, will 
not only prevent unfair profiling practices, but will actually improve 
the effectiveness of operations at Customs. I commend former 
Commissioner Kelly for his quick response to the concerns raised by the 
GAO study and for implementing changes to the Customs Service's 
personal search policies.
  The legislation we are introducing today will ensure that such 
progress continues, and is reported to Congress on a periodic basis. 
The Reasonable Search Standards Act will make the task at Customs 
easier by ensuring that a key federal service--one where profiling 
practices have already been demonstrated--remains focused on improving 
its personal search procedures and eliminating any practices that bear 
even the slightest resemblance to racial profiling.
  President Bush and Attorney General Ashcroft have both said that 
ending racial profiling will be a high priority for this 
Administration. We applaud their commitment to this important issue. We 
have written a letter to President Bush, co-signed by Representatives 
Lewis and Houghton, to commend the President's attention to racial 
profiling, and to urge him to support the Reasonable Search Standards 
Act. Similar letters have been sent to Attorney General Ashcroft and to 
Treasury Secretary O'Neill. This is not a black, or brown, or white 
issue. It is not a Republican or a Democratic issue. Racial profiling 
is an affront to all Americans. Allowing it to continue would diminish 
democracy for all Americans.
  Martin Luther King had a dream that the United States would become a 
nation where children would not be judged by the color of their skin 
but by the content of their character. We still have a long road to 
travel to make Dr. King's dream a full reality for all people. The 
Reasonable Search Standards Act is one step along that road. I urge my 
colleagues to support this important piece of legislation.
  I ask unanimous consent that the letter sent to President Bush be 
printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                Congress of the United States,

                                    Washington, DC, April 6, 2001.
     Hon. George W. Bush,
     The White House,
     Washington, DC.
       Dear President Bush: We are writing to commend you and 
     Attorney General Ashcroft for the priority your 
     administration has given to the issue of racial profiling, 
     and to seek your assistance regarding ongoing efforts to 
     address this issue in the U.S. Customs Service. The insidious 
     practice of racial profiling undermines public confidence in 
     law enforcement and damages the credibility of police forces 
     around the country, even though the vast majority of police 
     are carrying out their duties responsibly and professionally. 
     Most importantly, racial profiling creates an atmosphere of 
     distrust and alienation that isolates broad segments of the 
     American population.
       As you know, this issue affects federal, as well as state 
     and local law enforcement activities. In fact, a GAO study of 
     profiling practices of airline passengers concluded that the 
     U.S. Customs Service was intrusively searching African-
     American women and other minorities for contraband at much 
     higher rates than they searched other segments of the 
     population. Ironically, the women being targeted were 
     statistically less likely than other passengers to be found 
     carrying contraband.
       Commissioner Kelly quickly responded to the concerns raised 
     by the GAO study by implementing significant changes to the 
     Customs Service's personal search policies and data 
     collection activities. The Customs Service is to be commended 
     for its responsiveness that, we hope, will eventually 
     eliminate the practice or appearance of discrimination. Your 
     continued attention to this issue will insure that the rapid 
     pace of progress that the Customs Service has already made on 
     the issue of racial profiling will continue unabated. To that 
     end, we ask, first, that you quickly nominate someone who 
     shares your commitment to the issue of racial profiling to 
     the position of Commissioner of Customs.
       We also introduced Customs search legislation to 
     specifically address the issue by codifying some of the 
     changes already made by the Customs Service, and adding a 
     modest reporting requirement. The legislation would prohibit 
     the use of race, gender or other inappropriate criteria as 
     the basis for Customs Service selection of people for 
     searches or detention, and require Customs to improve its 
     record-keeping and analysis, institute periodic training, and 
     report annually to Congress. There is every indication that 
     these types of measures will help the Customs Service make 
     more effective use of its resources, and avoid unwarranted 
     searches.
       We are reintroducing these companion bills to address 
     profiling in the Customs Service and hope that you will work 
     with Congress to insure their passage as part of your effort 
     to bring an end to the inexcusable practice of racial 
     profiling.
           Sincerely,
     Richard J. Durbin,
       U.S. Senator.
     George V. Voinovich,
       U.S. Senator.
     John Lewis,
       Member of Congress.
     Amo Houghton,
       Member of Congress.

                                 ______
                                 
      By Mrs. FEINSTEIN:
  S. 800. A bill to provide for post conviction DNA testing, to 
establish a competent counsel grant program, and other purpose; to the 
Committee on Judiciary.
  Mrs. FEINSTEIN. Mr. President, I rise to introduce the Criminal 
Justice Integrity and Innocence Protection Act of 2001.
  It is my hope that this bill will jump-start the process of ensuring 
that every innocent prisoner in this nation has access to DNA testing 
that could set them free, and that every criminal defendant has access 
to truly competent counsel.
  This is not the first bill to be introduced on this issue.
  My good friend from Vermont and ranking member of the Judiciary 
Committee, Senator Leahy, has twice introduced his Innocence Protection 
Act, with an impressive and bipartisan group of supporters behind the 
bill. I commend him for his work on this issue, and I look forward to 
continuing to work with him to see a bill pass.
  But I have had some concerns with certain provisions of the Leahy 
bill, concerns that make it impossible for me to support the bill as 
currently drafted.
  Also last year, the chairman of the Judiciary Committee, Senator 
Hatch, addressed the DNA issue in a bill of his own. However, that bill 
did not include provisions on competent counsel, something that I very 
strongly feel should be included.
  So the real aim of my effort is to start moving this process forward. 
It has been well over a year since these bills were first discussed, 
and no real action has taken place. There are differences of opinion on 
how to move forward on this issue, and I fully understand how committed 
each side is to their position.
  But I believe that these differences of opinion will continue to 
prevent the Senate from considering this issue for the foreseeable 
future, unless something is done to break the stalemate.
  In the hopes of doing just that, breaking the stalemate, last year, I 
invited both Senator hatch and Senator Leahy together, to try to 
resolve the differences between their two approaches. We had a 
constructive meeting, and some progress was made.
  Since that time, each of us has gone back and forth with suggestions 
and

[[Page 6504]]

criticisms of various ideas, and our staffs have been working 
diligently on trying to craft a solution to the impasse.
  Nevertheless, time continues to run without action.
  So today, I am introducing what I believe is a good compromise on 
this issue, a piece of legislation, based on our discussions, that I 
hope will spur debate, and provide a major step forward on this issue.
  Essentially, the legislation I am introducing today does two things.
  First, the bill provides a procedure by which prisoners who might be 
able to prove their innocence with the use of new DNA technology can do 
so.
  The bill contains safeguards, of course, so that frivolous requests 
will be minimized.
  For instance, prisoners have to demonstrate that biological evidence 
does exist that could possibly prove them innocent, and they must show 
that DNA testing was unavailable to them at the time of trial.
  But overall, the bill will allow for the testing of inmates where 
evidence could lead to their exoneration.
  If DNA testing proves innocence, the judge can release the prisoner 
immediately or, if there are other crimes of which the defendant may 
have been guilty, the judge can determine the best way to proceed in 
the case.
  Second, the bill also addresses the issue of competent counsel, 
through the establishment of independent, national standards for legal 
representation in capital cases.
  Specifically, this legislation directs the State Justice Institute to 
study this issue and to develop standards for competent counsel in 
capital cases.
  The bill then authorizes grants to states that agree to adopt those 
standards.
  The State Justice Institute has long served as a neutral facilitator 
between the state and federal judicial systems, and the bill would 
allow them to work with judges, prosecutors, and defense attorneys 
alike to develop a model system for standards in these cases.
  The combination of these two parts of the bill, competent counsel 
standards and DNA testing, will serve as powerful tools in restoring 
the public's confidence in the integrity of our judicial system.
  I support the death penalty, and I have for a long time. And I have 
spent much of my public career trying to ensure that guilty people face 
the consequences of their actions.
  But we must protect the innocent from a system of justice that can 
make mistakes. That is what this bill is all about, and that is why I 
hope we can move quickly to debate this issue fairly, with all opinions 
on the table, and move forward towards passage of a reasoned, strong 
bill.
                                 ______
                                 
      By Mr. JEFFORDS (for himself, Mr. Conrad, Mr. Murkowski, Mr. 
        Hatch, and Mr. Breaux):
  S. 801. A bill to amend the Internal Revenue Code of 1986 to repeal 
the limitation on the use of foreign tax credits under the alternative 
minimum tax; to the Committee on Finance.
  Mr. JEFFORDS. Mr. President, today I am joining with four of my 
colleagues on the Finance Committee, Senators Conrad, Murkowski, Hatch 
and Breaux, to introduce a bill that will eliminate an aspect of our 
tax laws that is fundamentally unfair to taxpayers with income from 
foreign sources.
  Under our system of taxation, United States citizens and domestic 
corporations are subject to tax on income they earn from sources 
outside the United States. In all likelihood, foreign-source income 
will also be subject to tax by the country where it was earned. Absent 
an Internal Revenue Code measure providing for other treatment, the 
same income could be taxed twice, by two different countries. The tax 
code does have a provision to address this problem of double taxation: 
the foreign tax credit. This credit allows taxpayers to offset 
otherwise payable U.S. taxes with foreign taxes paid on the same 
foreign-source income. Like the other provisions governing 
international taxation, the details of the foreign tax credit are 
complex. The basic principle underlying the credit, however, is simple: 
relief from double taxation.
  The alternative minimum tax, AMT, requires taxpayers to compute their 
taxes twice, once under the ``regular'' method, and once using the AMT 
calculation. As a rule, taxpayers pay the larger of these two 
computations. When taxpayers become subject to the AMT, the protection 
against double taxation is undermined. In the ``regular'' tax 
computation, foreign tax credits protect against double taxation. This 
protection is only partial under AMT rules, however, where the 
allowable foreign tax credit is limited to 90 percent of a taxpayer's 
AMT liability. This limitation means that income subject to foreign tax 
is also subject to U.S. tax.
  There is no sound policy reason for denying relief from double 
taxation under the AMT. When first enacted, the AMT was designed to 
ensure that taxpayers claiming various tax ``preferences'' allowed by 
the Internal Revenue Code should pay a minimum amount of tax. The 
foreign tax credit is not a ``preference'' serving an incentive for a 
particular activity or behavior. Rather, it merely reflects the 
fundamental principle that income should not be subject to multiple 
taxation. The 90 percent limitation was enacted as part of the 1986 tax 
reform bill, solely for the purpose of raising revenue. The bill that 
we're introducing today will eliminate the AMT's 90 percent limitation 
on foreign tax credits. Elimination of this limitation will mean that 
taxpayers subject to the AMT will get the same protection against 
double taxation allowed to taxpayers subject to the regular tax.
  Repeal of the limit on foreign tax credits is not a revolutionary 
idea. In fact, Congress repealed the limitation in the Taxpayer Refund 
and Relief Act of 1999, which was subsequently vetoed. Legislation 
similar to the bill I'm introducing today has also been introduced in 
the House of Representatives. At this point in time, it is questionable 
whether the AMT still serves a valid purpose. In fact, in a study 
released last week, the Joint Committee on Taxation concluded that both 
the corporate and individual AMT should be repealed. In any event, the 
AMT's treatment of foreign tax credits serves no valid purpose. The 90 
percent limitation on foreign tax credits is probably the most unfair 
aspect of the corporate AMT. Even those unwilling to support wholesale 
AMT repeal should support elimination of this most unfair aspect of the 
AMT. In the age of globalization, the AMT limitation on foreign tax 
credits can put U.S. corporations at a competitive disadvantage with 
their foreign rivals. The time has come to repeal this unfair tax 
provision.
                                 ______
                                 
      By Mr. BINGAMAN:
  S. 802. A bill to assist low income taxpayers in preparing and filing 
their tax returns and to protect taxpayers from unscrupulous refund 
anticipation loan providers, and for other purposes; to the Committee 
on Finance.
  Mr. BINGAMAN. Mr. President, I rise today to introduce the Low Income 
Taxpayer Protection Act of 2001. This legislation, if enacted, will 
assist low and moderate income taxpayers with the annual task of 
preparing their tax returns and give them some protection from 
exploitive refund anticipation loans. RALs are high interest loans 
offered to taxpayers who are entitled to a refund. Recently, an article 
ran in the Albuquerque Journal about taxpayer abuses that were 
particularly acute near the Navajo Reservation in Gallup, New Mexico. 
While many taxpayers benefit from these loans, many more are hurt by 
outrageously high interest rates and fees. Worse, many taxpayers get 
caught with outstanding loans that they can't pay off because a mistake 
was made on their tax return resulting in a smaller than anticipated 
refund. Many of these loans, when annualized, have interest rates over 
200 percent.
  The majority of these loan recipients are low to moderate income 
taxpayers, many of whom receive an earned income tax credit. The EITC 
has become one of the most effective tools for fighting poverty and 
benefitting working families, and so it is essential that every dollar 
of this credit goes to the taxpayer.

[[Page 6505]]

  Congress is not without fault. We have made the EITC so complicated 
that many taxpayers feel they have to pay to have someone prepare their 
return. According to the New Mexico Advocates for Children and 
Families, 83 percent of the low income population in Gallup used a paid 
preparer. Many of these taxpayers won't have the money to pay for this 
service unless they are loaned the money up front, hence a 
proliferation of refund anticipation loans. Although this bill does not 
include simplification of the EITC, I am going to work with my 
colleagues to be sure that any tax bill that is passed through this 
body has made the EITC easier to calculate.
  To help low and moderate income taxpayers, my bill requires all those 
involved with RALs to register with the IRS. Treasury will then be 
required to determine what is a fair amount of interest and fees to be 
charged based on the benefit to the taxpayer and the risk to the 
lender. It will also expand the Volunteer Income Tax Assistance program 
by directly giving them funding to operate. VITA clinics are one of the 
few places low income taxpayers can go to get assistance on their tax 
returns. We need to expand this program. My bill also directs the IRS 
to focus its electronic filing services on the taxpayer. I am afraid 
that our desire to meet Congressional mandates for increasing 
electronic filing rates may have caused the IRS to forget why we are 
advancing electronic filing, to benefit the taxpayer.
  Finally, this legislation will create several mobile electronic tax 
filing centers, at least one of which must be located near a Native 
American reservation or pueblo. Currently, many low income taxpayers do 
not have the ability to file electronically unless they go to a 
commercial electronic filer where there is a fee to file. This trial 
program would allow these taxpayers to enjoy the benefits of electronic 
filing, such as a shorter turn around time for a refund, without having 
to find the money to pay for it.
  I look forward to working with my colleagues to expand this important 
legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 802

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Low Income Taxpayer 
     Protection Act of 2001''.

     SEC. 2. REGULATION OF INCOME TAX RETURN PREPARERS AND REFUND 
                   ANTICIPATION LOAN PROVIDERS.

       (a) Definitions.--In this Act:
       (1) Income tax return preparer.--
       (A) In general.--The term ``income tax return preparer'' 
     means any individual who is an income tax return preparer 
     (within the meaning of section 7701(a)(36) of the Internal 
     Revenue Code of 1986) who prepares not less than 5 returns of 
     tax imposed by subtitle A of such Code or claims for refunds 
     of tax imposed by such subtitle A per taxable year.
       (B) Exception.--Such term shall not include a federally 
     authorized tax practitioner within the meaning of section of 
     7526(a)(3) of such Code.
       (2) Refund anticipation loan provider.--The term ``refund 
     anticipation loan provider'' means a person who makes a loan 
     of money or of any other thing of value to a taxpayer because 
     of the taxpayer's anticipated receipt of a Federal tax 
     refund.
       (3) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.
       (b) Regulations.--
       (1) Registration required.--
       (A) In general.--Not later than 120 days after the date of 
     the enactment of this Act, the Secretary shall promulgate 
     regulations that--
       (i) require the registration of income tax return preparers 
     and of refund anticipation loan providers with the Secretary 
     or the designee of the Secretary, and
       (ii) prohibit the payment of a refund of tax to a refund 
     anticipation loan provider or an income tax return preparer 
     that is the result of a tax return which is prepared by the 
     refund anticipation loan provider or the income tax return 
     preparer which does not include the refund anticipation loan 
     provider's or the income tax return preparer's registration 
     number.
       (B) No disciplinary action.--The regulations shall require 
     that an applicant for registration must not have demonstrated 
     any conduct that would warrant disciplinary action under part 
     10 of title 31, Code of Federal Regulations.
       (C) Burden of registration.--In promulgating the 
     regulations, the Secretary shall minimize the burden and cost 
     on the registrant.
       (2) Rules of conduct.--All registrants shall be subject to 
     rules of conduct that are consistent with the rules that 
     govern federally authorized tax practitioners.
       (3) Reasonable fees and interest rates.--The Secretary, 
     after consultation with any expert as the Secretary deems 
     appropriate, shall include in the regulations guidance on 
     reasonable fees and interest rates charged to taxpayers in 
     connection with loans to taxpayers made by refund 
     anticipation loan providers.
       (4) Renewal of registration.--The regulations shall 
     determine the time frame required for renewal of registration 
     and the manner in which a registered income tax return 
     preparer or a registered refund anticipation loan provider 
     must renew such registration.
       (5) Fees.--
       (A) In general.--The Secretary may require the payment of 
     reasonable fees for registration and for renewal of 
     registration under the regulations.
       (B) Purpose of fees.--Any fees required under this 
     paragraph shall inure to the Secretary for the purpose of 
     reimbursement of the costs of administering the requirements 
     of the regulations.
       (c) Prohibition.--Section 6695 of the Internal Revenue Code 
     of 1986 (relating to other assessable penalties with respect 
     to the preparation of income tax returns for other persons) 
     is amended by adding at the end the following new subsection:
       ``(h) Actions on a Taxpayer's Behalf by a Non-Registered 
     Person.--Any person not registered pursuant to the 
     regulations promulgated by the Secretary under the Low Income 
     Taxpayer Protection Act of 2001 who--
       ``(1) prepares a tax return for another taxpayer for 
     compensation, or
       ``(2) provides a loan to a taxpayer that is linked to or in 
     anticipation of a tax refund for the taxpayer,

     shall be subject to a $500 penalty for each incident of 
     noncompliance.''.
       (d) Coordination with Section 6060(a).--The Secretary shall 
     determine whether the registration required under the 
     regulations issued pursuant to this section should be in lieu 
     of the return requirements of section 6060.
       (e) Paperwork Reduction.--The Secretary shall minimize the 
     amount of paperwork required of a income tax return preparer 
     or a refund anticipation loan provider to meet the 
     requirements of these regulations.

     SEC. 3. IMPROVED SERVICES FOR TAXPAYERS.

       (a) Electronic Filing Efforts.--
       (1) In general.--The Secretary shall focus electronic 
     filing efforts on benefiting the taxpayer by--
       (A) reducing the time between receipt of an electronically 
     filed return and remitting a refund, if any,
       (B) reducing the cost of filing a return electronically,
       (C) improving services provided by the Internal Revenue 
     Service to low and moderate income taxpayers, and
       (D) providing tax-related computer software at no or 
     nominal cost to low and moderate income taxpayers.
       (2) Report.--Not later than 120 days after the date of the 
     enactment of this Act, the Secretary shall prepare and submit 
     to Congress a report on the efforts made pursuant to 
     paragraph (1).
       (b) Volunteer Income Tax Assistance Program.--
       (1) Study.--The Secretary shall undertake a study on the 
     expansion of the volunteer income tax assistance program to 
     service more low income taxpayers.
       (2) Report.--Not later than 120 days after the date of the 
     enactment of this Act, the Secretary shall prepare and submit 
     to Congress a report on the study conducted pursuant to 
     paragraph (1).
       (3) Authorization of appropriations.--
       (A) In general.--There is authorized to be appropriated to 
     the Secretary for volunteer income tax assistance clinics 
     $6,000,000, to remain available until expended.
       (B) Use of funds.--Such amounts appropriated under 
     subparagraph (A) shall be used for the operating expenses of 
     volunteer income tax assistance clinics, expenses for 
     providing electronic filing expenditures through such 
     clinics, and related expenses.
       (c) Tele-Filing.--The Secretary shall ensure that tele-
     filing is available for all taxpayers for the filing of tax 
     returns with respect to taxable years beginning in 2001.
       (d) Deposit Indicator Program.--
       (1) Review.--The Secretary shall review the decision to 
     reinstate the Deposit Indicator program.
       (2) Report.--Not later than 120 days after the date of the 
     enactment of this Act, the Secretary shall prepare and submit 
     to Congress a report on the review made pursuant to paragraph 
     (1).
       (e) Direct Deposit Accounts.--The Secretary shall allocate 
     resources to programs to assist low income taxpayers in 
     establishing accounts at financial institutions that receive 
     direct deposits from the United States Treasury.
       (f) Pilot Program for Mobile Tax Return Filing Offices.--

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       (1) In general.--The Secretary shall establish a pilot 
     program for the creation of four mobile tax return filing 
     offices with electronic filing capabilities.
       (2) Location of service.--
       (A) In general.--The mobile tax return filing offices shall 
     be located in communities that the Secretary determines have 
     a high incidence of taxpayers claiming the earned income tax 
     credit.
       (B) Indian reservation.--At least one mobile tax return 
     filing office shall be on or near an Indian reservation (as 
     defined in section 168(j)(6) of the Internal Revenue Code of 
     1986).

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