[Congressional Record (Bound Edition), Volume 151 (2005), Part 20]
[Senate]
[Pages 27102-27170]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 2598. Mr. LAUTENBERG submitted an amendment intended to be 
proposed by him to the bill S. 2020, to provide for reconciliation 
pursuant to section 202(b) of the concurrent resolution on the budget 
for fiscal year 2006; which was ordered to lie on the table; as 
follows:

       At the end of title IV, insert the following:

     SEC. __. COMPUTATION OF LIMITS ON IRA AND ROTH IRA 
                   CONTRIBUTIONS.

       (a) Certain Wage Replacement Income Treated as 
     Compensation.--
       (1) Wage replacement income.--Section 219(f) (relating to 
     other definitions and special rules) is amended by adding at 
     the end the following new paragraph:
       ``(8) Treatment of certain wage replacement income as 
     compensation.--
       ``(A) In general.--Notwithstanding paragraph (1), 
     applicable wage replacement income not otherwise treated as 
     compensation shall be treated as compensation for purposes of 
     this section.
       ``(B) Applicable wage replacement income.--For purposes of 
     this paragraph, the term `applicable wage replacement income' 
     means any amount received by an individual--
       ``(i) as the result of the individual having become 
     disabled,
       ``(ii) as unemployment compensation (as defined in section 
     85(b)),
       ``(iii) under workmen's compensation acts, or
       ``(iv) which constitutes wage replacement income under 
     regulations prescribed by the Secretary.''
       (2) Certain excludable amounts may be taken into account 
     for purposes of roth iras.--Section 408A(c)(2) (relating to 
     contribution limit) is amended by adding at the end the 
     following new flush sentence:

     ``In determining the maximum amount under subparagraph (A), 
     subsections (b)(1)(B) and (c) of section 219 shall be applied 
     by taking into account compensation described in section 
     219(f)(8) without regard to whether it is includible in gross 
     income.''
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2004.
       (b) Computation of Maximum IRA Deduction for Roth IRAs 
     Using Compensation From 2 Preceding Taxable Years.--
       (1) In general.--Section 408A(c) (relating to treatment of 
     contributions) is amended by adding at the end the following 
     new paragraph:
       ``(8) Compensation from preceding 2 years may be taken into 
     account.--
       ``(A) In general.--A taxpayer may elect for purposes of 
     paragraph (2) to take into account any unused compensation 
     from the 2 taxable years immediately preceding the taxable 
     year.
       ``(B) Unused compensation.--For purposes of this paragraph, 
     the term `unused compensation' means with respect to an 
     individual for any taxable year the compensation includible 
     in the individual's gross income for the taxable year reduced 
     by the sum of--
       ``(i) the amount allowed as a deduction under 219(a) to 
     such individual for such taxable year,
       ``(ii) the amount of any designated nondeductible 
     contribution (as defined in section 408(o)) on behalf of such 
     individual for such taxable year,
       ``(iii) the amount of any contribution on behalf of such 
     individual to a Roth IRA under this section for such taxable 
     year, and
       ``(iv) the amount of compensation includible in such 
     individual's gross income for such taxable year taken into 
     account under section 219(c) in determining the limitation 
     under section 219 or paragraph (2) for the individual's 
     spouse.
       ``(C) Application to special rule for married 
     individuals.--Under rules prescribed by the Secretary, in 
     applying section 219(c) for any taxable year for purposes of 
     applying paragraph (2)(A), unused compensation of an 
     individual or an individual's spouse for the 2 taxable years 
     immediately preceding the taxable year may be taken into 
     account.''
       (2) Effective date.--The amendment made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2004, but unused compensation for taxable years beginning 
     before January 1, 2005, may be taken into account for taxable 
     years beginning after December 31, 2004.
                                 ______
                                 
  SA 2599. Mr. CONRAD (for himself, Mr. Dorgan, and Mr. Smith) 
submitted an amendment intended to be proposed by him to the bill S. 
2020, to provide for reconciliation pursuant to section 202(b) of the 
concurrent resolution on the budget for fiscal year 2006; which was 
ordered to lie on the table; as follows:

       At the end of title IV, add the following:

     SEC. __. EXTENSION OF FULL CREDIT FOR QUALIFIED ELECTRIC 
                   VEHICLES.

       (A) In general.--Section 30(b) (relating to limitations) is 
     amended by striking paragraph (2) and by redesignating 
     paragraph (3) as paragraph (2).
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2005.
                                 ______
                                 
  SA 2600. Mr. SHELBY proposed an amendment to the bill S. 467, to 
extend the applicability of the Terrorism Risk Insurance Act of 2002; 
as follows:

       Modify section 3(c)(2) of the bill to read as follows:
       (2) Conforming amendment.--Section 102(12)(A) of the 
     Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 
     116 Stat. 2326) is amended by striking ``surety insurance'' 
     and inserting ``directors and officers liability insurance''.
                                 ______
                                 
  SA 2601. Mr. NELSON of Florida (for himself, Mr. Dorgan, Mr. Leahy, 
Mr. Schumer, Mr. Dayton, Ms. Stabenow, Mr. Kohl, Mrs. Murray, Mr. 
Obama, Mrs. Clinton, Ms. Landrieu, Mr. Harkin, and Mr. Durbin) 
submitted an amendment intended to be proposed by him to the bill S. 
2020, to provide for reconciliation pursuant to section 202(b) of the 
concurrent resolution on the budget for fiscal year 2006; as follows:

       At the end of title IV, insert the following:

     SEC. __. PROTECTION FOR MEDICARE BENEFICIARIES WHO ENROLL IN 
                   THE PRESCRIPTION DRUG BENEFIT DURING 2006.

       (a) Extended Period of Open Enrollment During All of 2006 
     Without Late Enrollment Penalty.--Section 1851(e)(3)(B) of 
     the Social Security Act (42 U.S.C. 1395w-21(e)(3)(B)) is 
     amended--
       (1) in clause (iii), by striking ``May 15, 2006'' and 
     inserting ``December 31, 2006''; and
       (2) by adding at the end the following new sentence:
       ``An individual making an election during the period 
     beginning on November 15, 2006, and ending on December 15, 
     2006, shall specify whether the election is to be effective 
     with respect to 2006 or with respect to 2007 (or both).''.
       (b) One-Time Change of Plan Enrollment for Medicare 
     Prescription Drug Benefit During All of 2006.--
       (1) In general.--Section 1851(e) of the Social Security Act 
     (42 U.S.C. 1395w-21(e)) is amended--
       (A) in paragraph (2)(B)--
       (i) in the heading, by striking ``for first 6 months'';
       (ii) in clause (i)--

       (I) by striking ``the first 6 months of 2006'' and 
     inserting ``2006''; and
       (II) by striking ``the first 6 months during 2006'' and 
     inserting ``2006''; and

       (iii) in clause (ii), by inserting ``(other than during 
     2006)'' after ``paragraph (3)''; and
       (B) in paragraph (4), by striking ``2006'' and inserting 
     ``2007'' each place it appears.
       (2) Conforming amendment.--Section 1860D-1(b)(1)(B)(iii) of 
     the Social Security Act (42 U.S.C. 1395w-101(b)(1)(B)(iii)) 
     is amended by striking ``subparagraphs (B) and (C) of 
     paragraph (2)'' and inserting ``paragraph (2)(C)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of the 
     Medicare Prescription Drug, Improvement, and Modernization 
     Act of 2003 (Public Law 108-173).
                                 ______
                                 
  SA 2602. Mr. CONRAD proposed an amendment to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; as follows:

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF 
                   CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Fiscal 
     Responsibility Act of 2005''.
       (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; amendment of 1986 Code; table of contents.

 TITLE I--TAX BENEFITS FOR AREAS AFFECTED BY HURRICANES KATRINA, RITA, 
                               AND WILMA

                Subtitle A--Gulf Recovery Zone Benefits

Sec. 101. Gulf Recovery Zone benefits.
Sec. 102. Expansion of Hope Scholarship and Lifetime Learning Credit 
              for students in the Gulf Recovery Zone.

[[Page 27103]]

Sec. 103. Extension of special rules for mortgage revenue bonds.

     Subtitle B--Tax Benefits Related to Hurricanes Rita and Wilma

Sec. 111. Extension of certain emergency tax relief for Hurricane 
              Katrina to Hurricanes Rita and Wilma.

               TITLE II--EXTENSION OF EXPIRING PROVISIONS

Sec. 201. Extension and increase in minimum tax relief to individuals.
Sec. 202. Allowance of nonrefundable personal credits against regular 
              and minimum tax liability.
Sec. 203. Election to deduct State and local sales taxes in lieu of 
              State and local income taxes.
Sec. 204. Tuition deduction.
Sec. 205. Extension and modification of research credit.
Sec. 206. Extension and modifications to work opportunity credit and 
              welfare-to-work credit.
Sec. 207. Qualified zone academy bonds.
Sec. 208. Deduction for certain expenses of school teachers.
Sec. 209. Tax incentives for investment in the District of Columbia.
Sec. 210. Indian employment tax credit.
Sec. 211. Accelerated depreciation for business property on Indian 
              reservation.
Sec. 212. Extension and expansion of charitable contribution allowed 
              for scientific property used for research and for 
              computer technology and equipment used for educational 
              purposes.
Sec. 213. Expensing of brownfields remediation costs.
Sec. 214. Extension of full credit for qualified electric vehicles.
Sec. 215. Fifteen-year straight-line cost recovery for qualified 
              leasehold improvements and qualified restaurant 
              improvements.
Sec. 216. Application of EGTRRA sunset to this title.

                     TITLE III--REVENUE PROVISIONS

            Subtitle A--Provisions Relating to Tax Shelters

Sec. 301. Clarification of economic substance doctrine.
Sec. 302. Penalty for understatements attributable to transactions 
              lacking economic substance, etc.
Sec. 303. Denial of deduction for interest on underpayments 
              attributable to noneconomic substance transactions.
Sec. 304. Modifications of effective dates of leasing provisions of the 
              American Jobs Creation Act of 2004.
Sec. 305. Revaluation of LIFO inventories of large integrated oil 
              companies.
Sec. 306. Modification of effective date of exception from suspension 
              rules for certain listed and reportable transactions.
Sec. 307. Doubling of certain penalties, fines, and interest on 
              underpayments related to certain offshore financial 
              arrangements.
Sec. 308. Penalty for aiding and abetting the understatement of tax 
              liability.

   Subtitle B--Provisions to Close Corporate and Individual Loopholes

Sec. 311. Tax treatment of inverted entities.
Sec. 312. Grant of Treasury regulatory authority to address foreign tax 
              credit transactions involving inappropriate separation of 
              foreign taxes from related foreign income.
Sec. 313. Treatment of contingent payment convertible debt instruments.
Sec. 314. Application of earnings stripping rules to partners which are 
              corporations.
Sec. 315. Denial of deduction for certain fines, penalties, and other 
              amounts.
Sec. 316. Disallowance of deduction for punitive damages.
Sec. 317. Limitation of employer deduction for certain entertainment 
              expenses.
Sec. 318. Imposition of mark-to-market tax on individuals who 
              expatriate.
Sec. 319. Modification of exclusion for citizens living abroad.
Sec. 320. Limitation on annual amounts which may be deferred under 
              nonqualified deferred compensation arrangements.
Sec. 321. Increase in age of minor children whose unearned income is 
              taxed as if parent's income.

                   Subtitle C--Oil and Gas Provisions

Sec. 331. Extension of superfund taxes.
Sec. 332. Modifications of foreign tax credit rules applicable to dual 
              capacity taxpayers.
Sec. 333. Rules relating to foreign oil and gas income.
Sec. 334. Modification of credit for producing fuel from a 
              nonconventional source.
Sec. 335. Elimination of amortization of geological and geophysical 
              expenditures for major integrated oil companies.

               Subtitle D--Tax Administration Provisions

Sec. 341. Imposition of withholding on certain payments made by 
              government entities.
Sec. 342. Increase in certain criminal penalties.
Sec. 343. Repeal of suspension of interest and certain penalties where 
              Secretary fails to contact taxpayer.
Sec. 344. Increase in penalty for bad checks and money orders.
Sec. 345. Frivolous tax submissions.
Sec. 346. Partial payments required with submission of offers-in-
              compromise.
Sec. 347. Waiver of user fee for installment agreements using automated 
              withdrawals.
Sec. 348. Termination of installment agreements.

                   Subtitle E--Additional Provisions

Sec. 351. Modification of individual estimated tax safe harbor.
Sec. 352. Loan and redemption requirements on pooled financing 
              requirements.
Sec. 353. Reporting of interest on tax-exempt bonds.

 TITLE I--TAX BENEFITS FOR AREAS AFFECTED BY HURRICANES KATRINA, RITA, 
                               AND WILMA

                Subtitle A--Gulf Recovery Zone Benefits

     SEC. 101. GULF RECOVERY ZONE BENEFITS.

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

               ``Subchapter Z--Hurricane Relief Benefits

``Sec. 1400N. Definitions.
``Sec. 1400O. Tax benefits for Gulf Recovery Zone.

     ``SEC. 1400N. DEFINITIONS.

       ``For purposes of this subchapter--
       ``(1) Gulf recovery zone.--The term `Gulf Recovery Zone' 
     means that portion of the Hurricane Katrina disaster area 
     determined by the President to warrant individual or 
     individual and public assistance from the Federal Government 
     under the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act by reason of Hurricane Katrina.
       ``(2) Hurricane katrina disaster area.--The term `Hurricane 
     Katrina disaster area' means an area with respect to which a 
     major disaster has been declared by the President before 
     September 14, 2005, under section 401 of such Act by reason 
     of Hurricane Katrina.
       ``(3) Rita zone.--The term `Rita Zone' means that portion 
     of the Hurricane Rita disaster area determined by the 
     President to warrant individual or individual and public 
     assistance from the Federal Government under such Act by 
     reason of Hurricane Rita.
       ``(4) Hurricane rita disaster area.--The term `Hurricane 
     Rita disaster area' means an area with respect to which a 
     major disaster has been declared by the President before 
     October 6, 2005, under section 401 of such Act by reason of 
     Hurricane Rita.
       ``(5) Wilma zone.--The term `Wilma Zone' means that portion 
     of the Hurricane Wilma disaster area determined by the 
     President to warrant individual or individual and public 
     assistance from the Federal Government under such Act by 
     reason of Hurricane Wilma.
       ``(6) Hurricane wilma disaster area.--The term `Hurricane 
     Wilma disaster area' means an area with respect to which a 
     major disaster has been declared by the President before 
     October 25, 2005, under section 401 of such Act by reason of 
     Hurricane Wilma.

     ``SEC. 1400O. TAX BENEFITS FOR GULF RECOVERY ZONE.

       ``(a) Special Allowance for Certain Property Acquired After 
     August 27, 2005.--
       ``(1) Additional allowance.--In the case of any qualified 
     Gulf Recovery 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 50 percent of the 
     adjusted basis of such property, and
       ``(B) the adjusted basis of the qualified Gulf Recovery 
     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 gulf recovery zone property.--For purposes 
     of this subsection--
       ``(A) In general.--The term `qualified Gulf Recovery Zone 
     property' means property--
       ``(i)(I) which is described in section 168(k)(2)(A)(i), or
       ``(II) which is nonresidential real property or residential 
     rental property,
       ``(ii) substantially all of the use of which is in the Gulf 
     Recovery 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 Gulf Recovery Zone 
     commences with the taxpayer after August 27, 2005,
       ``(iv) which is acquired by the taxpayer by purchase (as 
     defined in section 179(d)) after August 27, 2005, but only if 
     no written binding contract for the acquisition was in effect 
     before August 28, 2005, and
       ``(v) which is placed in service by the taxpayer on or 
     before the termination date.

     The term `termination date' means December 31, 2007 (December 
     31, 2008, in the case of nonresidential real property and 
     residential rental property).

[[Page 27104]]

       ``(B) Exceptions.--
       ``(i) Alternative depreciation property.--The term 
     `qualified Gulf Recovery Zone property' shall not include any 
     property described in section 168(k)(2)(D)(i).
       ``(ii) Tax-exempt bond-financed property.--Such term shall 
     not include any property any portion of which is financed 
     with the proceeds of any obligation the interest on which is 
     exempt from tax under section 103.
       ``(iii) Qualified revitalization buildings.--Such term 
     shall not include any qualified revitalization building with 
     respect to which the taxpayer has elected the application of 
     paragraph (1) or (2) of section 1400I(a).
       ``(iv) Election out.--For purposes of this subsection, 
     rules similar to the rules of section 168(k)(2)(D)(iii) shall 
     apply.
       ``(C) Special rules.--For purposes of this subsection, 
     rules similar to the rules of section 168(k)(2)(E) shall 
     apply, except that--
       ``(i) clause (i) thereof shall be applied by substituting 
     `after August 27, 2005, and before the termination date (as 
     defined in section 1400O(a)(2))' for `after September 10, 
     2001, and before January 1, 2005',
       ``(ii) clauses (ii), (iii), and (iv) thereof shall be 
     applied by substituting `August 27, 2005' for `September 10, 
     2001' each place it appears, and
       ``(iii) clause (iv) thereof shall be applied by 
     substituting `qualified Gulf Recovery Zone property' for 
     `qualified property'.
       ``(D) Allowance against alternative minimum tax.--For 
     purposes of this subsection, rules similar to the rules of 
     section 168(k)(2)(G) shall apply.
       ``(3) Recapture.--For purposes of this subsection, rules 
     similar to the rules under section 179(d)(10) shall apply 
     with respect to any qualified Gulf Recovery Zone property 
     which ceases to be qualified Gulf Recovery Zone property.
       ``(b) Increase in Expensing Under Section 179.--
       ``(1) In general.--For purposes of section 179--
       ``(A) the $100,000 amount in section 179(b)(1) for the 
     taxable year shall be increased by the lesser of--
       ``(i) $100,000, or
       ``(ii) the cost of section 179 property (as defined in 
     section 179(d)) which is qualified Gulf Recovery Zone 
     property placed in service during the taxable year, and
       ``(B) the $400,000 amount in section 179(b)(2) for the 
     taxable year shall be increased by the lesser of--
       ``(i) $600,000, or
       ``(ii) the cost of section 179 property (as so defined) 
     which is qualified Gulf Recovery Zone property placed in 
     service during the taxable year.
       ``(2) Qualified gulf recovery zone property.--For purposes 
     of this subsection, the term `qualified Gulf Recovery Zone 
     property' has the meaning given such term by subsection 
     (a)(2).
       ``(3) Coordination with empowerment zones and renewal 
     communities.--For purposes of sections 1397A and 1400J, 
     qualified Gulf Recovery Zone property shall not be treated as 
     qualified zone property or qualified renewal property for any 
     taxable year, unless the taxpayer elects not to have this 
     subsection apply to all such qualified Gulf Recovery Zone 
     property placed in service by the taxpayer during the taxable 
     year.
       ``(4) Recapture.--Rules similar to the rules under section 
     179(d)(10) shall apply with respect to any qualified Gulf 
     Recovery Zone property which ceases to be Gulf Recovery Zone 
     property.
       ``(c) Tax-Exempt Bond Financing.--
       ``(1) In general.--For purposes of this title, any 
     qualified Gulf Recovery Zone Bond shall be treated as a 
     qualified bond.
       ``(2) Qualified gulf recovery zone bond.--For purposes of 
     this subsection, the term `qualified Gulf Recovery Zone Bond' 
     means any bond issued as part of an issue if--
       ``(A) except as provided in paragraph (4), such bond meets 
     the applicable requirements of part IV of subchapter B of 
     this chapter,
       ``(B) such bond is issued by the State of Alabama, 
     Louisiana, or Mississippi (or any political subdivision 
     thereof),
       ``(C) the Governor of such State designates such bond for 
     purposes of this section, and
       ``(D) such bond is issued after the date of the enactment 
     of this section and before January 1, 2011.
       ``(3) Limitation on aggregate amount of bonds designated.--
     The maximum aggregate face amount of bonds which may be 
     designated under this subsection shall not exceed the product 
     of $2,500 multiplied by the portion of the State population 
     which is in the Gulf Recovery Zone (as determined on the 
     basis of the most recent census estimate of resident 
     population released by the Bureau of Census before August 28, 
     2005).
       ``(4) Special rules.--In applying this title to any 
     qualified Gulf Recovery Zone Bond, the following 
     modifications shall apply:
       ``(A) Section 143 (relating to mortgage revenue bonds: 
     qualified mortgage bond and qualified veterans' mortgage 
     bond) shall be applied--
       ``(i) by treating any residence in the Gulf Recovery Zone 
     as a targeted area residence,
       ``(ii) by applying subsection (f)(3) without regard to 
     subparagraph (A) thereof, and
       ``(iii) by substituting `$150,000' for `$15,000' in 
     subsection (k)(4) thereof.
       ``(B) Section 146 (relating to volume cap) shall not apply.
       ``(C) Section 57(a)(5) shall not apply.
       ``(5) Separate issue treatment of portions of an issue.--
     This subsection shall not apply to the portion 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 paragraph (1)), if the 
     issuer elects to so treat such portion.
       ``(d) Advance Refundings of Certain Tax-Exempt Bonds.--
       ``(1) In general.--With respect to a bond described in 
     paragraph (2) issued as part of an issue 90 percent (95 
     percent in the case of a bond described in paragraph (2)(B)) 
     or more of the net proceeds (as defined in section 150(a)(3)) 
     of which were used to finance facilities located within the 
     Gulf Recovery Zone (or property which is functionally related 
     and subordinate to facilities located within the Gulf 
     Recovery Zone), one additional advanced refunding after the 
     date of the enactment of this section and before January 1, 
     2007, shall be allowed under the applicable rules of section 
     149(d) if--
       ``(A) the chief executive officer of the issuer of the bond 
     designates the advance refunding bond for purposes of this 
     subsection, and
       ``(B) the requirements of paragraph (3) are met.
       ``(2) Bonds described.--A bond is described in this 
     paragraph if such bond was outstanding on August 27, 2005, 
     and is--
       ``(A) a State or local bond (as defined in section 
     103(c)(1)) other than a private activity bond (as defined in 
     section 141(a)) issued by the State of Alabama, Louisiana, or 
     Mississippi (or any political subdivision thereof), or
       ``(B) a qualified 501(c)(3) bond (as defined in section 
     145(a)) issued by or on behalf of any such State or political 
     subdivision.
       ``(3) Additional requirements.--The requirements of this 
     paragraph are met with respect to any advance refunding of a 
     bond described in paragraph (2) if--
       ``(A) no advance refundings of such bond would be allowed 
     under any provision of law after August 27, 2005,
       ``(B) the advance refunding bond is the only other 
     outstanding bond with respect to the refunded bond, and
       ``(C) the requirements of section 148 are met with respect 
     to all bonds issued under this subsection.
       ``(e) Low-Income Housing Credit.--
       ``(1) Increase in state housing credit ceiling.--
       ``(A) In general.--In the case of the State of Alabama, 
     Louisiana, or Mississippi--
       ``(i) the amount otherwise determined under subclause (I) 
     of section 42(h)(3)(C)(ii) for each calendar year beginning 
     after 2005 and before 2010 shall be increased by an amount 
     equal to 3 times the dollar amount otherwise specified for 
     such calendar year under such subclause multiplied by the 
     State population located in the Gulf Recovery Zone (as 
     determined on the basis of the most recent census estimate of 
     resident population released by the Bureau of Census before 
     August 28, 2005), and
       ``(ii) the unused State housing credit ceiling for such 
     State for any calendar year under section 42(h)(3)(C)(i) 
     shall be determined without regard to the amount of the 
     increase determined under clause (i).
       ``(B) Elective carryforward of unused increased ceiling.--
       ``(i) In general.--If the amount determined under section 
     42(h)(3)(C)(ii)(I), as increased under subparagraph (A)(i), 
     for any calendar year for any State described in subparagraph 
     (A) exceeds the aggregate housing credit dollar amount 
     allocated during such calendar year by such State, such State 
     may elect to treat as a carryforward to the following 
     calendar year an amount equal to lesser of--

       ``(I) the amount of such excess, or
       ``(II) the amount by which the amount determined under 
     section 42(h)(3)(C)(ii)(I) for such calendar year was 
     increased under subparagraph (A)(i)).

       ``(ii) Use of carryforward.--If any State elects a 
     carryforward under clause (i), any housing credit dollar 
     amount allocated by such State during the calendar year 
     following the calendar year in which the carryforward arose 
     shall not be considered so allocated for purposes of section 
     42(h)(3)(C) and section 42(h)(3)(D) to the extent such 
     housing credit dollar amount does not exceed the amount of 
     the carryforward elected.
       ``(2) Difficult development area.--
       ``(A) In general.--For purposes of section 42--
       ``(i) in the case of property placed in service during 
     2006, 2007, or 2008, the Gulf Recovery Zone--

       ``(I) shall be treated as a difficult development area 
     designated under subclause (I) of section 42(d)(5)(C)(iii), 
     and
       ``(II) shall not be taken into account for purposes of 
     applying the limitation under subclause (II) of such section, 
     and

       ``(ii) subsection (b)(2)(B) thereof shall be applied with 
     respect to any such property placed in service in the Gulf 
     Recovery Zone by substituting `91 percent' and `39 percent' 
     for `70 percent' and `30 percent', respectively.
       ``(B) Application.--Subparagraph (A) shall apply only to--

[[Page 27105]]

       ``(i) housing credit dollar amounts allocated during the 
     period beginning on January 1, 2006, and ending on December 
     31, 2008, and
       ``(ii) buildings placed in service during such period to 
     the extent that paragraph (1) of section 42(h) does not apply 
     to any building by reason of paragraph (4) thereof, but only 
     with respect to bonds issued after December 31, 2005.
       ``(f) Treatment of Representations Regarding Income 
     Eligibility for Purposes of Qualified Residential Rental 
     Project Requirements.--For purposes of determining if any 
     residential rental project meets the requirements of section 
     142(d)(1) and if any certification with respect to such 
     project meets the requirements under section 142(d)(7), the 
     operator of the project may rely on the representations of 
     any individual applying for tenancy in such project that such 
     individual's income will not exceed the applicable income 
     limits of section 142(d)(1) upon commencement of the 
     individual's tenancy if such tenancy begins during the 6-
     month period beginning on and after the date such individual 
     was displaced by reason of Hurricane Katrina.
       ``(g) Application of New Markets Tax Credit to Investments 
     in Community Development Entities Serving Gulf Recovery 
     Zone.--For purposes of section 45D--
       ``(1) a qualified community development entity shall be 
     eligible for an allocation under subsection (f)(2) thereof of 
     the increase in the new markets tax credit limitation 
     described in paragraph (2) only if a significant mission of 
     such entity is the recovery and redevelopment of the Gulf 
     Recovery Zone,
       ``(2) the new markets tax credit limitation otherwise 
     determined under subsection (f)(1) thereof shall be increased 
     by an amount equal to--
       ``(A) $300,000,000 for 2005 and 2006, to be allocated among 
     qualified community development entities to make qualified 
     low-income community investments within the Gulf Recovery 
     Zone, and
       ``(B) $400,000,000 for 2007, to be so allocated, and
       ``(3) subsection (f)(3) thereof shall be applied separately 
     with respect to the amount of the increase under paragraph 
     (2).
       ``(h) Treatment of Net Operating Losses Attributable to 
     Gulf Recovery Zone Losses.--
       ``(1) In general.--If a portion of any net operating loss 
     of the taxpayer for any taxable year is a qualified Gulf 
     Recovery Zone loss, the following rules shall apply:
       ``(A) Extension of carryback period.--Section 172(b)(1) 
     shall be applied with respect to such portion--
       ``(i) by substituting `5 taxable years' for `2 taxable 
     years' in subparagraph (A)(i), and
       ``(ii) by not taking such portion into account in 
     determining any eligible loss of the taxpayer under 
     subparagraph (F) for the taxable year.
       ``(B) Suspension of 90 percent amt limitation.--Section 
     56(d)(1) shall be applied by increasing the amount determined 
     under subparagraph (A)(ii)(I) thereof by the sum of the 
     carrybacks and carryovers of any net operating loss 
     attributable to such portion.
       ``(2) Qualified gulf recovery zone loss.--For purposes of 
     paragraph (1), the term `qualified Gulf Recovery Zone loss' 
     means the lesser of--
       ``(A) the amount of the net operating loss for the taxable 
     year, or
       ``(B) the aggregate amount of the following deductions for 
     such taxable year:
       ``(i) Any deduction for any qualified Gulf Recovery Zone 
     casualty loss.
       ``(ii) Any deduction for moving expenses paid or incurred 
     after August 27, 2005, and before January 1, 2008, and 
     allowable under this chapter to any taxpayer in connection 
     with the employment of any individual--

       ``(I) whose principal place of abode was located in the 
     Gulf Recovery Zone before August 28, 2005,
       ``(II) who was unable to remain in such abode as the result 
     of Hurricane Katrina, and
       ``(III) whose principal place of employment with the 
     taxpayer after such expense is located in the Gulf Recovery 
     Zone.

     For purposes of this clause, the term `moving expenses' has 
     the meaning given such term by section 217(b), except that 
     the taxpayer's former residence and new residence may be the 
     same residence if the initial vacating of the residence was 
     as the result of Hurricane Katrina.
       ``(iii) Any deduction for expenses paid or incurred after 
     August 27, 2005, and before January 1, 2008, and allowable 
     under this chapter to temporarily house any employee of the 
     taxpayer whose principal place of employment is in the Gulf 
     Recovery Zone.
       ``(iv) Any deduction for depreciation (or amortization in 
     lieu of depreciation) allowable under this chapter with 
     respect to any qualified Gulf Recovery Zone property (as 
     defined in subsection (a)(2)) for the taxable year such 
     property is placed in service.
       ``(v) Any deduction for repair expenses (including expenses 
     for removal of debris) allowable under this chapter paid or 
     incurred after August 27, 2005, and before January 1, 2008, 
     with respect to any damage attributable to Hurricane Katrina 
     and in connection with property which is located in the Gulf 
     Recovery Zone.
       ``(3) Qualified gulf recovery zone casualty loss.--
       ``(A) In general.--For purposes of paragraph (2)(B)(i), the 
     term `qualified Gulf Recovery Zone casualty loss' means any 
     uncompensated section 1231 loss (as defined in section 
     1231(a)(3)(B)) of property located in the Gulf Recovery Zone 
     if--
       ``(i) such loss is allowed as a deduction under section 165 
     for the taxable year, and
       ``(ii) such loss is attributable to Hurricane Katrina.
       ``(B) Reduction for gains from involuntary conversion.--The 
     amount of qualified Gulf Recovery Zone casualty loss which 
     would (but for this subparagraph) be taken into account under 
     subparagraph (A) for any taxable year shall be reduced by the 
     amount of any gain recognized by the taxpayer for such year 
     from the involuntary conversion by reason of Hurricane 
     Katrina of property located in the Gulf Recovery Zone.
       ``(C) Coordination with general disaster loss rules.--
     Subsection (j) and section 165(i) shall not apply to any 
     qualified Gulf Recovery Zone casualty loss to the extent such 
     loss is taken into account under this subsection.
       ``(4) Special rules.--For purposes of paragraph (1), rules 
     similar to the rules of paragraphs (2) and (3) of section 
     172(i) shall apply with respect to such portion.
       ``(i) Treatment of Public Utility Property Disaster 
     Losses.--
       ``(1) In general.--Upon the election of the taxpayer, in 
     the case of any eligible public utility property loss--
       ``(A) section 165(i) shall be applied by substituting `the 
     fifth taxable year immediately preceding' for `the taxable 
     year immediately preceding',
       ``(B) an application for a tentative carryback adjustment 
     of the tax for any prior taxable year affected by the 
     application of subparagraph (A) may be made under section 
     6411, and
       ``(C) section 6611 shall not apply to any overpayment 
     attributable to such loss.
       ``(2) Eligible public utility property loss.--For purposes 
     of this subsection--
       ``(A) In general.--The term `eligible public utility 
     property loss' means any loss with respect to public utility 
     property located in the Gulf Recovery Zone and attributable 
     to Hurricane Katrina.
       ``(B) Public utility property.--The term `public utility 
     property' has the meaning given such term by section 
     168(i)(10) without regard to the matter following 
     subparagraph (D) thereof.
       ``(3) Waiver of limitations.--If refund or credit of any 
     overpayment of tax resulting from the application of 
     paragraph (1) is prevented at any time before the close of 
     the 1-year period beginning on the date of the enactment of 
     this section 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.
       ``(j) Special Rule for Gulf Recovery Zone Public Utility 
     Casualty Losses.--
       ``(1) In general.--The amount described in section 
     172(f)(1)(A) for any taxable year shall be increased by the 
     amount of the Gulf Recovery Zone public utility casualty loss 
     for such year.
       ``(2) Gulf recovery zone public utility casualty loss.--For 
     purposes of this subsection, the term `Gulf Recovery Zone 
     public utility casualty loss' means any casualty loss of 
     public utility property (as defined in section 168(i)(10)) 
     located in the Gulf Recovery Zone if--
       ``(A) such loss is allowed as a deduction under section 165 
     for the taxable year,
       ``(B) such loss is attributable to Hurricane Katrina, and
       ``(C) the taxpayer elects the application of this 
     subsection with respect to such loss.
       ``(3) Reduction for gains from involuntary conversion.--The 
     amount of Gulf Recovery Zone public utility casualty loss 
     which would (but for this paragraph) be taken into account 
     under paragraph (1) for any taxable year shall be reduced by 
     the amount of any gain recognized by the taxpayer for such 
     year from the involuntary conversion by reason of Hurricane 
     Katrina of public utility property (as so defined) located in 
     the Gulf Recovery Zone.
       ``(4) Coordination with general disaster loss rules.--
     Subsection (h) and section 165(i) shall not apply to any Gulf 
     Recovery Zone public utility casualty loss to the extent such 
     loss is taken into account under paragraph (1).
       ``(5) Election.--Any election under paragraph (2)(C) shall 
     be made in such manner as may be prescribed by the Secretary 
     and shall be made by the due date (including extensions of 
     time) for filing the taxpayer's return for the taxable year 
     of the loss. Such election, once made for any taxable year, 
     shall be irrevocable for such taxable year.
       ``(k) Special Rules for Small Timber Producers.--
       ``(1) Increased expensing for qualified timber property.--
     In the case of qualified timber property any portion of which 
     is located in the Gulf Recovery Zone, in that portion of the 
     Rita Zone which is not part of the Gulf Recovery Zone, or in 
     the Wilma Zone, the limitation under subparagraph (B) of 
     section 194(b)(1) shall be increased by the lesser of--
       ``(A) the limitation which would (but for this subsection) 
     apply under such subparagraph, or

[[Page 27106]]

       ``(B) the amount of reforestation expenditures (as defined 
     in section 194(c)(3)) paid or incurred by the taxpayer with 
     respect to such qualified timber property during the 
     specified portion of the taxable year.
       ``(2) 5 year nol carryback of certain timber losses.--For 
     purposes of determining farming loss under section 172(i), 
     income and deductions which are allocable to the specified 
     portion of the taxable year and which are attributable to 
     qualified timber property any portion of which is located in 
     the Gulf Recovery Zone, in that portion of the Rita Zone 
     which is not part of the Gulf Recovery Zone, or in the Wilma 
     Zone shall be treated as attributable to farming businesses.
       ``(3) Rules not applicable to certain entities.--Paragraphs 
     (1) and (2) shall not apply to any taxpayer which--
       ``(A) is a corporation the stock of which is publicly 
     traded on an established securities market, or
       ``(B) is a real estate investment trust.
       ``(4) Rules not applicable to large timber producers.--
     Paragraphs (1) and (2) shall not apply with respect to any 
     qualified timber property unless--
       ``(A) such property was held by the taxpayer--
       ``(i) on August 28, 2005, in the case of qualified timber 
     property any portion of which is located in the Gulf Recovery 
     Zone,
       ``(ii) on September 23, 2005, in the case of qualified 
     timber property (other than property described in subclause 
     (I)) any portion of which is located in that portion of the 
     Rita Zone which is not part of the Gulf Recovery Zone, or
       ``(iii) on October 23, 2005, in the case of qualified 
     timber property (other than property described in subclause 
     (I) or (II)) any portion of which is located in the Wilma 
     Zone, and
       ``(B) such taxpayer held not more than 500 acres of 
     qualified timber property on such date.
       ``(5) Definitions.--For purposes of this subsection--
       ``(A) Specified portion.--The term `specified portion' 
     means--
       ``(i) in the case of qualified timber property located in 
     the Gulf Recovery Zone, that portion of the taxable year 
     which is on or after August 28, 2005, and before January 1, 
     2007,
       ``(ii) in the case of qualified timber property located in 
     the Rita Zone and no part of which is located in the Gulf 
     Recovery Zone, that portion of the taxable year which is on 
     or after September 23, 2005, and before January 1, 2007, and
       ``(iii) in the case of qualified timber property located in 
     the Wilma Zone, that portion of the taxable year which is on 
     or after October 23, 2005, and before January 1, 2007.
       ``(B) Qualified timber property.--The term `qualified 
     timber property' has the meaning given such term in section 
     194(c)(1).
       ``(l) Expensing for Certain Demolition and Clean-up 
     Costs.--
       ``(1) In general.--A taxpayer may elect to treat 50 percent 
     of any qualified Gulf Recovery Zone clean-up cost as an 
     expense which is not chargeable to capital account. Any cost 
     so treated shall be allowed as a deduction for the taxable 
     year in which such cost is paid or incurred.
       ``(2) Gulf recovery zone clean-up cost.--For purposes of 
     this subsection, the term `Gulf Recovery Zone clean-up cost' 
     means any amount paid or incurred during the period beginning 
     on August 28, 2005, and ending on December 31, 2007, for the 
     removal of debris from, or the demolition of structures on, 
     real property which is located in the Gulf Recovery Zone and 
     which is--
       ``(A) held by the taxpayer for use in a trade or business 
     or for the production of income, or
       ``(B) property described in section 1221(a)(1) in the hands 
     of the taxpayer.

     For purposes of the preceding sentence, amounts paid or 
     incurred shall be taken into account only to the extent that 
     such amount would (but for paragraph (1)) be chargeable to 
     capital account.
       ``(m) Extension of Expensing for Environmental Remediation 
     Costs.--With respect to any qualified environmental 
     remediation expenditure (as defined in section 198(b)) paid 
     or incurred on or after August 28, 2005, in connection with a 
     qualified contaminated site located in the Gulf Recovery 
     Zone, section 198 (relating to expensing of environmental 
     remediation costs) shall be applied--
       ``(1) by substituting `December 31, 2007' for `December 31, 
     2006' in subsection (h) thereof, and
       ``(2) except as provided in section 198(d)(2), by treating 
     petroleum products (as defined in section 4612(a)(3)) as a 
     hazardous substance.
       ``(n) Gulf Recovery Zone.--For purposes of this section, 
     the term `Gulf Recovery Zone' means an area--
       ``(1) with respect to which a major disaster has been 
     declared by the President under section 401 of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act as a 
     result of Hurricane Katrina, and
       ``(2) which is determined by the President to warrant 
     individual assistance, or individual and public assistance, 
     from the Federal Government under such Act.''
       (b) Clerical Amendments.--The table of subchapters for 
     chapter 1 is amended by adding at the end the following new 
     item:


             ``Subchapter Z--Hurricane Relief Benefits.''.

     SEC. 102. EXPANSION OF HOPE SCHOLARSHIP AND LIFETIME LEARNING 
                   CREDIT FOR STUDENTS IN THE GULF RECOVERY ZONE.

       In the case of an individual who attends an eligible 
     educational institution (as defined in section 25A(f)(2) of 
     the Internal Revenue Code of 1986) located in the Gulf 
     Recovery Zone (as defined in section 1400N(1) of such Code) 
     for any taxable year beginning during 2005 or 2006--
       (1) in applying section 25A of the Internal Revenue Code of 
     1986, the term ``qualified tuition and related expenses'' 
     shall include any costs which are qualified higher education 
     expenses (as defined in section 529(e)(3) of such Code),
       (2) each of the dollar amounts in effect under of 
     subparagraphs (A) and (B) of section 25A(b)(1) of such Code 
     shall be twice the amount otherwise in effect before the 
     application of this subsection, and
       (3) section 25A(c)(1) of such Code shall be applied by 
     substituting ``40 percent'' for ``20 percent''.

     SEC. 103. EXTENSION OF SPECIAL RULES FOR MORTGAGE REVENUE 
                   BONDS.

       Section 404(d) of the Katrina Emergency Tax Relief Act of 
     2005 is amended by striking ``December 31, 2007'' and 
     inserting ``December 31, 2010''.

     Subtitle B--Tax Benefits Related to Hurricanes Rita and Wilma

     SEC. 111. EXTENSION OF CERTAIN EMERGENCY TAX RELIEF FOR 
                   HURRICANE KATRINA TO HURRICANES RITA AND WILMA.

       (a) In General.--Subchapter Z of chapter 1, as added by 
     this Act, is amended by adding at the end the following new 
     sections:

     ``SEC. 1400P. SPECIAL RULES FOR MORTGAGE REVENUE BONDS.

       ``(a) In General.--In the case of financing provided with 
     respect to residences in the Gulf Recovery Zone, the Rita 
     Zone, or the Wilma Zone, section 143 shall be applied--
       ``(1) by treating any residence in the Gulf Recovery Zone, 
     the Rita Zone, or the Wilma Zone as a targeted area 
     residence,
       ``(2) by applying subsection (f)(3) without regard to 
     subparagraph (A) thereof, and
       ``(3) by substituting `$150,000' for `$15,000' in 
     subsection (k)(4) thereof.
       ``(b) Application.--Subsection (a) shall not apply to 
     financing provided after December 31, 2010.

     ``SEC. 1400Q. SPECIAL RULES FOR USE OF RETIREMENT FUNDS.

       ``(a) Tax-Favored Withdrawals From Retirement Plans.--
       ``(1) In general.--Section 72(t) shall not apply to any 
     qualified hurricane distribution.
       ``(2) Aggregate dollar limitation.--
       ``(A) In general.--For purposes of this subsection, the 
     aggregate amount of distributions received by an individual 
     which may be treated as qualified hurricane distributions for 
     any taxable year shall not exceed the excess (if any) of--
       ``(i) $100,000, over
       ``(ii) the aggregate amounts treated as qualified hurricane 
     distributions received by such individual for all prior 
     taxable years.
       ``(B) Treatment of plan distributions.--If a distribution 
     to an individual would (without regard to subparagraph (A)) 
     be a qualified hurricane distribution, a plan shall not be 
     treated as violating any requirement of this title merely 
     because the plan treats such distribution as a qualified 
     hurricane distribution, unless the aggregate amount of such 
     distributions from all plans maintained by the employer (and 
     any member of any controlled group which includes the 
     employer) to such individual exceeds $100,000.
       ``(C) Controlled group.--For purposes of subparagraph (B), 
     the term `controlled group' means any group treated as a 
     single employer under subsection (b), (c), (m), or (o) of 
     section 414.
       ``(3) Amount distributed may be repaid.--
       ``(A) In general.--Any individual who receives a qualified 
     hurricane distribution may, at any time during the 3-year 
     period beginning on the day after the date on which such 
     distribution was received, make one or more contributions in 
     an aggregate amount not to exceed the amount of such 
     distribution to an eligible retirement plan of which such 
     individual is a beneficiary and to which a rollover 
     contribution of such distribution could be made under section 
     402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), as 
     the case may be.
       ``(B) Treatment of repayments of distributions from 
     eligible retirement plans other than iras.--For purposes of 
     this title, if a contribution is made pursuant to 
     subparagraph (A) with respect to a qualified hurricane 
     distribution from an eligible retirement plan other than an 
     individual retirement plan, then the taxpayer shall, to the 
     extent of the amount of the contribution, be treated as 
     having received the qualified hurricane distribution in an 
     eligible rollover distribution (as defined in section 
     402(c)(4)) and as having transferred the amount to the 
     eligible retirement plan in a direct trustee to trustee 
     transfer within 60 days of the distribution.
       ``(C) Treatment of repayments for distributions from 
     iras.--For purposes of this title, if a contribution is made 
     pursuant to

[[Page 27107]]

     subparagraph (A) with respect to a qualified hurricane 
     distribution from an individual retirement plan (as defined 
     by section 7701(a)(37)), then, to the extent of the amount of 
     the contribution, the qualified hurricane distribution shall 
     be treated as a distribution described in section 408(d)(3) 
     and as having been transferred to the eligible retirement 
     plan in a direct trustee to trustee transfer within 60 days 
     of the distribution.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) Qualified hurricane distribution.--Except as provided 
     in paragraph (2), the term `qualified hurricane distribution' 
     means--
       ``(i) any distribution from an eligible retirement plan 
     made on or after August 25, 2005, and before January 1, 2007, 
     to an individual whose principal place of abode on August 28, 
     2005, is located in the Hurricane Katrina disaster area and 
     who has sustained an economic loss by reason of Hurricane 
     Katrina,
       ``(ii) any distribution (which is not described in clause 
     (i)) from an eligible retirement plan made on or after 
     September 23, 2005, and before January 1, 2007, to an 
     individual whose principal place of abode on September 23, 
     2005, is located in the Hurricane Rita disaster area and who 
     has sustained an economic loss by reason of Hurricane Rita, 
     and
       ``(iii) any distribution (which is not described in clause 
     (i) or (ii)) from an eligible retirement plan made on or 
     after October 23, 2005, and before January 1, 2007, to an 
     individual whose principal place of abode on October 23, 
     2005, is located in the Hurricane Wilma disaster area and who 
     has sustained an economic loss by reason of Hurricane Wilma.
       ``(B) Eligible retirement plan.--The term `eligible 
     retirement plan' shall have the meaning given such term by 
     section 402(c)(8)(B).
       ``(5) Income inclusion spread over 3-year period.--
       ``(A) In general.--In the case of any qualified hurricane 
     distribution, unless the taxpayer elects not to have this 
     paragraph apply for any taxable year, any amount required to 
     be included in gross income for such taxable year shall be so 
     included ratably over the 3-taxable year period beginning 
     with such taxable year.
       ``(B) Special rule.--For purposes of subparagraph (A), 
     rules similar to the rules of subparagraph (E) of section 
     408A(d)(3) shall apply.
       ``(6) Special rules.--
       ``(A) Exemption of distributions from trustee to trustee 
     transfer and withholding rules.--For purposes of sections 
     401(a)(31), 402(f), and 3405, qualified hurricane 
     distributions shall not be treated as eligible rollover 
     distributions.
       ``(B) Qualified hurricane distributions treated as meeting 
     plan distribution requirements.--For purposes this title, a 
     qualified hurricane distribution shall be treated as meeting 
     the requirements of sections 401(k)(2)(B)(i), 
     403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A).
       ``(b) Recontributions of Withdrawals for Home Purchases.--
       ``(1) Recontributions.--
       ``(A) In general.--Any individual who received a qualified 
     distribution may, during the applicable period, make one or 
     more contributions in an aggregate amount not to exceed the 
     amount of such qualified distribution to an eligible 
     retirement plan (as defined in section 402(c)(8)(B)) of which 
     such individual is a beneficiary and to which a rollover 
     contribution of such distribution could be made under section 
     402(c), 403(a)(4), 403(b)(8), or 408(d)(3), as the case may 
     be.
       ``(B) Treatment of repayments.--Rules similar to the rules 
     of subparagraphs (B) and (C) of subsection (a)(3) shall apply 
     for purposes of this subsection.
       ``(2) Qualified distribution.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified distribution' means 
     any qualified Katrina distribution, any qualified Rita 
     distribution, and any qualified Wilma distribution.
       ``(B) Qualified katrina distribution.--The term `qualified 
     Katrina distribution' means any distribution--
       ``(i) described in section 401(k)(2)(B)(i)(IV), 
     403(b)(7)(A)(ii) (but only to the extent such distribution 
     relates to financial hardship), 403(b)(11)(B), or 
     72(t)(2)(F),
       ``(ii) received after February 28, 2005, and before August 
     29, 2005, and
       ``(iii) which was to be used to purchase or construct a 
     principal residence in the Hurricane Katrina disaster area, 
     but which was not so purchased or constructed on account of 
     Hurricane Katrina.
       ``(C) Qualified rita distribution.--The term `qualified 
     Rita distribution' means any distribution (other than a 
     qualified Katrina distribution)--
       ``(i) described in section 401(k)(2)(B)(i)(IV), 
     403(b)(7)(A)(ii) (but only to the extent such distribution 
     relates to financial hardship), 403(b)(11)(B), or 
     72(t)(2)(F),
       ``(ii) received after February 28, 2005, and before 
     September 24, 2005, and
       ``(iii) which was to be used to purchase or construct a 
     principal residence in the Hurricane Rita disaster area, but 
     which was not so purchased or constructed on account of 
     Hurricane Rita.
       ``(D) Qualified wilma distribution.--The term `qualified 
     Wilma distribution' means any distribution (other than a 
     qualified Katrina distribution or a qualified Rita 
     distribution)--
       ``(i) described in section 401(k)(2)(B)(i)(IV), 
     403(b)(7)(A)(ii) (but only to the extent such distribution 
     relates to financial hardship), 403(b)(11)(B), or 
     72(t)(2)(F),
       ``(ii) received after February 28, 2005, and before October 
     24, 2005, and
       ``(iii) which was to be used to purchase or construct a 
     principal residence in the Hurricane Wilma disaster area, but 
     which was not so purchased or constructed on account of 
     Hurricane Wilma.
       ``(3) Applicable period.--For purposes of this subsection, 
     the term `applicable period' means--
       ``(A) with respect to any qualified Katrina distribution, 
     the period beginning on August 25, 2005, and ending on 
     February 28, 2006,
       ``(B) with respect to any qualified Rita distribution, the 
     period beginning on September 23, 2005, and ending on 
     February 28, 2006, and
       ``(C) with respect to any qualified Wilma distribution, the 
     period beginning on October 23, 2005, and ending on February 
     28, 2006.
       ``(c) Loans From Qualified Plans.--
       ``(1) Increase in limit on loans not treated as 
     distributions.--In the case of any loan from a qualified 
     employer plan (as defined under section 72(p)(4)) to a 
     qualified individual made during the applicable period--
       ``(A) clause (i) of section 72(p)(2)(A) shall be applied by 
     substituting `$100,000' for `$50,000', and
       ``(B) clause (ii) of such section shall be applied by 
     substituting `the present value of the nonforfeitable accrued 
     benefit of the employee under the plan' for `one-half of the 
     present value of the nonforfeitable accrued benefit of the 
     employee under the plan'.
       ``(2) Delay of repayment.--In the case of a qualified 
     individual with an outstanding loan on or after the qualified 
     beginning date from a qualified employer plan (as defined in 
     section 72(p)(4))--
       ``(A) if the due date pursuant to subparagraph (B) or (C) 
     of section 72(p)(2) for any repayment with respect to such 
     loan occurs during the period beginning on the qualified 
     beginning date and ending on December 31, 2006, such due date 
     shall be delayed for 1 year,
       ``(B) any subsequent repayments with respect to any such 
     loan shall be appropriately adjusted to reflect the delay in 
     the due date under paragraph (1) and any interest accruing 
     during such delay, and
       ``(C) in determining the 5-year period and the term of a 
     loan under subparagraph (B) or (C) of section 72(p)(2), the 
     period described in subparagraph (A) shall be disregarded.
       ``(3) Qualified individual.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified individual' means 
     any qualified Hurricane Katrina individual, any qualified 
     Hurricane Rita individual, and any qualified Hurricane Wilma 
     individual.
       ``(B) Qualified hurricane katrina individual.--The term 
     `qualified Hurricane Katrina individual' means an individual 
     whose principal place of abode on August 28, 2005, is located 
     in the Hurricane Katrina disaster area and who has sustained 
     an economic loss by reason of Hurricane Katrina.
       ``(C) Qualified hurricane rita individual.--The term 
     `qualified Hurricane Rita individual' means an individual 
     (other than a qualified Hurricane Katrina individual) whose 
     principal place of abode on September 23, 2005, is located in 
     the Hurricane Rita disaster area and who has sustained an 
     economic loss by reason of Hurricane Rita.
       ``(D) Qualified hurricane wilma individual.--The term 
     `qualified Hurricane Wilma individual' means an individual 
     (other than a qualified Hurricane Katrina individual or a 
     qualified Hurricane Rita individual) whose principal place of 
     abode on October 23, 2005, is located in the Hurricane Wilma 
     disaster area and who has sustained an economic loss by 
     reason of Hurricane Wilma.
       ``(4) Applicable period; qualified beginning date.--For 
     purposes of this subsection--
       ``(A) Hurricane katrina.--In the case of any qualified 
     Hurricane Katrina individual--
       ``(i) the applicable period is the period beginning on 
     September 24, 2005, and ending on December 31, 2006, and
       ``(ii) the qualified beginning date is August 25, 2005.
       ``(B) Hurricane rita.--In the case of any qualified 
     Hurricane Rita individual--
       ``(i) the applicable period is the period beginning on the 
     date of the enactment of this subsection and ending on 
     December 31, 2006, and
       ``(ii) the qualified beginning date is September 23, 2005.
       ``(C) Hurricane wilma.--In the case of any qualified 
     Hurricane Wilma individual--
       ``(i) the applicable period is the period beginning on the 
     date of the enactment of this subsection and ending on 
     December 31, 2006, and
       ``(ii) the qualified beginning date is October 23, 2005.

     ``SEC. 1400R. EMPLOYMENT RELIEF.

       ``(a) Employee Retention Credit for Employers Affected by 
     Hurricane Katrina.--
       ``(1) In general.--For purposes of section 38, in the case 
     of an eligible employer, the

[[Page 27108]]

     Hurricane Katrina employee retention credit for any taxable 
     year is an amount equal to 40 percent of the qualified wages 
     with respect to each eligible employee of such employer for 
     such taxable year. For purposes of the preceding sentence, 
     the amount of qualified wages which may be taken into account 
     with respect to any individual shall not exceed $6,000.
       ``(2) Definitions.--For purposes of this subsection--
       ``(A) Eligible employer.--The term `eligible employer' 
     means any employer--
       ``(i) which conducted an active trade or business on August 
     28, 2005, in the Gulf Recovery Zone, and
       ``(ii) with respect to whom the trade or business described 
     in clause (i) is inoperable on any day after August 28, 2005, 
     and before January 1, 2006, as a result of damage sustained 
     by reason of Hurricane Katrina.
       ``(B) Eligible employee.--The term `eligible employee' 
     means with respect to an eligible employer an employee whose 
     principal place of employment on August 28, 2005, with such 
     eligible employer was in the Gulf Recovery Zone.
       ``(C) Qualified wages.--The term `qualified wages' means 
     wages (as defined in section 51(c)(1), but without regard to 
     section 3306(b)(2)(B)) paid or incurred by an eligible 
     employer with respect to an eligible employee on any day 
     after August 28, 2005, and before January 1, 2006, which 
     occurs during the period--
       ``(i) beginning on the date on which the trade or business 
     described in subparagraph (A) first became inoperable at the 
     principal place of employment of the employee immediately 
     before Hurricane Katrina, and
       ``(ii) ending on the date on which such trade or business 
     has resumed significant operations at such principal place of 
     employment.

     Such term shall include wages paid without regard to whether 
     the employee performs no services, performs services at a 
     different place of employment than such principal place of 
     employment, or performs services at such principal place of 
     employment before significant operations have resumed.
       ``(3) Certain rules to apply.--For purposes of this 
     subsection, rules similar to the rules of sections 51(i)(1), 
     52, and 280C(a) shall apply.
       ``(4) Employee not taken into account more than once.--An 
     employee shall not be treated as an eligible employee for 
     purposes of this subsection for any period with respect to 
     any employer if such employer is allowed a credit under 
     section 51 with respect to such employee for such period.
       ``(b) Employee Retention Credit for Employers Affected by 
     Hurricane Rita.--
       ``(1) In general.--For purposes of section 38, in the case 
     of an eligible employer, the Hurricane Rita employee 
     retention credit for any taxable year is an amount equal to 
     40 percent of the qualified wages with respect to each 
     eligible employee of such employer for such taxable year. For 
     purposes of the preceding sentence, the amount of qualified 
     wages which may be taken into account with respect to any 
     individual shall not exceed $6,000.
       ``(2) Definitions.--For purposes of this subsection--
       ``(A) Eligible employer.--The term `eligible employer' 
     means any employer--
       ``(i) which conducted an active trade or business on 
     September 23, 2005, in the Rita Zone, and
       ``(ii) with respect to whom the trade or business described 
     in clause (i) is inoperable on any day after September 23, 
     2005, and before January 1, 2006, as a result of damage 
     sustained by reason of Hurricane Rita.
       ``(B) Eligible employee.--The term `eligible employee' 
     means with respect to an eligible employer an employee whose 
     principal place of employment on September 23, 2005, with 
     such eligible employer was in the Rita Zone.
       ``(C) Qualified wages.--The term `qualified wages' means 
     wages (as defined in section 51(c)(1), but without regard to 
     section 3306(b)(2)(B)) paid or incurred by an eligible 
     employer with respect to an eligible employee on any day 
     after September 23, 2005, and before January 1, 2006, which 
     occurs during the period--
       ``(i) beginning on the date on which the trade or business 
     described in subparagraph (A) first became inoperable at the 
     principal place of employment of the employee immediately 
     before Hurricane Rita, and
       ``(ii) ending on the date on which such trade or business 
     has resumed significant operations at such principal place of 
     employment.

     Such term shall include wages paid without regard to whether 
     the employee performs no services, performs services at a 
     different place of employment than such principal place of 
     employment, or performs services at such principal place of 
     employment before significant operations have resumed.
       ``(3) Certain rules to apply.--For purposes of this 
     subsection, rules similar to the rules of sections 51(i)(1), 
     52, and 280C(a) shall apply.
       ``(4) Employee not taken into account more than once.--An 
     employee shall not be treated as an eligible employee for 
     purposes of this subsection for any period with respect to 
     any employer if such employer is allowed a credit under 
     subsection (a) or section 51 with respect to such employee 
     for such period.
       ``(c) Employee Retention Credit for Employers Affected by 
     Hurricane Wilma.--
       ``(1) In general.--For purposes of section 38, in the case 
     of an eligible employer, the Hurricane Wilma employee 
     retention credit for any taxable year is an amount equal to 
     40 percent of the qualified wages with respect to each 
     eligible employee of such employer for such taxable year. For 
     purposes of the preceding sentence, the amount of qualified 
     wages which may be taken into account with respect to any 
     individual shall not exceed $6,000.
       ``(2) Definitions.--For purposes of this subsection--
       ``(A) Eligible employer.--The term `eligible employer' 
     means any employer--
       ``(i) which conducted an active trade or business on 
     October 23, 2005, in the Wilma Zone, and
       ``(ii) with respect to whom the trade or business described 
     in clause (i) is inoperable on any day after October 23, 
     2005, and before January 1, 2006, as a result of damage 
     sustained by reason of Hurricane Wilma.
       ``(B) Eligible employee.--The term `eligible employee' 
     means with respect to an eligible employer an employee whose 
     principal place of employment on October 23, 2005, with such 
     eligible employer was in the Wilma Zone.
       ``(C) Qualified wages.--The term `qualified wages' means 
     wages (as defined in section 51(c)(1), but without regard to 
     section 3306(b)(2)(B)) paid or incurred by an eligible 
     employer with respect to an eligible employee on any day 
     after October 23, 2005, and before January 1, 2006, which 
     occurs during the period--
       ``(i) beginning on the date on which the trade or business 
     described in subparagraph (A) first became inoperable at the 
     principal place of employment of the employee immediately 
     before Hurricane Wilma, and
       ``(ii) ending on the date on which such trade or business 
     has resumed significant operations at such principal place of 
     employment.

     Such term shall include wages paid without regard to whether 
     the employee performs no services, performs services at a 
     different place of employment than such principal place of 
     employment, or performs services at such principal place of 
     employment before significant operations have resumed.
       ``(3) Certain rules to apply.--For purposes of this 
     subsection, rules similar to the rules of sections 51(i)(1), 
     52, and 280C(a) shall apply.
       ``(4) Employee not taken into account more than once.--An 
     employee shall not be treated as an eligible employee for 
     purposes of this subsection for any period with respect to 
     any employer if such employer is allowed a credit under 
     subsection (a) or section 51 with respect to such employee 
     for such period.

     ``SEC. 1400S. ADDITIONAL TAX RELIEF PROVISIONS.

       ``(a) Temporary Suspension of Limitations on Charitable 
     Contributions.--
       ``(1) In general.--Except as otherwise provided in 
     paragraph (2), section 170(b) shall not apply to qualified 
     contributions and such contributions shall not be taken into 
     account for purposes of applying subsections (b) and (d) of 
     section 170 to other contributions.
       ``(2) Treatment of excess contributions.--For purposes of 
     section 170--
       ``(A) Individuals.--In the case of an individual--
       ``(i) Limitation.--Any qualified contribution shall be 
     allowed only to the extent that the aggregate of such 
     contributions does not exceed the excess of the taxpayer's 
     contribution base (as defined in subparagraph (F) of section 
     170(b)(1)) over the amount of all other charitable 
     contributions allowed under section 170(b)(1).
       ``(ii) Carryover.--If the aggregate amount of qualified 
     contributions made in the contribution year (within the 
     meaning of section 170(d)(1)) exceeds the limitation of 
     clause (i), such excess shall be added to the excess 
     described in the portion of subparagraph (A) of such section 
     which precedes clause (i) thereof for purposes of applying 
     such section.
       ``(B) Corporations.--In the case of a corporation--
       ``(i) Limitation.--Any qualified contribution shall be 
     allowed only to the extent that the aggregate of such 
     contributions does not exceed the excess of the taxpayer's 
     taxable income (as determined under paragraph (2) of section 
     170(b)) over the amount of all other charitable contributions 
     allowed under such paragraph.
       ``(ii) Carryover.--Rules similar to the rules of 
     subparagraph (A)(ii) shall apply for purposes of this 
     subparagraph.
       ``(3) Exception to overall limitation on itemized 
     deductions.--So much of any deduction allowed under section 
     170 as does not exceed the qualified contributions paid 
     during the taxable year shall not be treated as an itemized 
     deduction for purposes of section 68.
       ``(4) Qualified contributions.--
       ``(A) In general.--For purposes of this subsection, the 
     term `qualified contribution'

[[Page 27109]]

     means any charitable contribution (as defined in section 
     170(c)) if--
       ``(i) such contribution is paid during the period beginning 
     on August 28, 2005, and ending on December 31, 2005, in cash 
     to an organization described in section 170(b)(1)(A) (other 
     than an organization described in section 509(a)(3)),
       ``(ii) in the case of a contribution paid by a corporation, 
     such contribution is for relief efforts related to Hurricane 
     Katrina, Hurricane Rita, or Hurricane Wilma, and
       ``(iii) the taxpayer has elected the application of this 
     subsection with respect to such contribution.
       ``(B) Exception.--Such term shall not include a 
     contribution if the contribution is for establishment of a 
     new, or maintenance in an existing, segregated fund or 
     account with respect to which the donor (or any person 
     appointed or designated by such donor) has, or reasonably 
     expects to have, advisory privileges with respect to 
     distributions or investments by reason of the donor's status 
     as a donor.
       ``(C) Application of election to partnerships and s 
     corporations.--In the case of a partnership or S corporation, 
     the election under subparagraph (A)(iii) shall be made 
     separately by each partner or shareholder.
       ``(b) Suspension of Certain Limitations on Personal 
     Casualty Losses.--Paragraphs (1) and (2)(A) of section 165(h) 
     shall not apply to losses described in section 165(c)(3)--
       ``(1) which arise in the Hurricane Katrina disaster area on 
     or after August 25, 2005, and which are attributable to 
     Hurricane Katrina,
       ``(2) which arise in the Hurricane Rita disaster area on or 
     after September 23, 2005, and which are attributable to 
     Hurricane Rita, or
       ``(3) which arise in the Hurricane Wilma disaster area on 
     or after October 23, 2005, and which are attributable to 
     Hurricane Wilma.

     In the case of any other losses, section 165(h)(2)(A) shall 
     be applied without regard to the losses referred to in the 
     preceding sentence.''.
       (b) Conforming Amendments.--
       (1) Subsection (b) of section 38 is amended by striking 
     ``and'' at the end of paragraph (25), by striking the period 
     at the end of paragraph (26) and inserting a comma, and by 
     adding at the end the following new paragraphs:
       ``(27) the Hurricane Katrina employee retention credit 
     determined under section 1400R(a),
       ``(28) the Hurricane Rita employee retention credit 
     determined under section 1400R(b), and
       ``(29) the Hurricane Wilma employee retention credit 
     determined under section 1400R(c).''.
       (2) The table of sections for subchapter Z of chapter 1 is 
     amended by adding at the end the following new items:

``Sec. 1400P. Special rules for mortgage revenue bonds.
``Sec. 1400Q. Special rules for use of retirement funds.
``Sec.  140RQ. Employment relief.
``Sec.  1400S. Additional tax relief provisions.''.

       (3) The following provisions of the Katrina Emergency Tax 
     Relief Act of 2005 are hereby repealed:
       (A) Title I.
       (B) Sections 202, 301, and 402.

               TITLE II--EXTENSION OF EXPIRING PROVISIONS

     SEC. 201. EXTENSION AND INCREASE IN MINIMUM TAX RELIEF TO 
                   INDIVIDUALS.

       (a) In General.--Section 55(d)(1) is amended--
       (1) by striking ``$58,000'' and all that follows through 
     ``2005'' in subparagraph (A) and inserting ``$62,550 in the 
     case of taxable years beginning in 2006'', and
       (2) by striking ``$40,250'' and all that follows through 
     ``2005'' in subparagraph (B) and inserting ``$42,500 in the 
     case of taxable years beginning in 2006''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 202. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST 
                   REGULAR AND MINIMUM TAX LIABILITY.

       (a) In General.--Paragraph (2) of section 26(a) is 
     amended--
       (1) by striking ``2005'' in the heading and inserting 
     ``2006'', and
       (2) by striking ``or 2005'' and inserting ``2005, or 
     2006''.
       (b) Conforming Provisions.--
       (1) Section 30B(g) is amended by adding at the end the 
     following new paragraph:
       ``(3) Special rule for 2006.--For purposes of any taxable 
     year beginning during 2006, the credit allowed under 
     subsection (a) (after the application of paragraph (1)) shall 
     not exceed the excess of--
       ``(A) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(B) the sum of the credits allowable under subpart A and 
     this subpart (other than this section and section 30C).''.
       (2) Section 30C(d) is amended by adding at the end the 
     following new paragraph:
       ``(3) Special rule for 2006.--For purposes of any taxable 
     year beginning during 2006, the credit allowed under 
     subsection (a) (after the application of paragraph (1)) shall 
     not exceed the excess of--
       ``(A) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(B) the sum of the credits allowable under subpart A and 
     this subpart (other than this section).''.
       (3) Section 904(h) is amended by striking ``or 2005'' and 
     inserting ``2005, or 2006''.
       (4) The amendments made by sections 201(b), 202(f), and 
     618(b) of the Economic Growth and Tax Relief Reconciliation 
     Act of 2001 shall not apply to taxable years beginning during 
     2006.

     SEC. 203. ELECTION TO DEDUCT STATE AND LOCAL SALES TAXES IN 
                   LIEU OF STATE AND LOCAL INCOME TAXES.

       Section 164(b)(5)(I) is amended by striking ``2006'' and 
     inserting ``2007''.

     SEC. 204. TUITION DEDUCTION.

       (a) In General.--Section 222(e) is amended by striking 
     ``2005'' and inserting ``2006''.
       (b) Conforming Amendments.--Section 222(b)(2)(B) is 
     amended--
       (1) by striking ``a taxable year beginning in 2004 or 
     2005'' and inserting ``any taxable year beginning after 
     2003'', and
       (2) by striking ``2004 and 2005'' and inserting ``After 
     2003''.

     SEC. 205. EXTENSION AND MODIFICATION OF RESEARCH CREDIT.

       (a) Extension.--
       (1) In general.--Section 41(h)(1)(B) is amended by striking 
     ``2005'' and inserting ``2006''.
       (2) Conforming amendment.--Section 45C(b)(1)(D) is amended 
     by striking ``2005'' and inserting ``2006''.
       (b) Increase in Rates of Alternative Incremental Credit.--
       (1) In general.--Subparagraph (A) of section 41(c)(4) 
     (relating to election of alternative incremental credit) is 
     amended--
       (A) by striking ``2.65 percent'' and inserting ``3 
     percent'',
       (B) by striking ``3.2 percent'' and inserting ``4 
     percent'', and
       (C) by striking ``3.75 percent'' and inserting ``5 
     percent''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
       (c) Alternative Simplified Credit for Qualified Research 
     Expenses.--
       (1) In general.--Subsection (c) of section 41 (relating to 
     base amount) is amended by redesignating paragraphs (5) and 
     (6) as paragraphs (6) and (7), respectively, and by inserting 
     after paragraph (4) the following new paragraph:
       ``(5) Election of alternative simplified credit.--
       ``(A) In general.--At the election of the taxpayer, the 
     credit determined under subsection (a)(1) shall be equal to 
     12 percent of so much of the qualified research expenses for 
     the taxable year as exceeds 50 percent of the average 
     qualified research expenses for the 3 taxable years preceding 
     the taxable year for which the credit is being determined.
       ``(B) Special rule in case of no qualified research 
     expenses in any of 3 preceding taxable years.--
       ``(i) Taxpayers to which subparagraph applies.--The credit 
     under this paragraph shall be determined under this 
     subparagraph if the taxpayer has no qualified research 
     expenses in any 1 of the 3 taxable years preceding the 
     taxable year for which the credit is being determined.
       ``(ii) Credit rate.--The credit determined under this 
     subparagraph shall be equal to 6 percent of the qualified 
     research expenses for the taxable year.
       ``(C) Election.--An election under this paragraph shall 
     apply to the taxable year for which made and all succeeding 
     taxable years unless revoked with the consent of the 
     Secretary. An election under this paragraph may not be made 
     for any taxable year to which an election under paragraph (4) 
     applies.''.
       (2) Coordination with election of alternative incremental 
     credit.--
       (A) In general.--Section 41(c)(4)(B) (relating to election) 
     is amended by adding at the end the following: ``An election 
     under this paragraph may not be made for any taxable year to 
     which an election under paragraph (5) applies.''.
       (B) Transition rule.--In the case of an election under 
     section 41(c)(4) of the Internal Revenue Code of 1986 which 
     applies to the taxable year which includes the date of the 
     enactment of this Act, such election shall be treated as 
     revoked with the consent of the Secretary of the Treasury if 
     the taxpayer makes an election under section 41(c)(5) of such 
     Code (as added by subsection (a)) for such year.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
       (d) Expansion of Credit to Expenses of General 
     Collaborative Research Consortia.--
       (1) In general.--Section 41 is amended--
       (A) by striking ``an energy research consortium'' in 
     subsections (a)(3) and (b)(3)(C)(i) and inserting ``a 
     research consortium'',
       (B) by striking ``energy'' each place it appears in 
     subsection (f)(6)(A),
       (C) by inserting ``or 501(c)(6)'' after ``section 
     501(c)(3)'' in subsection (f)(6)(A)(i)(I), and

[[Page 27110]]

       (D) by striking ``Energy research'' in the heading for 
     subsection (f)(6)(A) and inserting ``Research''.
       (2) Effective date.--The amendments made by this section 
     shall apply to amounts paid or incurred after the date of the 
     enactment of this Act, in taxable years ending after such 
     date.

     SEC. 206. EXTENSION AND MODIFICATIONS TO WORK OPPORTUNITY 
                   CREDIT AND WELFARE-TO-WORK CREDIT.

       (a) In General.--Section 51(c)(4)(B) is amended by striking 
     ``2005'' and inserting ``2006''.
       (b) Eligibility of Ex-Felons Determined Without Regard to 
     Family Income.--Paragraph (4) of section 51(d) is amended by 
     adding ``and'' at the end of subparagraph (A), by striking 
     ``, and'' at the end of subparagraph (B) and inserting a 
     period, and by striking all that follows subparagraph (B).
       (c) Increase in Maximum Age for Eligibility of Food Stamp 
     Recipients.--Clause (i) of section 51(d)(8)(A) is amended by 
     striking ``25'' and inserting ``40''.
       (d) Increase in Maximum Age for Designated Community 
     Residents.--
       (1) In general.--Paragraph (5) of section 51(d) is amended 
     to read as follows:
       ``(5) Designated community residents.--
       ``(A) In general.--The term `designated community resident' 
     means any individual who is certified by the designated local 
     agency--
       ``(i) as having attained age 18 but not age 40 on the 
     hiring date, and
       ``(ii) as having his principal place of abode within an 
     empowerment zone, enterprise community, or renewal community.
       ``(B) Individual must continue to reside in zone or 
     community.--In the case of a designated community resident, 
     the term `qualified wages' shall not include wages paid or 
     incurred for services performed while the individual's 
     principal place of abode is outside an empowerment zone, 
     enterprise community, or renewal community.''
       (2) Conforming amendment.--Subparagraph (D) of section 
     51(d)(1) is amended to read as follows:
       ``(D) a designated community resident,''.
       (e) Consolidation of Work Opportunity Credit With Welfare-
     to-Work Credit.--
       (1) In general.--Paragraph (1) of section 51(d) is amended 
     by striking ``or'' at the end of subparagraph (G), by 
     striking the period at the end of subparagraph (H) and 
     inserting ``, or'', and by adding at the end the following 
     new subparagraph:
       ``(I) a long-term family assistance recipient.''
       (2) Long-term family assistance recipient.--Subsection (d) 
     of section 51 is amended by redesignating paragraphs (10) 
     through (12) as paragraphs (11) through (13), respectively, 
     and by inserting after paragraph (9) the following new 
     paragraph:
       ``(10) Long-term family assistance recipient.--The term 
     `long-term family assistance recipient' means any individual 
     who is certified by the designated local agency--
       ``(A) as being a member of a family receiving assistance 
     under a IV-A program (as defined in paragraph (2)(B)) for at 
     least the 18-month period ending on the hiring date,
       ``(B)(i) as being a member of a family receiving such 
     assistance for 18 months beginning after August 5, 1997, and
       ``(ii) as having a hiring date which is not more than 2 
     years after the end of the earliest such 18-month period, or
       ``(C)(i) as being a member of a family which ceased to be 
     eligible for such assistance by reason of any limitation 
     imposed by Federal or State law on the maximum period such 
     assistance is payable to a family, and
       ``(ii) as having a hiring date which is not more than 2 
     years after the date of such cessation.''
       (3) Increased credit for employment of long-term family 
     assistance recipients.--Section 51 is amended by inserting 
     after subsection (d) the following new subsection:
       ``(e) Credit for Second-Year Wages for Employment of Long-
     Term Family Assistance Recipients.--
       ``(1) In general.--With respect to the employment of a 
     long-term family assistance recipient--
       ``(A) the amount of the work opportunity credit determined 
     under this section for the taxable year shall include 50 
     percent of the qualified second-year wages for such year, and
       ``(B) in lieu of applying subsection (b)(3), the amount of 
     the qualified first-year wages, and the amount of qualified 
     second-year wages, which may be taken into account with 
     respect to such a recipient shall not exceed $10,000 per 
     year.
       ``(2) Qualified second-year wages.--For purposes of this 
     subsection, the term `qualified second-year wages' means 
     qualified wages--
       ``(A) which are paid to a long-term family assistance 
     recipient, and
       ``(B) which are attributable to service rendered during the 
     1-year period beginning on the day after the last day of the 
     1-year period with respect to such recipient determined under 
     subsection (b)(2).
       ``(3) Special rules for agricultural and railway labor.--If 
     such recipient is an employee to whom subparagraph (A) or (B) 
     of subsection (h)(1) applies, rules similar to the rules of 
     such subparagraphs shall apply except that--
       ``(A) such subparagraph (A) shall be applied by 
     substituting `$10,000' for `$6,000', and
       ``(B) such subparagraph (B) shall be applied by 
     substituting `$833.33' for `$500'.''
       (4) Repeal of separate welfare-to-work credit.--
       (A) In general.--Section 51A is hereby repealed.
       (B) Clerical amendment.--The table of sections for subpart 
     F of part IV of subchapter A of chapter 1 is amended by 
     striking the item relating to section 51A.
       (f) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after December 31, 2005.

     SEC. 207. QUALIFIED ZONE ACADEMY BONDS.

       Paragraph (1) of section 1397E(e) is amended by striking 
     ``and 2005'' and inserting ``2005, and 2006''.

     SEC. 208. DEDUCTION FOR CERTAIN EXPENSES OF SCHOOL TEACHERS.

       Subparagraph (D) of section 62(a)(2) is amended by striking 
     ``or 2005'' and inserting ``2005, or 2006''.

     SEC. 209. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF 
                   COLUMBIA.

       (a) Designation of Zone.--Subsection (f) of section 1400 is 
     amended by striking ``2005'' both places it appears and 
     inserting ``2006''.
       (b) Tax-Exempt Economic Development Bonds.--Subsection (b) 
     of section 1400A is amended by striking ``2005'' and 
     inserting ``2006''.
       (c) Zero Percent Capital Gains Rate.--
       (1) In general.--Subsection (b) of section 1400B is amended 
     by striking ``2006'' each place it appears and inserting 
     ``2007''.
       (2) Conforming amendments.--
       (A) Section 1400B(e)(2) is amended--
       (i) by striking ``2010'' and inserting ``2011'', and
       (ii) by striking ``2010'' in the heading and inserting 
     ``2011''.
       (B) Section 1400B(g)(2) is amended by striking ``2010'' and 
     inserting ``2011''.
       (C) Section 1400F(d) is amended by striking ``2010'' and 
     inserting ``2011''.
       (d) First-Time Homebuyer Credit.--Subsection (i) of section 
     1400C is amended by striking ``2006'' and inserting ``2007''.

     SEC. 210. INDIAN EMPLOYMENT TAX CREDIT.

       Section 45A(f) is amended by striking ``2005'' and 
     inserting ``2006''.

     SEC. 211. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON 
                   INDIAN RESERVATION.

       Section 168(j)(8) is amended by striking ``2005'' and 
     inserting ``2006''.

     SEC. 212. EXTENSION AND EXPANSION OF CHARITABLE CONTRIBUTION 
                   ALLOWED FOR SCIENTIFIC PROPERTY USED FOR 
                   RESEARCH AND FOR COMPUTER TECHNOLOGY AND 
                   EQUIPMENT USED FOR EDUCATIONAL PURPOSES.

       (a) Scientific Property Used for Research.--
       (1) In general.--Clause (ii) of section 170(e)(4)(B) 
     (defining qualified research contributions) is amended by 
     inserting ``or assembled'' after ``constructed''.
       (2) Conforming amendment.--Clause (iii) of section 
     170(e)(4)(B) is amended by inserting ``or assembling'' after 
     ``construction''.
       (b) Computer Technology and Equipment for Educational 
     Purposes.--
       (1) In general.--Clause (ii) of section 170(e)(6)(B) is 
     amended by inserting ``or assembled'' after ``constructed'' 
     and ``or assembling'' after ``construction''.
       (2) Special rule extended.--Section 170(e)(6)(G) is amended 
     by striking ``2005'' and inserting ``2006''.
       (3) Conforming amendments.--Subparagraph (D) of section 
     170(e)(6) is amended by inserting ``or assembled'' after 
     ``constructed'' and ``or assembling'' after ``construction''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 213. EXPENSING OF BROWNFIELDS REMEDIATION COSTS.

       (a) Extension.--Subsection (h) of section 198 is amended by 
     striking ``2005'' and inserting ``2006''.
       (b) Expansion.--
       (1) In general.--Section 198(d)(1) (defining hazardous 
     substance) is amended by striking ``and'' at the end of 
     subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(C) any petroleum product (as defined in section 
     4612(a)(3)).''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to expenditures paid or incurred after December 
     31, 2005.

     SEC. 214. EXTENSION OF FULL CREDIT FOR QUALIFIED ELECTRIC 
                   VEHICLES.

       (a) In General.--Section 30(b) (relating to limitations) is 
     amended by striking paragraph (2) and by redesignating 
     paragraph (3) as paragraph (2).

     SEC. 215. FIFTEEN-YEAR STRAIGHT-LINE COST RECOVERY FOR 
                   QUALIFIED LEASEHOLD IMPROVEMENTS AND QUALIFIED 
                   RESTAURANT IMPROVEMENTS.

       Clauses (iv) and (v) of section 168(e)(3)(E) are each 
     amended by striking ``2006'' and inserting ``2007''.

     SEC. 216. APPLICATION OF EGTRRA SUNSET TO THIS TITLE.

       Each amendment made by this title shall be subject to title 
     IX of the Economic

[[Page 27111]]

     Growth and Tax Relief Reconciliation Act of 2001 to the same 
     extent and in the same manner as the provision of such Act to 
     which such amendment relates.

                     TITLE III--REVENUE PROVISIONS

            Subtitle A--Provisions Relating to Tax Shelters

     SEC. 301. CLARIFICATION OF ECONOMIC SUBSTANCE DOCTRINE.

       (a) In General.--Section 7701 is amended by redesignating 
     subsection (o) as subsection (p) and by inserting after 
     subsection (n) the following new subsection:
       ``(o) Clarification of Economic Substance Doctrine; Etc.--
       ``(1) General rules.--
       ``(A) In general.--In any case in which a court determines 
     that the economic substance doctrine is relevant for purposes 
     of this title to a transaction (or series of transactions), 
     such transaction (or series of transactions) shall have 
     economic substance only if the requirements of this paragraph 
     are met.
       ``(B) Definition of economic substance.--For purposes of 
     subparagraph (A)--
       ``(i) In general.--A transaction has economic substance 
     only if--

       ``(I) the transaction changes in a meaningful way (apart 
     from Federal tax effects) the taxpayer's economic position, 
     and
       ``(II) the taxpayer has a substantial nontax purpose for 
     entering into such transaction and the transaction is a 
     reasonable means of accomplishing such purpose.

     In applying subclause (II), a purpose of achieving a 
     financial accounting benefit shall not be taken into account 
     in determining whether a transaction has a substantial nontax 
     purpose if the origin of such financial accounting benefit is 
     a reduction of income tax.
       ``(ii) Special rule where taxpayer relies on profit 
     potential.--A transaction shall not be treated as having 
     economic substance by reason of having a potential for profit 
     unless--

       ``(I) the present value of the reasonably expected pre-tax 
     profit from the transaction is substantial in relation to the 
     present value of the expected net tax benefits that would be 
     allowed if the transaction were respected, and
       ``(II) the reasonably expected pre-tax profit from the 
     transaction exceeds a risk-free rate of return.

       ``(C) Treatment of fees and foreign taxes.--Fees and other 
     transaction expenses and foreign taxes shall be taken into 
     account as expenses in determining pre-tax profit under 
     subparagraph (B)(ii).
       ``(2) Special rules for transactions with tax-indifferent 
     parties.--
       ``(A) Special rules for financing transactions.--The form 
     of a transaction which is in substance the borrowing of money 
     or the acquisition of financial capital directly or 
     indirectly from a tax-indifferent party shall not be 
     respected if the present value of the deductions to be 
     claimed with respect to the transaction is substantially in 
     excess of the present value of the anticipated economic 
     returns of the person lending the money or providing the 
     financial capital. A public offering shall be treated as a 
     borrowing, or an acquisition of financial capital, from a 
     tax-indifferent party if it is reasonably expected that at 
     least 50 percent of the offering will be placed with tax-
     indifferent parties.
       ``(B) Artificial income shifting and basis adjustments.--
     The form of a transaction with a tax-indifferent party shall 
     not be respected if--
       ``(i) it results in an allocation of income or gain to the 
     tax-indifferent party in excess of such party's economic 
     income or gain, or
       ``(ii) it results in a basis adjustment or shifting of 
     basis on account of overstating the income or gain of the 
     tax-indifferent party.
       ``(3) Definitions and special rules.--For purposes of this 
     subsection--
       ``(A) Economic substance doctrine.--The term `economic 
     substance doctrine' means the common law doctrine under which 
     tax benefits under subtitle A with respect to a transaction 
     are not allowable if the transaction does not have economic 
     substance or lacks a business purpose.
       ``(B) Tax-indifferent party.--The term `tax-indifferent 
     party' means any person or entity not subject to tax imposed 
     by subtitle A. A person shall be treated as a tax-indifferent 
     party with respect to a transaction if the items taken into 
     account with respect to the transaction have no substantial 
     impact on such person's liability under subtitle A.
       ``(C) Exception for personal transactions of individuals.--
     In the case of an individual, this subsection shall apply 
     only to transactions entered into in connection with a trade 
     or business or an activity engaged in for the production of 
     income.
       ``(D) Treatment of lessors.--In applying paragraph 
     (1)(B)(ii) to the lessor of tangible property subject to a 
     lease--
       ``(i) the expected net tax benefits with respect to the 
     leased property shall not include the benefits of--

       ``(I) depreciation,
       ``(II) any tax credit, or
       ``(III) any other deduction as provided in guidance by the 
     Secretary, and

       ``(ii) subclause (II) of paragraph (1)(B)(ii) shall be 
     disregarded in determining whether any of such benefits are 
     allowable.
       ``(4) Other common law doctrines not affected.--Except as 
     specifically provided in this subsection, the provisions of 
     this subsection shall not be construed as altering or 
     supplanting any other rule of law, and the requirements of 
     this subsection shall be construed as being in addition to 
     any such other rule of law.
       ``(5) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection. Such regulations may include 
     exemptions from the application of this subsection.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after the date of 
     the enactment of this Act.

     SEC. 302. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO 
                   TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.

       (a) In General.--Subchapter A of chapter 68 is amended by 
     inserting after section 6662A the following new section:

     ``SEC. 6662B. PENALTY FOR UNDERSTATEMENTS ATTRIBUTABLE TO 
                   TRANSACTIONS LACKING ECONOMIC SUBSTANCE, ETC.

       ``(a) Imposition of Penalty.--If a taxpayer has an 
     noneconomic substance transaction understatement for any 
     taxable year, there shall be added to the tax an amount equal 
     to 40 percent of the amount of such understatement.
       ``(b) Reduction of Penalty for Disclosed Transactions.--
     Subsection (a) shall be applied by substituting `20 percent' 
     for `40 percent' with respect to the portion of any 
     noneconomic substance transaction understatement with respect 
     to which the relevant facts affecting the tax treatment of 
     the item are adequately disclosed in the return or a 
     statement attached to the return.
       ``(c) Noneconomic Substance Transaction Understatement.--
     For purposes of this section--
       ``(1) In general.--The term `noneconomic substance 
     transaction understatement' means any amount which would be 
     an understatement under section 6662A(b)(1) if section 6662A 
     were applied by taking into account items attributable to 
     noneconomic substance transactions rather than items to which 
     section 6662A would apply without regard to this paragraph.
       ``(2) Noneconomic substance transaction.--The term 
     `noneconomic substance transaction' means any transaction 
     if--
       ``(A) there is a lack of economic substance (within the 
     meaning of section 7701(o)(1)) for the transaction giving 
     rise to the claimed benefit or the transaction was not 
     respected under section 7701(o)(2), or
       ``(B) the transaction fails to meet the requirements of any 
     similar rule of law.
       ``(d) Rules Applicable to Compromise of Penalty.--
       ``(1) In general.--If the 1st letter of proposed deficiency 
     which allows the taxpayer an opportunity for administrative 
     review in the Internal Revenue Service Office of Appeals has 
     been sent with respect to a penalty to which this section 
     applies, only the Commissioner of Internal Revenue may 
     compromise all or any portion of such penalty.
       ``(2) Applicable rules.--The rules of paragraphs (2) and 
     (3) of section 6707A(d) shall apply for purposes of paragraph 
     (1).
       ``(e) Coordination With Other Penalties.--Except as 
     otherwise provided in this part, the penalty imposed by this 
     section shall be in addition to any other penalty imposed by 
     this title.
       ``(f) Cross References.--

  ``(1) For coordination of penalty with understatements under section 
              6662 and other special rules, see section 6662A(e)
  ``(2) For reporting of penalty imposed under this section to the 
              Securities and Exchange Commission, see section 
              6707A(e)''.
       (b) Coordination With Other Understatements and 
     Penalties.--
       (1) The second sentence of section 6662(d)(2)(A) is amended 
     by inserting ``and without regard to items with respect to 
     which a penalty is imposed by section 6662B'' before the 
     period at the end.
       (2) Subsection (e) of section 6662A is amended--
       (A) in paragraph (1), by inserting ``and noneconomic 
     substance transaction understatements'' after ``reportable 
     transaction understatements'' both places it appears,
       (B) in paragraph (2)(A), by inserting ``and a noneconomic 
     substance transaction understatement'' after ``reportable 
     transaction understatement'',
       (C) in paragraph (2)(B), by inserting ``6662B or'' before 
     ``6663'',
       (D) in paragraph (2)(C)(i), by inserting ``or section 
     6662B'' before the period at the end,
       (E) in paragraph (2)(C)(ii), by inserting ``and section 
     6662B'' after ``This section'',
       (F) in paragraph (3), by inserting ``or noneconomic 
     substance transaction understatement'' after ``reportable 
     transaction understatement'', and
       (G) by adding at the end the following new paragraph:
       ``(4) Noneconomic substance transaction understatement.--
     For purposes of this subsection, the term `noneconomic 
     substance transaction understatement' has the meaning given 
     such term by section 6662B(c).''.

[[Page 27112]]

       (3) Subsection (e) of section 6707A is amended--
       (A) by striking ``or'' at the end of subparagraph (B), and
       (B) by striking subparagraph (C) and inserting the 
     following new subparagraphs:
       ``(C) is required to pay a penalty under section 6662B with 
     respect to any noneconomic substance transaction, or
       ``(D) is required to pay a penalty under section 6662(h) 
     with respect to any transaction and would (but for section 
     6662A(e)(2)(C)) have been subject to penalty under section 
     6662A at a rate prescribed under section 6662A(c) or under 
     section 6662B,''.
       (c) Clerical Amendment.--The table of sections for part II 
     of subchapter A of chapter 68 is amended by inserting after 
     the item relating to section 6662A the following new item:

``Sec. 6662B. Penalty for understatements attributable to transactions 
              lacking economic substance, etc.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after the date of 
     the enactment of this Act.

     SEC. 303. DENIAL OF DEDUCTION FOR INTEREST ON UNDERPAYMENTS 
                   ATTRIBUTABLE TO NONECONOMIC SUBSTANCE 
                   TRANSACTIONS.

       (a) In General.--Section 163(m) (relating to interest on 
     unpaid taxes attributable to nondisclosed reportable 
     transactions) is amended--
       (1) by striking ``attributable'' and all that follows and 
     inserting the following: ``attributable to--
       ``(1) the portion of any reportable transaction 
     understatement (as defined in section 6662A(b)) with respect 
     to which the requirement of section 6664(d)(2)(A) is not met, 
     or
       ``(2) any noneconomic substance transaction understatement 
     (as defined in section 6662B(c)).'', and
       (2) by inserting ``and Noneconomic Substance Transactions'' 
     in the heading thereof after ``Transactions''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions after the date of the enactment 
     of this Act in taxable years ending after such date.

     SEC. 304. MODIFICATIONS OF EFFECTIVE DATES OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) In General.--Section 849(b) of the American Jobs 
     Creation Act of 2004 is amended by striking paragraphs (1) 
     and (2), by redesignating paragraphs (3) and (4) as 
     paragraphs (1) and (2), respectively, and by adding at the 
     end the following new paragraph:
       ``(3) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2004, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.

     SEC. 305. REVALUATION OF LIFO INVENTORIES OF LARGE INTEGRATED 
                   OIL COMPANIES.

       (a) General Rule.--Notwithstanding any other provision of 
     law, if a taxpayer is an applicable integrated oil company 
     for its last taxable year ending in calendar year 2005, the 
     taxpayer shall--
       (1) increase, effective as of the close of such taxable 
     year, the value of each historic LIFO layer of inventories of 
     crude oil, natural gas, or any other petroleum product 
     (within the meaning of section 4611) by the layer adjustment 
     amount, and
       (2) decrease its cost of goods sold for such taxable year 
     by the aggregate amount of the increases under paragraph (1).

     If the aggregate amount of the increases under paragraph (1) 
     exceed the taxpayer's cost of goods sold for such taxable 
     year, the taxpayer's gross income for such taxable year shall 
     be increased by the amount of such excess.
       (b) Layer Adjustment Amount.--For purposes of this 
     section--
       (1) In general.--The term ``layer adjustment amount'' 
     means, with respect to any historic LIFO layer, the product 
     of--
       (A) $18.75, and
       (B) the number of barrels of crude oil (or in the case of 
     natural gas or other petroleum products, the number of 
     barrel-of-oil equivalents) represented by the layer.
       (2) Barrel-of-oil equivalent.--The term ``barrel-of-oil 
     equivalent'' has the meaning given such term by section 
     29(d)(5) (as in effect before its redesignation by the Energy 
     Tax Incentives Act of 2005).
       (c) Application of Requirement.--
       (1) No change in method of accounting.--Any adjustment 
     required by this section shall not be treated as a change in 
     method of accounting.
       (2) Underpayments of estimated tax.--No addition to the tax 
     shall be made under section 6655 of the Internal Revenue Code 
     of 1986 (relating to failure by corporation to pay estimated 
     tax) with respect to any underpayment of an installment 
     required to be paid with respect to the taxable year 
     described in subsection (a) to the extent such underpayment 
     was created or increased by this section.
       (d) Applicable Integrated Oil Company.--For purposes of 
     this section, the term ``applicable integrated oil company'' 
     means an integrated oil company (as defined in section 
     291(b)(4) of the Internal Revenue Code of 1986) which--
       (1) had gross receipts in excess of $1,000,000,000 for its 
     last taxable year ending during calendar year 2005, and
       (2) uses the last-in, first-out (LIFO) method of accounting 
     with respect to its crude oil inventories for such taxable 
     year.

     For purposes of paragraph (1), all persons treated as a 
     single employer under subsections (a) and (b) of section 52 
     of the Internal Revenue Code of 1986 shall be treated as 1 
     person and, in the case of a short taxable year, the rule 
     under section 448(c)(3)(B) shall apply.

     SEC. 306. MODIFICATION OF EFFECTIVE DATE OF EXCEPTION FROM 
                   SUSPENSION RULES FOR CERTAIN LISTED AND 
                   REPORTABLE TRANSACTIONS.

       (a) In General.--Paragraph (2) of section 903(d) of the 
     American Jobs Creation Act of 2004 is amended to read as 
     follows:
       ``(2) Exception for reportable or listed transactions.--
       ``(A) In general.--The amendments made by subsection (c) 
     shall apply with respect to interest accruing after October 
     3, 2004.
       ``(B) Special rule for certain listed and reportable 
     transactions.--
       ``(i) In general.--Except as provided in clause (ii), the 
     amendments made by subsection (c) shall also apply with 
     respect to interest accruing on or before October 3, 2004.
       ``(ii) Participants in settlement initiatives.--Clause (i) 
     shall not apply to any transaction if, as of January 23, 
     2006--

       ``(I) the taxpayer is participating in a settlement 
     initiative described in Internal Revenue Service Announcement 
     2005-80 with respect to such transaction, or
       ``(II) the taxpayer has entered into a settlement agreement 
     pursuant to such an initiative.

       ``(iii) Termination of exception.--Clause (ii)(I) shall not 
     apply to any taxpayer if, after January 23, 2006, the 
     taxpayer withdraws from, or terminates, participation in the 
     initiative or the Secretary of the Treasury or the 
     Secretary's delegate determines that a settlement agreement 
     will not be reached pursuant to the initiative within a 
     reasonable period of time.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the provisions of the 
     American Jobs Creation Act of 2004 to which it relates.

     SEC. 307. DOUBLING OF CERTAIN PENALTIES, FINES, AND INTEREST 
                   ON UNDERPAYMENTS RELATED TO CERTAIN OFFSHORE 
                   FINANCIAL ARRANGEMENTS.

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

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

       (ii) has neither signed a closing agreement pursuant to the 
     Voluntary Offshore Compliance Initiative established by the 
     Department of the Treasury under Revenue Procedure 2003-11 
     nor voluntarily disclosed its participation in such 
     arrangement by notifying the Internal Revenue Service of such 
     arrangement prior to the issue being raised by the Internal 
     Revenue Service during an examination.
       (B) Authority to waive.--The Secretary of the Treasury or 
     the Secretary's delegate may waive the application of 
     paragraph (1) to any taxpayer if the Secretary or the 
     Secretary's delegate determines that the use of such offshore 
     payment mechanisms is incidental to the transaction and, in 
     addition, in the case of a trade or business, such use is 
     conducted in the ordinary course of the type of trade or 
     business of the taxpayer.
       (C) Issues raised.--For purposes of subparagraph (A)(ii), 
     an item shall be treated as

[[Page 27113]]

     an issue raised during an examination if the individual 
     examining the return--
       (i) communicates to the taxpayer knowledge about the 
     specific item, or
       (ii) has made a request to the taxpayer for information and 
     the taxpayer could not make a complete response to that 
     request without giving the examiner knowledge of the specific 
     item.
       (b) Definitions and Rules.--For purposes of this section--
       (1) Applicable penalty.--The term ``applicable penalty'' 
     means any penalty, addition to tax, or fine imposed under 
     chapter 68 of the Internal Revenue Code of 1986.
       (2) Fees and expenses.--The Secretary of the Treasury may 
     retain and use an amount not in excess of 25 percent of all 
     additional interest, penalties, additions to tax, and fines 
     collected under this section to be used for enforcement and 
     collection activities of the Internal Revenue Service. The 
     Secretary shall keep adequate records regarding amounts so 
     retained and used. The amount credited as paid by any 
     taxpayer shall be determined without regard to this 
     paragraph.
       (c) Report by Secretary.--The Secretary shall each year 
     conduct a study and report to Congress on the implementation 
     of this section during the preceding year, including 
     statistics on the number of taxpayers affected by such 
     implementation and the amount of interest and applicable 
     penalties asserted, waived, and assessed during such 
     preceding year.
       (d) Effective Date.--The provisions of this section shall 
     apply to interest, penalties, additions to tax, and fines 
     with respect to any taxable year if, as of the date of the 
     enactment of this Act, the assessment of any tax, penalty, or 
     interest with respect to such taxable year is not prevented 
     by the operation of any law or rule of law.

     SEC. 308. PENALTY FOR AIDING AND ABETTING THE UNDERSTATEMENT 
                   OF TAX LIABILITY.

       (a) In General.--Section 6701(a) (relating to imposition of 
     penalty) is amended--
       (1) by inserting ``the tax liability or'' after ``respect 
     to,'' in paragraph (1),
       (2) by inserting ``aid, assistance, procurement, or advice 
     with respect to such'' before ``portion'' both places it 
     appears in paragraphs (2) and (3), and
       (3) by inserting ``instance of aid, assistance, 
     procurement, or advice or each such'' before ``document'' in 
     the matter following paragraph (3).
       (b) Amount of Penalty.--Subsection (b) of section 6701 
     (relating to penalties for aiding and abetting understatement 
     of tax liability) is amended to read as follows:
       ``(b) Amount of Penalty; Calculation of Penalty; Liability 
     for Penalty.--
       ``(1) Amount of penalty.--The amount of the penalty imposed 
     by subsection (a) shall not exceed 100 percent of the gross 
     income derived (or to be derived) from such aid, assistance, 
     procurement, or advice provided by the person or persons 
     subject to such penalty.
       ``(2) Calculation of penalty.--The penalty amount 
     determined under paragraph (1) shall be calculated with 
     respect to each instance of aid, assistance, procurement, or 
     advice described in subsection (a), each instance in which 
     income was derived by the person or persons subject to such 
     penalty, and each person who made such an understatement of 
     the liability for tax.
       ``(3) Liability for penalty.--If more than 1 person is 
     liable under subsection (a) with respect to providing such 
     aid, assistance, procurement, or advice, all such persons 
     shall be jointly and severally liable for the penalty under 
     such subsection.''.
       (c) Penalty Not Deductible.--Section 6701 is amended by 
     adding at the end the following new subsection:
       ``(g) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.

   Subtitle B--Provisions to Close Corporate and Individual Loopholes

     SEC. 311. TAX TREATMENT OF INVERTED ENTITIES.

       (a) In General.--Section 7874 is amended--
       (1) by striking ``March 4, 2003'' in subsection 
     (a)(2)(B)(i) and in the matter following subsection 
     (a)(2)(B)(iii) and inserting ``March 20, 2002'',
       (2) by striking ``at least 60 percent'' in subsection 
     (a)(2)(B)(ii) and inserting ``more than 50 percent'',
       (3) by striking ``80 percent'' in subsection (b) and 
     inserting ``at least 80 percent'',
       (4) by striking ``60 percent'' in subsection (b) and 
     inserting ``more than 50 percent'',
       (5) by adding at the end of subsection (a)(2) the following 
     new sentence: ``Except as provided in regulations, an 
     acquisition of properties of a domestic corporation shall not 
     be treated as described in subparagraph (B) if none of the 
     corporation's stock was readily tradeable on an established 
     securities market at any time during the 4-year period ending 
     on the date of the acquisition.'', and
       (6) by redesignating subsection (g) as subsection (h) and 
     by inserting after subsection (f) the following new 
     subsection:
       ``(g) Special Rules Applicable to Expatriated Entities.--
       ``(1) Increases in accuracy-related penalties.--In the case 
     of any underpayment of tax of an expatriated entity--
       ``(A) section 6662(a) shall be applied with respect to such 
     underpayment by substituting `30 percent' for `20 percent', 
     and
       ``(B) if such underpayment is attributable to one or more 
     gross valuation understatements, the increase in the rate of 
     penalty under section 6662(h) shall be to 50 percent rather 
     than 40 percent.
       ``(2) Modifications of limitation on interest deduction.--
     In the case of an expatriated entity, section 163(j) shall be 
     applied--
       ``(A) without regard to paragraph (2)(A)(ii) thereof, and
       ``(B) by substituting `25 percent' for `50 percent' each 
     place it appears in paragraph (2)(B) thereof.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after March 20, 2002.

     SEC. 312. GRANT OF TREASURY REGULATORY AUTHORITY TO ADDRESS 
                   FOREIGN TAX CREDIT TRANSACTIONS INVOLVING 
                   INAPPROPRIATE SEPARATION OF FOREIGN TAXES FROM 
                   RELATED FOREIGN INCOME.

       (a) In General.--Section 901 (relating to taxes of foreign 
     countries and of possessions of United States) is amended by 
     redesignating subsection (m) as subsection (n) and by 
     inserting after subsection (l) the following new subsection:
       ``(m) Regulations.--The Secretary may prescribe regulations 
     disallowing a credit under subsection (a) for all or a 
     portion of any foreign tax, or allocating a foreign tax among 
     2 or more persons, in cases where the foreign tax is imposed 
     on any person in respect of income of another person or in 
     other cases involving the inappropriate separation of the 
     foreign tax from the related foreign income.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transactions entered into after the date of 
     the enactment of this Act.

     SEC. 313. TREATMENT OF CONTINGENT PAYMENT CONVERTIBLE DEBT 
                   INSTRUMENTS.

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

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

     SEC. 314. APPLICATION OF EARNINGS STRIPPING RULES TO PARTNERS 
                   WHICH ARE CORPORATIONS.

       (a) In General.--Section 163(j) (relating to limitation on 
     deduction for interest on certain indebtedness) is amended by 
     redesignating paragraph (8) as paragraph (9) and by inserting 
     after paragraph (7) the following new paragraph:
       ``(8) Treatment of corporate partners.--Except to the 
     extent provided by regulations, in applying this subsection 
     to a corporation which owns (directly or indirectly) an 
     interest in a partnership--
       ``(A) such corporation's distributive share of interest 
     income paid or accrued to such partnership shall be treated 
     as interest income paid or accrued to such corporation,
       ``(B) such corporation's distributive share of interest 
     paid or accrued by such partnership shall be treated as 
     interest paid or accrued by such corporation, and
       ``(C) such corporation's share of the liabilities of such 
     partnership shall be treated as liabilities of such 
     corporation.''.
       (b) Additional Regulatory Authority.--Section 163(j)(9) 
     (relating to regulations), as redesignated by subsection (a), 
     is amended by striking ``and'' at the end of subparagraph 
     (B), by striking the period at the end of subparagraph (C) 
     and inserting ``, and'', and by adding at the end the 
     following new subparagraph:

[[Page 27114]]

       ``(D) regulations providing for the reallocation of shares 
     of partnership indebtedness, or distributive shares of the 
     partnership's interest income or interest expense, as may be 
     appropriate to carry out the purposes of this subsection.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning on or after the date 
     of the enactment of this Act.

     SEC. 315. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, 
                   AND OTHER AMOUNTS.

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

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

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

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

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

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

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

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

     SEC. 316. DISALLOWANCE OF DEDUCTION FOR PUNITIVE DAMAGES.

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

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

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

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

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

     SEC. 317. LIMITATION OF EMPLOYER DEDUCTION FOR CERTAIN 
                   ENTERTAINMENT EXPENSES.

       (a) In General.--Paragraph (2) of section 274(e) (relating 
     to expenses treated as compensation) is amended to read as 
     follows:
       ``(2) Expenses treated as compensation.--Expenses for 
     goods, services, and facilities, to the extent that the 
     expenses do not exceed the amount of the expenses which are 
     treated by the taxpayer, with respect to the recipient of the 
     entertainment, amusement, or recreation, as compensation to 
     an employee on the taxpayer's return of tax under this 
     chapter and as wages to such employee for purposes of chapter 
     24 (relating to withholding of income tax at source on 
     wages).''.
       (b) Persons Not Employees.--Paragraph (9) of section 274(e) 
     is amended by striking ``to the extent that the expenses are 
     includible in the gross income'' and inserting ``to the 
     extent that the expenses do not exceed the amount of the 
     expenses which are includible in the gross income''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to expenses

[[Page 27115]]

     incurred after the date of the enactment of this Act.

     SEC. 318. IMPOSITION OF MARK-TO-MARKET TAX ON INDIVIDUALS WHO 
                   EXPATRIATE.

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

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

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

     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence.
       ``(3) Exclusion for certain gain.--
       ``(A) In general.--The amount which, but for this 
     paragraph, would be includible in the gross income of any 
     individual by reason of this section shall be reduced (but 
     not below zero) by $600,000. For purposes of this paragraph, 
     allocable expatriation gain taken into account under 
     subsection (f)(2) shall be treated in the same manner as an 
     amount required to be includible in gross income.
       ``(B) Cost-of-living adjustment.--
       ``(i) In general.--In the case of an expatriation date 
     occurring in any calendar year after 2005, the $600,000 
     amount under subparagraph (A) shall be increased by an amount 
     equal to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, determined by 
     substituting `calendar year 2004' for `calendar year 1992' in 
     subparagraph (B) thereof.

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

[[Page 27116]]

       ``(A) any United States citizen who relinquishes 
     citizenship, and
       ``(B) any long-term resident of the United States who--
       ``(i) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(ii) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.
       ``(2) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date of the event described in clause (i) or (ii) 
     of paragraph (1)(B).
       ``(3) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces such individual's 
     United States nationality before a diplomatic or consular 
     officer of the United States pursuant to paragraph (5) of 
     section 349(a) of the Immigration and Nationality Act (8 
     U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.

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

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

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

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

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

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

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

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

       ``(g) Termination of Deferrals, Etc.--In the case of any 
     covered expatriate, notwithstanding any other provision of 
     this title--
       ``(1) any period during which recognition of income or gain 
     is deferred shall terminate on the day before the 
     expatriation date, and

[[Page 27117]]

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

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

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

     SEC. 319. MODIFICATION OF EXCLUSION FOR CITIZENS LIVING 
                   ABROAD.

       (a) Inflation Adjustment of Foreign Earned Income 
     Limitation.--Clause (ii) of section 911(b)(2)(D) (relating to 
     inflation adjustment) is amended--
       (1) by striking ``2007'' and inserting ``2005'', and
       (2) by striking ``2006'' in subclause (II) and inserting 
     ``2004''.
       (b) Modification of Housing Cost Amount.--
       (1) Minimum amount.--Clause (i) of section 911(c)(1)(B) is 
     amended to read as follows:
       ``(i) 16 percent of the amount (computed on a daily basis) 
     in effect under subsection (b)(2)(D) for the calendar year in 
     which such taxable year begins, multiplied by''.
       (2) Maximum amount of exclusion.--
       (A) In general.--Subparagraph (A) of section 911(c)(1) is 
     amended by inserting ``to the extent such expenses do not 
     exceed the amount determined under paragraph (2)'' after 
     ``the taxable year''.
       (B) Limitation.--Subsection (c) of section 911 is amended 
     by redesignating paragraphs (2) and (3) as paragraphs (3) and 
     (4), respectively, and by inserting after paragraph (1) the 
     following new paragraph:
       ``(2) Limitation.--The amount determined under this 
     paragraph is an amount equal to the product of--
       ``(A) 30 percent of the amount (computed on a daily basis) 
     in effect under subsection

[[Page 27118]]

     (b)(2)(D) for the calendar year in which the taxable year of 
     the individual begins, multiplied by
       ``(B) the number of days of such taxable year within the 
     applicable period described in subparagraph (A) or (B) of 
     subsection (d)(1).''.
       (C) Conforming amendments.--
       (i) Section 911(d)(4) is amended by striking ``and 
     (c)(1)(B)(ii)'' and inserting ``, (c)(1)(B)(ii), and 
     (c)(2)(B)''
       (ii) Section 911(d)(7) is amended by striking ``subsection 
     (c)(3)'' and inserting ``subsection (c)(4)''.
       (c) Rates of Tax Applicable to Nonexcluded Income.--Section 
     911 (relating to exclusion of certain income of citizens and 
     residents of the United States living abroad) is amended by 
     redesignating subsection (f) as subsection (g) and by 
     inserting after subsection (e) the following new subsection:
       ``(f) Determination of Tax Liability on Nonexcluded 
     Amounts.--If any amount is excluded from the gross income of 
     a taxpayer under subsection (a) for any taxable year, then, 
     notwithstanding section 1 or 55--
       ``(1) the tax imposed by section 1 on the taxpayer for such 
     taxable year shall be equal to the excess (if any) of--
       ``(A) the tax which would be imposed by section 1 for the 
     taxable year if the taxpayer's taxable income were equal to 
     the sum of--
       ``(i) the taxpayer's taxable income for the taxable year 
     (determined without regard to this subsection), plus
       ``(ii) the amount excluded under subsection (a) for the 
     taxable year, over
       ``(B) the tax which would be imposed by section 1 for the 
     taxable year if the taxpayer's taxable income were equal to 
     the amount excluded under subsection (a) for the taxable 
     year, and
       ``(2) the tax imposed by section 55 for such taxable year 
     shall be equal to the excess (if any) of--
       ``(A) the amount which would be the tentative minimum tax 
     under section 55 for the taxable year if the taxpayer's 
     alternative minimum taxable income were equal to the sum of--
       ``(i) the taxpayer's alternative minimum taxable income for 
     the taxable year (determined without regard to this 
     subsection), plus
       ``(ii) the amount excluded under subsection (a) for the 
     taxable year, over
       ``(B) the sum of--
       ``(i) the amount which would be the tentative minimum tax 
     under section 55 for the taxable year if the taxpayer's 
     alternative minimum taxable income were equal to the amount 
     excluded under subsection (a) for the taxable year, plus
       ``(ii) the amount which would be the regular tax for the 
     taxable year if the tax imposed by section 1 were the tax 
     computed under paragraph (1).

     For purposes of this subsection, the amount excluded under 
     subsection (a) shall be reduced by the aggregate amount of 
     any deductions or exclusions disallowed under subsection 
     (d)(6) with respect to such excluded amount.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 320. LIMITATION ON ANNUAL AMOUNTS WHICH MAY BE DEFERRED 
                   UNDER NONQUALIFIED DEFERRED COMPENSATION 
                   ARRANGEMENTS.

       (a) In General.--Section 409A (relating to inclusion of 
     gross income under nonqualified deferred compensation plans) 
     is amended by redesignating subsections (c), (d), and (e) as 
     subsections (d), (e), and (f), respectively, and by inserting 
     after subsection (b) the following new subsection:
       ``(c) Annual Limitation on Aggregate Deferred Amounts.--
       ``(1) Limitation.--If the aggregate amount of compensation 
     which--
       ``(A) is deferred for any taxable year with respect to a 
     participant under 1 or more nonqualified deferred 
     compensation plans maintained by the same employer, and
       ``(B) is not otherwise includible in gross income of the 
     participant for the taxable year,
     exceeds the applicable dollar amount for the taxable year, 
     then such excess shall be included in the participant's gross 
     income for the taxable year.
       ``(2) Inclusion of earnings.--If--
       ``(A) an amount is includible under paragraph (1) in the 
     gross income of a participant for any taxable year, and
       ``(B) any portion of any assets set aside in a trust or 
     other arrangement under a nonqualified deferred compensation 
     plan are properly allocable to such amount,

     then any increase in value in, or earnings with respect to, 
     such portion for the taxable year or any succeeding taxable 
     year shall be included in gross income of the participant for 
     such taxable year or succeeding taxable year.
       ``(3) Applicable dollar amount.--For purposes of this 
     subsection--
       ``(A) In general.--The term `applicable dollar amount' 
     means, with respect to any participant, the lesser of--
       ``(i) the average annual compensation which--

       ``(I) was payable during the base period to the participant 
     by the employer described in paragraph (1)(A), and
       ``(II) was includible in the participant's gross income for 
     taxable years in the base period, or

       ``(ii) $1,000,000.
       ``(B) Base period.--The term `base period' means, with 
     respect to any computation year, the 5-taxable year period 
     ending with the taxable year preceding the taxable year in 
     which the election described in subsection (a)(4)(B) is made 
     by the participant to have compensation for services 
     performed in the computation year deferred under a 
     nonqualified deferred compensation plan, except that if the 
     election is made after the beginning of the computation year, 
     such period shall be the 5-taxable year period ending with 
     the taxable year preceding the computation year. For purposes 
     of this subparagraph, the term `computation year' means any 
     taxable year of the participant for which the limitation 
     under paragraph (1) is being determined.''.
       (b) Conforming Amendments.--Sections 6041(g)(1) and 
     6051(a)(13) are each amended by striking ``409A(d)'' and 
     inserting ``409A(e)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005, except that taxable years beginning on or before such 
     date shall be taken into account in determining the average 
     annual compensation of a participant during any base period 
     for purposes of section 409A(c)(2) of the Internal Revenue 
     Code of 1986 (as added by such amendments).

     SEC. 321. INCREASE IN AGE OF MINOR CHILDREN WHOSE UNEARNED 
                   INCOME IS TAXED AS IF PARENT'S INCOME.

       (a) In General.--Section 1(g)(2)(A) (relating to child to 
     whom subsection applies) is amended by striking ``age 14'' 
     and inserting ``age 18''.
       (b) Treatment of Distributions From Qualified Disability 
     Trusts.--Section 1(g)(4) (relating to net unearned income) is 
     amended by adding at the end the following new subparagraph:
       ``(C) Treatment of distributions from qualified disability 
     trusts.--For purposes of this subsection, in the case of any 
     child who is a beneficiary of a qualified disability trust 
     (as defined in section 642(b)(2)(C)(ii)), any amount included 
     in the income of such child under sections 652 and 662 during 
     a taxable year shall be considered earned income of such 
     child for such taxable year.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

                   Subtitle C--Oil and Gas Provisions

     SEC. 331. EXTENSION OF SUPERFUND TAXES.

       (a) Excise Taxes.--Section 4611(e) is amended to read as 
     follows:
       ``(e) Application of Hazardous Substance Superfund 
     Financing Rate.--The Hazardous Substance Superfund financing 
     rate under this section shall apply after December 31, 1986, 
     and before January 1, 1996, and after December 31, 2005, and 
     before January 1, 2015.''
       (b) Corporate Environmental Income Tax.--Section 59A(e) is 
     amended to read as follows:
       ``(e) Application of Tax.--The tax imposed by this section 
     shall apply to taxable years beginning after December 31, 
     1986, and before January 1, 1996, and to taxable years 
     beginning after December 31, 2005, and before January 1, 
     2015.''
       (c) Effective Dates.--
       (1) Excise taxes.--The amendments made by subsection (a) 
     shall take effect on the date of the enactment of this Act.
       (2) Income tax.--The amendment made by subsection (b) shall 
     apply to taxable years beginning after December 31, 2005.

     SEC. 332. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 
                   APPLICABLE TO DUAL CAPACITY TAXPAYERS.

       (a) In General.--Section 901 (relating to credit for taxes 
     of foreign countries and of possessions of the United States) 
     is amended by redesignating subsection (m) as subsection (n) 
     and by inserting after subsection (l) the following new 
     subsection:
       ``(m) Special Rules Relating To Dual Capacity Taxpayers.--
       ``(1) General rule.--Notwithstanding any other provision of 
     this chapter, any amount paid or accrued by a dual capacity 
     taxpayer to a foreign country or possession of the United 
     States for any period shall not be considered a tax--
       ``(A) if, for such period, the foreign country or 
     possession does not impose a generally applicable income tax, 
     or
       ``(B) to the extent such amount exceeds the amount 
     (determined in accordance with regulations) which--
       ``(i) is paid by such dual capacity taxpayer pursuant to 
     the generally applicable income tax imposed by the country or 
     possession, or
       ``(ii) would be paid if the generally applicable income tax 
     imposed by the country or possession were applicable to such 
     dual capacity taxpayer.

     Nothing in this paragraph shall be construed to imply the 
     proper treatment of any such amount not in excess of the 
     amount determined under subparagraph (B).
       ``(2) Dual capacity taxpayer.--For purposes of this 
     subsection, the term `dual capacity taxpayer' means, with 
     respect to any foreign country or possession of the United 
     States, a person who--
       ``(A) is subject to a levy of such country or possession, 
     and

[[Page 27119]]

       ``(B) receives (or will receive) directly or indirectly a 
     specific economic benefit (as determined in accordance with 
     regulations) from such country or possession.
       ``(3) Generally applicable income tax.--For purposes of 
     this subsection--
       ``(A) In general.--The term `generally applicable income 
     tax' means an income tax (or a series of income taxes) which 
     is generally imposed under the laws of a foreign country or 
     possession on income derived from the conduct of a trade or 
     business within such country or possession.
       ``(B) Exceptions.--Such term shall not include a tax unless 
     it has substantial application, by its terms and in practice, 
     to--
       ``(i) persons who are not dual capacity taxpayers, and
       ``(ii) persons who are citizens or residents of the foreign 
     country or possession.''
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxes paid or accrued in taxable years beginning 
     after the date of the enactment of this Act.
       (2) Contrary treaty obligations upheld.--The amendments 
     made by this section shall not apply to the extent contrary 
     to any treaty obligation of the United States.

     SEC. 333. RULES RELATING TO FOREIGN OIL AND GAS INCOME.

       (a) Separate Basket for Foreign Tax Credit.--
       (1) Separate basket.--
       (A) Years before 2007.--Paragraph (1) of section 904(d) 
     (relating to separate application of section with respect to 
     certain categories of income), as in effect for years 
     beginning before 2007, is amended by striking ``and'' at the 
     end of subparagraph (H), by redesignating subparagraph (I) as 
     subparagraph (J), and by inserting after subparagraph (H) the 
     following new subparagraph:
       ``(I) foreign oil and gas income, and''.
       (B) 2007 and after.--Paragraph (1) of section 904(d), as in 
     effect for years beginning after 2006, is amended by striking 
     ``and'' at the end of subparagraph (A), by striking the 
     period at the end of subparagraph (B) and inserting ``, 
     and'', and by adding at the end the following:
       ``(C) foreign oil and gas income.''
       (2) Definition.--
       (A) Years before 2007.--Paragraph (2) of section 904(d), as 
     in effect for years beginning before 2007, is amended by 
     redesignating subparagraphs (H) and (I) as subparagraphs (I) 
     and (J), respectively, and by inserting after subparagraph 
     (G) the following new subparagraph:
       ``(H) Foreign oil and gas income.--The term `foreign oil 
     and gas income' has the meaning given such term by section 
     954(g).''
       (B) 2007 and after.--Section 904(d)(2), as in effect for 
     years after 2006, is amended by redesignating subparagraphs 
     (J) and (K) as subparagraphs (K) and (L) and by inserting 
     after subparagraph (I) the following:
       ``(J) Foreign oil and gas income.--For purposes of this 
     section--
       ``(i) In general.--The term `foreign oil and gas income' 
     has the meaning given such term by section 954(g).
       ``(ii) Coordination.--Passive category income and general 
     category income shall not include foreign oil and gas income 
     (as so defined).''
       (3) Conforming amendments.--
       (A) Section 904(d)(3)(F)(i) is amended by striking ``or 
     (E)'' and inserting ``(E), or (I)''.
       (B) Section 907(a) is hereby repealed.
       (C) Section 907(c)(4) is hereby repealed.
       (D) Section 907(f) is hereby repealed.
       (4) Effective dates.--
       (A) In general.--The amendments made by this section shall 
     apply to taxable years beginning after the date of the 
     enactment of this Act.
       (B) Years after 2006.--The amendments made by paragraphs 
     (1)(B) and (2)(B) shall apply to taxable years beginning 
     after December 31, 2006.
       (C) Transitional rules.--
       (i) Separate basket treatment.--Any taxes paid or accrued 
     in a taxable year beginning on or before the date of the 
     enactment of this Act, with respect to income which was 
     described in subparagraph (I) of section 904(d)(1) of such 
     Code (as in effect on the day before the date of the 
     enactment of this Act), shall be treated as taxes paid or 
     accrued with respect to foreign oil and gas income to the 
     extent the taxpayer establishes to the satisfaction of the 
     Secretary of the Treasury that such taxes were paid or 
     accrued with respect to foreign oil and gas income.
       (ii) Carryovers.--Any unused oil and gas extraction taxes 
     which under section 907(f) of such Code (as so in effect) 
     would have been allowable as a carryover to the taxpayer's 
     first taxable year beginning after the date of the enactment 
     of this Act (without regard to the limitation of paragraph 
     (2) of such section 907(f) for first taxable year) shall be 
     allowed as carryovers under section 904(c) of such Code in 
     the same manner as if such taxes were unused taxes under such 
     section 904(c) with respect to foreign oil and gas extraction 
     income.
       (iii) Losses.--The amendment made by paragraph (3)(C) shall 
     not apply to foreign oil and gas extraction losses arising in 
     taxable years beginning on or before the date of the 
     enactment of this Act.
       (b) Elimination of Deferral for Foreign Oil and Gas 
     Extraction Income.--
       (1) General rule.--Paragraph (1) of section 954(g) 
     (defining foreign base company oil related income) is amended 
     to read as follows:
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the term `foreign oil and gas income' means any 
     income of a kind which would be taken into account in 
     determining the amount of--
       ``(A) foreign oil and gas extraction income (as defined in 
     section 907(c)), or
       ``(B) foreign oil related income (as defined in section 
     907(c)).''
       (2) Conforming amendments.--
       (A) Subsections (a)(5), (b)(5), and (b)(6) of section 954, 
     and section 952(c)(1)(B)(ii)(I), are each amended by striking 
     ``base company oil related income'' each place it appears 
     (including in the heading of subsection (b)(8)) and inserting 
     ``oil and gas income''.
       (B) Subsection (b)(4) of section 954 is amended by striking 
     ``base company oil-related income'' and inserting ``oil and 
     gas income''.
       (C) The subsection heading for subsection (g) of section 
     954 is amended by striking ``Foreign Base Company Oil Related 
     Income'' and inserting ``Foreign Oil and Gas Income''.
       (D) Subparagraph (A) of section 954(g)(2) is amended by 
     striking ``foreign base company oil related income'' and 
     inserting ``foreign oil and gas income''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years of foreign corporations 
     beginning after the date of the enactment of this Act, and to 
     taxable years of United States shareholders ending with or 
     within such taxable years of foreign corporations.

     SEC. 334. MODIFICATION OF CREDIT FOR PRODUCING FUEL FROM A 
                   NONCONVENTIONAL SOURCE.

       (a) Taxable Years Ending Before 2006.--
       (1) Modification of phaseout.--
       (A) In general.--Section 29(b)(1)(A) is amended by 
     inserting ``the calendar year preceding'' before ``the 
     calendar year''.
       (B) Conforming amendments.--Section 29(b)((2) is amended--
       (i) by striking ``The'' and inserting ``With respect to any 
     calendar year, the'', and
       (ii) by striking ``for the calendar year in which the sale 
     occurs'' and inserting ``for such calendar year''.
       (2) No inflation adjustment for the credit amount in 
     2005.--Section 29(b)(2), as amended by paragraph (1), is 
     amended by adding at the end the following new sentence: 
     ``This paragraph shall not apply with respect to the $3 
     amount in subsection (a) for calendar year 2005 and the 
     amount in effect under subsection (a) for sales in such 
     calendar year shall be the amount which was in effect for 
     sales in calendar year 2004.''.
       (b) Taxable Years Ending After 2005.--
       (1) Modification of phaseout.--
       (A) In general.--Section 45K(b)(1)(A) is amended by 
     inserting ``the calendar year preceding'' before ``the 
     calendar year''.
       (B) Conforming amendments.--Section 45K(b)((2) is amended--
       (i) by striking ``The'' and inserting ``With respect to any 
     calendar year, the'', and
       (ii) by striking ``for the calendar year in which the sale 
     occurs'' and inserting ``for such calendar year''.
       (2) No inflation adjustment for the credit amount in 2005, 
     2006, and 2007.--Section 45K(b)(2), as amended by paragraph 
     (1), is amended by adding at the end the following new 
     sentence: ``This paragraph shall not apply with respect to 
     the $3 amount in subsection (a) for calendar years 2005, 
     2006, and 2007 and the amount in effect under subsection (a) 
     for sales in each such calendar year shall be the amount 
     which was in effect for sales in calendar year 2004.''.
       (3) Treatment of coke and coke gas.--
       (A) Nonapplication of phaseout.--Section 45K(g)(2) is 
     amended by adding at the end the following new subparagraph:
       ``(D) Nonapplication of phaseout.--Subsection (b)(1) shall 
     not apply.''.
       (B) Application of inflation adjust-
     ment.--Section 45K(g)(2)(B) is amended by inserting ``and the 
     last sentence of subsection (b)(2) shall not apply.''.
       (C) Clarification of qualifying facility.--Section 
     45K(g)(1) is amended by inserting ``(other than from 
     petroleum based products)'' after ``coke or coke gas''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to fuel sold after December 31, 2004.

     SEC. 335. ELIMINATION OF AMORTIZATION OF GEOLOGICAL AND 
                   GEOPHYSICAL EXPENDITURES FOR MAJOR INTEGRATED 
                   OIL COMPANIES.

       (a) In General.--Section 167(h) is amended by adding at the 
     end the following new paragraph:
       ``(5) Nonapplication to major integrated oil companies.--
     This subsection shall not apply with respect to any expenses 
     paid or incurred for any taxable year by any integrated oil 
     company (as defined in section 291(b)(4)) which has an 
     average daily worldwide production of crude oil of at least 
     500,000 barrels for such taxable year.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the amendment made by 
     section 1329(a) of the Energy Policy Act of 2005.

[[Page 27120]]



               Subtitle D--Tax Administration Provisions

     SEC. 341. IMPOSITION OF WITHHOLDING ON CERTAIN PAYMENTS MADE 
                   BY GOVERNMENT ENTITIES.

       (a) In General.--Section 3402 is amended by adding at the 
     end the following new subsection:
       ``(t) Extension of Withholding to Certain Payments Made by 
     Government Entities.--
       ``(1) General rule.--The Government of the United States, 
     every State, every political subdivision thereof, and every 
     instrumentality of the foregoing (including multi-State 
     agencies) making any payment for goods and services which is 
     subject to withholding shall deduct and withhold form such 
     payment a tax in an amount equal to 3 percent of such 
     payment.
       ``(2) Exceptions.--Paragraph (1) shall not apply to any 
     payment--
       ``(A) except as provided in subparagraph (B), which is 
     subject to withholding under any other provision of this 
     chapter or chapter 3,
       ``(B) which is subject to withholding under section 3406 
     and from which amounts are being withheld under such section,
       ``(C) of interest,
       ``(D) for real property,
       ``(E) to any tax-exempt entity, foreign government, or 
     other entity subject to the requirements of paragraph (1),
       ``(F) made pursuant to a classified or confidential 
     contract (as defined in section 6050M(e)(3)), and
       ``(G) made by a political subdivision of a State (or any 
     instrumentality thereof) which makes less than $100,000,000 
     of such payments annually.
       ``(3) Coordination with other sections.--For purposes of 
     sections 3403 and 3404 and for purposes of so much of 
     subtitle F (except section 7205) as relates to this chapter, 
     payments to any person of any payment for goods and services 
     which is subject to withholding shall be treated as if such 
     payments were wages paid by an employer to an employee.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to payments made after December 31, 2005.

     SEC. 342. INCREASE IN CERTAIN CRIMINAL PENALTIES.

       (a) In General.--Section 7206 (relating to fraud and false 
     statements) is amended--
       (1) by striking ``Any person who--'' and inserting ``(a) In 
     General.--Any person who--'', and
       (2) by adding at the end the following new subsection:
       ``(b) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--If any portion of any 
     underpayment (as defined in section 6664(a)) or overpayment 
     (as defined in section 6401(a)) of tax required to be shown 
     on a return is attributable to fraudulent action described in 
     subsection (a), the applicable dollar amount under subsection 
     (a) shall in no event be less than an amount equal to such 
     portion. A rule similar to the rule under section 6663(b) 
     shall apply for purposes of determining the portion so 
     attributable.''.
       (b) Increase in Penalties.--
       (1) Attempt to evade or defeat tax.--Section 7201 is 
     amended--
       (A) by striking ``$100,000'' and inserting ``$500,000'',
       (B) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (C) by striking ``5 years'' and inserting ``10 years''.
       (2) Willful failure to file return, supply information, or 
     pay tax.--Section 7203 is amended--
       (A) in the first sentence--
       (i) by striking ``Any person'' and inserting the following:
       ``(a) In General.--Any person'', and
       (ii) by striking ``$25,000'' and inserting ``$50,000'',
       (B) in the third sentence, by striking ``section'' and 
     inserting ``subsection'', and
       (C) by adding at the end the following new subsection:
       ``(b) Aggravated Failure to File.--
       ``(1) In general.--In the case of any failure described in 
     paragraph (2), the first sentence of subsection (a) shall be 
     applied by substituting--
       ``(A) `felony' for `misdemeanor',
       ``(B) `$500,000 ($1,000,000' for `$25,000 ($100,000', and
       ``(C) `10 years' for `1 year'.
       ``(2) Failure described.--A failure described in this 
     paragraph is a failure to make a return described in 
     subsection (a) for a period of 3 or more consecutive taxable 
     years.''.
       (3) Fraud and false statements.--Section 7206(a) (as 
     redesignated by subsection (a)) is amended--
       (A) by striking ``$100,000'' and inserting ``$500,000'',
       (B) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (C) by striking ``3 years'' and inserting ``5 years''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to actions, and failures to act, occurring after 
     the date of the enactment of this Act.

     SEC. 343. REPEAL OF SUSPENSION OF INTEREST AND CERTAIN 
                   PENALTIES WHERE SECRETARY FAILS TO CONTACT 
                   TAXPAYER.

       (a) In General.--Section 6404 (relating to abatements) is 
     amended by striking subsection (g) and by redesignating 
     subsections (h) and (i) as subsections (g) and (h), 
     respectively.
       (b) Effective Date.--The amendments made by this section 
     shall apply to returns of tax filed after December 31, 2005.

     SEC. 344. INCREASE IN PENALTY FOR BAD CHECKS AND MONEY 
                   ORDERS.

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

     SEC. 345. FRIVOLOUS TAX SUBMISSIONS.

       (a) Civil Penalties.--Section 6702 is amended to read as 
     follows:

     ``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.

       ``(a) Civil Penalty for Frivolous Tax Returns.--A person 
     shall pay a penalty of $5,000 if--
       ``(1) such person files what purports to be a return of a 
     tax imposed by this title but which--
       ``(A) does not contain information on which the substantial 
     correctness of the self-assessment may be judged, or
       ``(B) contains information that on its face indicates that 
     the self-assessment is substantially incorrect; and
       ``(2) the conduct referred to in paragraph (1)--
       ``(A) is based on a position which the Secretary has 
     identified as frivolous under subsection (c), or
       ``(B) reflects a desire to delay or impede the 
     administration of Federal tax laws.
       ``(b) Civil Penalty for Specified Frivolous Submissions.--
       ``(1) Imposition of penalty.--Except as provided in 
     paragraph (3), any person who submits a specified frivolous 
     submission shall pay a penalty of $5,000.
       ``(2) Specified frivolous submission.--For purposes of this 
     section--
       ``(A) Specified frivolous submission.--The term `specified 
     frivolous submission' means a specified submission if any 
     portion of such submission--
       ``(i) is based on a position which the Secretary has 
     identified as frivolous under subsection (c), or
       ``(ii) reflects a desire to delay or impede the 
     administration of Federal tax laws.
       ``(B) Specified submission.--The term `specified 
     submission' means--
       ``(i) a request for a hearing under--

       ``(I) section 6320 (relating to notice and opportunity for 
     hearing upon filing of notice of lien), or
       ``(II) section 6330 (relating to notice and opportunity for 
     hearing before levy), and

       ``(ii) an application under--

       ``(I) section 6159 (relating to agreements for payment of 
     tax liability in installments),
       ``(II) section 7122 (relating to compromises), or
       ``(III) section 7811 (relating to taxpayer assistance 
     orders).

       ``(3) Opportunity to withdraw submission.--If the Secretary 
     provides a person with notice that a submission is a 
     specified frivolous submission and such person withdraws such 
     submission within 30 days after such notice, the penalty 
     imposed under paragraph (1) shall not apply with respect to 
     such submission.
       ``(c) Listing of Frivolous Positions.--The Secretary shall 
     prescribe (and periodically revise) a list of positions which 
     the Secretary has identified as being frivolous for purposes 
     of this subsection. The Secretary shall not include in such 
     list any position that the Secretary determines meets the 
     requirement of section 6662(d)(2)(B)(ii)(II).
       ``(d) Reduction of Penalty.--The Secretary may reduce the 
     amount of any penalty imposed under this section if the 
     Secretary determines that such reduction would promote 
     compliance with and administration of the Federal tax laws.
       ``(e) Penalties in Addition to Other Penalties.--The 
     penalties imposed by this section shall be in addition to any 
     other penalty provided by law.''.
       (b) Treatment of Frivolous Requests for Hearings Before 
     Levy.--
       (1) Frivolous requests disregarded.--Section 6330 (relating 
     to notice and opportunity for hearing before levy) is amended 
     by adding at the end the following new subsection:
       ``(g) Frivolous Requests for Hearing, Etc.--Notwithstanding 
     any other provision of this section, if the Secretary 
     determines that any portion of a request for a hearing under 
     this section or section 6320 meets the requirement of clause 
     (i) or (ii) of section 6702(b)(2)(A), then the Secretary may 
     treat such portion as if it were never submitted and such 
     portion shall not be subject to any further administrative or 
     judicial review.''.
       (2) Preclusion from raising frivolous issues at hearing.--
     Section 6330(c)(4) is amended--
       (A) by striking ``(A)'' and inserting ``(A)(i)'';
       (B) by striking ``(B)'' and inserting ``(ii)'';
       (C) by striking the period at the end of the first sentence 
     and inserting ``; or''; and
       (D) by inserting after subparagraph (A)(ii) (as so 
     redesignated) the following:
       ``(B) the issue meets the requirement of clause (i) or (ii) 
     of section 6702(b)(2)(A).''.

[[Page 27121]]

       (3) Statement of grounds.--Section 6330(b)(1) is amended by 
     striking ``under subsection (a)(3)(B)'' and inserting ``in 
     writing under subsection (a)(3)(B) and states the grounds for 
     the requested hearing''.
       (c) Treatment of Frivolous Requests for Hearings Upon 
     Filing of Notice of Lien.--Section 6320 is amended--
       (1) in subsection (b)(1), by striking ``under subsection 
     (a)(3)(B)'' and inserting ``in writing under subsection 
     (a)(3)(B) and states the grounds for the requested hearing'', 
     and
       (2) in subsection (c), by striking ``and (e)'' and 
     inserting ``(e), and (g)''.
       (d) Treatment of Frivolous Applications for Offers-in-
     Compromise and Installment Agreements.--Section 7122 is 
     amended by adding at the end the following new subsection:
       ``(e) Frivolous Submissions, Etc.--Notwithstanding any 
     other provision of this section, if the Secretary determines 
     that any portion of an application for an offer-in-compromise 
     or installment agreement submitted under this section or 
     section 6159 meets the requirement of clause (i) or (ii) of 
     section 6702(b)(2)(A), then the Secretary may treat such 
     portion as if it were never submitted and such portion shall 
     not be subject to any further administrative or judicial 
     review.''.
       (e) Clerical Amendment.--The table of sections for part I 
     of subchapter B of chapter 68 is amended by striking the item 
     relating to section 6702 and inserting the following new 
     item:

``Sec. 6702. Frivolous tax submissions.''.

       (f) Effective Date.--The amendments made by this section 
     shall apply to submissions made and issues raised after the 
     date on which the Secretary first prescribes a list under 
     section 6702(c) of the Internal Revenue Code of 1986, as 
     amended by subsection (a).

     SEC. 346. PARTIAL PAYMENTS REQUIRED WITH SUBMISSION OF 
                   OFFERS-IN-COMPROMISE.

       (a) In General.--Section 7122 (relating to compromises), as 
     amended by this Act, is amended by redesignating subsections 
     (c), (d), and (e) as subsections (d), (e), and (f), 
     respectively, and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Rules for Submission of Offers-in-Compromise.--
       ``(1) Partial payment required with submission.--
       ``(A) Lump-sum offers.--
       ``(i) In general.--The submission of any lump-sum offer-in-
     compromise shall be accompanied by the payment of 20 percent 
     of amount of such offer.
       ``(ii) Lump-sum offer-in-compromise.--For purposes of this 
     section, the term `lump-sum offer-in-compromise' means any 
     offer of payments made in 5 or fewer installments.
       ``(B) Periodic payment offers.--The submission of any 
     periodic payment offer-in-compromise shall be accompanied by 
     the payment of the amount of the first proposed installment 
     and each proposed installment due during the period such 
     offer is being evaluated for acceptance and has not been 
     rejected by the Secretary. Any failure to make a payment 
     required under the preceding sentence shall be deemed a 
     withdrawal of the offer-in-compromise.
       ``(2) Rules of application.--
       ``(A) Use of payment.--The application of any payment made 
     under this subsection to the assessed tax or other amounts 
     imposed under this title with respect to such tax may be 
     specified by the taxpayer.
       ``(B) No user fee imposed.--Any user fee which would 
     otherwise be imposed under this section shall not be imposed 
     on any offer-in-compromise accompanied by a payment required 
     under this subsection.
       ``(C) Waiver authority.--The Secretary may issue 
     regulations waiving any payment required under paragraph (1) 
     in a manner consistent with the practices established in 
     accordance with the requirements under subsection (d)(3).''.
       (b) Additional Rules Relating to Treatment of Offers.--
       (1) Unprocessable offer if payment requirements are not 
     met.--Paragraph (3) of section 7122(d) (relating to standards 
     for evaluation of offers), as redesignated by subsection (a), 
     is amended by striking ``; and'' at the end of subparagraph 
     (A) and inserting a comma, by striking the period at the end 
     of subparagraph (B) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(C) any offer-in-compromise which does not meet the 
     requirements of subsection (c) shall be returned to the 
     taxpayer as unprocessable.''.
       (2) Deemed acceptance of offer not rejected within certain 
     period.--Section 7122, as amended by subsection (a), is 
     amended by adding at the end the following new subsection:
       ``(g) Deemed Acceptance of Offer Not Rejected Within 
     Certain Period.--Any offer-in-compromise submitted under this 
     section shall be deemed to be accepted by the Secretary if 
     such offer is not rejected by the Secretary before the date 
     which is 24 months after the date of the submission of such 
     offer (12 months for offers-in-compromise submitted after the 
     date which is 5 years after the date of the enactment of this 
     subsection). For purposes of the preceding sentence, any 
     period during which any tax liability which is the subject of 
     such offer-in-compromise is in dispute in any judicial 
     proceeding shall not be taken in to account in determining 
     the expiration of the 24-month period (or 12-month period, if 
     applicable).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to offers-in-compromise submitted on and after 
     the date which is 60 days after the date of the enactment of 
     this Act.

     SEC. 347. WAIVER OF USER FEE FOR INSTALLMENT AGREEMENTS USING 
                   AUTOMATED WITHDRAWALS.

       (a) In General.--Section 6159 (relating to agreements for 
     payment of tax liability in installments) is amended by 
     redesignating subsection (e) as subsection (f) and by 
     inserting after subsection (d) the following:
       ``(e) Waiver of User Fees for Installment Agreements Using 
     Automated Withdrawals.--In the case of a taxpayer who enters 
     into an installment agreement in which automated installment 
     payments are agreed to, the Secretary shall waive the fee (if 
     any) for entering into the installment agreement.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to agreements entered into on or after the date 
     which is 180 days after the date of the enactment of this 
     Act.

     SEC. 348. TERMINATION OF INSTALLMENT AGREEMENTS.

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

                   Subtitle E--Additional Provisions

     SEC. 351. MODIFICATION OF INDIVIDUAL ESTIMATED TAX SAFE 
                   HARBOR.

       (a) In General.--The table contained in section 
     6654(d)(1)(C) is amended by striking ``2002 or thereafter'' 
     and inserting ``2002, 2003, 2004, or 2005'' and by adding at 
     the end the following new items:

``2006..............................................................111
2007 or thereafter...............................................110''.

       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to any installment payment for 
     taxable years beginning after December 31, 2005.

     SEC. 352. LOAN AND REDEMPTION REQUIREMENTS ON POOLED 
                   FINANCING REQUIREMENTS.

       (a) Strengthened Reasonable Expectation Requirement.--
     Subparagraph (A) of section 149(f)(2) (relating to reasonable 
     expectation requirement) is amended to read as follows:
       ``(A) In general.--The requirements of this paragraph are 
     met with respect to an issue if the issuer reasonably expects 
     that--
       ``(i) as of the close of the 1-year period beginning on the 
     date of issuance of the issue, at least 50 percent of the net 
     proceeds of the issue (as of the close of such period) will 
     have been used directly or indirectly to make or finance 
     loans to ultimate borrowers, and
       ``(ii) as of the close of the 3-year period beginning on 
     such date of issuance, at least 95 percent of the net 
     proceeds of the issue (as of the close of such period) will 
     have been so used.''.
       (b) Written Loan Commitment and Redemption Requirements.--
     Section 149(f) (relating to treatment of certain pooled 
     financing bonds) is amended by redesignating paragraphs (4) 
     and (5) as paragraphs (6) and (7), respectively, and by 
     inserting after paragraph (3) the following new paragraphs:
       ``(4) Written loan commitment requirement.--
       ``(A) In general.--The requirement of this paragraph is met 
     with respect to an issue if the issuer receives prior to 
     issuance written loan commitments identifying the ultimate 
     potential borrowers of at least 50 percent of the net 
     proceeds of such issue.
       ``(B) Exception.--Subparagraph (A) shall not apply with 
     respect to any issuer which is a State (or an integral part 
     of a State) issuing pooled financing bonds to make or finance 
     loans to subordinate governmental units of such State or to 
     State-created entities providing financing for water-
     infrastructure projects through the federally-sponsored State 
     revolving fund program.
       ``(5) Redemption requirement.--The requirement of this 
     paragraph is met if to the extent that less than the 
     percentage of the proceeds of an issue required to be used 
     under clause (i) or (ii) of paragraph (2)(A) is used by the 
     close of the period identified in such clause, the issuer 
     uses an amount of proceeds equal to the excess of--

[[Page 27122]]

       ``(A) the amount required to be used under such clause, 
     over
       ``(B) the amount actually used by the close of such period,

     to redeem outstanding bonds within 90 days after the end of 
     such period.''.
       (c) Elimination of Disregard of Pooled Bonds in Determining 
     Eligibility for Small Issuer Exception to Arbitrage Rebate.--
     Section 148(f)(4)(D)(ii) (relating to aggregation of issuers) 
     is amended by striking subclause (II) and by redesignating 
     subclauses (III) and (IV) as subclauses (II) and (III), 
     respectively.
       (d) Conforming Amendments.--
       (1) Section 149(f)(1) is amended by striking ``paragraphs 
     (2) and (3)'' and inserting ``paragraphs (2), (3), (4), and 
     (5)''.
       (2) Section 149(f)(7)(B), as redesignated by subsection 
     (b), is amended by striking ``paragraph (4)(A)'' and 
     inserting ``paragraph (6)(A)''.
       (3) Section 54(l)(2) is amended by striking ``section 
     149(f)(4)(A)'' and inserting ``section 149(f)(6)(A)''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.

     SEC. 353. REPORTING OF INTEREST ON TAX-EXEMPT BONDS.

       (a) In General.--Section 6049(b)(2) (relating to 
     exceptions) is amended by striking subparagraph (B) and by 
     redesignating subparagraphs (C) and (D) as subparagraphs (B) 
     and (C), respectively.
       (b) Conforming Amendment.--Section 6049(b)(2)(C), as 
     redesignated by subsection (a), is amended by striking 
     ``subparagraph (C)'' and inserting ``subparagraph (B)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to interest earned after December 31, 2005.
                                 ______
                                 
  SA 2603. Mr. PRYOR submitted an amendment intended to be proposed by 
him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, add the following:

     SEC. __. DEFINITION OF CONVENTION OR ASSOCIATION OF CHURCHES.

       (a) In General.--Section 7701 (relating to definitions) is 
     amended by redesignating subsection (o) as subsection (p) and 
     by inserting after subsection (n) the following new 
     subsection:
       ``(o) Convention or Association of Churches.--For purposes 
     of this title, any organization which is otherwise a 
     convention or association of churches shall not fail to so 
     qualify merely because the membership of such organization 
     includes individuals as well as churches or because 
     individuals have voting rights in such organization.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after December 31, 2005.
                                 ______
                                 
  SA 2604. Mrs. CLINTON (for herself and Mr. Obama) submitted an 
amendment intended to be proposed by her to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; which was ordered to lie 
on the table; as follows:

       At the end of title IV, add the following:

     SEC. __. HOME LEAD HAZARD REDUCTION ACTIVITY TAX CREDIT.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1 (relating to foreign tax credit, etc.) is amended 
     by adding at the end the following new section:

     ``SEC. 30D. HOME LEAD HAZARD REDUCTION ACTIVITY.

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for the 
     taxable year an amount equal to 50 percent of the lead hazard 
     reduction activity cost paid or incurred by the taxpayer 
     during the taxable year for each eligible dwelling unit.
       ``(b) Limitation.--The amount of the credit allowed under 
     subsection (a) for any eligible dwelling unit for any taxable 
     year shall not exceed--
       ``(1) either--
       ``(A) $3,000 in the case of lead hazard reduction activity 
     cost including lead abatement measures described in clauses 
     (i), (ii), (iv) and (v) of subsection (c)(1)(A), or
       ``(B) $1,000 in the case of lead hazard reduction activity 
     cost including interim lead control measures described in 
     clauses (i), (iii), (iv), and (v) of subsection (c)(1)(A), 
     reduced by
       ``(2) the aggregate lead hazard reduction activity cost 
     taken into account under subsection (a) with respect to such 
     unit for all preceding taxable years.
       ``(c) Definitions and Special Rules.--For purposes of this 
     section:
       ``(1) Lead hazard reduction activity cost.--
       ``(A) In general.--The term `lead hazard reduction activity 
     cost' means, with respect to any eligible dwelling unit--
       ``(i) the cost for a certified risk assessor to conduct an 
     assessment to determine the presence of a lead-based paint 
     hazard,
       ``(ii) the cost for performing lead abatement measures by a 
     certified lead abatement supervisor, including the removal of 
     paint and dust, the permanent enclosure or encapsulation of 
     lead-based paint, the replacement of painted surfaces, 
     windows, or fixtures, or the removal or permanent covering of 
     soil when lead-based paint hazards are present in such paint, 
     dust, or soil,
       ``(iii) the cost for performing interim lead control 
     measures to reduce exposure or likely exposure to lead-based 
     paint hazards, including specialized cleaning, repairs, 
     maintenance, painting, temporary containment, ongoing 
     monitoring of lead-based paint hazards, and the establishment 
     and operation of management and resident education programs, 
     but only if such measures are evaluated and completed by a 
     certified lead abatement supervisor using accepted methods, 
     are conducted by a qualified contractor, and have an expected 
     useful life of more than 10 years,
       ``(iv) the cost for a certified lead abatement supervisor, 
     those working under the supervision of such supervisor, or a 
     qualified contractor to perform all preparation, cleanup, 
     disposal, and clearance testing activities associated with 
     the lead abatement measures or interim lead control measures, 
     and
       ``(v) costs incurred by or on behalf of any occupant of 
     such dwelling unit for any relocation which is necessary to 
     achieve occupant protection (as defined under section 35.1345 
     of title 24, Code of Federal Regulations).
       ``(B) Limitation.--The term `lead hazard reduction activity 
     cost' does not include any cost to the extent such cost is 
     funded by any grant, contract, or otherwise by another person 
     (or any governmental agency).
       ``(2) Eligible dwelling unit.--
       ``(A) In general.--The term `eligible dwelling unit' means, 
     with respect to any taxable year, any dwelling unit--
       ``(i) placed in service before 1960,
       ``(ii) located in the United States,
       ``(iii) in which resides, for a total period of not less 
     than 50 percent of the taxable year, at least 1 child who has 
     not attained the age of 6 years or 1 woman of child-bearing 
     age, and
       ``(iv) each of the residents of which during such taxable 
     year has an adjusted gross income of less than 185 percent of 
     the poverty line (as determined for such taxable year in 
     accordance with criteria established by the Director of the 
     Office of Management and Budget).
       ``(B) Dwelling unit.--The term `dwelling unit' has the 
     meaning given such term by section 280A(f)(1).
       ``(3) Lead-based paint hazard.--The term `lead-based paint 
     hazard' has the meaning given such term by section 745.61 of 
     title 40, Code of Federal Regulations.
       ``(4) Certified lead abatement supervisor.--The term 
     `certified lead abatement supervisor' means an individual 
     certified by the Environmental Protection Agency pursuant to 
     section 745.226 of title 40, Code of Federal Regulations, or 
     an appropriate State agency pursuant to section 745.325 of 
     title 40, Code of Federal Regulations.
       ``(5) Certified inspector.--The term `certified inspector' 
     means an inspector certified by the Environmental Protection 
     Agency pursuant to section 745.226 of title 40, Code of 
     Federal Regulations, or an appropriate State agency pursuant 
     to section 745.325 of title 40, Code of Federal Regulations.
       ``(6) Certified risk assessor.--The term `certified risk 
     assessor' means a risk assessor certified by the 
     Environmental Protection Agency pursuant to section 745.226 
     of title 40, Code of Federal Regulations, or an appropriate 
     State agency pursuant to section 745.325 of title 40, Code of 
     Federal Regulations.
       ``(7) Qualified contractor.--The term `qualified 
     contractor' means any contractor who has successfully 
     completed a training course on lead safe work practices which 
     has been approved by the Department of Housing and Urban 
     Development and the Environmental Protection Agency.
       ``(8) Documentation required for credit allowance.--No 
     credit shall be allowed under subsection (a) with respect to 
     any eligible dwelling unit for any taxable year unless--
       ``(A) after lead hazard reduction activity is complete, a 
     certified inspector or certified risk assessor provides 
     written documentation to the taxpayer that includes--
       ``(i) evidence that--

       ``(I) the eligible dwelling unit passes the clearance 
     examinations required by the Department of Housing and Urban 
     Development under part 35 of title 40, Code of Federal 
     Regulations,
       ``(II) the eligible dwelling unit does not contain lead 
     dust hazards (as defined by section 745.227(e)(8)(viii) of 
     such title 40), or
       ``(III) the eligible dwelling unit meets lead hazard 
     evaluation criteria established under an authorized State or 
     local program, and

       ``(ii) documentation showing that the lead hazard reduction 
     activity meets the requirements of this section, and
       ``(B) the taxpayer files with the appropriate State agency 
     and attaches to the tax return for the taxable year--
       ``(i) the documentation described in subparagraph (A),

[[Page 27123]]

       ``(ii) documentation of the lead hazard reduction activity 
     costs paid or incurred during the taxable year with respect 
     to the eligible dwelling unit, and
       ``(iii) a statement certifying that the dwelling unit 
     qualifies as an eligible dwelling unit for such taxable year.
       ``(9) Basis reduction.--The basis of any property for which 
     a credit is allowable under subsection (a) shall be reduced 
     by the amount of such credit (determined without regard to 
     subsection (d)).
       ``(10) No double benefit.--Any deduction allowable for 
     costs taken into account in computing the amount of the 
     credit for lead-based paint abatement shall be reduced by the 
     amount of such credit attributable to such costs.
       ``(d) Limitation Based on Amount of Tax.--The credit 
     allowed under subsection (a) for the taxable year shall not 
     exceed the excess of--
       ``(1) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(2) the sum of the credits allowable under subpart A and 
     sections 27, 29, 30, 30A, 30B, and 30C for the taxable year.
       ``(e) Carryforward Allowed.--
       ``(1) In general.--If the credit amount allowable under 
     subsection (a) for a taxable year exceeds the amount of the 
     limitation under subsection (d) for such taxable year 
     (referred to as the `unused credit year' in this subsection), 
     such excess shall be allowed as a credit carryforward for 
     each of the 20 taxable years following the unused credit 
     year.
       ``(2) Rules.--Rules similar to the rules of section 39 
     shall apply with respect to the credit carryforward under 
     paragraph (1).''.
       (b) Conforming Amendments.--
       (1) Section 1016(a) of the Internal Revenue Code of 1986 is 
     amended by striking ``and'' in paragraph (36), by striking 
     the period and inserting ``, and'' in paragraph (37), and by 
     inserting at the end the following new paragraph:
       ``(38) in the case of an eligible dwelling unit with 
     respect to which a credit for any lead hazard reduction 
     activity cost was allowed under section 30D, to the extent 
     provided in section 30D(c)(9).''.
       (2) The table of sections for subpart B of part IV of 
     subchapter A of chapter 1 of such Code is amended by 
     inserting after the item relating to section 30C the 
     following new item:

``Sec. 30D. Home lead hazard reduction activity.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to lead hazard reduction activity costs incurred 
     after December 31, 2005, in taxable years ending after that 
     date.

     SEC. __. MODIFICATION OF EXCLUSION FOR CITIZENS LIVING 
                   ABROAD.

       (a) Inflation Adjustment of Foreign Earned Income 
     Limitation.--Clause (ii) of section 911(b)(2)(D) (relating to 
     inflation adjustment) is amended--
       (1) by striking ``2007'' and inserting ``2005'', and
       (2) by striking ``2006'' in subclause (II) and inserting 
     ``2004''.
       (b) Modification of Housing Cost Amount.--
       (1) Minimum amount.--Clause (i) of section 911(c)(1)(B) is 
     amended to read as follows:
       ``(i) 16 percent of the amount (computed on a daily basis) 
     in effect under subsection (b)(2)(D) for the calendar year in 
     which such taxable year begins, multiplied by''.
       (2) Maximum amount of exclusion.--
       (A) In general.--Subparagraph (A) of section 911(c)(1) is 
     amended by inserting ``to the extent such expenses do not 
     exceed the amount determined under paragraph (2)'' after 
     ``the taxable year''.
       (B) Limitation.--Subsection (c) of section 911 is amended 
     by redesignating paragraphs (2) and (3) as paragraphs (3) and 
     (4), respectively, and by inserting after paragraph (1) the 
     following new paragraph:
       ``(2) Limitation.--The amount determined under this 
     paragraph is an amount equal to the product of--
       ``(A) 30 percent of the amount (computed on a daily basis) 
     in effect under subsection (b)(2)(D) for the calendar year in 
     which the taxable year of the individual begins, multiplied 
     by
       ``(B) the number of days of such taxable year within the 
     applicable period described in subparagraph (A) or (B) of 
     subsection (d)(1).''.
       (C) Conforming amendments.--
       (i) Section 911(d)(4) is amended by striking ``and 
     (c)(1)(B)(ii)'' and inserting ``, (c)(1)(B)(ii), and 
     (c)(2)(B)''
       (ii) Section 911(d)(7) is amended by striking ``subsection 
     (c)(3)'' and inserting ``subsection (c)(4)''.
       (c) Rates of Tax Applicable to Nonexcluded Income.--Section 
     911 (relating to exclusion of certain income of citizens and 
     residents of the United States living abroad) is amended by 
     redesignating subsection (f) as subsection (g) and by 
     inserting after subsection (e) the following new subsection:
       ``(f) Determination of Tax Liability on Nonexcluded 
     Amounts.--If any amount is excluded from the gross income of 
     a taxpayer under subsection (a) for any taxable year, then, 
     notwithstanding section 1 or 55--
       ``(1) the tax imposed by section 1 on the taxpayer for such 
     taxable year shall be equal to the excess (if any) of--
       ``(A) the tax which would be imposed by section 1 for the 
     taxable year if the taxpayer's taxable income were equal to 
     the sum of--
       ``(i) the taxpayer's taxable income for the taxable year 
     (determined without regard to this subsection), plus
       ``(ii) the amount excluded under subsection (a) for the 
     taxable year, over
       ``(B) the tax which would be imposed by section 1 for the 
     taxable year if the taxpayer's taxable income were equal to 
     the amount excluded under subsection (a) for the taxable 
     year, and
       ``(2) the tax imposed by section 55 for such taxable year 
     shall be equal to the excess (if any) of--
       ``(A) the amount which would be the tentative minimum tax 
     under section 55 for the taxable year if the taxpayer's 
     alternative minimum taxable income were equal to the sum of--
       ``(i) the taxpayer's alternative minimum taxable income for 
     the taxable year (determined without regard to this 
     subsection), plus
       ``(ii) the amount excluded under subsection (a) for the 
     taxable year, over
       ``(B) the sum of--
       ``(i) the amount which would be the tentative minimum tax 
     under section 55 for the taxable year if the taxpayer's 
     alternative minimum taxable income were equal to the amount 
     excluded under subsection (a) for the taxable year, plus
       ``(ii) the amount which would be the regular tax for the 
     taxable year if the tax imposed by section 1 were the tax 
     computed under paragraph (1).
     For purposes of this subsection, the amount excluded under 
     subsection (a) shall be reduced by the aggregate amount of 
     any deductions or exclusions disallowed under subsection 
     (d)(6) with respect to such excluded amount.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.
                                 ______
                                 
  SA 2605. Mr. OBAMA (for himself, Mr. Coburn, Mr. Lautenberg, Ms. 
Snowe, Mr. Johnson, and Mr. Ensign) submitted an amendment intended to 
be proposed by him to the bill S. 2020, to provide for reconciliation 
pursuant to section 202(b) of the concurrent resolution on the budget 
for fiscal year 2006; as follows:

       At the appropriate place, insert the following:

     SEC. __. SENSE OF THE SENATE ON USE OF NO-BID CONTRACTING BY 
                   FEDERAL EMERGENCY MANAGEMENT AGENCY.

       (a) Findings.--The Senate finds that--
       (1) on September 8, 2005, the Federal Emergency Management 
     Agency announced that it had awarded 4 contracts for 
     emergency housing relief following Hurricane Katrina to The 
     Shaw Group of Baton Rouge, Louisiana, Fluor Corporation of 
     Aliso Viejo, California, Bechtel National of San Francisco, 
     California, and CH2M Hill of Denver, Colorado;
       (2) these contracts were awarded with no competition from 
     other capable firms, and up to $100,000,000 in taxpayer funds 
     were authorized for each of these contracts;
       (3) in the midst of concerns about abusive and 
     irresponsible spending of taxpayer funds, the Federal 
     Emergency Management Agency pledged to re-bid these 
     noncompetitive contracts, with Acting Under Secretary of 
     Emergency Preparedness and Response, R. David Paulison, 
     stating before the Committee on Homeland Security and 
     Government Affairs of the Senate that ``[a]ll of these no-bid 
     contracts, we are going to go back and re-bid'';
       (4) the Federal Emergency Management Agency has yet to 
     reopen these 4 contracts to competitive bidding, and declared 
     on November 11, 2005, that these contracts would not be 
     reopened for bidding until February 2006;
       (5) by February 2006, the majority of the contracts will 
     have been completed and the majority of taxpayer funds will 
     have been spent;
       (6) large and politically-connected firms continue to 
     benefit from no-bid and limited-competition contracts, and 
     contracts are not being awarded to capable, local companies;
       (7) according to an analysis in the Washington Post, 
     companies outside the States most affected by Hurricane 
     Katrina have received more than 90 percent of the Federal 
     contracts for recovery and reconstruction;
       (8) the monitoring of Federal contracting practices remains 
     difficult, with a report by the San Jose Mercury News stating 
     ``The database of contracts is incomplete. Information 
     released by Federal agencies is spotty and sporadic. And 
     disclosure of many no-bid contracts isn't required by law''; 
     and
       (9)(A) there is currently no Chief Financial Officer 
     charged with monitoring the flow of all funds to the affected 
     areas; and
       (B) the task of financial management is spread across 
     disparate Federal departments and agencies with inadequate 
     oversight of taxpayer funds.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that the Federal Emergency Management Agency should--

[[Page 27124]]

       (1) immediately rebid noncompetitive contracts entered into 
     following Hurricane Katrina, consistent with the commitment 
     of the Agency made on October 6, 2005, before millions of 
     taxpayer dollars are wasted on irresponsible and inefficient 
     spending;
       (2)(A) immediately implement the planned competitive 
     contracting strategy of the Agency for recovery work in all 
     current and future reconstruction efforts; and
       (B) in carrying out that strategy, should prioritize local 
     and small disadvantaged businesses in the contracting and 
     subcontracting process; and
       (3) immediately after the awarding of a contract, publicly 
     disclose the amount and competitive or noncompetitive nature 
     of the contract.
                                 ______
                                 
  SA 2606. Mr. KERRY (for himself and Mr. Wyden) submitted an amendment 
intended to be proposed by him to the bill S. 2020, to provide for 
reconciliation pursuant to section 202(b) of the concurrent resolution 
on the budget for fiscal year 2006; which was ordered to lie on the 
table; as follows:

       On page 235, between lines 13 and 14, insert the following:

     SEC. ___. EXTENSION AND INCREASE IN MINIMUM TAX RELIEF TO 
                   INDIVIDUALS.

       (a) In General.--Section 55(d)(1) is amended--
       (1) by striking ``$58,000'' and all that follows through 
     ``2005'' in subparagraph (A) and inserting ``$62,550 in the 
     case of taxable years beginning in 2006'', and
       (2) by striking ``$40,250'' and all that follows through 
     ``2005'' in subparagraph (B) and inserting ``$42,500 in the 
     case of taxable years beginning in 2006''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. ___. MODIFICATION OF EXCLUSION FOR CITIZENS LIVING 
                   ABROAD.

       (a) Inflation Adjustment of Foreign Earned Income 
     Limitation.--Clause (ii) of section 911(b)(2)(D) (relating to 
     inflation adjustment) is amended--
       (1) by striking ``2007'' and inserting ``2005'', and
       (2) by striking ``2006'' in subclause (II) and inserting 
     ``2004''.
       (b) Modification of Housing Cost Amount.--
       (1) Minimum amount.--Clause (i) of section 911(c)(1)(B) is 
     amended to read as follows:
       ``(i) 16 percent of the amount (computed on a daily basis) 
     in effect under subsection (b)(2)(D) for the calendar year in 
     which such taxable year begins, multiplied by''.
       (2) Maximum amount of exclusion.--
       (A) In general.--Subparagraph (A) of section 911(c)(1) is 
     amended by inserting ``to the extent such expenses do not 
     exceed the amount determined under paragraph (2)'' after 
     ``the taxable year''.
       (B) Limitation.--Subsection (c) of section 911 is amended 
     by redesignating paragraphs (2) and (3) as paragraphs (3) and 
     (4), respectively, and by inserting after paragraph (1) the 
     following new paragraph:
       ``(2) Limitation.--The amount determined under this 
     paragraph is an amount equal to the product of--
       ``(A) 30 percent of the amount (computed on a daily basis) 
     in effect under subsection (b)(2)(D) for the calendar year in 
     which the taxable year of the individual begins, multiplied 
     by
       ``(B) the number of days of such taxable year within the 
     applicable period described in subparagraph (A) or (B) of 
     subsection (d)(1).''.
       (C) Conforming amendments.--
       (i) Section 911(d)(4) is amended by striking ``and 
     (c)(1)(B)(ii)'' and inserting ``, (c)(1)(B)(ii), and 
     (c)(2)(B)''
       (ii) Section 911(d)(7) is amended by striking ``subsection 
     (c)(3)'' and inserting ``subsection (c)(4)''.
       (c) Rates of Tax Applicable to Nonexcluded Income.--Section 
     911 (relating to exclusion of certain income of citizens and 
     residents of the United States living abroad) is amended by 
     redesignating subsection (f) as subsection (g) and by 
     inserting after subsection (e) the following new subsection:
       ``(f) Determination of Tax Liability on Nonexcluded 
     Amounts.--If any amount is excluded from the gross income of 
     a taxpayer under subsection (a) for any taxable year, then, 
     notwithstanding section 1 or 55--
       ``(1) the tax imposed by section 1 on the taxpayer for such 
     taxable year shall be equal to the excess (if any) of--
       ``(A) the tax which would be imposed by section 1 for the 
     taxable year if the taxpayer's taxable income were equal to 
     the sum of--
       ``(i) the taxpayer's taxable income for the taxable year 
     (determined without regard to this subsection), plus
       ``(ii) the amount excluded under subsection (a) for the 
     taxable year, over
       ``(B) the tax which would be imposed by section 1 for the 
     taxable year if the taxpayer's taxable income were equal to 
     the amount excluded under subsection (a) for the taxable 
     year, and
       ``(2) the tax imposed by section 55 for such taxable year 
     shall be equal to the excess (if any) of--
       ``(A) the amount which would be the tentative minimum tax 
     under section 55 for the taxable year if the taxpayer's 
     alternative minimum taxable income were equal to the sum of--
       ``(i) the taxpayer's alternative minimum taxable income for 
     the taxable year (determined without regard to this 
     subsection), plus
       ``(ii) the amount excluded under subsection (a) for the 
     taxable year, over
       ``(B) the sum of--
       ``(i) the amount which would be the tentative minimum tax 
     under section 55 for the taxable year if the taxpayer's 
     alternative minimum taxable income were equal to the amount 
     excluded under subsection (a) for the taxable year, plus
       ``(ii) the amount which would be the regular tax for the 
     taxable year if the tax imposed by section 1 were the tax 
     computed under paragraph (1).

     For purposes of this subsection, the amount excluded under 
     subsection (a) shall be reduced by the aggregate amount of 
     any deductions or exclusions disallowed under subsection 
     (d)(6) with respect to such excluded amount.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. ___. MODIFICATION OF INDIVIDUAL ESTIMATED TAX SAFE 
                   HARBOR.

       (a) In General.--The table contained in section 
     6654(d)(1)(C) is amended by striking ``2002 or thereafter'' 
     and inserting ``2002, 2003, 2004, or 2005'' and by adding at 
     the end the following new items:

  ``2006.........................................................121.1 
  2007 or thereafter.............................................110''.

       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to any installment payment for 
     taxable years beginning after December 31, 2005.
                                 ______
                                 
  SA 2607. Mr. SUNUNU submitted an amendment intended to be proposed by 
him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. REPEAL OF STATE AND LOCAL TAX EXEMPTION FOR FANNIE 
                   MAE AND FREDDIE MAC.

       (a) Fannie Mae.--Section 309(c) of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1723a(c)) is 
     amended to read as follows:
       ``(c) [Repealed.]''.
       (b) Freddie Mac.--Section 303(e) of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1452(e)) is amended to 
     read as follows:
       ``(e) [Repealed.]''.
                                 ______
                                 
  SA 2608. Ms. MURKOWSKI (for herself, Mr. Johnson, and Mr. Bingaman) 
submitted an amendment intended to be proposed by her to the bill S. 
2020, to provide for reconciliation pursuant to section 202(b) of the 
concurrent resolution on the budget for fiscal year 2006; which was 
ordered to lie on the table; as follows:

       On page 235, between lines 13 and 14, insert the following:

     SEC. __. CHARITABLE CONTRIBUTIONS OF FOOD INVENTORY TO INDIAN 
                   TRIBES.

       (a) In General.--Section 170(e)(3) of the Internal Revenue 
     Code of 1986 (relating to special rule for contributions of 
     inventory and other property) is amended by redesignating 
     subparagraph (D) as subparagraph (E) and by inserting after 
     subparagraph (C) the following new subparagraph:
       ``(D) Special rule for food contributions to indian 
     tribes.--
       ``(i) In general.--For purposes of this paragraph, in the 
     case of a charitable contribution of food which is apparently 
     wholesome food (as defined in subparagraph (C)(iii)), an 
     Indian tribe (as defined in section 7871(c)(3)(E)(ii)) shall 
     be treated as an organization eligible to be a donee under 
     subparagraph (A).
       ``(ii) Use of property.--For purposes of subparagraph 
     (A)(i), if the use of the property donated is related to the 
     exercise of an essential governmental function of the Indian 
     tribal government (within the meaning of section 7871), such 
     use shall be treated as related to the purpose or function 
     constituting the basis for the organization's exemption.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.
                                 ______
                                 
  SA 2609. Mrs. FEINSTEIN (for herself, Mr. Sununu, Mr. Gregg, Mr. 
Wyden, Ms. Cantwell, Mr. Feingold, Mr. Burr, Mr. McCain, Mr. Kerry, Ms. 
Collins, and Mrs. Clinton) proposed an amendment to the bill S. 2020, 
to provide for reconciliation pursuant to section 202(b) of the 
concurrent resolution on the budget for fiscal year 2006; as follows:

       At the end of title IV, add the following:

[[Page 27125]]



     SEC. __. REPEAL OF CERTAIN TAX BENEFITS RELATING TO OIL AND 
                   GAS WELLS INTANGIBLE DRILLING AND DEVELOPMENT 
                   COSTS.

       (a) In General.--Section 263(c) (relating to intangible 
     drilling and development costs) is amended by adding at the 
     end the following new sentence: ``This subsection shall not 
     apply with respect to wells (other than wells drilled for any 
     geothermal deposit (as so defined)) of any integrated oil 
     company (as defined in section 291(b)(4)) which has an 
     average daily worldwide production of crude oil of at least 
     500,000 barrels for the taxable year in any taxable year 
     beginning after December 31, 2005.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.
                                 ______
                                 
  SA 2610. Mrs. FEINSTEIN (for herself and Mr. Kerry) proposed an 
amendment to the bill S. 2020, to provide for reconciliation pursuant 
to section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; as follows:

       At the end of the bill, insert the following:

     SEC. __. REINSTATEMENT FOR MILLIONAIRES OF 39.6 PERCENT 
                   INCOME TAX RATE, PRE-MAY 2003 CAPITAL GAIN AND 
                   DIVIDEND RATES, AND DEDUCTION LIMITATIONS UNTIL 
                   BUDGET DEFICIT ELIMINATED.

       (a) Repeal of Top Income Tax Rate Reductions.--
       (1) In general.--Section 1(i) (relating to rate reductions) 
     is amended by redesignating paragraph (3) as paragraph (4) 
     and by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Exception for taxpayers with taxable income of 
     $1,000,000, or more.--Notwithstanding paragraph (2), in the 
     case of taxable years beginning in a calender year after 
     2005, the last item in the fourth column of the table under 
     paragraph (2) shall be applied by substituting `39.6%' for 
     `35.0%' with respect to taxable income in excess of 
     $1,000,000 ($500,000 in the case of taxpayers to whom 
     subsection (d) applies).''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2005.
       (3) Application of egtrra sunset.--The amendment made by 
     this subsection shall be subject to title IX of the Economic 
     Growth and Tax Relief Reconciliation Act of 2001 to the same 
     extent and in the same manner as the provision of such Act to 
     which such amendment relates.
       (b) Restoration of Pre-May 2003 Tax Rates on Capital Gains 
     and Dividends for Individuals In Top Rate Bracket.--
       (1) In general.--Section 1(h) is amended by adding at the 
     end the following new paragraph:
       ``(12) Increased rates for individuals in the top rate 
     bracket.--
       ``(A) Dividends.--In no event shall the qualified dividend 
     income of a taxpayer for any taxable year exceed the excess 
     (if any) of--
       ``(i) the minimum dollar amount to which the 39.6 rate 
     applies under subsection (i) for the taxable year, over
       ``(ii) taxable income, reduced by adjusted net capital gain 
     (determined without regard to this paragraph).
       ``(B) Capital gains.--If a taxpayer has a net capital gain 
     for any taxable year, the taxpayer's tax shall be increased 
     by an amount equal to 5 percent of the lesser of--
       ``(i) the taxpayer's adjusted net capital gain, determined 
     after application of subparagraph (A) and by only taking into 
     account gain or loss properly allocable to the portion of the 
     taxable year after December 31, 2005, or
       ``(ii) taxable income in excess of the minimum dollar 
     amount to which the 39.6 rate applies under subsection (i) 
     for the taxable year.''
       (2) Application to minimum tax.--Section 55(b)(3) is 
     amended by adding at the end the following new sentence: 
     ``The rules of section 1(h)(12) shall apply for purposes of 
     this paragraph.''
       (3) Effective dates.--
       (A) Capital gains.--Section 1(h)(12)(B) of the Internal 
     Revenue Code of 1986 (as added by paragraph (1)) shall apply 
     to taxable years beginning after December 31, 2005.
       (B) Dividend rates.--Section 1(h)(12)(A) of such Code (as 
     added by paragraph (1)) shall apply to dividends received 
     after December 31, 2005.
       (4) Application of jgtrra sunset.--The amendment made by 
     this subsection shall be subject to section 303 of the Jobs 
     and Growth Tax Relief Reconciliation Act of 2003 to the same 
     extent and in the same manner as the provision of such Act to 
     which such amendment relates.
       (c) Repeal of the Scheduled Phase Out and Termination of 
     the Limitations on Personal Exemptions and Itemized 
     Deductions.--
       (1) Repeal.--
       (A) Personal exemptions.--Section 1(d)(3) is amended by 
     adding at the end the following:
       ``(6) Reduction of phase out and termination not to 
     apply.--Subparagraphs (E) and (F) shall not apply to a 
     taxpayer whose adjusted gross income for the taxable year 
     exceeds $1,000,000 ($500,000 in the case of a married 
     individual filing a separate return).''
       (B) Itemized deductions.--Section 68 is amended by adding 
     at the end the following:
       ``(h) Reduction of Phase Out and Termination Not to 
     Apply.--Subsections (f) and (g) shall not apply to a taxpayer 
     whose adjusted gross income for the taxable year exceeds 
     $1,000,000 ($500,000 in the case of a married individual 
     filing a separate return).''
       (2) Effective date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.
       (3) Application of egtrra sunset.--The amendments made by 
     this section shall be subject to title IX of the Economic 
     Growth and Tax Relief Reconciliation Act of 2001 to the same 
     extent and in the same manner as the provision of such Act to 
     which such amendment relates.
       (d) Sunset of Amendments if Budget Deficit Eliminated.--
       (1) In general.--The amendments made by this section shall 
     not apply to taxable years beginning after the first calendar 
     year for which the certification described in paragraph 
     (2)(B) is made.
       (2) Estimates and certification.--
       (A) In general.--Not later than October 15 of each calendar 
     year beginning after 2005, the Director of the Office of 
     Management and Budget, in consultation with the Secretary of 
     the Treasury, shall estimate--
       (i) the Federal budget deficit for the fiscal year ending 
     in the calendar year, and
       (ii) the Federal budget deficit for the fiscal year 
     beginning in the calendar year (determined as if the 
     amendments made by this section were not in effect for 
     taxable years beginning in the following calendar year).
       (B) Certification.--The Director of the Office of 
     Management and Budget shall certify to the President of the 
     United States and to the Congress the first calendar year for 
     which the Director estimates under subparagraph (A) that 
     there will be no Federal budget deficit for both of the 
     fiscal years for which the estimate was made.
                                 ______
                                 
  SA 2611. Mr. SCHUMER (for himself, Mr. Lautenberg, Mrs. Feinstein, 
Mr. Feingold, Mrs. Clinton, Mr. Kerry, Mr. Lieberman, Mr. Salazar, Mrs. 
Boxer, Ms. Stabenow, Ms. Mikulski, Mr. Kohl, and Mr. Kennedy) submitted 
an amendment intended to be proposed by him to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; which was ordered to lie 
on the table; as follows:

       At the end of title IV, insert the following:

     SEC. __. SENSE OF THE SENATE REGARDING THE FEDERAL TAX 
                   DEDUCTION FOR STATE AND LOCAL TAXES.

       (a) Findings.--The Senate finds the following:
       (1) No American should be unnecessarily or excessively 
     burdened with additional taxes.
       (2) The Federal income tax has grown more complicated and 
     unmanageable over time, imposing burdensome administrative 
     and compliance costs on American taxpayers.
       (3) On January 7, 2005, President George W. Bush created 
     the President's Advisory Panel on Federal Tax Reform (the 
     ``Panel'') via Executive Order 13369.
       (4) The Panel was tasked with providing several options for 
     Federal tax reform that would simplify Federal tax laws, 
     retain progressivity, and promote long-run economic growth 
     and job creation.
       (5) In its final report, released publicly on November 1, 
     2005, the Panel recommended the complete repeal of the 
     Federal deduction for State and local taxes, as a central 
     component of both the ``Simplified Income Tax Plan'' and the 
     ``Growth and Investment Tax Plan''.
       (6) State and local taxes have been deductible from the 
     Federal income tax since the inception of the Federal income 
     tax in 1913.
       (7) Eliminating the deduction for State and local taxes 
     would create a new form of double taxation at a time where 
     efforts are being made to reduce other forms of double 
     taxation, since repeal would require millions of taxpayers to 
     pay Federal taxes on income that is also taxed at the State 
     or local level.
       (8) Congress has recently taken steps to expand, rather 
     than cut back, the State and local tax deduction, by 
     reinstating a deduction for State sales taxes for some 
     taxpayers (previously repealed as part of the Tax Reform Act 
     of 1986), as part of the American Jobs Creation Act of 2004.
       (9) There is some concern, as noted by the nonpartisan 
     Urban-Brookings Tax Policy Center, that eliminating the 
     deduction could ``lower support for public services and lead 
     to a `race to the bottom' in terms of State and local 
     expenditures as States compete to have the lowest taxes in 
     order to attract higher-income households''.
       (10) The deduction for State and local taxes is not just a 
     concern for a small minority of taxpayers in the largest 
     States, as 22 States saw more than \1/3\ of their taxpayers 
     take the deduction in 2003, the latest year for which data is 
     available (Maryland, New Jersey, Connecticut, Colorado, 
     Oregon, Minnesota, Massachusetts, Virginia, Utah, California, 
     Georgia, New York, Wisconsin, Arizona, Rhode Island, 
     Michigan, Delaware, North Carolina, Illinois, New Hampshire, 
     Nevada,

[[Page 27126]]

     and Idaho (ranked in order of the percentage of taxpayers 
     affected)).
       (11) In tax year 2003, 43,538,000 taxpayers in the United 
     States took advantage of the Federal deduction for State and 
     local taxes, deducting a total of $315,690,000,000, thereby 
     saving taxpayers in the United States approximately 
     $88,390,000,000 in Federal income taxes, assuming an average 
     marginal rate of 28 percent for taxpayers who itemize.
       (12) In tax year 2003, the top 25 States ranked by the 
     number of taxpayers affected represented 77 percent of the 
     taxpayers affected nationally, and took 85 percent of the 
     total deductions for State and local taxes, as described in 
     the following subparagraphs:
       (A) In California, 5,807,000 taxpayers deducted a total of 
     $54,920,000,000, saving California taxpayers approximately 
     $15,380,000,000 in Federal income taxes.
       (B) In New York, 3,228,000 taxpayers deducted a total of 
     $37,600,000,000, saving New York taxpayers approximately 
     $10,530,000,000 in Federal income taxes.
       (C) In Illinois, 1,994,000 taxpayers deducted a total of 
     $13,720,000,000, saving Illinois taxpayers approximately 
     $3,840,000,000 in Federal income taxes.
       (D) In Ohio, 1,809,000 taxpayers deducted a total of 
     $12,720,000,000, saving Ohio taxpayers approximately 
     $3,560,000,000 in Federal income taxes.
       (E) In New Jersey, 1,791,000 taxpayers deducted a total of 
     $18,750,000,000, saving New Jersey taxpayers approximately 
     $5,250,000,000 in Federal income taxes.
       (F) In Pennsylvania, 1,765,000 taxpayers deducted a total 
     of $12,400,000,000, saving Pennsylvania taxpayers 
     approximately $3,470,000,000 in Federal income taxes.
       (G) In Michigan, 1,627,000 taxpayers deducted a total of 
     $10,350,000,000, saving Michigan taxpayers approximately 
     $2,900,000,000 in Federal income taxes.
       (H) In Georgia, 1,416,000 taxpayers deducted a total of 
     $8,720,000,000, saving Georgia taxpayers approximately 
     $2,440,000,000 in Federal income taxes.
       (I) In Virginia, 1,355,000 taxpayers deducted a total of 
     $9,630,000,000, saving Virginia taxpayers approximately 
     $2,700,000,000 in Federal income taxes.
       (J) In North Carolina, 1,304,000 taxpayers deducted a total 
     of $8,720,000,000, saving North Carolina taxpayers 
     approximately $2,440,000,000 in Federal income taxes.
       (K) In Maryland, 1,260,000 taxpayers deducted a total of 
     $10,410,000,000, saving Maryland taxpayers approximately 
     $2,920,000,000 in Federal income taxes.
       (L) In Massachusetts, 1,216,000 taxpayers deducted a total 
     of $10,840,000,000, saving Massachusetts taxpayers 
     approximately $3,040,000,000 in Federal income taxes.
       (M) In Minnesota, 969,000 taxpayers deducted a total of 
     $7,060,000,000, saving Minnesota taxpayers approximately 
     $1,980,000,000 in Federal income taxes.
       (N) In Wisconsin, 961,000 taxpayers deducted a total of 
     $8,000,000,000, saving Wisconsin taxpayers approximately 
     $2,240,000,000 in Federal income taxes.
       (O) In Colorado, 856,000 taxpayers deducted a total of 
     $4,570,000,000, saving Colorado taxpayers approximately 
     $1,280,000,000 in Federal income taxes.
       (P) In Arizona, 841,000 taxpayers deducted a total of 
     $4,110,000,000, saving Arizona taxpayers approximately 
     $1,150,000,000 in Federal income taxes.
       (Q) In Indiana, 832,000 taxpayers deducted a total of 
     $4,530,000,000, saving Indiana taxpayers approximately 
     $1,270,000,000 in Federal income taxes.
       (R) In Missouri, 772,000 taxpayers deducted a total of 
     $4,890,000,000, saving Missouri taxpayers approximately 
     $1,370,000,000 in Federal income taxes.
       (S) In Connecticut, 713,000 taxpayers deducted a total of 
     $7,970,000,000, saving Connecticut taxpayers approximately 
     $2,230,000,000 in Federal income taxes.
       (T) In Oregon, 641,000 taxpayers deducted a total of 
     $5,100,000,000, saving Oregon taxpayers approximately 
     $1,430,000,000 in Federal income taxes.
       (U) In South Carolina, 574,000 taxpayers deducted a total 
     of $3,390,000,000, saving South Carolina taxpayers 
     approximately $949,000,000 in Federal income taxes.
       (V) In Alabama, 538,000 taxpayers deducted a total of 
     $2,090,000,000, saving Alabama taxpayers approximately 
     $586,000,000 in Federal income taxes.
       (W) In Kentucky, 515,000 taxpayers deducted a total of 
     $3,300,000,000, saving Kentucky taxpayers approximately 
     $925,000,000 in Federal income taxes.
       (X) In Oklahoma, 434,000 taxpayers deducted a total of 
     $2,320,000,000, saving Oklahoma taxpayers approximately 
     $650,000,000 in Federal income taxes.
       (Y) In Iowa, 397,000 taxpayers deducted a total of 
     $2,510,000,000, saving Iowa taxpayers approximately 
     $702,000,000 in Federal income taxes.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that Congress should not repeal or substantially alter the 
     longstanding Federal tax deduction for State and local taxes.
                                 ______
                                 
  SA 2612. Ms. CANTWELL (form herself, Mr. Bayh, Mr. Lieberman, Mr. 
Schumer, Mrs. Boxer, Mr. Carper, Mrs. Clinton, Mr. Salazar, Mr. Kohl, 
Mrs. Murray, Ms. Stabenow, and Mrs. Feinstein) submitted an amendment 
to the bill S. 2020, to provide for reconciliation pursuant to section 
202(b) of the concurrent resolution on the budget for fiscal year 2006; 
as follows:

       At the end of the bill, insert the following:

             TITLE I--ENERGY EMERGENCY CONSUMER PROTECTION

     SEC. __. UNFAIR OR DECEPTIVE ACTS OR PRACTICES IN COMMERCE 
                   RELATED TO GASOLINE AND PETROLEUM DISTILLATES.

       (a) Sales to Consumers at Unconscionable Price.--
       (1) In general.--During any energy emergency declared by 
     the President under section 3, it is unlawful for any person 
     to sell crude oil, gasoline, or petroleum distillates in, or 
     for use in, the area to which that declaration applies at a 
     price that--
       (A) is unconscionably excessive; or
       (B) indicates the seller is taking unfair advantage of the 
     circumstances to increase prices unreasonably.
       (2) Factors considered.--In determining whether a violation 
     of paragraph (1) has occurred, there shall be taken into 
     account, among other factors, whether--
       (A) the amount charged represents a gross disparity between 
     the price of the crude oil, gasoline, or petroleum distillate 
     sold and the price at which it was offered for sale in the 
     usual course of the seller's business immediately prior to 
     the energy emergency; or
       (B) the amount charged grossly exceeds the price at which 
     the same or similar crude oil, gasoline, or petroleum 
     distillate was readily obtainable by other purchasers in the 
     area to which the declaration applies.
       (3) Mitigating factors.--In determining whether a violation 
     of paragraph (1) has occurred, there also shall be taken into 
     account, among other factors, the price that would reasonably 
     equate supply and demand in a competitive and freely 
     functioning market and whether the price at which the crude 
     oil, gasoline, or petroleum distillate was sold reasonably 
     reflects additional costs, not within the control of the 
     seller, that were paid or incurred by the seller.
       (b) False Pricing Information.--It is unlawful for any 
     person to report information related to the wholesale price 
     of crude oil, gasoline, or petroleum distillates to the 
     Federal Trade Commission if--
       (1) that person knew, or reasonably should have known, the 
     information to be false or misleading;
       (2) the information was required by law to be reported; and
       (3) the person intended the false or misleading data to 
     affect data compiled by that department or agency for 
     statistical or analytical purposes with respect to the market 
     for crude oil, gasoline, or petroleum distillates.
       (c) Market Manipulation.--It is unlawful for any person, 
     directly or indirectly, to use or employ, in connection with 
     the purchase or sale of crude oil, gasoline, or petroleum 
     distillates at wholesale, any manipulative or deceptive 
     device or contrivance, in contravention of such rules and 
     regulations as the Commission may prescribe as necessary or 
     appropriate in the public interest or for the protection of 
     United States citizens.

     SEC. __. DECLARATION OF ENERGY EMERGENCY.

       (a) In General.--If the President finds that the health, 
     safety, welfare, or economic well-being of the citizens of 
     the United States is at risk because of a shortage or 
     imminent shortage of adequate supplies of crude oil, 
     gasoline, or petroleum distillates due to a disruption in the 
     national distribution system for crude oil, gasoline, or 
     petroleum distillates (including such a shortage related to a 
     major disaster (as defined in section 102(2) of the Robert T. 
     Stafford Disaster Relief and Emergency Assistance Act (42 
     U.S.C. 5122))), or significant pricing anomalies in national 
     energy markets for crude oil, gasoline, or petroleum 
     distillates, the President may declare that a Federal energy 
     emergency exists.
       (b) Scope and Duration.--The declaration shall apply to the 
     Nation, a geographical region, or 1 or more States, as 
     determined by the President, but may not be in effect for a 
     period of more than 45 days.
       (c) Extensions.--The President may--
       (1) extend a declaration under subsection (a) for a period 
     of not more than 45 days; and
       (2) extend such a declaration more than once.

     SEC. __. ENFORCEMENT UNDER FEDERAL TRADE COMMISSION ACT.

       (a) Enforcement by Commission.--This Act shall be enforced 
     by the Federal Trade Commission. In enforcing section 2(a) of 
     this Act, the Commission shall give priority to enforcement 
     actions concerning companies with total United States 
     wholesale or retail sales of crude oil, gasoline, and 
     petroleum distillates in excess of $500,000,000 per year but 
     shall not exclude enforcement actions against companies with 
     total United States wholesale sales of $500,000,000 or less 
     per year.
       (b) Violation Is Unfair or Deceptive Act or Practice.--The 
     violation of any provision of this Act shall be treated as an 
     unfair or deceptive act or practice proscribed under a rule 
     issued under section 18(a)(1)(B) of the Federal Trade 
     Commission Act (15 U.S.C. 57a(a)(1)(B)).

[[Page 27127]]



     SEC. __. ENFORCEMENT AT RETAIL LEVEL BY STATE ATTORNEYS 
                   GENERAL.

       (a) In General.--A State, as parens patriae, may bring a 
     civil action on behalf of its residents in an appropriate 
     district court of the United States to enforce the provisions 
     of section 2(a) of this Act, or to impose the civil penalties 
     authorized by section 6 for violations of section 2(a), 
     whenever the attorney general of the State has reason to 
     believe that the interests of the residents of the State have 
     been or are being threatened or adversely affected by a 
     person engaged in retail sales of gasoline or petroleum 
     distillates to consumers for purposes other than resale that 
     violates this Act or a regulation under this Act.
       (b) Notice.--The State shall serve written notice to the 
     Commission of any civil action under subsection (a) prior to 
     initiating such civil action. The notice shall include a copy 
     of the complaint to be filed to initiate such civil action, 
     except that if it is not feasible for the State to provide 
     such prior notice, the State shall provide such notice 
     immediately upon instituting such civil action.
       (c) Authority To Intervene.--Upon receiving the notice 
     required by subsection (b), the Commission may intervene in 
     such civil action and upon intervening--
       (1) be heard on all matters arising in such civil action; 
     and
       (2) file petitions for appeal of a decision in such civil 
     action.
       (d) Construction.--For purposes of bringing any civil 
     action under subsection (a), nothing in this section shall 
     prevent the attorney general of a State from exercising the 
     powers conferred on the attorney general by the laws of such 
     State to conduct investigations or to administer oaths or 
     affirmations or to compel the attendance of witnesses or the 
     production of documentary and other evidence.
       (e) Venue; Service of Process.--In a civil action brought 
     under subsection (a)--
       (1) the venue shall be a judicial district in which--
       (A) the defendant operates;
       (B) the defendant was authorized to do business; or
       (C) where the defendant in the civil action is found;
       (2) process may be served without regard to the territorial 
     limits of the district or of the State in which the civil 
     action is instituted; and
       (3) a person who participated with the defendant in an 
     alleged violation that is being litigated in the civil action 
     may be joined in the civil action without regard to the 
     residence of the person.
       (f) Limitation on State Action While Federal Action Is 
     Pending.--If the Commission has instituted a civil action or 
     an administrative action for violation of this Act, no State 
     attorney general, or official or agency of a State, may bring 
     an action under this subsection during the pendency of that 
     action against any defendant named in the complaint of the 
     Commission or the other agency for any violation of this Act 
     alleged in the complaint.
       (g) Enforcement of State Law.--Nothing contained in this 
     section shall prohibit an authorized State official from 
     proceeding in State court to enforce a civil or criminal 
     statute of such State.

     SEC. __. PENALTIES.

       (a) Civil Penalty.--
       (1) In general.--In addition to any penalty applicable 
     under the Federal Trade Commission Act--
       (A) any person who violates section 2(b) or 2(c) of this 
     Act is punishable by a civil penalty of not more than 
     $1,000,000; and
       (B) any person who violates section 2(a) of this Act is 
     punishable by a civil penalty of not more than $3,000,000.
       (2) Method of assessment.--The penalties provided by 
     paragraph (1) shall be assessed in the same manner as civil 
     penalties imposed under section 5 of the Federal Trade 
     Commission Act (15 U.S.C. 45).
       (3) Multiple offenses; mitigating factors.--In assessing 
     the penalty provided by subsection (a)--
       (A) each day of a continuing violation shall be considered 
     a separate violation; and
       (B) the Commission shall take into consideration the 
     seriousness of the violation and the efforts of the person 
     committing the violation to remedy the harm caused by the 
     violation in a timely manner.
       (b) Criminal Penalty.--Violation of section 2(a) of this 
     Act is punishable by a fine of not more than $1,000,000, 
     imprisonment for not more than 5 years, or both.

     SEC. __. EFFECT ON OTHER LAWS.

       (a) Other Authority of Commission.--Nothing in this Act 
     shall be construed to limit or affect in any way the 
     Commission's authority to bring enforcement actions or take 
     any other measure under the Federal Trade Commission Act (15 
     U.S.C. 41 et seq.) or any other provision of law.
       (b) State Law.--Nothing in this Act preempts any State law.
                                 ______
                                 
  SA 2613. Mr. KENNEDY (for himself, Mr. Bingaman, Mr. Levin, Mr. 
Durbin, and Ms. Mikulski) submitted an amendment intended to be 
proposed by him to the bill S. 2020, to provide for reconciliation 
pursuant to section 202(b) of the concurrent resolution on the budget 
for fiscal year 2006; which was ordered to lie on the table; as 
follows:

       At the appropriate place, insert the following:

     SEC. __. EXPANSION OF HOPE SCHOLARSHIP CREDIT.

       (a) Credit Allowed for Books and Room and Board.--
       (1) In general.--
       (A) Subsection (b) of section 25A is amended by striking 
     ``qualified tuition and related expenses'' each place it 
     occurs and inserting ``qualified higher education expenses''.
       (B) Subsection (f) of section 25A is amended by adding at 
     the end the following new paragraph:
       ``(3) Qualified higher education expenses.--The term 
     `qualified higher education expenses' has the meaning given 
     such term under section 529(e)(3).''.
       (2) Conforming amendments.--Subsections (e) and (g) of 
     section 25A are amended by inserting ``qualified higher 
     education expenses or'' before ``qualified'' each place it 
     appears.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. __. MODIFICATIONS OF EFFECTIVE DATES OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) In General.--Section 849(b) of the American Jobs 
     Creation Act of 2004 is amended by striking paragraphs (1) 
     and (2), by redesignating paragraphs (3) and (4) as 
     paragraphs (1) and (2), respectively, and by adding at the 
     end the following new paragraph:
       ``(3) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2004, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.
                                 ______
                                 
  SA 2614. Mr. PRYOR submitted an amendment intended to be proposed by 
him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, add the following:

     SEC. __. DEFINITION OF CONVENTION OR ASSOCIATION OF CHURCHES.

       Section 7701 (relating to definitions) is amended by 
     redesignating subsection (o) as subsection (p) and by 
     inserting after subsection (n) the following new subsection:
       ``(o) Convention or Association of Churches.--For purposes 
     of this title, any organization which is otherwise a 
     convention or association of churches shall not fail to so 
     qualify merely because the membership of such organization 
     includes individuals as well as churches or because 
     individuals have voting rights in such organization.''.
                                 ______
                                 
  SA 2615. Ms. COLLINS submitted an amendment intended to be proposed 
by her to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

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

     SEC. __. REPEAL OF EXPENSING OF INTANGIBLE DRILLING AND 
                   DEVELOPMENT COSTS FOR OIL AND GAS WELLS.

       (a) In General.--Section 263(c) (relating to intangible 
     drilling and development costs) is amended by adding at the 
     end the following new sentence: ``This subsection shall not 
     apply with respect to wells (other than wells drilled for any 
     geothermal deposit (as so defined)) of any integrated oil 
     company (as defined in section 291(b)(4)) which has an 
     average daily worldwide production of crude oil of at least 
     500,000 barrels for the taxable year in any taxable year 
     beginning after December 31, 2005.''.
       (b) Conforming Amendments.--Paragraphs (2) and (3) of 
     section 291(b) are each amended by striking ``section 263(c), 
     616(a),'' and inserting ``section 616(a)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.
                                 ______
                                 
  SA 2616. Mr. KERRY (for himself and Mr. Obama) submitted an amendment 
intended to be proposed by him to the bill S. 2020, to provide for 
reconciliation pursuant to section 202(b) of the concurrent resolution 
on the budget for fiscal year 2006; as follows:

       On page 235, between lines 13 and 14, insert the following:

     SEC. __. ACCELERATION OF MARRIAGE PENALTY RELIEF WITH RESPECT 
                   TO THE EARNED INCOME TAX CREDIT.

       (a) In General.--Subparagraph (B) of section 32(b)(2) 
     (relating to joint returns) is amended--

[[Page 27128]]

       (1) in clause (ii) by striking ``, 2006, and 2007'', and
       (2) in clause (iii) by striking ``2007'' and inserting 
     ``2005''.
       (b) Inflation Amount.--Section 32(j)(1)(B)(ii) is amended 
     by striking ``calendar year 2007'' and inserting ``calendar 
     year 2005''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. __. EXTENSION OF ELECTION TO INCLUDE COMBAT PAY IN 
                   EARNED INCOME.

       (a) In General.--Subclause (II) of section 32(c)(2)(B)(vi) 
     (relating to earned income) is amended by striking ``January 
     1, 2006'' and inserting ``January 1, 2008''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. ___. MODIFICATIONS OF EFFECTIVE DATES OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) In General.--Section 849(b) of the American Jobs 
     Creation Act of 2004 is amended by adding at the end the 
     following new paragraph:
       ``(5) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2004, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.
                                 ______
                                 
  SA 2617. Mr. SANTORUM submitted an amendment intended to be proposed 
by him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, insert the following:

     SEC. __. CLASSIFICATION OF AUTOMATIC FIRE SPRINKLER SYSTEMS.

       (a) In General.--Subparagraph (B) of section 168(e)(3) 
     (relating to 5-year property) is amended by striking ``and'' 
     at the end of clause (v), by striking the period at the end 
     of clause (vi) and inserting ``, and '', and by adding at the 
     end the following:
       ``(vii) any automatic fire sprinkler system placed in 
     service after the date of the enactment of this clause in a 
     building structure which was placed in service before such 
     date of enactment.''.
       (b) Alternative System.--The table contained in section 
     168(g)(3)(B) (relating to special rule for certain property 
     assigned to classes) is amended by inserting after the item 
     relating to subparagraph (B)(iii) the following:

``(B)(vii).........................................................7''.

       (c) Definition of Automatic Fire Sprinkler System.--
     Subsection (i) of section 168 is amended by adding at the end 
     the following:
       ``(18) Automated fire sprinkler system.--The term 
     `automated fire sprinkler system' means those sprinkler 
     systems classified under one or more of the following 
     publications of the National Fire Protection Association--
       ``(A) NFPA 13, Installation of Sprinkler Systems,
       ``(B) NFPA 13 D, Installation of Sprinkler Systems in One 
     and Two Family Dwellings and Manufactured Homes, and
       ``(C) NFPA 13 R, Installation of Sprinkler Systems in 
     Residential Occupancies up to and Including Four Stories in 
     Height.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act.
                                 ______
                                 
  SA 2618. Mr. SANTORUM submitted an amendment intended to be proposed 
by him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, insert the following:

                Subtitle B--Savings for Working Families

     SEC. 411. DEFINITIONS.

       In this subtitle:
       (1) Eligible individual.--
       (A) In general.--The term ``eligible individual'' means, 
     with respect to any taxable year, an individual who--
       (i) has attained the age of 18 but not the age of 61 as of 
     the last day of such taxable year,
       (ii) is a citizen or lawful permanent resident (within the 
     meaning of section 7701(b)(6) of the Internal Revenue Code of 
     1986) of the United States as of the last day of such taxable 
     year,
       (iii) was not a student (as defined in section 151(c)(4) of 
     such Code) for the immediately preceding taxable year,
       (iv) is not an individual with respect to whom a deduction 
     under section 151 of such Code is allowable to another 
     taxpayer for a taxable year of the other taxpayer ending 
     during the immediately preceding taxable year of the 
     individual,
       (v) is not a taxpayer described in subsection (c), (d), or 
     (e) of section 6402 of such Code for the immediately 
     preceding taxable year,
       (vi) is not a taxpayer described in section 1(d) of such 
     Code for the immediately preceding taxable year, and
       (vii) is a taxpayer the modified adjusted gross income of 
     whom for the immediately preceding taxable year does not 
     exceed--

       (I) $20,000, in the case of a taxpayer described in section 
     1(c) of such Code,
       (II) $30,000, in the case of a taxpayer described in 
     section 1(b) of such Code, and
       (III) $40,000, in the case of a taxpayer described in 
     section 1(a) of such Code.

       (B) Inflation adjustment.--
       (i) In general.--In the case of any taxable year beginning 
     after 2005, each dollar amount referred to in subparagraph 
     (A)(vii) shall be increased by an amount equal to--

       (I) such dollar amount, multiplied by
       (II) the cost-of-living adjustment determined under section 
     (1)(f)(3) of the Internal Revenue Code of 1986 for the 
     calendar year in which the taxable year begins, by 
     substituting ``2004'' for ``1992''.

       (ii) Rounding.--If any amount as adjusted under clause (i) 
     is not a multiple of $50, such amount shall be rounded to the 
     nearest multiple of $50.
       (C) Modified adjusted gross income.--For purposes of 
     subparagraph (A)(v), the term ``modified adjusted gross 
     income'' means adjusted gross income--
       (i) determined without regard to sections 86, 893, 911, 
     931, and 933 of the Internal Revenue Code of 1986, and
       (ii) increased by the amount of interest received or 
     accrued by the taxpayer during the taxable year which is 
     exempt from tax.
       (2) Individual development account.--The term ``Individual 
     Development Account'' means an account established for an 
     eligible individual as part of a qualified individual 
     development account program, but only if the written 
     governing instrument creating the account meets the following 
     requirements:
       (A) The owner of the account is the individual for whom the 
     account was established.
       (B) No contribution will be accepted unless it is in cash, 
     and, except in the case of any qualified rollover, 
     contributions will not be accepted for the taxable year in 
     excess of $1,500 on behalf of any individual.
       (C) The trustee of the account is a qualified financial 
     institution.
       (D) The assets of the account will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       (E) Except as provided in section 415(b), any amount in the 
     account may be paid out only for the purpose of paying the 
     qualified expenses of the account owner.
       (3) Parallel account.--The term ``parallel account'' means 
     a separate, parallel individual or pooled account for all 
     matching funds and earnings dedicated to an Individual 
     Development Account owner as part of a qualified individual 
     development account program, the trustee of which is a 
     qualified financial institution.
       (4) Qualified financial institution.--
       (A) In general.--The term ``qualified financial 
     institution'' means any person authorized to be a trustee of 
     any individual retirement account under section 408(a)(2) of 
     the Internal Revenue Code of 1986.
       (B) Rule of construction.--
       (i) In general.--Nothing in this paragraph shall be 
     construed as preventing a person described in subparagraph 
     (A) from collaborating with 1 or more qualified nonprofit 
     organizations or Indian tribes to carry out an individual 
     development account program established under section 412.
       (ii) Qualified nonprofit organization.--The term 
     ``qualified nonprofit organization'' means--

       (I) any organization described in section 501(c)(3) of the 
     Internal Revenue Code of 1986 and exempt from taxation under 
     section 501(a) of such Code,
       (II) any community development financial institution 
     certified by the Community Development Financial Institution 
     Fund,
       (III) any credit union chartered under Federal or State 
     law, or
       (IV) any public housing agency as defined in section 
     3(b)(6) of the United States Housing Act of 1937 (42 U.S.C. 
     1437a(b)(6)).

       (iii) Indian tribe.--The term ``Indian tribe'' means any 
     Indian tribe as defined in section 4(12) of the Native 
     American Housing Assistance and Self-Determination Act of 
     1996 (25 U.S.C. 4103(12), and includes any tribally 
     designated housing entity (as defined in section 4(21) of 
     such Act (25 U.S.C. 4103(21)), tribal subsidiary, 
     subdivision, or other wholly owned tribal entity.
       (5) Qualified individual development account program.--The 
     term ``qualified individual development account program'' 
     means a program established upon approval of the Secretary 
     under section 412 after December 31, 2006, under which--
       (A) Individual Development Accounts and parallel accounts 
     are held in trust by a qualified financial institution, and
       (B) additional activities determined by the Secretary, in 
     consultation with the Secretary of Health and Human Services, 
     as necessary to responsibly develop and administer

[[Page 27129]]

     accounts, including recruiting, providing financial education 
     and other training to Account owners, and regular program 
     monitoring, are carried out by the qualified financial 
     institution.
       (6) Qualified expense distribution.--
       (A) In general.--The term ``qualified expense 
     distribution'' means any amount paid (including through 
     electronic payments) or distributed out of an Individual 
     Development Account or a parallel account established for an 
     eligible individual if such amount--
       (i) is used exclusively to pay the qualified expenses of 
     the Individual Development Account owner or such owner's 
     spouse or dependents,
       (ii) is paid by the qualified financial institution--

       (I) except as otherwise provided in this clause, directly 
     to the unrelated third party to whom the amount is due,
       (II) in the case of any qualified rollover, directly to 
     another Individual Development Account and parallel account, 
     or
       (III) in the case of a qualified final distribution, 
     directly to the spouse, dependent, or other named beneficiary 
     of the deceased Account owner, and

       (iii) is paid after the Account owner has completed a 
     financial education course if required under section 413(b).
       (B) Qualified expenses.--
       (i) In general.--The term ``qualified expenses'' means any 
     of the following expenses approved by the qualified financial 
     institution:

       (I) Qualified higher education expenses.
       (II) Qualified first-time homebuyer costs.
       (III) Qualified business capitalization or expansion costs.
       (IV) Qualified rollovers.
       (V) Qualified final distribution.

       (ii) Qualified higher education expenses.--

       (I) In general.--The term ``qualified higher education 
     expenses'' has the meaning given such term by section 
     529(e)(3) of the Internal Revenue Code of 1986, determined by 
     treating the Account owner, the owner's spouse, or one or 
     more of the owner's dependents as a designated beneficiary, 
     and reduced as provided in section 25A(g)(2) of such Code.
       (II) Coordination with other benefits.--The amount of 
     expenses which may be taken into account for purposes of 
     section 135, 529, or 530 of such Code for any taxable year 
     shall be reduced by the amount of any qualified higher 
     education expenses taken into account as qualified expense 
     distributions during such taxable year.

       (iii) Qualified first-time homebuyer costs.--The term 
     ``qualified first-time homebuyer costs'' means qualified 
     acquisition costs (as defined in section 72(t)(8)(C) of the 
     Internal Revenue Code of 1986) with respect to a principal 
     residence (within the meaning of section 121 of such Code) 
     for a qualified first-time homebuyer (as defined in section 
     72(t)(8)(D)(i) of such Code).
       (iv) Qualified business capitalization or expansion 
     costs.--

       (I) In general.--The term ``qualified business 
     capitalization or expansion costs'' means qualified 
     expenditures for the capitalization or expansion of a 
     qualified business pursuant to a qualified business plan.
       (II) Qualified expenditures.--The term ``qualified 
     expenditures'' means expenditures normally associated with 
     starting or expanding a business and included in a qualified 
     business plan, including costs for capital, plant, and 
     equipment, inventory expenses, and attorney and accounting 
     fees.
       (III) Qualified business.--The term ``qualified business'' 
     means any business that does not contravene any law.
       (IV) Qualified business plan.--The term ``qualified 
     business plan'' means a business plan which has been approved 
     by the qualified financial institution and which meets such 
     requirements as the Secretary may specify.

       (v) Qualified rollovers.--The term ``qualified rollover'' 
     means the complete distribution of the amounts in an 
     Individual Development Account and parallel account to 
     another Individual Development Account and parallel account 
     established in another qualified financial institution for 
     the benefit of the Account owner.
       (vi) Qualified final distribution.--The term ``qualified 
     final distribution'' means, in the case of a deceased Account 
     owner, the complete distribution of the amounts in the 
     Individual Development Account and parallel account directly 
     to the spouse, any dependent, or other named beneficiary of 
     the deceased.
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.

     SEC. 412. STRUCTURE AND ADMINISTRATION OF QUALIFIED 
                   INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAMS.

       (a) Establishment of Qualified Individual Development 
     Account Programs.--Any qualified financial institution may 
     apply to the Secretary for approval to establish 1 or more 
     qualified individual development account programs which meet 
     the requirements of this subtitle.
       (b) Basic Program Structure.--
       (1) In general.--All qualified individual development 
     account programs shall consist of the following 2 components 
     for each participant:
       (A) An Individual Development Account to which an eligible 
     individual may contribute cash in accordance with section 
     413.
       (B) A parallel account to which all matching funds shall be 
     deposited in accordance with section 414.
       (2) Tailored ida programs.--A qualified financial 
     institution may tailor its qualified individual development 
     account program to allow matching funds to be spent on 1 or 
     more of the categories of qualified expenses.
       (c) Coordination With Public Housing Agency Individual 
     Savings Accounts.--Section 3(e)(2) of the United States 
     Housing Act of 1937 (42 U.S.C. 1437a(e)(2)) is amended by 
     inserting ``or in any Individual Development Account 
     established under subtitle B of title IV of the Tax Relief 
     Act of 2005'' after ``subsection''.
       (d) Tax Treatment of Parallel Accounts.--
       (1) In general.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     section:

     ``SEC. 7529. TAX INCENTIVES FOR INDIVIDUAL DEVELOPMENT 
                   PARALLEL ACCOUNTS.

       ``For purposes of this title--
       ``(1) any account described in section 412(b)(1)(B) of the 
     Tax Relief Act of 2005 shall be exempt from taxation,
       ``(2) except as provided in section 45G, no item of income, 
     expense, basis, gain, or loss with respect to such an account 
     may be taken into account, and
       ``(3) any amount withdrawn from such an account shall not 
     be includible in gross income.''.
       (2) Conforming amendment.--The table of sections for 
     chapter 77 is amended by adding at the end the following new 
     item:

``Sec. 7529. Tax incentives for individual development parallel 
              accounts.''.

       (e) Coordination of Certain Expenses.--Section 25A(g)(2) is 
     amended by striking ``and'' at the end of subparagraph (C), 
     by striking the period at the end of subparagraph (D) and 
     inserting ``, and'', and by adding at the end the following 
     new subparagraph:
       ``(D) a qualified expense distribution with respect to 
     qualified higher education expenses from an Individual 
     Development Account or a parallel account under section 
     415(a) of the Tax Relief Act of 2005.''.

     SEC. 413. PROCEDURES FOR OPENING AND MAINTAINING AN 
                   INDIVIDUAL DEVELOPMENT ACCOUNT AND QUALIFYING 
                   FOR MATCHING FUNDS.

       (a) Opening an Account.--An eligible individual may open an 
     Individual Development Account with a qualified financial 
     institution upon certification that such individual has never 
     maintained any other Individual Development Account (other 
     than an Individual Development Account to be terminated by a 
     qualified rollover).
       (b) Required Completion of Financial Education Course.--
       (1) In general.--Before becoming eligible to withdraw funds 
     to pay for qualified expenses, owners of Individual 
     Development Accounts must complete 1 or more financial 
     education courses specified in the qualified individual 
     development account program.
       (2) Standard and applicability of course.--The Secretary, 
     in consultation with representatives of qualified individual 
     development account programs and financial educators, shall, 
     not later than January 1, 2006, establish minimum quality 
     standards for the contents of financial education courses and 
     providers of such courses described in paragraph (1) and a 
     protocol to exempt individuals from the requirement under 
     paragraph (1) in the case of hardship, lack of need, the 
     attainment of age 65, or a qualified final distribution.
       (c) Proof of Status as an Eligible Individual.--Federal 
     income tax forms for the immediately preceding taxable year 
     and any other evidence of eligibility which may be required 
     by a qualified financial institution shall be presented to 
     such institution at the time of the establishment of the 
     Individual Development Account and in any taxable year in 
     which contributions are made to the Account to qualify for 
     matching funds under section 414(b)(1)(A).
       (d) Special Rule in the Case of Married Individuals.--For 
     purposes of this subtitle, if, with respect to any taxable 
     year, 2 married individuals file a Federal joint income tax 
     return, then not more than 1 of such individuals may be 
     treated as an eligible individual with respect to the 
     succeeding taxable year.

     SEC. 414. DEPOSITS BY QUALIFIED INDIVIDUAL DEVELOPMENT 
                   ACCOUNT PROGRAMS.

       (a) Parallel Accounts.--The qualified financial institution 
     shall deposit all matching funds for each Individual 
     Development Account into a parallel account at a qualified 
     financial institution.
       (b) Regular Deposits of Matching Funds.--
       (1) In general.--Subject to paragraph (2), the qualified 
     financial institution shall deposit into the parallel account 
     with respect to each eligible individual the following 
     amounts:
       (A) A dollar-for-dollar match for the first $500 
     contributed by the eligible individual into an Individual 
     Development Account with respect to any taxable year of such 
     individual.

[[Page 27130]]

       (B) Any matching funds provided by State, local, or private 
     sources in accordance with the matching ratio set by those 
     sources.
       (2) Timing of deposits.--A deposit of the amounts described 
     in paragraph (1) shall be made into a parallel account--
       (A) in the case of amounts described in paragraph (1)(A), 
     not later than 30 days after the end of the calendar quarter 
     during which the contribution described in such paragraph was 
     made, and
       (B) in the case of amounts described in paragraph (1)(B), 
     not later than 2 business days after such amounts were 
     provided.
       (3) Cross reference.--For allowance of tax credit for 
     Individual Development Account subsidies, including matching 
     funds, see section 45N of the Internal Revenue Code of 1986, 
     as added by section 419(a).
       (c) Deposit of Matching Funds Into Individual Development 
     Account of Individual Who Has Attained Age 65.--In the case 
     of an Individual Development Account owner who attains the 
     age of 65, the qualified financial institution shall deposit 
     the funds in the parallel account with respect to such 
     individual into the Individual Development Account of such 
     individual on the later of--
       (1) the day which is the 1-year anniversary of the deposit 
     of such funds in the parallel account, or
       (2) the first business day of the taxable year of such 
     individual following the taxable year in which such 
     individual attained age 65.
       (d) Uniform Accounting Regulations.--To ensure proper 
     recordkeeping and determination of the tax credit under 
     section 45N of the Internal Revenue Code of 1986, as added by 
     section 419(a), the Secretary shall prescribe regulations 
     with respect to accounting for matching funds in the parallel 
     accounts.
       (e) Regular Reporting of Accounts.--Any qualified financial 
     institution shall report the balances in any Individual 
     Development Account and parallel account of an individual on 
     not less than an annual basis to such individual.

     SEC. 415. WITHDRAWAL PROCEDURES.

       (a) Withdrawals for Qualified Expenses.--
       (1) In general.--An Individual Development Account owner 
     may withdraw funds in order to pay qualified expense 
     distributions from such individual's--
       (A) Individual Development Account, but only from funds 
     which have been on deposit in such Account for at least 1 
     year, and
       (B) parallel account, but only--
       (i) from matching funds which have been on deposit in such 
     parallel account for at least 1 year,
       (ii) from earnings in such parallel account, after all 
     matching funds described in clause (i) have been withdrawn, 
     and
       (iii) to the extent such withdrawal does not result in a 
     remaining balance in such parallel account which is less than 
     the remaining balance in the Individual Development Account 
     after such withdrawal.
       (2) Procedure.--Upon receipt of a withdrawal request which 
     meets the requirements of paragraph (1), the qualified 
     financial institution shall directly transfer the funds 
     electronically to the distributees described in section 
     411(6)(A)(ii). If a distributee is not equipped to receive 
     funds electronically, the qualified financial institution may 
     issue such funds by paper check to the distributee.
       (b) Withdrawals for Nonqualified Expenses.--An Individual 
     Development Account owner may withdraw any amount of funds 
     from the Individual Development Account for purposes other 
     than to pay qualified expense distributions, but if, after 
     such withdrawal, the amount in the parallel account of such 
     owner (excluding earnings on matching funds) exceeds the 
     amount remaining in such Individual Development Account, then 
     such owner shall forfeit from the parallel account the lesser 
     of such excess or the amount withdrawn.
       (c) Withdrawals From Accounts of Noneligible Individuals.--
     If the individual for whose benefit an Individual Development 
     Account is established ceases to be an eligible individual, 
     such account shall remain an Individual Development Account, 
     but such individual shall not be eligible for any further 
     matching funds under section 414(b)(1)(A) for contributions 
     which are made to the Account during any taxable year when 
     such individual is not an eligible individual.
       (d) Effect of Pledging Account as Security.--If, during any 
     taxable year of the individual for whose benefit an 
     Individual Development Account is established, that 
     individual uses the Account, the individual's parallel 
     account, or any portion thereof as security for a loan, the 
     portion so used shall be treated as a withdrawal of such 
     portion from the Individual Development Account for purposes 
     other than to pay qualified expenses.

     SEC. 416. CERTIFICATION AND TERMINATION OF QUALIFIED 
                   INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAMS.

       (a) Certification Procedures.--Upon establishing a 
     qualified individual development account program under 
     section 412, a qualified financial institution shall certify 
     to the Secretary at such time and in such manner as may be 
     prescribed by the Secretary and accompanied by any 
     documentation required by the Secretary, that--
       (1) the accounts described in subparagraphs (A) and (B) of 
     section 412(b)(1) are operating pursuant to all the 
     provisions of this Act, and
       (2) the qualified financial institution agrees to implement 
     an information system necessary to monitor the cost and 
     outcomes of the qualified individual development account 
     program.
       (b) Authority to Terminate Qualified IDA Program.--If the 
     Secretary determines that a qualified financial institution 
     under this Act is not operating a qualified individual 
     development account program in accordance with the 
     requirements of this Act (and has not implemented any 
     corrective recommendations directed by the Secretary), the 
     Secretary shall terminate such institution's authority to 
     conduct the program. If the Secretary is unable to identify a 
     qualified financial institution to assume the authority to 
     conduct such program, then any funds in a parallel account 
     established for the benefit of any individual under such 
     program shall be deposited into the Individual Development 
     Account of such individual as of the first day of such 
     termination.

     SEC. 417. REPORTING, MONITORING, AND EVALUATION.

       (a) Responsibilities of Qualified Financial Institutions.--
     Each qualified financial institution that operates a 
     qualified individual development account program under 
     section 412 shall report annually to the Secretary within 90 
     days after the end of each calendar year on--
       (1) the number of individuals making contributions into 
     Individual Development Accounts and the amounts contributed,
       (2) the amounts contributed into Individual Development 
     Accounts by eligible individuals and the amounts deposited 
     into parallel accounts for matching funds,
       (3) the amounts withdrawn from Individual Development 
     Accounts and parallel accounts, and the purposes for which 
     such amounts were withdrawn,
       (4) the balances remaining in Individual Development 
     Accounts and parallel accounts, and
       (5) such other information needed to help the Secretary 
     monitor the effectiveness of the qualified individual 
     development account program (provided in a non-individually-
     identifiable manner).
       (b) Responsibilities of the Secretary.--
       (1) Monitoring protocol.--Not later than 12 months after 
     the date of the enactment of this Act, the Secretary, in 
     consultation with the Secretary of Health and Human Services, 
     shall develop and implement a protocol and process to monitor 
     the cost and outcomes of the qualified individual development 
     account programs established under section 412.
       (2) Annual reports.--For each year after 2007, the 
     Secretary shall submit a progress report to Congress on the 
     status of such qualified individual development account 
     programs. Such report shall, to the extent data are 
     available, include from a representative sample of qualified 
     individual development account programs information on--
       (A) the characteristics of participants, including age, 
     gender, race or ethnicity, marital status, number of 
     children, employment status, and monthly income,
       (B) deposits, withdrawals, balances, uses of Individual 
     Development Accounts, and participant characteristics,
       (C) the characteristics of qualified individual development 
     account programs, including match rate, economic education 
     requirements, permissible uses of accounts, staffing of 
     programs in full time employees, and the total costs of 
     programs, and
       (D) process information on program implementation and 
     administration, especially on problems encountered and how 
     problems were solved.
       (3) Use of accounts in rural areas encouraged.--The 
     Secretary shall develop methods to encourage the use of 
     Individual Development Accounts in rural areas.

     SEC. 418. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--There is authorized to be appropriated to 
     the Secretary $1,000,000 for fiscal year 2007 and for each 
     fiscal year through 2014, for the purposes of implementing 
     this subtitle, including the reporting, monitoring, and 
     evaluation required under section 417, to remain available 
     until expended.
       (b) Grants.--There is authorized to be appropriated to the 
     Secretary $20,000,000--
       (1) to make grants to qualified nonprofit organizations and 
     Indian tribes to help defray the administrative costs 
     associated with the operation of individual development 
     account programs, including the required financial education 
     courses, and
       (2) to provide technical assistance to qualified nonprofit 
     organizations and Indian tribes in meeting such program 
     requirements.

     SEC. 419. MATCHING FUNDS FOR INDIVIDUAL DEVELOPMENT ACCOUNTS 
                   PROVIDED THROUGH A TAX CREDIT FOR QUALIFIED 
                   FINANCIAL INSTITUTIONS.

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

     ``SEC. 45N. INDIVIDUAL DEVELOPMENT ACCOUNT INVESTMENT CREDIT.

       ``(a) Determination of Amount.--For purposes of section 38, 
     the individual development account investment credit 
     determined

[[Page 27131]]

     under this section with respect to any eligible entity for 
     any taxable year is an amount equal to the individual 
     development account investment provided by such eligible 
     entity during the taxable year under an individual 
     development account program established under section 412 of 
     the Tax Relief Act of 2005.
       ``(b) Applicable Tax.--For the purposes of this section, 
     the term `applicable tax' means the excess (if any) of--
       ``(1) the tax imposed under this chapter (other than the 
     taxes imposed under the provisions described in subparagraphs 
     (C) through (Q) of section 26(b)(2)), over
       ``(2) the credits allowable under subpart B (other than 
     this section) and subpart D of this part.
       ``(c) Individual Development Account Investment.--For 
     purposes of this section, the term `individual development 
     account investment' means, with respect to an individual 
     development account program in any taxable year, an amount 
     equal to the sum of--
       ``(1) the aggregate amount of dollar-for-dollar matches 
     under such program under section 414(b)(1)(A) of the Tax 
     Relief Act of 2005 for such taxable year, plus
       ``(2) $50 with respect to each Individual Development 
     Account maintained--
       ``(A) as of the end of such taxable year, but only if such 
     taxable year is within the 7-taxable-year period beginning 
     with the taxable year in which such Account is opened, and
       ``(B) with a balance of not less than $100 (other than the 
     taxable year in which such Account is opened).
       ``(d) Eligible Entity.--For purposes of this section, 
     except as provided in regulations, the term `eligible entity' 
     means a qualified financial institution.
       ``(e) Other Definitions.--For purposes of this section, any 
     term used in this section and also in subtitle B of part IV 
     of the Tax Relief Act of 2005 shall have the meaning given 
     such term in such subtitle.
       ``(f) Denial of Double Benefit.--
       ``(1) In general.--No deduction or credit (other than under 
     this section) shall be allowed under this chapter with 
     respect to any expense which--
       ``(A) is taken into account under subsection (c)(1)(A) in 
     determining the credit under this section, or
       ``(B) is attributable to the maintenance of an Individual 
     Development Account.
       ``(2) Determination of amount.--Solely for purposes of 
     paragraph (1)(B), the amount attributable to the maintenance 
     of an Individual Development Account shall be deemed to be 
     the dollar amount of the credit allowed under subsection 
     (c)(l)(B) for each taxable year such Individual Development 
     Account is maintained.
       ``(g) Credit May Be Transferred.--
       ``(1) In general.--An eligible entity may transfer any 
     credit allowable to the eligible entity under subsection (a) 
     to any person other than to another eligible entity which is 
     exempt from tax under this title. The determination as to 
     whether a credit is allowable shall be made without regard to 
     the tax-exempt status of the eligible entity.
       ``(2) Consent required for revocation.--Any transfer under 
     paragraph (1) may be revoked only with the consent of the 
     Secretary.
       ``(h) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section, including
       ``(1) such regulations as necessary to insure that any 
     credit described in subsection (g)(1) is claimed once and not 
     retransferred by a transferee, and
       ``(2) regulations providing for a recapture of the credit 
     allowed under this section (notwithstanding any termination 
     date described in subsection (i)) in cases where there is a 
     forfeiture under section 415(b) of the Tax Relief Act of 2005 
     in a subsequent taxable year of any amount which was taken 
     into account in determining the amount of such credit.
       ``(i) Application of Section.--
       ``(1) In general.--This section shall apply to any 
     expenditure made in any taxable year ending after December 
     31, 2006, and beginning on or before January 1, 2014, with 
     respect to any Individual Development Account which--
       ``(A) is opened before January 1, 2012, and
       ``(B) as determined by the Secretary, when added to all of 
     the previously opened Individual Development Accounts, does 
     not cause the total number of such Accounts to exceed 
     900,000.

     Notwithstanding the preceding sentence, this section shall 
     apply to amounts which are described in subsection (c)(1) and 
     which are timely deposited into a parallel account during the 
     30-day period following the end of the last taxable year 
     beginning on or before January 1, 2014.
       ``(2) Determination of limitation.--The limitation on the 
     number of Individual Development Accounts under paragraph 
     (1)(B) shall be allocated by the Secretary among eligible 
     individuals as such individuals open such Accounts under 
     qualified individual development account programs, except 
     that, in the case of 300,000 Accounts, such limitation shall 
     be equally allocated among the States.''.
       (b) Credit Treated as Business Credit.--Section 38(b) 
     (relating to current year business credit) is amended by 
     striking ``and'' at the end of paragraph (25), by striking 
     the period at the end of paragraph (26) and inserting ``, 
     and'', and by adding at the end the following new paragraph:
       ``(27) the individual development account investment credit 
     determined under section 45J(a).''.
       (c) Conforming Amendment.--The table of sections for 
     subpart C of part IV of subchapter A of chapter 1 is amended 
     by adding at the end the following new item:

``Sec. 45N. Individual development account investment credit.''.

       (d) Report Regarding Account Maintenance Fees.--The 
     Secretary of the Treasury shall study the adequacy of the 
     amount specified in section 45N(c)(2) of the Internal Revenue 
     Code of 1986 (as added by this section). Not later than 
     December 31, 2010, the Secretary of the Treasury shall report 
     the findings of the study described in the preceding sentence 
     to Congress.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 2006.

     SEC. 420. ACCOUNT FUNDS DISREGARDED FOR PURPOSES OF CERTAIN 
                   MEANS-TESTED FEDERAL PROGRAMS.

       Notwithstanding any other provision of Federal law (other 
     than the Internal Revenue Code of 1986) that requires 
     consideration of 1 or more financial circumstances of an 
     individual, for the purpose of determining eligibility to 
     receive, or the amount of, any assistance or benefit 
     authorized by such provision to be provided to or for the 
     benefit of such individual, any amount (including earnings 
     thereon) in any Individual Development Account of such 
     individual and any matching deposit made on behalf of such 
     individual (including earnings thereon) in any parallel 
     account shall be disregarded for such purpose with respect to 
     any period during which such individual maintains or makes 
     contributions into such Individual Development Account.
                                 ______
                                 
  SA 2619. Mrs. HUTCHISON submitted an amendment intended to be 
proposed by her to the bill S. 2020, to provide for reconciliation 
pursuant to section 202(b) of the concurrent resolution on the budget 
for fiscal year 2006; which was ordered to lie on the table; as 
follows:

       On page 235, between lines 13 and 14, insert the following:

     SEC. __. MODIFICATION OF BOND RULE.

       (a) In General.--In the case of bonds issued after the date 
     of the enactment of this Act and before August 31, 2009--
       (1) the requirement of paragraph (1) of section 648 of the 
     Deficit Reduction Act of 1984 (98 Stat. 941) shall be treated 
     as met with respect to the securities or obligations referred 
     to in such section if such securities or obligations are held 
     in a fund the annual distributions from which cannot exceed 7 
     percent of the average fair market value of the assets held 
     in such fund except to the extent distributions are necessary 
     to pay debt service on the bond issue,
       (2) paragraph (3) of such section shall be applied by 
     substituting ``distributions from'' for ``the investment 
     earnings of'' both places it appears, and
       (3) Paragraph (4) of such section shall be applied by 
     substituting ``March 1, 1985'' for ``October 9, 1969''.
       (b) Increase in Minimum Penalty for Bad Checks and Money 
     Orders.--
       (1) In general.--Section 6657 (related to bad checks), as 
     amended by section 535, is amended--
       (A) by striking ``$1,250'' and inserting ``$2,000'', and
       (B) by striking ``$25'' and inserting ``$40''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to checks or money orders received after the date 
     of the enactment of this Act.
                                 ______
                                 
  SA 2620. Ms. SNOWE (for herself and Mr. Schumer) submitted an 
amendment intended to be proposed by her to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; which was ordered to lie 
on the table; as follows:

       At the end of title IV, add the following:

     SEC. __. INTEREST DETERMINATIONS ON STUDENT LOANS.

       (a) In General.--Section 221 (relating to interest on 
     education loans) is amended by redesignating subsection (f) 
     as subsection (g) and by inserting after subsection (e) the 
     following new subsection:
       ``(f) Determination of Interest Paid.--In the case of a 
     qualified education loan made after December 31, 2004, for 
     purposes of this section and notwithstanding any other 
     provision of this title--
       ``(1) In general.--
       ``(A) Treatment as interest.--Any payment on such loan 
     shall be treated as a payment of interest to the extent of 
     the balance, immediately before such payment, in the 
     accumulated interest account with respect to such loan.
       ``(B) Exception.--Subparagraph (A) shall not apply to any 
     payment of collection costs, late fees, and penalties.
       ``(2) Accumulated interest account.--

[[Page 27132]]

       ``(A) In general.--The term `accumulated interest account' 
     means an account which is adjusted in accordance with this 
     paragraph.
       ``(B) Increases.--The balance in the accumulated interest 
     account shall be increased for any period by the sum of--
       ``(i) the loan origination fees incurred by the borrower in 
     such period,
       ``(ii) the amount of stated interest on the loan for such 
     period, and
       ``(iii) the amount of any fee imposed under section 
     428(b)(1)(H) of the Higher Education Act of 1965 (20 U.S.C. 
     1078(b)(1)(H)).
       ``(C) Decreases.--The balance in the accumulated interest 
     account shall be decreased (but not below zero) by payments 
     made on the loan to the extent treated as interest under this 
     section.
       ``(3) Loan origination fees.--
       ``(A) Federal programs.--The term `loan origination fee' 
     includes any fee imposed under any of the following 
     provisions of the Higher Education Act of 1965:
       ``(i) Section 438(c) (20 U.S.C. 1087-1(c)).
       ``(ii) Section 455(c) (20 U.S.C. 1087e(c)).
       ``(B) Fees for services or property excluded.--Except as 
     provided under subparagraph (A), the term `loan origination 
     fee' does not include any fee which is a fee for services or 
     property.
       ``(4) Stated interest.--The term `stated interest' means, 
     with respect to any period, the amount of interest determined 
     for the period based on the stated rate of interest 
     applicable to the period (whether or not the interest is 
     required to be paid in such period).
       ``(5) Anti-abuse rule.--The Secretary may prescribe rules 
     to prevent the acceleration or deceleration of additions to 
     the accumulated interest account where the loan origination 
     fees or stated interest do not properly reflect the substance 
     of the loan.''.
       (b) Information Returns.--
       (1) Interest and loan origination fee defined.--Subsection 
     (e) of section 6050S (relating to the general rule for form 
     and manner of returns) is amended by inserting before the 
     period at the end the following: ``, and the term `interest' 
     has the same meaning as when used in section 221''.
       (2) Pre-2005 loans.--The regulations under section 6050S of 
     the Internal Revenue Code of 1986 which are applicable to 
     loans made before September 1, 2004, shall also apply to 
     loans made on or after such date which are made before 
     January 1, 2005.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.
                                 ______
                                 
  SA 2621. Ms. SNOWE submitted an amendment intended to be proposed by 
her to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, add the following:

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

       (a) Cash Accounting Permitted.--
       (1) In general.--Section 446 (relating to general rule for 
     methods of accounting) is amended by adding at the end the 
     following new subsection:
       ``(g) Certain Small Business Taxpayers Permitted to Use 
     Cash Accounting Method Without Limitation.--
       ``(1) In general.--An eligible taxpayer shall not be 
     required to use an accrual method of accounting for any 
     taxable year.
       ``(2) Eligible taxpayer.--For purposes of this subsection, 
     a taxpayer is an eligible taxpayer with respect to any 
     taxable year if--
       ``(A) for all prior taxable years beginning after December 
     31, 2004, the taxpayer (or any predecessor) met the gross 
     receipts test of section 448(c), and
       ``(B) the taxpayer is not subject to section 447 or 448.''.
       (2) Expansion of gross receipts test.--
       (A) In general.--Paragraph (3) of section 448(b) (relating 
     to entities with gross receipts of not more than $5,000,000) 
     is amended by striking ``$5,000,000'' in the text and in the 
     heading and inserting ``$10,000,000''.
       (B) Conforming amendments.--Section 448(c) is amended--
       (i) by striking ``$5,000,000'' each place it appears in the 
     text and in the heading of paragraph (1) and inserting 
     ``$10,000,000'', and
       (ii) by adding at the end the following new paragraph:
       ``(4) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2005, the dollar 
     amount contained in subsection (b)(3) and paragraph (1) of 
     this subsection shall be increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 2004' for 
     `calendar year 1992' in subparagraph (B) thereof.
     If any amount as adjusted under this subparagraph is not a 
     multiple of $100,000, such amount shall be rounded to the 
     nearest multiple of $100,000.''.
       (b) Clarification of Inventory Rules for Small Business.--
       (1) In general.--Section 471 (relating to general rule for 
     inventories) is amended by redesignating subsection (c) as 
     subsection (d) and by inserting after subsection (b) the 
     following new subsection:
       ``(c) Small Business Taxpayers Not Required to Use 
     Inventories.--
       ``(1) In general.--A qualified taxpayer shall not be 
     required to use inventories under this section for a taxable 
     year.
       ``(2) Treatment of taxpayers not using inventories.--If a 
     qualified taxpayer does not use inventories with respect to 
     any property for any taxable year beginning after December 
     31, 2004, such property shall be treated as a material or 
     supply which is not incidental.
       ``(3) Qualified taxpayer.--For purposes of this subsection, 
     the term `qualified taxpayer' means--
       ``(A) any eligible taxpayer (as defined in section 
     446(g)(2)), and
       ``(B) any taxpayer described in section 448(b)(3).''.
       (2) Conforming amendments.--
       (A) Subpart D of part II of subchapter E of chapter 1 is 
     amended by striking section 474.
       (B) The table of sections for subpart D of part II of 
     subchapter E of chapter 1 is amended by striking the item 
     relating to section 474.
       (c) Effective Date and Special Rules.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 2004.
       (2) Change in method of accounting.--In the case of any 
     taxpayer changing the taxpayer's method of accounting for any 
     taxable year under the amendments made by this section--
       (A) such change shall be treated as initiated by the 
     taxpayer;
       (B) such change shall be treated as made with the consent 
     of the Secretary of the Treasury; and
       (C) the net amount of the adjustments required to be taken 
     into account by the taxpayer under section 481 of the 
     Internal Revenue Code of 1986 shall be taken into account 
     over a period (not greater than 4 taxable years) beginning 
     with such taxable year.

     SEC. __. INCLUSION OF HEAVY VEHICLES IN LIMITATION ON 
                   DEPRECIATION OF CERTAIN LUXURY AUTOMOBILES.

       (a) In General.--Section 280F(d)(5)(A) (defining passenger 
     automobile) is amended--
       (1) by striking clause (ii) and inserting the following new 
     clause:
       ``(ii)(I) which is rated at 6,000 pounds unloaded gross 
     vehicle weight or less, or
       ``(II) which is rated at more than 6,000 pounds but not 
     more than 14,000 pounds gross vehicle weight.'',
       (2) by striking ``clause (ii)'' in the second sentence and 
     inserting ``clause (ii)(I)''.
       (b) Conforming Amendment.--Section 179(b) (relating to 
     limitations) is amended by striking paragraph (6).
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after the date of 
     the enactment of this Act.
                                 ______
                                 
  SA 2622. Ms. MURKOWSKI (for herself and Mr. Stevens) submitted an 
amendment intended to be proposed by her to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; which was ordered to lie 
on the table; as follows:

       At the end of title IV, add the following:

     SEC. __. HYDROELECTRIC DEVELOPMENT INCENTIVES.

       (a) In General.--Project numbers 1051, 10440, 11393, 11077, 
     11588, and 12379 of the Federal Energy Regulatory Commission 
     shall be eligible for the maximum favorable treatment 
     afforded under any Federal legislation or any amendments made 
     by such legislation which promotes hydroelectric development 
     that is enacted during the 10-year period that begins on the 
     date that is 5 years prior to the date of enactment of this 
     Act.
       (b) Deemed Qualified Energy Resources.--All power produced 
     by the project numbers specified in subsection (a) shall be 
     deemed to be qualified energy resources for purposes of 
     qualifying for any energy production credit or similar 
     benefit enacted for hydroelectric development within the 10-
     year period described in subsection (a).
       (c) Triple Interest and Penalties for Underpayments Related 
     to Certain Offshore Financial Arrangements.--Section 532 of 
     this Act is amended--
       (1) in the section heading, by striking ``DOUBLING'' and 
     inserting ``TRIPLING''; and
       (2) in subsection (a)(1)(B), by striking ``twice'' and 
     inserting ``3 times''.
                                 ______
                                 
  SA 2623. Mr. DURBIN (for himself and Mr. Obama) submitted an 
amendment intended to be proposed by him to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; as follows:

       At the end of title IV, insert the following:

     SEC. __. REDUCED TAXES FOR PATRIOT EMPLOYERS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 is amended by adding at the end the following new 
     section:

[[Page 27133]]



     ``SEC. 45N. REDUCTION IN TAX OF PATRIOT EMPLOYERS.

       ``(a) In General.--In the case of any taxable year 
     beginning after December 31, 2005, and before January 1, 
     2011, with respect to which a taxpayer is certified by the 
     Secretary as a Patriot employer, the Patriot employer credit 
     determined under this section for purposes of section 38 
     shall be equal to 1 percent of the taxable income of the 
     taxpayer which is properly allocable to all trades or 
     businesses with respect to which the taxpayer is certified as 
     a Patriot employer for the taxable year.
       ``(b) Patriot Employer.--For purposes of subsection (a), 
     the term `Patriot employer' means, with respect to any 
     taxable year, any taxpayer which--
       ``(1) maintains its headquarters in the United States if 
     the taxpayer has ever been headquartered in the United 
     States,
       ``(2) pays at least 60 percent of each employee's health 
     care premiums,
       ``(3) if such taxpayer employs at least 50 employees on 
     average during the taxable year--
       ``(A) maintains or increases the number of full-time 
     workers in the United States relative to the number of full-
     time workers outside of United States,
       ``(B) compensates each employee of the taxpayer at an 
     hourly rate (or equivalent thereof) not less than an amount 
     equal to the Federal poverty level for a family of three for 
     the calendar year in which the taxable year begins divided by 
     2,080,
       ``(C) provides either a defined benefit plan or a defined 
     contribution plan which fully matches at least 5 percent of 
     each employee's contributions to the plan, and
       ``(D) provides full differential salary and insurance 
     benefits for all National Guard and Reserve employees who are 
     called for active duty, and
       ``(4) if such taxpayer employs less than 50 employees on 
     average during the taxable year, either--
       ``(A) compensates each employee of the taxpayer at an 
     hourly rate (or equivalent thereof) not less than an amount 
     equal to the Federal poverty level for a family of 3 for the 
     calendar year in which the taxable year begins divided by 
     2,080, or
       ``(B) provides either a defined benefit plan or a defined 
     contribution plan which fully matches at least 5 percent of 
     each employee's contributions to the plan.''.
       (b) Allowance as General Business Credit.--Section 38(b) is 
     amended by striking ``and'' at the end of paragraph (25), by 
     striking the period at the end of paragraph (26) and 
     inserting ``, and'', and by adding at the end the following:
       ``(27) the Patriot employer credit determined under section 
     45N.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. __. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE 
                   TO DUAL CAPACITY TAXPAYERS.

       (a) In General.--Section 901 (relating to credit for taxes 
     of foreign countries and of possessions of the United States) 
     is amended by redesignating subsection (m) as subsection (n) 
     and by inserting after subsection (l) the following new 
     subsection:
       ``(m) Special Rules Relating To Dual Capacity Taxpayers.--
       ``(1) General rule.--Notwithstanding any other provision of 
     this chapter, any amount paid or accrued by a dual capacity 
     taxpayer to a foreign country or possession of the United 
     States for any period shall not be considered a tax--
       ``(A) if, for such period, the foreign country or 
     possession does not impose a generally applicable income tax, 
     or
       ``(B) to the extent such amount exceeds the amount 
     (determined in accordance with regulations) which--
       ``(i) is paid by such dual capacity taxpayer pursuant to 
     the generally applicable income tax imposed by the country or 
     possession, or
       ``(ii) would be paid if the generally applicable income tax 
     imposed by the country or possession were applicable to such 
     dual capacity taxpayer.

     Nothing in this paragraph shall be construed to imply the 
     proper treatment of any such amount not in excess of the 
     amount determined under subparagraph (B).
       ``(2) Dual capacity taxpayer.--For purposes of this 
     subsection, the term `dual capacity taxpayer' means, with 
     respect to any foreign country or possession of the United 
     States, a person who--
       ``(A) is subject to a levy of such country or possession, 
     and
       ``(B) receives (or will receive) directly or indirectly a 
     specific economic benefit (as determined in accordance with 
     regulations) from such country or possession.
       ``(3) Generally applicable income tax.--For purposes of 
     this subsection--

       ``(A) In general.--The term `generally applicable income 
     tax' means an income tax (or a series of income taxes) which 
     is generally imposed under the laws of a foreign country or 
     possession on income derived from the conduct of a trade or 
     business within such country or possession.
       ``(B) Exceptions.--Such term shall not include a tax unless 
     it has substantial application, by its terms and in practice, 
     to--
       ``(i) persons who are not dual capacity taxpayers, and
       ``(ii) persons who are citizens or residents of the foreign 
     country or possession.''
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxes paid or accrued in taxable years beginning 
     after the date of the enactment of this Act.
       (2) Contrary treaty obligations upheld.--The amendments 
     made by this section shall not apply to the extent contrary 
     to any treaty obligation of the United States.

     SEC. __. RULES RELATING TO FOREIGN OIL AND GAS INCOME.

       (a) Separate Basket for Foreign Tax Credit.--
       (1) Separate basket.--
       (A) Years before 2007.--Paragraph (1) of section 904(d) 
     (relating to separate application of section with respect to 
     certain categories of income), as in effect for years 
     beginning before 2007, is amended by striking ``and'' at the 
     end of subparagraph (H), by redesignating subparagraph (I) as 
     subparagraph (J), and by inserting after subparagraph (H) the 
     following new subparagraph:
       ``(I) foreign oil and gas income, and''.
       (B) 2007 and after.--Paragraph (1) of section 904(d), as in 
     effect for years beginning after 2006, is amended by striking 
     ``and'' at the end of subparagraph (A), by striking the 
     period at the end of subparagraph (B) and inserting ``, 
     and'', and by adding at the end the following:
       ``(C) foreign oil and gas income.''
       (2) Definition.--
       (A) Years before 2007.--Paragraph (2) of section 904(d), as 
     in effect for years beginning before 2007, is amended by 
     redesignating subparagraphs (H) and (I) as subparagraphs (I) 
     and (J), respectively, and by inserting after subparagraph 
     (G) the following new subparagraph:
       ``(H) Foreign oil and gas income.--The term `foreign oil 
     and gas income' has the meaning given such term by section 
     954(g).''
       (B) 2007 and after.--Section 904(d)(2), as in effect for 
     years after 2006, is amended by redesignating subparagraphs 
     (J) and (K) as subparagraphs (K) and (L) and by inserting 
     after subparagraph (I) the following:
       ``(J) Foreign oil and gas income.--For purposes of this 
     section--
       ``(i) In general.--The term `foreign oil and gas income' 
     has the meaning given such term by section 954(g).
       ``(ii) Coordination.--Passive category income and general 
     category income shall not include foreign oil and gas income 
     (as so defined).''
       (3) Conforming amendments.--
       (A) Section 904(d)(3)(F)(i) is amended by striking ``or 
     (E)'' and inserting ``(E), or (I)''.
       (B) Section 907(a) is hereby repealed.
       (C) Section 907(c)(4) is hereby repealed.
       (D) Section 907(f) is hereby repealed.
       (4) Effective dates.--
       (A) In general.--The amendments made by this section shall 
     apply to taxable years beginning after the date of the 
     enactment of this Act.
       (B) Years after 2006.--The amendments made by paragraphs 
     (1)(B) and (2)(B) shall apply to taxable years beginning 
     after December 31, 2006.
       (C) Transitional rules.--
       (i) Separate basket treatment.--Any taxes paid or accrued 
     in a taxable year beginning on or before the date of the 
     enactment of this Act, with respect to income which was 
     described in subparagraph (I) of section 904(d)(1) of such 
     Code (as in effect on the day before the date of the 
     enactment of this Act), shall be treated as taxes paid or 
     accrued with respect to foreign oil and gas income to the 
     extent the taxpayer establishes to the satisfaction of the 
     Secretary of the Treasury that such taxes were paid or 
     accrued with respect to foreign oil and gas income.
       (ii) Carryovers.--Any unused oil and gas extraction taxes 
     which under section 907(f) of such Code (as so in effect) 
     would have been allowable as a carryover to the taxpayer's 
     first taxable year beginning after the date of the enactment 
     of this Act (without regard to the limitation of paragraph 
     (2) of such section 907(f) for first taxable year) shall be 
     allowed as carryovers under section 904(c) of such Code in 
     the same manner as if such taxes were unused taxes under such 
     section 904(c) with respect to foreign oil and gas extraction 
     income.
       (iii) Losses.--The amendment made by paragraph (3)(C) shall 
     not apply to foreign oil and gas extraction losses arising in 
     taxable years beginning on or before the date of the 
     enactment of this Act.
       (b) Elimination of Deferral for Foreign Oil and Gas 
     Extraction Income.--
       (1) General rule.--Paragraph (1) of section 954(g) 
     (defining foreign base company oil related income) is amended 
     to read as follows:
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the term `foreign oil and gas income' means any 
     income of a kind which would be taken into account in 
     determining the amount of--
       ``(A) foreign oil and gas extraction income (as defined in 
     section 907(c)), or
       ``(B) foreign oil related income (as defined in section 
     907(c)).''
       (2) Conforming amendments.--
       (A) Subsections (a)(5), (b)(5), and (b)(6) of section 954, 
     and section 952(c)(1)(B)(ii)(I), are

[[Page 27134]]

     each amended by striking ``base company oil related income'' 
     each place it appears (including in the heading of subsection 
     (b)(8)) and inserting ``oil and gas income''.
       (B) Subsection (b)(4) of section 954 is amended by striking 
     ``base company oil-related income'' and inserting ``oil and 
     gas income''.
       (C) The subsection heading for subsection (g) of section 
     954 is amended by striking ``Foreign Base Company Oil Related 
     Income'' and inserting ``Foreign Oil and Gas Income''.
       (D) Subparagraph (A) of section 954(g)(2) is amended by 
     striking ``foreign base company oil related income'' and 
     inserting ``foreign oil and gas income''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to taxable years of foreign corporations 
     beginning after the date of the enactment of this Act, and to 
     taxable years of United States shareholders ending with or 
     within such taxable years of foreign corporations.

     SEC. __. MODIFICATION OF CREDIT FOR PRODUCING FUEL FROM A 
                   NONCONVENTIONAL SOURCE.

       (a) Taxable Years Ending Before 2006.--
       (1) Modification of phaseout.--
       (A) In general.--Section 29(b)(1)(A) is amended by 
     inserting ``the calendar year preceding'' before ``the 
     calendar year''.
       (B) Conforming amendments.--Section 29(b)((2) is amended--
       (i) by striking ``The'' and inserting ``With respect to any 
     calendar year, the'', and
       (ii) by striking ``for the calendar year in which the sale 
     occurs'' and inserting ``for such calendar year''.
       (2) No inflation adjustment for the credit amount in 
     2005.--Section 29(b)(2), as amended by paragraph (1), is 
     amended by adding at the end the following new sentence: 
     ``This paragraph shall not apply with respect to the $3 
     amount in subsection (a) for calendar year 2005 and the 
     amount in effect under subsection (a) for sales in such 
     calendar year shall be the amount which was in effect for 
     sales in calendar year 2004.''.
       (b) Taxable Years Ending After 2005.--
       (1) Modification of phaseout.--
       (A) In general.--Section 45K(b)(1)(A) is amended by 
     inserting ``the calendar year preceding'' before ``the 
     calendar year''.
       (B) Conforming amendments.--Section 45K(b)((2) is amended--
       (i) by striking ``The'' and inserting ``With respect to any 
     calendar year, the'', and
       (ii) by striking ``for the calendar year in which the sale 
     occurs'' and inserting ``for such calendar year''.
       (2) No inflation adjustment for the credit amount in 2005, 
     2006, and 2007.--Section 45K(b)(2), as amended by paragraph 
     (1), is amended by adding at the end the following new 
     sentence: ``This paragraph shall not apply with respect to 
     the $3 amount in subsection (a) for calendar years 2005, 
     2006, and 2007 and the amount in effect under subsection (a) 
     for sales in each such calendar year shall be the amount 
     which was in effect for sales in calendar year 2004.''.
       (3) Treatment of coke and coke gas.--
       (A) Nonapplication of phaseout.--Section 45K(g)(2) is 
     amended by adding at the end the following new subparagraph:
       ``(D) Nonapplication of phaseout.--Subsection (b)(1) shall 
     not apply.''.
       (B) Application of inflation adjust- ment.--Section 
     45K(g)(2)(B) is amended by inserting ``and the last sentence 
     of subsection (b)(2) shall not apply.''.
       (C) Clarification of qualifying facility.--Section 
     45K(g)(1) is amended by inserting ``(other than from 
     petroleum based products)'' after ``coke or coke gas''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to fuel sold after December 31, 2004.
                                 ______
                                 
  SA 2624. Mr. LEAHY (for himself, Mr. Bennett, Mr. Domenici, Mr. 
Schumer, Mr. Kennedy, Mr. Bingaman, Mr. Lieberman, Mr. Johnson, Mr. 
Warner, Mr. Santorum, and Mr. Coleman) submitted an amendment intended 
to be proposed by him to the bill S. 2020, to provide for 
reconciliation pursuant to section 202(b) of the concurrent resolution 
on the budget for fiscal year 2006; which was ordered to lie on the 
table; as follows:

       At the end of subtitle A of title III, insert the 
     following:

     SEC. __. CHARITABLE CONTRIBUTIONS OF CERTAIN ITEMS CREATED BY 
                   THE TAXPAYER.

       (a) In General.--Subsection (e) of section 170 (relating to 
     certain contributions of ordinary income and capital gain 
     property), as amended by section 316(a), is amended by adding 
     at the end the following new paragraph:
       ``(8) Special rule for certain contributions of literary, 
     musical, or artistic compositions.--
       ``(A) In general.--In the case of a qualified artistic 
     charitable contribution--
       ``(i) the amount of such contribution shall be the fair 
     market value of the property contributed (determined at the 
     time of such contribution), and
       ``(ii) no reduction in the amount of such contribution 
     shall be made under paragraph (1).
       ``(B) Qualified artistic charitable contribution.--For 
     purposes of this paragraph, the term `qualified artistic 
     charitable contribution' means a charitable contribution of 
     any literary, musical, artistic, or scholarly composition, or 
     similar property, or the copyright thereon (or both), but 
     only if--
       ``(i) such property was created by the personal efforts of 
     the taxpayer making such contribution no less than 18 months 
     prior to such contribution,
       ``(ii) the taxpayer--

       ``(I) has received a qualified appraisal of the fair market 
     value of such property in accordance with the regulations 
     under this section, and
       ``(II) attaches to the taxpayer's income tax return for the 
     taxable year in which such contribution was made a copy of 
     such appraisal,

       ``(iii) the donee is an organization described in 
     subsection (b)(1)(A),
       ``(iv) the use of such property by the donee is related to 
     the purpose or function constituting the basis for the 
     donee's exemption under section 501 (or, in the case of a 
     governmental unit, to any purpose or function described under 
     subsection (c)),
       ``(v) the taxpayer receives from the donee a written 
     statement representing that the donee's use of the property 
     will be in accordance with the provisions of clause (iv), and
       ``(vi) the written appraisal referred to in clause (ii) 
     includes evidence of the extent (if any) to which property 
     created by the personal efforts of the taxpayer and of the 
     same type as the donated property is or has been--

       ``(I) owned, maintained, and displayed by organizations 
     described in subsection (b)(1)(A), and
       ``(II) sold to or exchanged by persons other than the 
     taxpayer, donee, or any related person (as defined in section 
     465(b)(3)(C)).

       ``(C) Maximum dollar limitation; no carryover of increased 
     deduction.--The increase in the deduction under this section 
     by reason of this paragraph for any taxable year--
       ``(i) shall not exceed the artistic adjusted gross income 
     of the taxpayer for such taxable year, and
       ``(ii) shall not be taken into account in determining the 
     amount which may be carried from such taxable year under 
     subsection (d).
       ``(D) Artistic adjusted gross income.--For purposes of this 
     paragraph, the term `artistic adjusted gross income' means 
     that portion of the adjusted gross income of the taxpayer for 
     the taxable year attributable to--
       ``(i) income from the sale or use of property created by 
     the personal efforts of the taxpayer which is of the same 
     type as the donated property, and
       ``(ii) income from teaching, lecturing, performing, or 
     similar activity with respect to property described in clause 
     (i).
       ``(E) Paragraph not to apply to certain contributions.--
     Subparagraph (A) shall not apply to any charitable 
     contribution of any letter, memorandum, or similar property 
     which was written, prepared, or produced by or for an 
     individual while the individual is an officer or employee of 
     any person (including any government agency or 
     instrumentality) unless such letter, memorandum, or similar 
     property is entirely personal.
       ``(F) Copyright treated as separate property for partial 
     interest rule.--In the case of a qualified artistic 
     charitable contribution, the tangible literary, musical, 
     artistic, or scholarly composition, or similar property and 
     the copyright on such work shall be treated as separate 
     properties for purposes of this paragraph and subsection 
     (f)(3).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after the date of the 
     enactment of this Act in taxable years ending after such 
     date.
                                 ______
                                 
  SA 2625. Mr. NELSON of Nebraska (for himself, Mr. DeWine, and Ms. 
Collins) proposed an amendment to the bill S. 2020, to provide for 
reconciliation pursuant to section 202(b) of the concurrent resolution 
on the budget for fiscal year 2006; as follows:

       At the end of title IV, insert the following:

     SEC. __. DISABILITY PREFERENCE PROGRAM FOR TAX COLLECTION 
                   CONTRACTS.

       (a) In General.--The Secretary of the Treasury shall not 
     enter into any qualified tax collection contract after April 
     1, 2006, until the Secretary implements a disability 
     preference program that meets the requirements of subsection 
     (b).
       (b) Disability Preference Program Requirements.--
       (1) In general.--A disability preference program meets the 
     requirements of this subsection if such program requires that 
     not less than 10 percent of the accounts of each dollar value 
     category are awarded to persons described in paragraph (2).
       (2) Person described.--For purposes of paragraph (1), a 
     person is described in this paragraph if--
       (A) as of the date any qualified tax collection contract is 
     awarded--
       (i) such person employs not less than 50 severely disabled 
     individuals within the United States; or
       (ii) not less than 30 percent of the employees of such 
     person within the United States are severely disabled 
     individuals;

[[Page 27135]]

       (B) such person agrees as a condition of the qualified tax 
     collection contract that not more than 90 days after the date 
     such contract is awarded, not less than 35 percent of the 
     employees of such person employed in connection with 
     providing services under such contract shall--
       (i) be hired after the date such contract is awarded; and
       (ii) be severely disabled individuals; and
       (C) such person is otherwise qualified to perform the 
     services required.
       (c) Definitions.--For purposes of this section--
       (1) Qualified tax collection contract.--The term 
     ``qualified tax collection contract'' shall have the meaning 
     given such term under section 6306(b) of the Internal Revenue 
     Code of 1986.
       (2) Dollar value category.--The term ``dollar value 
     category'' means the dollar ranges of accounts for collection 
     as determined and assigned by the Secretary under section 
     6306(b)(1)(B) of the Internal Revenue Code of 1986 with 
     respect to a qualified tax collection contract.
       (3) Severely disabled individual.--The term ``severely 
     disabled individual'' means--
       (A) a veteran of the United States armed forces with a 
     disability of 50 percent or greater--
       (i) determined by the Secretary of Veterans Affairs to be 
     service-connected; or
       (ii) deemed by law to be service-connected; or
       (B) any individual who is a disabled beneficiary (as 
     defined in section 1148(k)(2) of the Social Security Act (42 
     U.S.C. 1320b-19(k)(2))) or who would be considered to be such 
     a disabled beneficiary but for having income or resources in 
     excess of the income or resources eligibility limits 
     established under title XVI of the Social Security Act (42 
     U.S.C. 1381 et seq.), respectively.
                                 ______
                                 
  SA 2626. Mr. REED (for himself, Mr. Kennedy, Mr. Schumer, Mr. Kohl, 
Mr. Rockefeller, Mr. Kerry, Mr. Carper, Mr. Leahy, Mr. Dayton, Mr. 
Lieberman, and Ms. Stabenow) proposed an amendment to the bill S. 2020, 
to provide for reconciliation pursuant to section 202(b) of the 
concurrent resolution on the budget for fiscal year 2006; as follows:

       At the end of title IV add the following:

     SEC. 410. TEMPORARY WINDFALL PROFITS TAX.

       (a) In General.--Subtitle E of the Internal Revenue Code of 
     1986 (relating to alcohol, tobacco, and certain other excise 
     taxes) is amended by adding at the end thereof the following 
     new chapter:

         ``CHAPTER 56--TEMPORARY WINDFALL PROFITS ON CRUDE OIL

``Sec. 5896. Imposition of tax.
``Sec. 5897. Windfall profit; etc.
``Sec. 5898. Special rules and definitions.

     ``SEC. 5896. IMPOSITION OF TAX.

       ``(a) In General.--In addition to any other tax imposed 
     under this title, there is hereby imposed on any applicable 
     taxpayer an excise tax in an amount equal to the applicable 
     percentage of the windfall profit of such taxpayer for any 
     taxable year beginning in 2005.
       ``(b) Applicable Taxpayer.--For purposes of this chapter, 
     the term `applicable taxpayer' means, with respect to 
     operations in the United States--
       ``(1) any integrated oil company (as defined in section 
     291(b)(4)) which has an average daily worldwide production of 
     crude oil of at least 500,000 barrels for the taxable year.
       ``(c) Applicable Percentage.--For purposes of subsection 
     (a), the applicable percentage shall be determined by the 
     Secretary such that the resulting increase in revenues in the 
     Treasury equals $2,920,000,000.

     ``SEC. 5897. WINDFALL PROFIT; ETC.

       ``(a) General Rule.--For purposes of this chapter, the term 
     `windfall profit' means the excess of the adjusted taxable 
     income of the applicable taxpayer for the taxable year over 
     the reasonably inflated average profit for such taxable year.
       ``(b) Adjusted Taxable Income.--For purposes of this 
     chapter, with respect to any applicable taxpayer, the 
     adjusted taxable income for any taxable year is equal to the 
     taxable income for such taxable year (within the meaning of 
     section 63 and determined without regard to this 
     subsection)--
       ``(1) increased by any interest expense deduction, 
     charitable contribution deduction, and any net operating loss 
     deduction carried forward from any prior taxable year, and
       ``(2) reduced by any interest income, dividend income, and 
     net operating losses to the extent such losses exceed taxable 
     income for the taxable year.

     In the case of any applicable taxpayer which is a foreign 
     corporation, the adjusted taxable income shall be determined 
     with respect to such income which is effectively connected 
     with the conduct of a trade or business in the United States.
       ``(c) Reasonably Inflated Average Profit.--For purposes of 
     this chapter, with respect to any applicable taxpayer, the 
     reasonably inflated average profit for any taxable year is an 
     amount equal to the average of the adjusted taxable income of 
     such taxpayer for taxable years beginning during the 2000-
     2004 taxable year period (determined without regard to the 
     taxable year with the highest adjusted taxable income in such 
     period) plus 10 percent of such average.

     ``SEC. 5898. SPECIAL RULES AND DEFINITIONS .

       ``(a) Withholding and Deposit of Tax.--The Secretary shall 
     provide such rules as are necessary for the withholding and 
     deposit of the tax imposed under section 5896.
       ``(b) Records and Information.--Each taxpayer liable for 
     tax under section 5896 shall keep such records, make such 
     returns, and furnish such information as the Secretary may by 
     regulations prescribe.
       ``(c) Return of Windfall Profit Tax.--The Secretary shall 
     provide for the filing and the time of such filing of the 
     return of the tax imposed under section 5896.
       ``(d) Crude Oil.--The term `crude oil' includes crude oil 
     condensates and natural gasoline.
       ``(e) Businesses Under Common Control.--For purposes of 
     this chapter, all members of the same controlled group of 
     corporations (within the meaning of section 267(f)) and all 
     persons under common control (within the meaning of section 
     52(b) but determined by treating an interest of more than 50 
     percent as a controlling interest) shall be treated as 1 
     person.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this chapter.''.
       (b) Clerical Amendment.--The table of chapters for subtitle 
     E of the Internal Revenue Code of 1986 is amended by adding 
     at the end the following new item:

       ``Chapter 56. Temporary Windfall Profits on Crude Oil.''.

       (c) Deductibility of Windfall Profit Tax.--The first 
     sentence of section 164(a) of the Internal Revenue Code of 
     1986 (relating to deduction for taxes) is amended by 
     inserting after paragraph (5) the following new paragraph:
       ``(6) The windfall profit tax imposed by section 5896.''.
       (d) Low Income Home Energy Assistance Trust Fund.--
       (1) In general.--Subchapter A of chapter 98 of the Internal 
     Revenue Code of 1986 (relating to trust fund code) is amended 
     by adding at the end the following new section:

     ``SEC. 9511. LOW-INCOME HOME ENERGY ASSISTANCE TRUST FUND.

       ``(a) Creation of Trust Fund.--There is established in the 
     Treasury of the United States a trust fund to be known as the 
     `Low-Income Home Energy Assistance Trust Fund', consisting of 
     any amount appropriated or credited to the Trust Fund as 
     provided in this section or section 9602(b).
       ``(b) Transfers to Trust Fund.--There are hereby 
     appropriated to the Low-Income Home Energy Assistance Trust 
     Fund amounts equivalent to the increased revenues received in 
     the Treasury as the result of the amendment made by section 
     410(a) of the Tax Relief Act of 2005.
       ``(c) Expenditures From Trust Fund.--Amounts in the Low 
     Income Home Energy Assistance Trust Fund not to exceed 
     $2,920,000,000 shall be available for fiscal year 2006, as 
     provided by appropriation Acts, to carry out the program 
     under the Low-Income Home Energy Assistance Act of 1981 
     through the distribution of funds to all the States in 
     accordance with section 2604 of that Act (42 U.S.C. 8623) 
     (other than subsection (e) of such section), but only if not 
     less than $1,880,000,000 has been appropriated for such 
     program for such fiscal year.''.
       (2) Clerical amendment.--The table of sections for such 
     subchapter is amended by adding at the end the following new 
     item:

``Sec. 9511. Low-Income Home Energy Assistance Trust Fund.''.

       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning in 2005.
       (2) Subsection (d).--The amendments made by subsection (d) 
     shall take effect on the date of the enactment of this Act.
                                 ______
                                 
  SA 2627. Mr. GRAHAM submitted an amendment intended to be proposed by 
him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, add the following:

     SEC. __. CLARIFICATION OF WORKING CAPITAL FOR REASONABLY 
                   ANTICIPATED NEEDS OF A BUSINESS FOR PURPOSES OF 
                   ACCUMULATED EARNINGS TAX.

       (a) In General.--Section 537(b) (relating to special rules) 
     is amended by adding at the end the following new paragraph:
       ``(6) Working capital.--The reasonably anticipated needs of 
     a business for any taxable year shall include working capital 
     for the business in an amount which is not less than the sum 
     of the costs of goods, operating expenses, taxes, and 
     interest expense which the business incurred during the 
     preceding taxable year. Any amounts incurred as part of a 
     plan a principal purposes of which is to increase the 
     limitation under this subsection shall not be taken into 
     account.''

[[Page 27136]]

       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     3005, and before January 1, 2011.
                                 ______
                                 
  SA 2628. Mr. LEVIN (for himself, Mr. Coleman, and Mr. Obama) 
submitted an amendment intended to be proposed by him to the bill S. 
2020, to provide for reconciliation pursuant to section 202(b) of the 
concurrent resolution on the budget for fiscal year 2006; which was 
ordered to lie on the table; as follows:

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

     SEC. 504. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS.

       (a) Penalty for Promoting Abusive Tax Shelters.--Section 
     6700 (relating to promoting abusive tax shelters, etc.) is 
     amended--
       (1) by redesignating subsections (b) and (c) as subsections 
     (d) and (e), respectively,
       (2) by striking ``a penalty'' and all that follows through 
     the period in the first sentence of subsection (a) and 
     inserting ``a penalty determined under subsection (b)'', and
       (3) by inserting after subsection (a) the following new 
     subsections:
       ``(b) Amount of Penalty; Calculation of Penalty; Liability 
     for Penalty.--
       ``(1) Amount of penalty.--The amount of the penalty imposed 
     by subsection (a) shall not exceed the greater of--
       ``(A) 150 percent of the gross income derived (or to be 
     derived) from such activity by the person or persons subject 
     to such penalty, and
       ``(B) if readily subject to calculation, the total amount 
     of underpayment by the taxpayer (including penalties, 
     interest, and taxes) in connection with such activity.
       ``(2) Calculation of penalty.--The penalty amount 
     determined under paragraph (1) shall be calculated with 
     respect to each instance of an activity described in 
     subsection (a), each instance in which income was derived by 
     the person or persons subject to such penalty, and each 
     person who participated in such an activity.
       ``(3) Liability for penalty.--If more than 1 person is 
     liable under subsection (a) with respect to such activity, 
     all such persons shall be jointly and severally liable for 
     the penalty under such subsection.
       ``(c) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (b) Conforming Amendment.--Section 6700(a) is amended by 
     striking the last sentence.
       (c) Effective Date.--The amendments made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.

     SEC. 505. PENALTY FOR AIDING AND ABETTING THE UNDERSTATEMENT 
                   OF TAX LIABILITY.

       (a) In General.--Section 6701(a) (relating to imposition of 
     penalty) is amended--
       (1) by striking ``preparation or presentation of'' and 
     inserting ``tax liability reflected in'' in paragraph (1),
       (2) by inserting ``aid, assistance, procurement, or advice 
     with respect to such'' before ``portion'' both places it 
     appears in paragraphs (2) and (3), and
       (3) by inserting ``instance of aid, assistance, 
     procurement, or advice or each such'' before ``document'' in 
     the matter following paragraph (3).
       (b) Amount of Penalty.--Subsection (b) of section 6701 
     (relating to penalties for aiding and abetting understatement 
     of tax liability) is amended to read as follows:
       ``(b) Amount of Penalty; Calculation of Penalty; Liability 
     for Penalty.--
       ``(1) Amount of penalty.--The amount of the penalty imposed 
     by subsection (a) shall not exceed the greater of--
       ``(A) 150 percent of the gross income derived (or to be 
     derived) from such aid, assistance, procurement, or advice 
     provided by the person or persons subject to such penalty, 
     and
       ``(B) if readily subject to calculation, the total amount 
     of underpayment by the taxpayer (including penalties, 
     interest, and taxes) in connection with the understatement of 
     the liability for tax.
       ``(2) Calculation of penalty.--The penalty amount 
     determined under paragraph (1) shall be calculated with 
     respect to each instance of aid, assistance, procurement, or 
     advice described in subsection (a), each instance in which 
     income was derived by the person or persons subject to such 
     penalty, and each person who made such an understatement of 
     the liability for tax.
       ``(3) Liability for penalty.--If more than 1 person is 
     liable under subsection (a) with respect to providing such 
     aid, assistance, procurement, or advice, all such persons 
     shall be jointly and severally liable for the penalty under 
     such subsection.''.
       (c) Penalty Not Deductible.--Section 6701 is amended by 
     adding at the end the following new subsection:
       ``(g) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.

     SEC. 506. PREVENTING TAX SHELTER ACTIVITIES BY FINANCIAL 
                   INSTITUTIONS.

       (a) Examinations.--
       (1) Development of examination techniques.--Each of the 
     Federal banking agencies and the Commission shall, in 
     consultation with the Internal Revenue Service, develop 
     examination techniques to detect potential violations of 
     section 6700 or 6701 of the Internal Revenue Code of 1986, by 
     depository institutions, brokers, dealers, and investment 
     advisers, as appropriate.
       (2) Frequency.--Not less frequently than once in each 2-
     year period, each of the Federal banking agencies and the 
     Commission shall implement the examination techniques 
     developed under paragraph (1) with respect to each of the 
     depository institutions, brokers, dealers, or investment 
     advisers subject to their enforcement authority. Such 
     examination shall, to the extent possible, be combined with 
     any examination by such agency otherwise required or 
     authorized by Federal law.
       (b) Report to Internal Revenue Service.--In any case in 
     which an examination conducted under this section with 
     respect to a financial institution or other entity reveals a 
     potential violation, such agency shall promptly notify the 
     Internal Revenue Service of such potential violation for 
     investigation and enforcement by the Internal Revenue Service 
     in accordance with applicable provisions of law.
       (c) Report to Congress.--The Federal banking agencies and 
     the Commission shall submit a joint written report to 
     Congress in 2007 and 2010 on their progress in preventing 
     violations of sections 6700 and 6701 of the Internal Revenue 
     Code of 1986, by depository institutions, brokers, dealers, 
     and investment advisers, as appropriate.
       (d) Definitions.--For purposes of this section--
       (1) the terms ``broker'', ``dealer'', and ``investment 
     adviser'' have the same meanings as in section 3 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c);
       (2) the term ``Commission'' means the Securities and 
     Exchange Commission;
       (3) the term ``depository institution'' has the same 
     meaning as in section 3(c) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1813(c));
       (4) the term ``Federal banking agencies'' has the same 
     meaning as in section 3(q) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1813(q)); and
       (5) the term ``Secretary'' means the Secretary of the 
     Treasury.

     SEC. 507. INFORMATION SHARING FOR ENFORCEMENT PURPOSES.

       (a) Promotion of Prohibited Tax Shelters or Tax Avoidance 
     Schemes.--Section 6103(h) (relating to disclosure to certain 
     Federal officers and employees for purposes of tax 
     administration, etc.) is amended by adding at the end the 
     following new paragraph:
       ``(7) Disclosure of returns and return information related 
     to promotion of prohibited tax shelters or tax avoidance 
     schemes.--
       ``(A) Written request.--Upon receipt by the Secretary of a 
     written request which meets the requirements of subparagraph 
     (B) from the head of the United States Securities and 
     Exchange Commission, an appropriate Federal banking agency as 
     defined under section 1813(q) of title 12, United States 
     Code, or the Public Company Accounting Oversight Board, a 
     return or return information shall be disclosed to such 
     requestor's officers and employees who are personally and 
     directly engaged in an investigation, examination, or 
     proceeding by such requestor to evaluate, determine, 
     penalize, or deter conduct by a financial institution, 
     issuer, or public accounting firm, or associated person, in 
     connection with a potential or actual violation of section 
     6700 (promotion of abusive tax shelters), 6701 (aiding and 
     abetting understatement of tax liability), or activities 
     related to promoting or facilitating inappropriate tax 
     avoidance or tax evasion. Such disclosure shall be solely for 
     use by such officers and employees in such investigation, 
     examination, or proceeding.
       ``(B) Requirements.--A request meets the requirements of 
     this subparagraph if it sets forth--
       ``(i) the nature of the investigation, examination, or 
     proceeding,
       ``(ii) the statutory authority under which such 
     investigation, examination, or proceeding is being conducted,
       ``(iii) the name or names of the financial institution, 
     issuer, or public accounting firm to which such return 
     information relates,
       ``(iv) the taxable period or periods to which such return 
     information relates, and
       ``(v) the specific reason or reasons why such disclosure 
     is, or may be, relevant to such investigation, examination or 
     proceeding.
       ``(C) Financial institution.--For the purposes of this 
     paragraph, the term `financial

[[Page 27137]]

     institution' means a depository institution, foreign bank, 
     insured institution, industrial loan company, broker, dealer, 
     investment company, investment advisor, or other entity 
     subject to regulation or oversight by the United States 
     Securities and Exchange Commission or an appropriate Federal 
     banking agency.''.
       (b) Financial and Accounting Fraud Investigations.--Section 
     6103(i) (relating to disclosure to Federal officers or 
     employees for administration of Federal laws not relating to 
     tax administration) is amended by adding at the end the 
     following new paragraph:
       ``(9) Disclosure of returns and return information for use 
     in financial and accounting fraud investigations.--
       ``(A) Written request.--Upon receipt by the Secretary of a 
     written request which meets the requirements of subparagraph 
     (B) from the head of the United States Securities and 
     Exchange Commission or the Public Company Accounting 
     Oversight Board, a return or return information shall be 
     disclosed to such requestor's officers and employees who are 
     personally and directly engaged in an investigation, 
     examination, or proceeding by such requester to evaluate the 
     accuracy of a financial statement or report or to determine 
     whether to require a restatement, penalize, or deter conduct 
     by an issuer, investment company, or public accounting firm, 
     or associated person, in connection with a potential or 
     actual violation of auditing standards or prohibitions 
     against false or misleading statements or omissions in 
     financial statements or reports. Such disclosure shall be 
     solely for use by such officers and employees in such 
     investigation, examination, or proceeding.
       ``(B) Requirements.--A request meets the requirements of 
     this subparagraph if it sets forth--
       ``(i) the nature of the investigation, examination, or 
     proceeding,
       ``(ii) the statutory authority under which such 
     investigation, examination, or proceeding is being conducted,
       ``(iii) the name or names of the issuer, investment 
     company, or public accounting firm to which such return 
     information relates,
       ``(iv) the taxable period or periods to which such return 
     information relates, and
       ``(v) the specific reason or reasons why such disclosure 
     is, or may be, relevant to such investigation, examination or 
     proceeding.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to disclosures and to information and document 
     requests made after the date of the enactment of this Act.

     SEC. 508. DISCLOSING PAYMENTS TO PERSONS IN UNCOOPERATIVE TAX 
                   HAVENS.

       (a) In General.--Subpart A of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6038C the 
     following new section:

     ``SEC. 6038D. DETERRING UNCOOPERATIVE TAX HAVENS THROUGH 
                   LISTING AND REPORTING REQUIREMENTS.

       ``(a) In General.--Each United States person who transfers 
     money or other property directly or indirectly to any 
     uncooperative tax haven, to any financial institution 
     licensed by or operating in any uncooperative tax haven, or 
     to any person who is a resident of any uncooperative tax 
     haven shall furnish to the Secretary, at such time and in 
     such manner as the Secretary shall by regulation prescribe, 
     such information with respect to such transfer as the 
     Secretary may require.
       ``(b) Exceptions.--Subsection (a) shall not apply to a 
     transfer by a United States person if the amount of money 
     (and the fair market value of property) transferred is less 
     than $10,000. Related transfers shall be treated as 1 
     transfer for purposes of this subsection.
       ``(c) Uncooperative Tax Haven.--For purposes of this 
     section--
       ``(1) In general.--The term `uncooperative tax haven' means 
     any foreign jurisdiction which is identified on a list 
     maintained by the Secretary under paragraph (2) as being a 
     jurisdiction--
       ``(A) which imposes no or nominal taxation either generally 
     or on specified classes of income, and
       ``(B) has corporate, business, bank, or tax secrecy or 
     confidentiality rules and practices, or has ineffective 
     information exchange practices which, in the judgment of the 
     Secretary, effectively limit or restrict the ability of the 
     United States to obtain information relevant to the 
     enforcement of this title.
       ``(2) Maintenance of list.--Not later than November 1 of 
     each calendar year, the Secretary shall issue a list of 
     foreign jurisdictions which the Secretary determines qualify 
     as uncooperative tax havens under paragraph (1).
       ``(3) Ineffective information exchange practices.--For 
     purposes of paragraph (1), a jurisdiction shall be deemed to 
     have ineffective information exchange practices if the 
     Secretary determines that during any taxable year ending in 
     the 12-month period preceding the issuance of the list under 
     paragraph (2)--
       ``(A) the exchange of information between the United States 
     and such jurisdiction was inadequate to prevent evasion or 
     avoidance of United States income tax by United States 
     persons or to enable the United States effectively to enforce 
     this title, or
       ``(B) such jurisdiction was identified by an 
     intergovernmental group or organization of which the United 
     States is a member as uncooperative with international tax 
     enforcement or information exchange and the United States 
     concurs in the determination.
       ``(d) Penalty for Failure to File Information.--If a United 
     States person fails to furnish the information required by 
     subsection (a) with respect to any transfer within the time 
     prescribed therefor (including extensions), such United 
     States person shall pay (upon notice and demand by the 
     Secretary and in the same manner as tax) an amount equal to 
     20 percent of the amount of such transfer.
       ``(e) Simplified Reporting.--The Secretary may by 
     regulations provide for simplified reporting under this 
     section for United States persons making large volumes of 
     similar payments.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (b) Clerical Amendment.--The table of sections for such 
     subpart A is amended by inserting after the item relating to 
     section 6038C the following new item:

``Sec. 6038D. Deterring uncooperative tax havens through listing and 
              reporting requirements.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers after the date which is 180 days 
     after the date of the enactment of this Act.

     SEC. 509. DETERRING UNCOOPERATIVE TAX HAVENS BY RESTRICTING 
                   ALLOWABLE TAX BENEFITS.

       (a) Limitation on Deferral.--
       (1) In general.--Subsection (a) of section 952 (defining 
     subpart F income) is amended by striking ``and'' at the end 
     of paragraph (4), by striking the period at the end of 
     paragraph (5) and inserting ``, and'', and by inserting after 
     paragraph (5) the following new paragraph:
       ``(6) an amount equal to the applicable fraction (as 
     defined in subsection (e)) of the income of such corporation 
     other than income which--
       ``(A) is attributable to earnings and profits of the 
     foreign corporation included in the gross income of a United 
     States person under section 951 (other than by reason of this 
     paragraph or paragraph (3)(A)(i)), or
       ``(B) is described in subsection (b).''.
       (2) Applicable fraction.--Section 952 is amended by adding 
     at the end the following new subsection:
       ``(e) Identified Tax Haven Income Which Is Subpart F 
     Income.--
       ``(1) In general.--For purposes of subsection (a)(6), the 
     term `applicable fraction' means the fraction--
       ``(A) the numerator of which is the aggregate identified 
     tax haven income for the taxable year, and
       ``(B) the denominator of which is the aggregate income for 
     the taxable year which is from sources outside the United 
     States.
       ``(2) Identified tax haven income.--For purposes of 
     paragraph (1), the term `identified tax haven income' means 
     income for the taxable year which is attributable to a 
     foreign jurisdiction for any period during which such 
     jurisdiction has been identified as an uncooperative tax 
     haven under section 6038D(c).
       ``(3) Regulations.--The Secretary shall prescribe 
     regulations similar to the regulations issued under section 
     999(c) to carry out the purposes of this subsection.''.
       (b) Denial of Foreign Tax Credit.--Section 901 (relating to 
     taxes of foreign countries and of possessions of United 
     States) is amended by redesignating subsection (m) as 
     subsection (n) and by inserting after subsection (l) the 
     following new subsection:
       ``(m) Reduction of Foreign Tax Credit, Etc., for Identified 
     Tax Haven Income.--
       ``(1) In general.--Notwithstanding any other provision of 
     this part--
       ``(A) no credit shall be allowed under subsection (a) for 
     any income, war profits, or excess profits taxes paid or 
     accrued (or deemed paid under section 902 or 960) to any 
     foreign jurisdiction if such taxes are with respect to income 
     attributable to a period during which such jurisdiction has 
     been identified as an uncooperative tax haven under section 
     6038D(c), and
       ``(B) subsections (a), (b), (c), and (d) of section 904 and 
     sections 902 and 960 shall be applied separately with respect 
     to all income of a taxpayer attributable to periods described 
     in subparagraph (A) with respect to all such jurisdictions.
       ``(2) Taxes allowed as a deduction, etc.--Sections 275 and 
     78 shall not apply to any tax which is not allowable as a 
     credit under subsection (a) by reason of this subsection.
       ``(3) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this subsection, including regulations which 
     treat income paid through 1 or more entities as derived from 
     a foreign jurisdiction to which this subsection applies if 
     such income was, without regard to such entities, derived 
     from such jurisdiction.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

[[Page 27138]]


                                 ______
                                 
  SA 2629. Mr. DAYTON (for himself and Mr. Salazar) submitted an 
amendment intended to be proposed by him to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; as follows:

       On page 235, between lines 13 and 14, insert the following:

     SEC. __. REFUNDABLE TAX CREDIT FOR ENERGY COST ASSISTANCE OF 
                   FARMERS AND RANCHERS.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 (relating to refundable credits) is amended by 
     redesignating section 36 as section 37 and by inserting after 
     section 35 the following new section:

     ``SEC. 36. CREDIT FOR ENERGY COST ASSISTANCE FOR FARMERS AND 
                   RANCHERS.

       ``(a) General Rule.--In the case of an eligible taxpayer, 
     there shall be allowed as a credit against the tax imposed by 
     this subtitle for the taxable year an amount equal to the 
     lesser of--
       ``(1) 30 percent of the amount paid or incurred for 
     qualified energy costs, or
       ``(2) $3,000.
       ``(b) Eligible Taxpayer.--For purposes of this section, the 
     term `eligible taxpayer' means any individual engaged in a 
     farming business (as defined in section 263A(e)(4)).
       ``(c) Residential Energy Costs.--For purposes of this 
     section, the term `qualified energy costs' means the cost of 
     any fuel, energy utility, natural gas, fertilizer, and 
     heating oil used in the farming business of the taxpayer 
     during the taxable year.
       ``(d) Termination.--This section shall not apply to 
     qualified energy costs paid or incurred after December 31, 
     2005.''.
       (b) No Double Benefit.--Section 280C is amended by adding 
     at the end the following new subsection:
       ``(e) Energy Assistance for Farmers and Ranchers.--No 
     deduction shall be allowed for that portion of the expenses 
     otherwise allowable as a deduction for the taxable year which 
     is equal to the amount of the credit determined under section 
     36(a).''.
       (c) Refundability.--Section 1324(b)(2) of title 31, United 
     States Code, is amended by striking ``or'' before ``enacted'' 
     and by inserting before the period at the end ``, or from 
     section 36 of such Code''.
       (d) Clerical Amendments.--The table of sections for subpart 
     C of part IV of subchapter A of chapter 1 is amended by 
     striking the item relating to section 35 and by adding at the 
     end the following new items:

``Sec. 36. Credit for energy cost assistance for farmers and ranchers.
``Sec. 37. Overpayments of tax.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.

     SEC. ___. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 
                   APPLICABLE TO DUAL CAPACITY TAXPAYERS.

       (a) In General.--Section 901 (relating to credit for taxes 
     of foreign countries and of possessions of the United States) 
     is amended by redesignating subsection (m) as subsection (n) 
     and by inserting after subsection (l) the following new 
     subsection:
       ``(m) Special Rules Relating To Dual Capacity Taxpayers.--
       ``(1) General rule.--Notwithstanding any other provision of 
     this chapter, any amount paid or accrued by a dual capacity 
     taxpayer to a foreign country or possession of the United 
     States for any period shall not be considered a tax--
       ``(A) if, for such period, the foreign country or 
     possession does not impose a generally applicable income tax, 
     or
       ``(B) to the extent such amount exceeds the amount 
     (determined in accordance with regulations) which--
       ``(i) is paid by such dual capacity taxpayer pursuant to 
     the generally applicable income tax imposed by the country or 
     possession, or
       ``(ii) would be paid if the generally applicable income tax 
     imposed by the country or possession were applicable to such 
     dual capacity taxpayer.

     Nothing in this paragraph shall be construed to imply the 
     proper treatment of any such amount not in excess of the 
     amount determined under subparagraph (B).
       ``(2) Dual capacity taxpayer.--For purposes of this 
     subsection, the term `dual capacity taxpayer' means, with 
     respect to any foreign country or possession of the United 
     States, a person who--
       ``(A) is subject to a levy of such country or possession, 
     and
       ``(B) receives (or will receive) directly or indirectly a 
     specific economic benefit (as determined in accordance with 
     regulations) from such country or possession.
       ``(3) Generally applicable income tax.--For purposes of 
     this subsection--
       ``(A) In general.--The term `generally applicable income 
     tax' means an income tax (or a series of income taxes) which 
     is generally imposed under the laws of a foreign country or 
     possession on income derived from the conduct of a trade or 
     business within such country or possession.
       ``(B) Exceptions.--Such term shall not include a tax unless 
     it has substantial application, by its terms and in practice, 
     to--
       ``(i) persons who are not dual capacity taxpayers, and
       ``(ii) persons who are citizens or residents of the foreign 
     country or possession.''
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxes paid or accrued in taxable years beginning 
     after the date of the enactment of this Act.
       (2) Contrary treaty obligations upheld.--The amendments 
     made by this section shall not apply to the extent contrary 
     to any treaty obligation of the United States.
                                 ______
                                 
  SA 2630. Mr. SCHUMER (for himself and Mr. Wyden) submitted an 
amendment intended to be proposed by him to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; which was ordered to lie 
on the table; as follows:

       At the end of title V, add the following:

     SEC. __. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE 
                   TO DUAL CAPACITY TAXPAYERS.

       (a) In General.--Section 901 (relating to credit for taxes 
     of foreign countries and of possessions of the United States) 
     is amended by redesignating subsection (m) as subsection (n) 
     and by inserting after subsection (l) the following new 
     subsection:
       ``(m) Special Rules Relating To Dual Capacity Taxpayers.--
       ``(1) General rule.--Notwithstanding any other provision of 
     this chapter, any amount paid or accrued by a dual capacity 
     taxpayer to a foreign country or possession of the United 
     States for any period shall not be considered a tax--
       ``(A) if, for such period, the foreign country or 
     possession does not impose a generally applicable income tax, 
     or
       ``(B) to the extent such amount exceeds the amount 
     (determined in accordance with regulations) which--
       ``(i) is paid by such dual capacity taxpayer pursuant to 
     the generally applicable income tax imposed by the country or 
     possession, or
       ``(ii) would be paid if the generally applicable income tax 
     imposed by the country or possession were applicable to such 
     dual capacity taxpayer.

     Nothing in this paragraph shall be construed to imply the 
     proper treatment of any such amount not in excess of the 
     amount determined under subparagraph (B).
       ``(2) Dual capacity taxpayer.--For purposes of this 
     subsection, the term `dual capacity taxpayer' means, with 
     respect to any foreign country or possession of the United 
     States, a person who--
       ``(A) is subject to a levy of such country or possession, 
     and
       ``(B) receives (or will receive) directly or indirectly a 
     specific economic benefit (as determined in accordance with 
     regulations) from such country or possession.
       ``(3) Generally applicable income tax.--For purposes of 
     this subsection--
       ``(A) In general.--The term `generally applicable income 
     tax' means an income tax (or a series of income taxes) which 
     is generally imposed under the laws of a foreign country or 
     possession on income derived from the conduct of a trade or 
     business within such country or possession.
       ``(B) Exceptions.--Such term shall not include a tax unless 
     it has substantial application, by its terms and in practice, 
     to--
       ``(i) persons who are not dual capacity taxpayers, and
       ``(ii) persons who are citizens or residents of the foreign 
     country or possession.''
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxes paid or accrued in taxable years beginning 
     after the date of the enactment of this Act.
       (2) Contrary treaty obligations upheld.--The amendments 
     made by this section shall not apply to the extent contrary 
     to any treaty obligation of the United States.

     SEC. __. RULES RELATING TO FOREIGN OIL AND GAS INCOME.

       (a) Separate Basket for Foreign Tax Credit.--
       (1) Years before 2007.--Paragraph (1) of section 904(d) 
     (relating to separate application of section with respect to 
     certain categories of income), as in effect for years 
     beginning before 2007, is amended by striking ``and'' at the 
     end of subparagraph (H), by redesignating subparagraph (I) as 
     subparagraph (J), and by inserting after subparagraph (H) the 
     following new subparagraph:
       ``(I) foreign oil and gas income, and''.
       (2) 2007 and after.--Paragraph (1) of section 904(d), as in 
     effect for years beginning after 2006, is amended by striking 
     ``and'' at the end of subparagraph (A), by striking the 
     period at the end of subparagraph (B) and inserting ``, 
     and'', and by adding at the end the following:
       ``(C) foreign oil and gas income.''
       (b) Definition.--
       (1) Years before 2007.--Paragraph (2) of section 904(d), as 
     in effect for years beginning before 2007, is amended by 
     redesignating subparagraphs (H) and (I) as subparagraphs (I) 
     and (J), respectively, and by inserting after subparagraph 
     (G) the following new subparagraph:
       ``(H) Foreign oil and gas income.--The term `foreign oil 
     and gas income' has the meaning given such term by section 
     954(g).''

[[Page 27139]]

       (2) 2007 and after.--Section 904(d)(2), as in effect for 
     years after 2006, is amended by redesignating subparagraphs 
     (J) and (K) as subparagraphs (K) and (L) and by inserting 
     after subparagraph (I) the following:
       ``(J) Foreign oil and gas income.--For purposes of this 
     section--
       ``(i) In general.--The term `foreign oil and gas income' 
     has the meaning given such term by section 954(g).
       ``(ii) Coordination.--Passive category income and general 
     category income shall not include foreign oil and gas income 
     (as so defined).''
       (c) Conforming Amendments.--
       (1) Section 904(d)(3)(F)(i) is amended by striking ``or 
     (E)'' and inserting ``(E), or (I)''.
       (2) Section 907(a) is hereby repealed.
       (3) Section 907(c)(4) is hereby repealed.
       (4) Section 907(f) is hereby repealed.
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after the date of the 
     enactment of this Act.
       (2) Years after 2006.--The amendments made by paragraphs 
     (1)(B) and (2)(B) shall apply to taxable years beginning 
     after December 31, 2006.
       (3) Transitional rules.--
       (A) Separate basket treatment.--Any taxes paid or accrued 
     in a taxable year beginning on or before the date of the 
     enactment of this Act, with respect to income which was 
     described in subparagraph (I) of section 904(d)(1) of such 
     Code (as in effect on the day before the date of the 
     enactment of this Act), shall be treated as taxes paid or 
     accrued with respect to foreign oil and gas income to the 
     extent the taxpayer establishes to the satisfaction of the 
     Secretary of the Treasury that such taxes were paid or 
     accrued with respect to foreign oil and gas income.
       (B) Carryovers.--Any unused oil and gas extraction taxes 
     which under section 907(f) of such Code (as so in effect) 
     would have been allowable as a carryover to the taxpayer's 
     first taxable year beginning after the date of the enactment 
     of this Act (without regard to the limitation of paragraph 
     (2) of such section 907(f) for first taxable year) shall be 
     allowed as carryovers under section 904(c) of such Code in 
     the same manner as if such taxes were unused taxes under such 
     section 904(c) with respect to foreign oil and gas extraction 
     income.
       (C) Losses.--The amendment made by subsection (c)(3) shall 
     not apply to foreign oil and gas extraction losses arising in 
     taxable years beginning on or before the date of the 
     enactment of this Act.
                                 ______
                                 
  SA 2631. Ms. LANDRIEU submitted an amendment intended to be proposed 
by her to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, insert the following:

                        Subtitle B--Hope at Home

     SEC. 411. READY RESERVE-NATIONAL GUARD EMPLOYEE CREDIT ADDED 
                   TO GENERAL BUSINESS CREDIT.

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

     ``SEC. 45N. READY RESERVE-NATIONAL GUARD EMPLOYEE CREDIT.

       ``(a) General Rule.--For purposes of section 38, the Ready 
     Reserve-National Guard employee credit determined under this 
     section for any taxable year is an amount equal to 50 percent 
     of the actual compensation amount for such taxable year.
       ``(b) Definition of Actual Compensation Amount.--For 
     purposes of this section, the term `actual compensation 
     amount' means the amount of compensation paid or incurred by 
     an employer with respect to a Ready Reserve-National Guard 
     employee on any day during a taxable year when the employee 
     was absent from employment for the purpose of performing 
     qualified active duty.
       ``(c) Limitation.--No credit shall be allowed with respect 
     to a Ready Reserve-National Guard employee who performs 
     qualified active duty on any day on which the employee was 
     not scheduled to work (for reason other than to participate 
     in qualified active duty).
       ``(d) Definitions.--For purposes of this section--
       ``(1) Qualified active duty.--The term `qualified active 
     duty' means--
       ``(A) active duty, other than the training duty specified 
     in section 10147 of title 10, United States Code (relating to 
     training requirements for the Ready Reserve), or section 
     502(a) of title 32, United States Code (relating to required 
     drills and field exercises for the National Guard), in 
     connection with which an employee is entitled to reemployment 
     rights and other benefits or to a leave of absence from 
     employment under chapter 43 of title 38, United States Code, 
     and
       ``(B) hospitalization incident to such duty.
       ``(2) Compensation.--The term `compensation' means any 
     remuneration for employment, whether in cash or in kind, 
     which is paid or incurred by a taxpayer and which is 
     deductible from the taxpayer's gross income under section 
     162(a)(1).
       ``(3) Ready reserve-national guard employee.--The term 
     `Ready Reserve-National Guard employee' means an employee who 
     is a member of the Ready Reserve of a reserve component of an 
     Armed Force of the United States as described in sections 
     10142 and 10101 of title 10, United States Code.
       ``(4) Certain rules to apply.--Rules similar to the rules 
     of section 52 shall apply.
       ``(e) Portion of Credit Made Refundable.--
       ``(1) In general.--In the case of an eligible employer of a 
     Ready Reserve-National Guard employee, the aggregate credits 
     allowed to a taxpayer under subpart C shall be increased by 
     the lesser of--
       ``(A) the credit which would be allowed under this section 
     without regard to this subsection and the limitation under 
     section 38(c), or
       ``(B) the amount by which the aggregate amount of credits 
     allowed by this subpart (determined without regard to this 
     subsection) would increase if the limitation imposed by 
     section 38(c) for any taxable year were increased by the 
     amount of employer payroll taxes imposed on the taxpayer 
     during the calendar year in which the taxable year begins.

     The amount of the credit allowed under this subsection shall 
     not be treated as a credit allowed under this subpart and 
     shall reduce the amount of the credit otherwise allowable 
     under subsection (a) without regard to section 38(c).
       ``(2) Eligible employer.--For purposes of this subsection, 
     the term `eligible employer' means an employer which is a 
     State or local government or subdivision thereof.
       ``(3) Employer payroll taxes.--For purposes of this 
     subsection--
       ``(A) In general.--The term `employer payroll taxes' means 
     the taxes imposed by--
       ``(i) section 3111(b), and
       ``(ii) sections 3211(a) and 3221(a) (determined at a rate 
     equal to the rate under section 3111(b)).
       ``(B) Special rule.--A rule similar to the rule of section 
     24(d)(2)(C) shall apply for purposes of subparagraph (A).''.
       (b) Credit to Be Part of General Business Credit.--Section 
     38(b) (relating to current year business credit) is amended 
     by striking ``and'' at the end of paragraph (25), by striking 
     the period at the end of paragraph (26) and inserting ``, 
     and'', and by adding at the end the following:
       ``(27) the Ready Reserve-National Guard employee credit 
     determined under section 45N(a).''.
       (c) Denial of Double Benefit.--Section 280C(a) (relating to 
     rule for employment credits) is amended by inserting 
     ``45N(a),'' after ``45A(a),''.
       (d) Conforming Amendment.--The table of sections for 
     subpart D of part IV of subchapter A of chapter 1 is amended 
     by inserting after the item relating to section 45M the 
     following:

``Sec. 45N. Ready Reserve-National Guard employee credit.''.

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

     SEC. 412. READY RESERVE-NATIONAL GUARD REPLACEMENT EMPLOYEE 
                   CREDIT.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1 (relating to foreign tax credit, etc.) is amended 
     by adding after section 30C the following new section:

     ``SEC. 30D. READY RESERVE-NATIONAL GUARD REPLACEMENT EMPLOYEE 
                   CREDIT.

       ``(a) Allowance of Credit.--
       ``(1) In general.--In the case of an eligible taxpayer, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year the sum of the employment 
     credits for each qualified replacement employee under this 
     section.
       ``(2) Employment credit.--The employment credit with 
     respect to a qualified replacement employee of the taxpayer 
     for any taxable year is equal to 50 percent of the lesser 
     of--
       ``(A) the individual's qualified compensation attributable 
     to service rendered as a qualified replacement employee, or
       ``(B) $12,000.
       ``(b) Qualified Compensation.--The term `qualified 
     compensation' means--
       ``(1) compensation which is normally contingent on the 
     qualified replacement employee's presence for work and which 
     is deductible from the taxpayer's gross income under section 
     162(a)(1),
       ``(2) compensation which is not characterized by the 
     taxpayer as vacation or holiday pay, or as sick leave or pay, 
     or as any other form of pay for a nonspecific leave of 
     absence, and
       ``(3) group health plan costs (if any) with respect to the 
     qualified replacement employee.
       ``(c) Qualified Replacement Employee.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified replacement 
     employee' means an individual who is hired to replace a Ready 
     Reserve-National Guard employee or a Ready Reserve-National 
     Guard self-employed taxpayer, but only with respect to the 
     period during which--

[[Page 27140]]

       ``(A) such Ready Reserve-National Guard employee is 
     receiving an actual compensation amount (as defined in 
     section 45N(b)) from the employee's employer and is 
     participating in qualified active duty, including time spent 
     in travel status, or
       ``(B) such Ready Reserve-National Guard self-employed 
     taxpayer is participating in such qualified active duty.
       ``(2) Ready reserve-national guard employee.--The term 
     `Ready Reserve-National Guard employee' has the meaning given 
     such term by section 45N(d)(3).
       ``(3) Ready reserve-national guard self-employed 
     taxpayer.--The term `Ready Reserve-National Guard self-
     employed taxpayer' means a taxpayer who--
       ``(A) has net earnings from self-employment (as defined in 
     section 1402(a)) for the taxable year, and
       ``(B) is a member of the Ready Reserve of a reserve 
     component of an Armed Force of the United States as described 
     in section 10142 and 10101 of title 10, United States Code.
       ``(d) Coordination With Other Credits.--The amount of 
     credit otherwise allowable under sections 51(a) and 1396(a) 
     with respect to any employee shall be reduced by the credit 
     allowed by this section with respect to such employee.
       ``(e) Limitations.--
       ``(1) Application with other credits.--The credit allowed 
     under subsection (a) for any taxable year shall not exceed 
     the excess (if any) of--
       ``(A) the regular tax for the taxable year reduced by the 
     sum of the credits allowable under subpart A and sections 27, 
     29, and 30, over
       ``(B) the tentative minimum tax for the taxable year.
       ``(2) Disallowance for failure to comply with employment or 
     reemployment rights of members of the reserve components of 
     the armed forces of the united states.--No credit shall be 
     allowed under subsection (a) to a taxpayer for--
       ``(A) any taxable year, beginning after the date of the 
     enactment of this section, in which the taxpayer is under a 
     final order, judgment, or other process issued or required by 
     a district court of the United States under section 4323 of 
     title 38 of the United States Code with respect to a 
     violation of chapter 43 of such title, and
       ``(B) the 2 succeeding taxable years.
       ``(f) General Definitions and Special Rules.--For purposes 
     of this section--
       ``(1) Eligible taxpayer.--The term `eligible taxpayer' 
     means a small business employer or a Ready Reserve-National 
     Guard self-employed taxpayer.
       ``(2) Small business employer.--
       ``(A) In general.--The term `small business employer' 
     means, with respect to any taxable year, any employer who 
     employed an average of 50 or fewer employees on business days 
     during such taxable year.
       ``(B) Controlled groups.--For purposes of subparagraph (A), 
     all persons treated as a single employer under subsection 
     (b), (c), (m), or (o) of section 414 shall be treated as a 
     single employer.
       ``(3) Qualified active duty.--The term `qualified active 
     duty' has the meaning given such term by section 45N(d)(1).
       ``(4) Special rules for certain manufacturers.--
       ``(A) In general.--In the case of any qualified 
     manufacturer--
       ``(i) subsection (a)(2)(B) shall be applied by substituting 
     `$20,000' for `$12,000', and
       ``(ii) paragraph (2)(A) of this subsection shall be applied 
     by substituting `100' for `50'.
       ``(B) Qualified manufacturer.--For purposes of this 
     paragraph, the term `qualified manufacturer' means any person 
     if--
       ``(i) the primary business of such person is classified in 
     sector 31, 32, or 33 of the North American Industrial 
     Classification System, and
       ``(ii) all of such person's facilities which are used for 
     production in such business are located in the United States.
       ``(5) Carryback and carryforward allowed.--
       ``(A) In general.--If the credit allowable under subsection 
     (a) for a taxable year exceeds the amount of the limitation 
     under subsection (e)(1) for such taxable year (in this 
     paragraph referred to as the `unused credit year'), such 
     excess shall be a credit carryback to each of the 3 taxable 
     years preceding the unused credit year and a credit 
     carryforward to each of the 20 taxable years following the 
     unused credit year.
       ``(B) Rules.--Rules similar to the rules of section 39 
     shall apply with respect to the credit carryback and credit 
     carryforward under subparagraph (A).
       ``(6) Certain rules to apply.--Rules similar to the rules 
     of subsections (c), (d), and (e) of section 52 shall 
     apply.''.
       (b) No Deduction for Compensation Taken Into Account for 
     Credit.--Section 280C(a) (relating to rule for employment 
     credits) is amended--
       (1) by inserting ``or compensation'' after ``salaries'', 
     and
       (2) by inserting ``30D,'' before ``45A(a),''.
       (c) Conforming Amendment.--Section 55(c)(2) is amended by 
     inserting ``30D(e)(1),'' after ``30(b)(3),''.
       (d) Clerical Amendment.--The table of sections for subpart 
     B of part IV of subchapter A of chapter 1 is amended by 
     adding after the item relating to section 30C the following 
     new item:

``Sec. 30D. Credit for replacement of activated military reservists.''.

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

     SEC. 413. INCOME TAX WITHHOLDING ON DIFFERENTIAL WAGE 
                   PAYMENTS.

       (a) In General.--Section 3401 (relating to definitions) is 
     amended by adding at the end the following new subsection:
       ``(i) Differential Wage Payments to Active Duty Members of 
     the Uniformed Services.--
       ``(1) In general.--For purposes of subsection (a), any 
     differential wage payment shall be treated as a payment of 
     wages by the employer to the employee.
       ``(2) Differential wage payment.--For purposes of paragraph 
     (1), the term `differential wage payment' means any payment 
     which--
       ``(A) is made by an employer to an individual with respect 
     to any period during which the individual is performing 
     service in the uniformed services while on active duty for a 
     period of more than 30 days, and
       ``(B) represents all or a portion of the wages the 
     individual would have received from the employer if the 
     individual were performing service for the employer.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to remuneration paid after December 31, 2005.

     SEC. 414. TREATMENT OF DIFFERENTIAL WAGE PAYMENTS FOR 
                   RETIREMENT PLAN PURPOSES.

       (a) Pension Plans.--
       (1) In general.--Section 414(u) (relating to special rules 
     relating to veterans' reemployment rights under USERRA) is 
     amended by adding at the end the following new paragraph:
       ``(11) Treatment of differential wage payments.--
       ``(A) In general.--Except as provided in this paragraph, 
     for purposes of applying this title to a retirement plan to 
     which this subsection applies--
       ``(i) an individual receiving a differential wage payment 
     shall be treated as an employee of the employer making the 
     payment,
       ``(ii) the differential wage payment shall be treated as 
     compensation, and
       ``(iii) the plan shall not be treated as failing to meet 
     the requirements of any provision described in paragraph 
     (1)(C) by reason of any contribution which is based on the 
     differential wage payment.
       ``(B) Special rule for distributions.--
       ``(i) In general.--Notwithstanding subparagraph (A)(i), for 
     purposes of section 401(k)(2)(B)(i)(I), 403(b)(7)(A)(ii), 
     403(b)(11)(A), or 457(d)(1)(A)(ii), an individual shall be 
     treated as having been severed from employment during any 
     period the individual is performing service in the uniformed 
     services described in section 3401(i)(2)(A).
       ``(ii) Limitation.--If an individual elects to receive a 
     distribution by reason of clause (i), the plan shall provide 
     that the individual may not make an elective deferral or 
     employee contribution during the 6-month period beginning on 
     the date of the distribution.
       ``(C) Nondiscrimination requirement.--Subparagraph (A)(iii) 
     shall apply only if all employees of an employer performing 
     service in the uniformed services described in section 
     3401(i)(2)(A) are entitled to receive differential wage 
     payments on reasonably equivalent terms and, if eligible to 
     participate in a retirement plan maintained by the employer, 
     to make contributions based on the payments. For purposes of 
     applying this subparagraph, the provisions of paragraphs (3), 
     (4), and (5), of section 410(b) shall apply.
       ``(D) Differential wage payment.--For purposes of this 
     paragraph, the term `differential wage payment' has the 
     meaning given such term by section 3401(i)(2).''.
       (2) Conforming amendment.--The heading for section 414(u) 
     is amended by inserting ``and to Differential Wage Payments 
     to Members on Active Duty'' after ``USERRA''.
       (b) Differential Wage Payments Treated as Compensation for 
     Individual Retirement Plans.--Section 219(f)(1) (defining 
     compensation) is amended by adding at the end the following 
     new sentence: ``The term `compensation' includes any 
     differential wage payment (as defined in section 
     3401(i)(2)).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2005.
       (d) Provisions Relating to Plan Amendments.--
       (1) In general.--If this subsection applies to any plan or 
     annuity contract amendment--
       (A) such plan or contract shall be treated as being 
     operated in accordance with the terms of the plan or contract 
     during the period described in paragraph (2)(B)(i), and
       (B) except as provided by the Secretary of the Treasury, 
     such plan shall not fail to meet the requirements of the 
     Internal Revenue Code of 1986 or the Employee Retirement 
     Income Security Act of 1974 by reason of such amendment.
       (2) Amendments to which section applies.--

[[Page 27141]]

       (A) In general.--This subsection shall apply to any 
     amendment to any plan or annuity contract which is made--
       (i) pursuant to any amendment made by this section, and
       (ii) on or before the last day of the first plan year 
     beginning on or after January 1, 2007.
       (B) Conditions.--This subsection shall not apply to any 
     plan or annuity contract amendment unless--
       (i) during the period beginning on the date the amendment 
     described in subparagraph (A)(i) takes effect and ending on 
     the date described in subparagraph (A)(ii) (or, if earlier, 
     the date the plan or contract amendment is adopted), the plan 
     or contract is operated as if such plan or contract amendment 
     were in effect, and
       (ii) such plan or contract amendment applies retroactively 
     for such period.

     SEC. 415. MODIFICATIONS OF EFFECTIVE DATES OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) In General.--Section 849(b) of the American Jobs 
     Creation Act of 2004 is amended by adding at the end the 
     following new paragraph:
       ``(5) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2004, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.
                                 ______
                                 
  SA 2632. Mr. LOTT (for himself and Mr. Baucus) submitted an amendment 
intended to be proposed by him to the bill S. 2020, to provide for 
reconciliation pursuant to section 202(b) of the concurrent resolution 
on the budget for fiscal year 2006; which was ordered to lie on the 
table; as follows:

       At the end of title IV, insert:

     SEC. __. MODIFICATIONS TO RULES RELATING TO TAXATION OF 
                   DISTRIBUTIONS OF STOCK AND SECURITIES OF A 
                   CONTROLLED CORPORATION.

       (a) Modification of Active Business Definition Under 
     Section 355.--
       (1) In general.--Section 355(b) (defining active conduct of 
     a trade or business) is amended by adding at the end the 
     following new paragraph:
       ``(3) Special rules relating to active business 
     requirement.--
       ``(A) In general.--For purposes of determining whether a 
     corporation meets the requirement of paragraph (2)(A), all 
     members of such corporation's separate affiliated group shall 
     be treated as 1 corporation. For purposes of the preceding 
     sentence, the term `separate affiliated group' means, with 
     respect to any corporation, the affiliated group which would 
     be determined under section 1504(a) if such corporation were 
     the common parent and section 1504(b) did not apply.
       ``(B) Control.--For purposes of paragraph (2)(D), all 
     distributee corporations which are members of the same 
     affiliated group (as defined in section 1504(a) without 
     regard to section 1504(b)) shall be treated as 1 distributee 
     corporation.''.
       (2) Conforming amendments.--
       (A) Subparagraph (A) of section 355(b)(2) is amended to 
     read as follows:
       ``(A) it is engaged in the active conduct of a trade or 
     business,''.
       (B) Section 355(b)(2) of such Code is amended by striking 
     the last sentence.
       (3) Effective dates.--
       (A) In general.--The amendments made by this subsection 
     shall apply--
       (i) to distributions after the date of the enactment of 
     this Act, and before January 1, 2010, and
       (ii) for purposes of determining the continued 
     qualification under section 355(b)(2)(A) of the Internal 
     Revenue Code of 1986 (as amended by paragraph (2)(A)) of 
     distributions made before such date, as a result of an 
     acquisition, disposition, or other restructuring after such 
     date and before January 1, 2010.
       (B) Transition rule.--The amendments made by this 
     subsection shall not apply to any distribution pursuant to a 
     transaction which is--
       (i) made pursuant to an agreement which was binding on such 
     date of enactment and at all times thereafter,
       (ii) described in a ruling request submitted to the 
     Internal Revenue Service on or before such date, or
       (iii) described on or before such date in a public 
     announcement or in a filing with the Securities and Exchange 
     Commission.
       (C) Elections.--
       (i) Out of transition relief.--Subparagraph (B) shall not 
     apply if the distributing corporation elects not to have such 
     subparagraph apply to distributions of such corporation. Any 
     such election, once made, shall be irrevocable.
       (ii) Application to prior distributions.--Subparagraph 
     (A)(ii) shall not apply to a distributing or controlled 
     corporation if the corporation elects not to have such 
     subparagraph apply to such corporation. Any such election, 
     once made, shall be irrevocable.
       (b) Section 355 Not to Apply to Distributions if the 
     Distributing or Controlled Corporation Is a Disqualified 
     Investment Corporation.--
       (1) In general.--Section 355 (relating to distributions of 
     stock and securities of a controlled corporation) is amended 
     by adding at the end the following new subsection:
       ``(g) Section Not to Apply to Distributions Involving 
     Disqualified Investment Corporations.--
       ``(1) In general.--This section (and so much of section 356 
     as relates to this section) shall not apply to any 
     distribution which is part of a transaction if--
       ``(A) either the distributing corporation or controlled 
     corporation is, immediately after the transaction, a 
     disqualified investment corporation, and
       ``(B) any person holds, immediately after the transaction, 
     a 50-percent or greater interest in any disqualified 
     investment corporation, but only if such person did not hold 
     such an interest in such corporation immediately before the 
     transaction.
       ``(2) Disqualified investment corporation.--For purposes of 
     this subsection--
       ``(A) In general.--The term `disqualified investment 
     corporation' means any distributing or controlled corporation 
     if the fair market value of the investment assets of the 
     corporation is 75 percent or more of the fair market value of 
     all assets of the corporation.
       ``(B) Investment assets.--
       ``(i) In general.--Except as otherwise provided in this 
     subparagraph, the term `investment assets' means--

       ``(I) cash,
       ``(II) any stock or securities in a corporation,
       ``(III) any interest in a partnership,
       ``(IV) any debt instrument or other evidence of 
     indebtedness,
       ``(V) any option, forward or futures contract, notional 
     principal contract, or derivative,
       ``(VI) foreign currency, or
       ``(VII) any similar asset.

       ``(ii) Exception for assets used in active conduct of 
     certain financial trades or businesses.--Such term shall not 
     include any asset which is held for use in the active and 
     regular conduct of--

       ``(I) a lending or finance business (within the meaning of 
     section 954(h)(4)),
       ``(II) a banking business through a bank (as defined in 
     section 581), a domestic building and loan association 
     (within the meaning of section 7701(a)(19)), or any similar 
     institution specified by the Secretary, or
       ``(III) an insurance business if the conduct of the 
     business is licensed, authorized, or regulated by an 
     applicable insurance regulatory body.

     This clause shall only apply with respect to any business if 
     substantially all of the income of the business is derived 
     from persons who are not related (within the meaning of 
     section 267(b) or 707(b)(1)) to the person conducting the 
     business.
       ``(iii) Exception for securities marked to market.--Such 
     term shall not include any security (as defined in section 
     475(c)(2)) which is held by a dealer in securities and to 
     which section 475(a) applies.
       ``(iv) Stock or securities in a 25-percent controlled 
     entity.--

       ``(I) In general.--Such term shall not include any stock 
     and securities in, or any asset described in subclause (IV) 
     or (V) of clause (i) issued by, a corporation which is a 25-
     percent controlled entity with respect to the distributing or 
     controlled corporation.
       ``(II) Look-thru rule.--The distributing or controlled 
     corporation shall, for purposes of applying this subsection, 
     be treated as owning its ratable share of the assets of any 
     25-percent controlled entity.
       ``(III) 25-percent controlled entity.--For purposes of this 
     clause, the term `25-percent controlled entity' means, with 
     respect to any distributing or controlled corporation, any 
     corporation with respect to which the distributing or 
     controlled corporation owns directly or indirectly stock 
     meeting the requirements of section 1504(a)(2), except that 
     such section shall be applied by substituting `25 percent' 
     for `80 percent' and without regard to stock described in 
     section 1504(a)(4).

       ``(v) Interests in certain partnerships.--

       ``(I) In general.--Such term shall not include any interest 
     in a partnership, or any debt instrument or other evidence of 
     indebtedness, issued by the partnership, if 1 or more of the 
     trades or businesses of the partnership are (or, without 
     regard to the 5-year requirement under subsection (b)(2)(B), 
     would be) taken into account by the distributing or 
     controlled corporation, as the case may be, in determining 
     whether the requirements of subsection (b) are met with 
     respect to the distribution.
       ``(II) Look-thru rule.--The distributing or controlled 
     corporation shall, for purposes of applying this subsection, 
     be treated as owning its ratable share of the assets of any 
     partnership described in subclause (I).

       ``(3) 50-percent or greater interest.--For purposes of this 
     subsection--
       ``(A) In general.--The term `50-percent or greater 
     interest' has the meaning given such term by subsection 
     (d)(4).
       ``(B) Attribution rules.--The rules of section 318 shall 
     apply for purposes of determining ownership of stock for 
     purposes of this paragraph.

[[Page 27142]]

       ``(4) Transaction.--For purposes of this subsection, the 
     term `transaction' includes a series of transactions.
       ``(5) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out, or prevent the 
     avoidance of, the purposes of this subsection, including 
     regulations--
       ``(A) to carry out, or prevent the avoidance of, the 
     purposes of this subsection in cases involving--
       ``(i) the use of related persons, intermediaries, pass-thru 
     entities, options, or other arrangements, and
       ``(ii) the treatment of assets unrelated to the trade or 
     business of a corporation as investment assets if, prior to 
     the distribution, investment assets were used to acquire such 
     unrelated assets,
       ``(B) which in appropriate cases exclude from the 
     application of this subsection a distribution which does not 
     have the character of a redemption which would be treated as 
     a sale or exchange under section 302, and
       ``(C) which modify the application of the attribution rules 
     applied for purposes of this subsection.''.
       (2) Effective dates.--
       (A) In general.--The amendments made by this subsection 
     shall apply to distributions after the date of the enactment 
     of this Act.
       (B) Transition rule.--The amendments made by this 
     subsection shall not apply to any distribution pursuant to a 
     transaction which is--
       (i) made pursuant to an agreement which was binding on such 
     date of enactment and at all times thereafter,
       (ii) described in a ruling request submitted to the 
     Internal Revenue Service on or before such date, or
       (iii) described on or before such date in a public 
     announcement or in a filing with the Securities and Exchange 
     Commission.
                                 ______
                                 
  SA 2633. Mr. LOTT submitted an amendment intended to be proposed by 
him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; as follows:

       At the appropriate place, insert the following:

     SEC. __. CLARIFICATION OF TREATMENT OF OUTSIDE INCOME AND 
                   EXPENSES IN THE SENATE.

       (a) In General.--For purposes of rule XXXVI and paragraph 
     5(b)(3) of rule XXXVII of the Standing Rules of the Senate, 
     compensation or outside earned income for any calendar year 
     shall be reduced by actual and necessary expenses incurred by 
     a Member of the Senate in connection with the practice of 
     medicine. A Member of the Senate shall include information 
     with respect to such expenses with any report in which such 
     compensation or income is required to be included.
       (b) Payment or Reimbursement.--If expenses described in 
     subsection (a) are--
       (1) paid or reimbursed by another person, the amount of any 
     such payment shall not be counted as compensation or outside 
     earned income; and
       (2) not paid or reimbursed, the amount of compensation or 
     outside earned income shall be determined by subtracting the 
     actual and necessary expenses incurred by the Member from any 
     payment received for the activity.
                                 ______
                                 
  SA 2634. Mrs. BOXER (for herself and Mr. Schumer) submitted an 
amendment intended to be proposed by her to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; as follows:

       At the appropriate place, insert the following:

     SEC. __. TREATMENT AND SUPPORT SERVICES FOR VETERANS.

       Out of any money in the Treasury of the United States not 
     otherwise appropriated, and in addition to any amount 
     otherwise appropriated, there are appropriated $500,000,000 
     to the Secretary of Veterans Affairs for each of fiscal years 
     2006 through 2010, to provide veterans suffering from mental 
     illness, post-traumatic stress disorder, or drug or alcohol 
     dependency with--
       (1) readjustment counseling and related mental health 
     services under section 1712A of title 38, United States Code; 
     and
       (2) treatment and rehabilitative services under section 
     1720A of such title.

     SEC. __. ELIMINATION OF THE SCHEDULED PHASE OUT OF THE 
                   LIMITATIONS ON PERSONAL EXEMPTIONS AND ITEMIZED 
                   DEDUCTIONS FOR INDIVIDUALS EARNING IN EXCESS OF 
                   $1,000,000.

       (a) Personal Exemptions.--Section 151(d)(3)(E) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new clause:
       ``(iii) Exception.--This subparagraph shall not apply with 
     respect to any individual whose adjusted gross income for the 
     taxable year exceeds $1,000,000 ($2,000,000 in the case of a 
     joint return).''.
       (b) Itemized Deductions.--Section 68(f) of such Code is 
     amended by adding at the end the following new paragraph:
       ``(3) Exception.--This subsection shall not apply with 
     respect to any individual whose adjusted gross income for the 
     taxable year exceeds $1,000,000 ($2,000,000 in the case of a 
     joint return).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.
       (d) Application of EGTRRA Sunset.--The amendments made by 
     this section shall be subject to title IX of the Economic 
     Growth and Tax Relief Reconciliation Act of 2001 to the same 
     extent and in the same manner as the provision of such Act to 
     which such amendment relates.
                                 ______
                                 
  SA 2635. Mr. SCHUMER (for himself and Mrs. Feinstein) proposed an 
amendment to the bill S. 2020, to provide for reconciliation pursuant 
to section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; as follows:

       At the end of title IV add the following:

     SEC. 410. TEMPORARY WINDFALL PROFITS TAX.

       (a) In General.--Subtitle E (relating to alcohol, tobacco, 
     and certain other excise taxes) is amended by adding at the 
     end thereof the following new chapter:

         ``CHAPTER 56--TEMPORARY WINDFALL PROFITS ON CRUDE OIL

``Sec. 5896. Imposition of tax.
``Sec. 5897. Windfall profit; etc.
``Sec. 5898. Special rules and definitions.

     ``SEC. 5896. IMPOSITION OF TAX.

       ``(a) In General.--In addition to any other tax imposed 
     under this title, there is hereby imposed on any applicable 
     taxpayer an excise tax in an amount equal to 50 percent of 
     the windfall profit of such taxpayer for any taxable year 
     beginning in 2005.
       ``(b) Applicable Taxpayer.--For purposes of this chapter, 
     the term `applicable taxpayer' means, with respect to 
     operations in the United States--
       ``(1) any integrated oil company (as defined in section 
     291(b)(4)), and
       ``(2) any other producer or refiner of crude oil with gross 
     receipts from the sale of such crude oil or refined oil 
     products for the taxable year exceeding $100,000,000.

     ``SEC. 5897. WINDFALL PROFIT; ETC.

       ``(a) General Rule.--For purposes of this chapter, the term 
     `windfall profit' means the excess of the adjusted taxable 
     income of the applicable taxpayer for the taxable year over 
     the reasonably inflated average profit for such taxable year.
       ``(b) Adjusted Taxable Income.--For purposes of this 
     chapter, with respect to any applicable taxpayer, the 
     adjusted taxable income for any taxable year is equal to the 
     taxable income for such taxable year (within the meaning of 
     section 63 and determined without regard to this 
     subsection)--
       ``(1) increased by any interest expense deduction, 
     charitable contribution deduction, and any net operating loss 
     deduction carried forward from any prior taxable year, and
       ``(2) reduced by any interest income, dividend income, and 
     net operating losses to the extent such losses exceed taxable 
     income for the taxable year.

     In the case of any applicable taxpayer which is a foreign 
     corporation, the adjusted taxable income shall be determined 
     with respect to such income which is effectively connected 
     with the conduct of a trade or business in the United States.
       ``(c) Reasonably Inflated Average Profit.--For purposes of 
     this chapter, with respect to any applicable taxpayer, the 
     reasonably inflated average profit for any taxable year is an 
     amount equal to the average of the adjusted taxable income of 
     such taxpayer for taxable years beginning during the 2002-
     2004 taxable year period plus 10 percent of such average.

     ``SEC. 5898. SPECIAL RULES AND DEFINITIONS.

       ``(a) Withholding and Deposit of Tax.--The Secretary shall 
     provide such rules as are necessary for the withholding and 
     deposit of the tax imposed under section 5896.
       ``(b) Records and Information.--Each taxpayer liable for 
     tax under section 5896 shall keep such records, make such 
     returns, and furnish such information as the Secretary may by 
     regulations prescribe.
       ``(c) Return of Windfall Profit Tax.--The Secretary shall 
     provide for the filing and the time of such filing of the 
     return of the tax imposed under section 5896.
       ``(d) Crude Oil.--The term `crude oil' includes crude oil 
     condensates and natural gasoline.
       ``(e) Businesses Under Common Control.--For purposes of 
     this chapter, all members of the same controlled group of 
     corporations (within the meaning of section 267(f)) and all 
     persons under common control (within the meaning of section 
     52(b) but determined by treating an interest of more than 50 
     percent as a controlling interest) shall be treated as 1 
     person.
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this chapter.''.
       (b) Clerical Amendment.--The table of chapters for subtitle 
     E of the Internal Revenue Code of 1986 is amended by adding 
     at the end the following new item:

        ``Chapter 56. Temporary Windfall Profit on Crude Oil.''.

       (c) Deductibility of Windfall Profit Tax.--The first 
     sentence of section 164(a) of

[[Page 27143]]

     the Internal Revenue Code of 1986 (relating to deduction for 
     taxes) is amended by inserting after paragraph (5) the 
     following new paragraph:
       ``(6) The windfall profit tax imposed by section 5896.''.
       (d) Nonrefundable Credit.--In the case of taxable years 
     beginning in 2005, for purposes of the Internal Revenue Code 
     of 1986, the tax liability of each taxpayer otherwise 
     determined under the Internal Revenue Code of 1986 shall be 
     reduced by $100 for each personal exemption (within the 
     meaning of section 151 of such Code) claimed by such taxpayer 
     for such taxable year.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning in 2005.
                                 ______
                                 
  SA 2636. Mr. INHOFE submitted an amendment intended to be proposed by 
him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       On page 121, line 4, strike the period at the end and 
     insert ``, or
       ``(v)(I) the applicable exempt organization, or a financing 
     subsidiary or affiliate wholly owned by one or more 
     applicable exempt organizations, is the sole owner and 
     beneficiary of the contract,
       ``(II) the interest in the contract of each person other 
     than the applicable exempt organization arises solely from a 
     security or collateral interest, and
       ``(III) a principal portion of the death benefits 
     attributable to the insurance contract is paid to the 
     applicable exempt organization, or a subsidiary or affiliate 
     wholly owned by one or more applicable exempt organizations.
                                 ______
                                 
  SA 2637. Mr. COLEMAN (for himself and Mr. Pryor) submitted an 
amendment intended to be proposed by him to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; which was ordered to lie 
on the table; as follows:

       On page 235, between lines 13 and 14, insert the following:

     SEC. ___. ALTERNATIVE PERCENTAGE LIMITATION FOR CORPORATE 
                   CHARITABLE CONTRIBUTIONS TO THE MATHEMATICS AND 
                   SCIENCE PARTNERSHIP PROGRAM.

       (a) In General.--Section 170(b) (related to percentage 
     limitations) is amended by adding at the end the following 
     new paragraph:
       ``(3) Special rule for corporate contributions to the 
     mathematics and science partnership program.--
       ``(A) In general.--In the case of a corporation which makes 
     an eligible mathematics and science contribution--
       ``(i) the limitation under paragraph (2) shall apply 
     separately with respect to all such contributions and all 
     other charitable contributions, and
       ``(ii) paragraph (2) shall be applied with respect to all 
     eligible mathematics and science contributions by 
     substituting `15 percent' for `10 percent'.
       ``(B) Eligible mathematics and science contribution.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `eligible mathematics and science contribution' means a 
     charitable contribution (other than a contribution of used 
     equipment) to a qualified partnership for the purpose of an 
     activity described in section 2202(c) of the Elementary and 
     Secondary Education Act of 1965.
       ``(ii) Qualified partnership.--The term `qualified 
     partnership' means an eligible partnership (within the 
     meaning of section 2201(b)(1) of the Elementary and Secondary 
     Education Act of 1965), but only to the extent that such 
     partnership does not include a person other than a person 
     described in paragraph (1)(A).
       ``(C) Termination.--This paragraph shall not apply to any 
     contributions made in taxable years beginning after December 
     31, 2006.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2005.
                                 ______
                                 
  SA 2638. Mr. BUNNING submitted an amendment intended to be proposed 
by him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, insert the following:

     SEC. __. EXEMPTION OF QUALIFIED 501(C)(3) BONDS FOR NURSING 
                   HOMES FROM FEDERAL GUARANTEE PROHIBITIONS.

       (a) In General.--Section 149(b)(3) (relating to exceptions) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(E) Exception for qualified 501(c)(3) bonds for nursing 
     homes.--
       ``(i) In general.--Paragraph (1) shall not apply to any 
     qualified 501(c)(3) bond issued before the date which is 1 
     year after the date of the enactment of this subparagraph for 
     the benefit of an organization described in section 
     501(c)(3), if such bond is part of an issue the proceeds of 
     which are used to finance 1 or more of the following 
     facilities primarily for the benefit of the elderly:

       ``(I) Licensed nursing home facility.
       ``(II) Licensed or certified assisted living facility.
       ``(III) Licensed personal care facility.
       ``(IV) Continuing care retirement community.

       ``(ii) Limitation.--With respect to any calendar year, 
     clause (i) shall not apply to any bond described in such 
     clause if the aggregate authorized face amount of the issue 
     of which such bond is a part when increased by the 
     outstanding amount of such bonds issued by the issuer for 
     such calendar year exceeds $15,000,000.
       ``(iii) Continuing care retirement community.--For purposes 
     of this subparagraph, the term `continuing care retirement 
     community' means a community which provides, on the same 
     campus, a continuum of residential living options and support 
     services to persons at least 60 years of age under a written 
     agreement. For purposes of the preceding sentence, the 
     residential living options shall include independent living 
     units, nursing home beds, and either assisted living units or 
     personal care beds.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act.
                                 ______
                                 
  SA 2639. Mr. ROCKEFELLER submitted an amendment intended to be 
proposed by him to the bill S. 2020, to provide for reconciliation 
pursuant to section 202(b) of the concurrent resolution on the budget 
for fiscal year 2006; which was ordered to lie on the table; as 
follows:

       Beginning on page 76, strike line 23 and all that follows 
     through page 77, line 2.
                                 ______
                                 
  SA 2640. Mr. ROCKEFELLER submitted an amendment intended to be 
proposed by him to the bill S. 2020, to provide for reconciliation 
pursuant to section 202(b) of the concurrent resolution on the budget 
for fiscal year 2006; which was ordered to lie on the table; as 
follows:

       Beginning on page 76, strike line 24 and all that follows 
     through page 77, line 2, and insert the following:
     Section 1397E(d)(2)(B) is amended to read as follows:
       ``(B) Qualified contributions.--
       ``(i) In general.--For purposes of subparagraph (A), the 
     term `qualified contribution' means any contribution (of a 
     type and quality acceptable to the eligible local education 
     agency) of--

       ``(I) equipment or software for use in the qualified zone 
     academy (including state-of-the-art technology and vocational 
     equipment),
       ``(II) technical assistance in developing curriculum or in 
     training teachers in order to promote appropriate market 
     driven technology in the classroom,
       ``(III) services of employees (but not of the local 
     education agency) as volunteer mentors,
       ``(IV) internships, or other educational opportunities 
     outside the academy for students,
       ``(V) cash, or
       ``(VI) any other tangible or intangible property specified 
     by the eligible local education agency.

       ``(ii) Exclusion.--Such term shall not include any 
     discounts, set-up fees, and contributions conditioned upon 
     business with the contributor.
       ``(iii) Valuation.--Valuation of the qualified contribution 
     shall be reasonable given the nature of the contribution. For 
     tangible and intangible property, valuation based on pricing 
     that is regularly charged for the sale of such tangible and 
     intangible property shall be reasonable. For services, 
     valuation of such services based on pricing that is regularly 
     charged for the sale of such services shall be reasonable. 
     For services that are not regularly sold, valuation based on 
     the average hourly compensation, including benefits, of the 
     employees providing such services for the contributor shall 
     be reasonable, so long as such cost is applied to the 
     reasonable estimate of the contributed hours for such 
     services.''.
                                 ______
                                 
  SA 2641. Mr. BINGAMAN submitted an amendment intended to be proposed 
by him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV add the following:

     SEC. __. MODIFICATIONS OF EFFECTIVE DATES OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004 AND FUNDING OF LIHEAP TRUST FUND.

       (a) In General.--Section 849(b) of the American Jobs 
     Creation Act of 2004, as

[[Page 27144]]

     amended by section 553 of this Act, is amended by adding at 
     the end the following new paragraph:
       ``(3) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2004, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Low Income Home Energy Assistance Trust Fund.--
       (1) In general.--Subchapter A of chapter 98 (relating to 
     trust fund code) is amended by adding at the end the 
     following new section:

     ``SEC. 9511. LOW-INCOME HOME ENERGY ASSISTANCE TRUST FUND.

       ``(a) Creation of Trust Fund.--There is established in the 
     Treasury of the United States a trust fund to be known as the 
     `Low-Income Home Energy Assistance Trust Fund', consisting of 
     any amount appropriated or credited to the Trust Fund as 
     provided in this section or section 9602(b).
       ``(b) Transfers to Trust Fund.--There are hereby 
     appropriated to the Low-Income Home Energy Assistance Trust 
     Fund amounts equivalent to the increased revenues received in 
     the Treasury as the result of the amendment made by section 
     410(a) of the Tax Relief Act of 2005.
       ``(c) Expenditures From Trust Fund.--Amounts in the Low 
     Income Home Energy Assistance Trust Fund not to exceed 
     $2,920,000,000 shall be available for fiscal year 2006, as 
     provided by appropriation Acts, to carry out the program 
     under the Low-Income Home Energy Assistance Act of 1981 
     through the distribution of funds to all the States in 
     accordance with section 2604 of that Act (42 U.S.C. 8623) 
     (other than subsection (e) of such section), but only if not 
     less than $1,880,000,000 has been appropriated for such 
     program for such fiscal year.''.
       (2) Clerical amendment.--The table of sections for such 
     subchapter is amended by adding at the end the following new 
     item:

``Sec. 9511. Low-Income Home Energy Assistance Trust Fund.''.

       (c) Effective Dates.--
       (1) In general.--The amendments made by subsection (a) 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall take effect on the date of the enactment of this Act.
                                 ______
                                 
  SA 2642. Mr. BINGAMAN (for himself, Mr. Kerry, and Ms. Snowe) 
submitted an amendment intended to be proposed by him to the bill S. 
2020, to provide for reconciliation pursuant to section 202(b) of the 
concurrent resolution on the budget for fiscal year 2006; as follows:

       At the end of title IV, add the following:

     SEC. __. CREDIT FOR EMPLOYEE HEALTH INSURANCE EXPENSES.

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

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

       ``(a) General Rule.--For purposes of section 38, in the 
     case of a qualified small employer, the employee health 
     insurance expenses credit determined under this section is an 
     amount equal to the applicable percentage of the amount paid 
     by the taxpayer during the taxable year for qualified 
     employee health insurance expenses.
       ``(b) Applicable Percentage.--For purposes of subsection 
     (a), the applicable percentage is equal to--
       ``(1) 50 percent in the case of an employer with less than 
     26 qualified employees,
       ``(2) 40 percent in the case of an employer with more than 
     25 but less than 36 qualified employees, and
       ``(3) 30 percent in the case of an employer with more than 
     35 but less than 51 qualified employees.
       ``(c) Per Employee Dollar Limitation.--The amount of 
     qualified employee health insurance expenses taken into 
     account under subsection (a) with respect to any qualified 
     employee for any taxable year shall not exceed the maximum 
     employer contribution for self-only coverage or family 
     coverage (as applicable) determined under section 8906(a) of 
     title 5, United States Code, for the calendar year in which 
     such taxable year begins.
       ``(d) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Qualified small employer.--
       ``(A) In general.--The term `qualified small employer' 
     means any small employer which--
       ``(i) provides eligibility for health insurance coverage 
     (after any waiting period (as defined in section 9801(b)(4)) 
     to all qualified employees of the employer, and
       ``(ii) pays at least 70 percent of the cost of such 
     coverage (60 percent in the case of family coverage) for each 
     qualified employee.
       ``(B) Transition rule for new plans.--
       ``(i) In general.--If a small employer (or any predecessor) 
     did not provide health insurance coverage to the qualified 
     employees of the employer during the employer's precompliance 
     period, then subparagraph (A) shall be applied to such 
     employer for the first 5 taxable years following such period 
     by substituting `50 percent' for `70 percent' in clause (ii) 
     (or for `60 percent' in such clause, in the case of family 
     coverage).
       ``(ii) Precompliance period.--For purposes of clause (i), 
     the precompliance periods are--

       ``(I) the period beginning with the small employer's 
     taxable year preceding its first taxable year beginning after 
     the date of the enactment of this section, and
       ``(II) the period beginning with the small employer's 
     taxable year preceding the first taxable year for which the 
     employer meets the requirement of subparagraph (A)(i).

     An employer not in existence for any period shall be treated 
     in the same manner as an employer which is in existence and 
     not providing coverage.
       ``(C) Small employer.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `small employer' means, with respect to any calendar year, 
     any employer if such employer employed an average of not less 
     than 2 and not more than 50 qualified employees on business 
     days during either of the 2 preceding calendar years. For 
     purposes of the preceding sentence, a preceding calendar year 
     may be taken into account only if the employer was in 
     existence throughout such year.
       ``(ii) Employers not in existence in preceding year.--In 
     the case of an employer which was not in existence throughout 
     the 1st preceding calendar year, the determination under 
     clause (i) shall be based on the average number of qualified 
     employees that it is reasonably expected such employer will 
     employ on business days in the current calendar year.
       ``(2) Qualified employee health insurance expenses.--
       ``(A) In general.--The term `qualified employee health 
     insurance expenses' means any amount paid by an employer for 
     health insurance coverage to the extent such amount is 
     attributable to coverage provided to any employee while such 
     employee is a qualified employee.
       ``(B) Exception for amounts paid under salary reduction 
     arrangements.--No amount paid or incurred for health 
     insurance coverage pursuant to a salary reduction arrangement 
     shall be taken into account under subparagraph (A).
       ``(C) Health insurance coverage.--The term `health 
     insurance coverage' has the meaning given such term by 
     paragraph (1) of section 9832(b) (determined by disregarding 
     the last sentence of paragraph (2) of such section).
       ``(3) Qualified employee.--The term `qualified employee' 
     means an employee of an employer who, with respect to any 
     period, is not provided health insurance coverage under--
       ``(A) a health plan of the employee's spouse,
       ``(B) title XVIII, XIX, or XXI of the Social Security Act,
       ``(C) chapter 17 of title 38, United States Code,
       ``(D) chapter 55 of title 10, United States Code,
       ``(E) chapter 89 of title 5, United States Code, or
       ``(F) any other provision of law.
       ``(4) Employee.--The term `employee'--
       ``(A) means any individual, with respect to any calendar 
     year, who is reasonably expected to receive at least $5,000 
     of compensation from the employer during such year,
       ``(B) does not include an employee within the meaning of 
     section 401(c)(1), and
       ``(C) includes a leased employee within the meaning of 
     section 414(n).
       ``(5) Compensation.--The term `compensation' means amounts 
     described in section 6051(a)(3).
       ``(e) Certain Rules Made Applicable.--For purposes of this 
     section, rules similar to the rules of section 52 shall 
     apply.
       ``(f) Denial of Double Benefit.--No deduction or credit 
     under any other provision of this chapter shall be allowed 
     with respect to qualified employee health insurance expenses 
     taken into account under subsection (a).
       ``(g) Termination.--This section shall not apply with 
     respect to any taxable year beginning after December 31, 
     2006.''.
       (b) Credit to Be Part of General Business Credit.--Section 
     38(b) (relating to current year business credit) is amended 
     by striking ``and'' at the end of paragraph (25), by striking 
     the period at the end of paragraph (26) and inserting ``, 
     and'', and by adding at the end the following:
       ``(27) the employee health insurance expenses credit 
     determined under section 45N.''.
       (c) Credit Allowed Against Minimum Tax.--Subparagraph (B) 
     of section 38(c)(4) (relating to limitation based on amount 
     of tax for specified credits) is amended--
       (1) in clause (ii)(II), by striking the period at the end 
     and inserting ``, and''; and
       (2) by adding at the end the following new clause:
       ``(iii) the employee health insurance expenses credit 
     determined under section 45N.''.
       (d) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 is amended by 
     adding at the end the following:

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


[[Page 27145]]


       (e) Employer Outreach.--The Internal Revenue Service shall, 
     in conjunction with the Small Business Administration, 
     develop materials and implement an educational program to 
     ensure that business personnel are aware of--
       (1) the eligibility criteria for the tax credit provided 
     under section 45N of the Internal Revenue Code of 1986 (as 
     added by this section),
       (2) the methods to be used in calculating such credit, and
       (3) the documentation needed in order to claim such credit.
       (f) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred in taxable years 
     beginning after December 31, 2005.

     SEC. __. MODIFICATIONS OF EFFECTIVE DATES OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) In General.--Section 849(b) of the American Jobs 
     Creation Act of 2004, as amended by section 553 of this 
     Act,is amended by adding at the end the following new 
     paragraph:
       ``(3) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2004, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.

     SEC. __. EXTENSION OF SUPERFUND TAXES.

       (a) Excise Taxes.--Section 4611(e) is amended to read as 
     follows:
       ``(e) Application of Hazardous Substance Superfund 
     Financing Rate.--The Hazardous Substance Superfund financing 
     rate under this section shall apply after December 31, 1986, 
     and before January 1, 1996, and after December 31, 2005, and 
     before January 1, 2015.''
       (b) Corporate Environmental Income Tax.--Section 59A(e) is 
     amended to read as follows:
       ``(e) Application of Tax.--The tax imposed by this section 
     shall apply to taxable years beginning after December 31, 
     1986, and before January 1, 1996, and to taxable years 
     beginning after December 31, 2005, and before January 1, 
     2015.''
       (c) Effective Dates.--
       (1) Excise taxes.--The amendments made by subsection (a) 
     shall take effect on the date of the enactment of this Act.
       (2) Income tax.--The amendment made by subsection (b) shall 
     apply to taxable years beginning after December 31, 2005.
                                 ______
                                 
  SA 2643. Ms. LANDRIEU submitted an amendment intended to be proposed 
by her to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       On page 35, between lines 16 and 17, insert the following:

     SEC. 104. HOUSING RELIEF FOR INDIVIDUALS AFFECTED BY 
                   HURRICANE KATRINA.

       (a) Exclusion of Employer Provided Housing for Individual 
     Affected by Hurricane Katrina.--
       (1) In general.--For purposes of the Internal Revenue Code 
     of 1986, gross income of a qualified employee shall not 
     include the value of any lodging furnished to such employee, 
     such employee's spouse, or any of such employee's dependents 
     by or on behalf of a qualified employer for any month during 
     the taxable year.
       (2) Limitation.--The amount which may be excluded under 
     subsection (a) for any month for which lodging is furnished 
     during the taxable year shall not exceed $1,000.
       (3) Treatment of exclusion.--For purposes of the Internal 
     Revenue Code of 1986, an exclusion under subsection (a) shall 
     be treated as an exclusion under section 119 of such Code.
       (b) Employer Credit for Housing Employees Affected by 
     Hurricane Katrina.--
       (1) In general.--In the case of a qualified employer, there 
     shall be allowed as a credit against the tax imposed by 
     chapter 1 of the Internal Revenue Code of 1986 for any month 
     during the taxable year an amount equal to 30 percent of any 
     amount which is excludable from the gross income of a 
     qualified employee of such employer under subsection (a).
       (2) Certain rules to apply.--For purposes of this section, 
     rules similar to the rules of section 280C(a) of such Code 
     shall apply.
       (3) Credit to be part of general business credit.--The 
     credit allowed under this section shall be added to the 
     current year business credit under section 38(b) of such Code 
     and shall be treated as a credit allowed under subpart D of 
     part IV of subchapter A of such Code.
       (c) Qualified Employee.--For purposes of this section, the 
     term ``qualified employee'' means, with respect to any month, 
     an individual--
       (1) who had a principal residence (as defined in section 
     121 of the Internal Revenue Code of 1986) in the Hurricane 
     Katrina disaster area (as defined in section 1400N(2) of such 
     Code) on August 28, 2005, and
       (2) who performs not less than 80 percent of the employment 
     services for a qualified employer in the Hurricane Katrina 
     disaster area (as so defined).
       (d) Qualified Employer.--For purposes of this section, the 
     term ``qualified employer'' means any employer with a trade 
     or business located in the Hurricane Katrina disaster area 
     (as so defined).
       (e) Application of Section.--This section shall apply to 
     lodging provided--
       (1) after the date of the enactment of this Act, and
       (2) before the date which is 1 year after the date of the 
     enactment of this Act.

     SEC. 105. HOMELESSNESS PREVENTION.

       Notwithstanding any other provision of law, the Director of 
     the Federal Emergency Management Agency (referred to in this 
     section as the ``Director'') shall not cease to make payments 
     for hotel or motel accommodations, or for other short-term 
     temporary housing, on behalf of a victim of Hurricane Katrina 
     or Hurricane Rita who was being assisted in that manner as of 
     November 14, 2005 (referred to in this section as an 
     ``eligible victim''), until such time as the Director 
     determines that--
       (1) the eligible victim has located a habitable home;
       (2) the Director has provided financial assistance to the 
     eligible victim for use in relocating to that home, and the 
     eligible victim has so relocated; and
       (3) the eligible victim is able to afford the rent for that 
     home, either with resources of the eligible victim or through 
     the use of assistance payments from the Director (and, in the 
     case of a victim who can afford that home only through the 
     use of those assistance payments, that the Director has 
     provided the assistance payments for a period of at least 90 
     days).

     SEC. 106. SENSE OF THE SENATE.

       It is the sense of the Senate that Congress should develop 
     and provide funding for solutions necessary to address the 
     lack of supply of affordable housing in areas devastated by 
     Hurricane Katrina and Hurricane Rita.
                                 ______
                                 
  SA 2644. Ms. LANDRIEU submitted an amendment intended to be proposed 
by her to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, add the following:

     SEC. __. TREATMENT OF BIOFUEL PRODUCTION FACILITIES AS EXEMPT 
                   FACILITY BOND.

       (a) In General.--Subsection (a) of section 142 (relating to 
     exempt facility bond) is amended by striking ``or'' at the 
     end of paragraph (14), by striking the period at the end of 
     paragraph (15) and inserting ``, or'' and by adding at the 
     end the following new paragraph:
       ``(16) biofuel production facilities.''.
       (b) Biofuel Production Facilities.--Section 142 is amended 
     by adding at the end the following:
       ``(n) Biofuel Production Facilities.--
       ``(1) In general.--For purposes of subsection (a)(16), the 
     term `biofuel production facilities' means any facility for 
     the production of any transportation fuel and related 
     byproducts from biomass.
       ``(2) Biomass defined.--For purposes of paragraph (1), the 
     term `biomass' means any organic matter that is available on 
     a renewable or recurring basis, including agricultural crops 
     and trees, wood and wood wastes and residues, plants 
     (including aquatic plants), grasses, residues, fibers, and 
     animal wastes, municipal wastes, and other waste 
     materials.''.
       (c) Effective Date.--The amendments made by this section 
     apply to bonds issued after the date of enactment of this 
     Act.
                                 ______
                                 
  SA 2645. Mr. COLEMAN (for himself and Mr. Pryor) submitted an 
amendment intended to be proposed by him to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; which was ordered to lie 
on the table; as follows:

       At the end of title IV, insert the following:

     SEC. __. WEATHERIZATION ASSISTANCE CREDIT.

       (a) In General.--Subpart D of Part IV of subchapter A of 
     chapter 1 (relating to business related credits) is amended 
     by inserting after section 45M the following new section:

     ``SEC. 45N. WEATHERIZATION ASSISTANCE CREDIT.

       ``(a) General Rule.--For purposes of section 38, in the 
     case of a utility, the amount of the weatherization 
     assistance credit determined under this section for the 
     taxable year shall be an amount equal to 20 percent of the 
     qualified weatherization assistance expenses.
       ``(b) Definitions.--For purposes of this section:
       ``(1) Weatherization assistance expenses.--The term 
     `weatherization assistance expenses' means amounts--
       ``(A) paid by the taxpayer--
       ``(i) to an entity that is described in section 415(b)(2) 
     of the Energy Conservation and

[[Page 27146]]

     Production Act (42 U.S.C. 6865(b)(2)), that receives funds 
     from the Department of Energy Weatherization Assistance 
     Program as such an entity, and that uses the taxpayer's 
     amounts for the installation of energy efficiency 
     improvements in residences of low-income individuals for 
     purposes of section 415(a)(2) of the Energy Conservation and 
     Production Act (42 U.S.C. 6865(a)(2)), as administered by the 
     Department of Energy, or
       ``(ii) to a State weatherization agency for use by such 
     agency in its program that enhances or extends the Department 
     of Energy's program described in subparagraph (A), and
       ``(B) certified to the taxpayer by a State weatherization 
     agency as paid to one or more entities described in 
     subparagraph (A)(i) or to such agency described in 
     subparagraph (A)(ii).
       ``(2) Qualified weatherization assistance expenses.--The 
     term `qualified weatherization assistance expenses' means--
       ``(A) with respect to the first 5 taxable years ending 
     after the date of enactment of this section, the 
     weatherization assistance expenses for each such year, and
       ``(B) with respect to a taxable year after the fifth 
     taxable year ending after the date of enactment of this 
     section, the excess (if any) of the weatherization assistance 
     expenses for such year over the weatherization assistance 
     expenses for the fifth taxable year preceding such year.
       ``(3) Utility.--The term `utility' means a corporation that 
     is engaged in the sale of electric energy or gas and is 
     described in section 7701(a)(33)(A).
       ``(4) State weatherization agency.--The term `State 
     weatherization agency' means the department, agency, board, 
     or other entity of a State that is authorized by such State 
     to administer the weatherization program described in section 
     415 of the Energy Conservation and Production Act (42 U.S.C. 
     6865).
       ``(c) Regulations.--The Secretary shall prescribe 
     regulations necessary to carry out the purposes of this 
     section.''.
       (b) Credit Treated as Part of General Business Credit.--
     Section 38(b) (relating to current year business credit) is 
     amended by striking ``and'' at the end of paragraph (25), 
     striking the period at the end of paragraph (26), and 
     inserting ``, and'', and by inserting after paragraph (26) 
     the following new paragraph:
       ``(27) the weatherization assistance credit determined 
     under section 45N(a).''.
       (c) Conforming Amendment.--The table of sections for 
     Subpart D of Part IV of subchapter A of chapter 1 (relating 
     to business related credits) is amended by adding after the 
     item relating to section 45M the following new item:

``45N. Weatherization assistance credit''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to weatherization assistance expenses (within the 
     meaning of section 45N of the Internal Revenue Code of 1986) 
     paid or incurred in taxable years ending after the date of 
     enactment of this Act.
                                 ______
                                 
  SA 2646. Ms. MURKOWSKI submitted an amendment intended to be proposed 
by her to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, add the following:

     SEC. __. INCOME AVERAGING FOR CERTAIN PUNITIVE DAMAGE AWARD 
                   RECIPIENTS.

       (a) In General.--For purposes of section 1301 of the 
     Internal Revenue Code of 1986--
       (1) any individual who receives any punitive damage award 
     as a plaintiff in the Exxon Valdez oil spill litigation (Case 
     No. A89-095-CV (HRH)) in any taxable year shall be treated as 
     engaged in a fishing business (determined without regard to 
     the commercial nature of the business), and
       (2) income which is attributable to such award shall be 
     treated as income attributable to such a fishing business for 
     such taxable year.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
                                 ______
                                 
  SA 2647. Mr. GRASSLEY (for himself and Mr. Baucus) proposed an 
amendment to the bill S. 2020, to provide for reconciliation pursuant 
to section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; as follows:

       Beginning on page 63, line 18, strike all through page 64, 
     line 15, and insert the following:

     SEC. 212. EXTENSION AND INCREASE IN MINIMUM TAX RELIEF TO 
                   INDIVIDUALS.

       (a) In General.--Section 55(d)(1) is amended--
       (1) by striking ``$58,000'' and all that follows through 
     ``2005'' in subparagraph (A) and inserting ``$62,550 in the 
     case of taxable years beginning in 2006'', and
       (2) by striking ``$40,250'' and all that follows through 
     ``2005'' in subparagraph (B) and inserting ``$42,500 in the 
     case of taxable years beginning in 2006''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.
       Beginning on page 69, line 6, strike all through page 71, 
     line 13, and insert the following:
       (d) Expansion of Credit to Expenses of General 
     Collaborative Research Consortia.--Section 41 is amended--
       (1) by striking ``an energy research consortium'' in 
     subsections (a)(3) and (b)(3)(C)(i) and inserting ``a 
     research consortium'',
       (2) by striking ``energy'' each place it appears in 
     subsection (f)(6)(A),
       (3) by inserting ``or 501(c)(6)'' after ``section 
     501(c)(3)'' in subsection (f)(6)(A)(i)(I), and
       (4) by striking ``Energy research'' in the heading for 
     subsection (f)(6)(A) and inserting ``Research'' .

       Beginning on page 267, line 12, strike all through page 
     268, line 15, and insert the following:
       (b) Applicable Penalty.--For purposes of this section, the 
     term ``applicable penalty'' means any penalty, addition to 
     tax, or fine imposed under chapter 68 of the Internal Revenue 
     Code of 1986.
       (c) Effective Date.--The provisions of this section shall 
     apply to interest, penalties, additions to tax, and fines 
     with respect to any taxable year if, as of the date of the 
     enactment of this Act, the assessment of any tax, penalty, or 
     interest with respect to such taxable year is not prevented 
     by the operation of any law or rule of law.
       On page 310, between lines 10 and 11, insert the following:
       (b) Leases to Foreign Entities.--Section 849(b) of the 
     American Jobs Creation Act of 2004, as amended by subsection 
     (a), is amended by adding at the end the following new 
     paragraph:
       ``(3) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2005, with respect to leases entered into on or before March 
     12, 2004.''.
       On page 310, line 11, strike ``(b)'' and insert ``(c)''.
       On page 320, in the table following line 17, strike 
     ``119.5'' and insert ``120''.
       On page 322, line 24, insert ``which has an average daily 
     worldwide production of crude oil of at least 500,000 barrels 
     for the taxable year and''
                                 ______
                                 
  SA 2648. Mr. ROBERTS submitted an amendment intended to be proposed 
by him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       On page 235, between lines 13 and 14, insert the following:

     SEC. 405. EXCLUSION OF CERTAIN AMOUNTS FROM INCOME FOR 
                   PURPOSES OF ELIGIBILITY FOR FEDERALLY ASSISTED 
                   LOW-INCOME HOUSING PROGRAMS.

       The Department of Housing and Urban Development Act (42 
     U.S.C. 3537a) is amended by inserting after section 12 the 
     following new section:

     ``SEC. 13. EXCLUSION OF CERTAIN AMOUNTS FROM INCOME.

       ``(a) In General.--Notwithstanding any other provision of 
     law, amounts received by a member of the Armed Forces under 
     section 403 of title 37, United States Code, as a basic 
     allowance for housing may not be treated as income for 
     purposes of determining, for purposes of any program of the 
     Department of Housing and Urban Development (unless a request 
     is made by such member for the receipt of rental assistance 
     under any such program to be treated as such income) or any 
     other agency of the Federal Government for housing assistance 
     (including any program for grants, loans, subsidies, 
     advances, guarantees, credits, tax-exempt bonds, or other 
     financial assistance), the eligibility of the member or the 
     member's family, or a dependent of the member or such 
     dependent's family, for--
       ``(1) assistance under such program; or
       ``(2) occupancy in any dwelling unit in any building or 
     project for which assistance under such program is provided--
       ``(A) to the member or the member's family, or a dependent 
     of the member or such dependent's family directly; or
       ``(B) to the owner of such building or project.
       ``(b) Opt Out.--Each State housing authority may, without 
     penalty, determine if it will provide the exclusion described 
     in subsection (a) to members of the Armed Forces.''.
                                 ______
                                 
  SA 2649. Mr. MARTINEZ (for himself and Mr. Nelson of Florida) 
submitted an amendment intended to be proposed by him to the bill S. 
2020, to provide for reconciliation pursuant to section 202(b) of the 
concurrent resolution on the budget for fiscal year 2006; which was 
ordered to lie on the table; as follows:


[[Page 27147]]

       On page 16, line 23, strike ``or Mississippi'' and insert 
     ``Mississippi, Florida, or Texas''
       On page 17, line 7, strike ``Gulf Opportunity Zone'' and 
     insert ``Katrina, Wilma, and Rita Go Zones''
                                 ______
                                 
  SA 2650. Mr. FEINGOLD (for himself, Mr. Conrad, Mr. Chafee, Mr. 
Obama, and Mr. Salazar) proposed an amendment to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; as follows:

       At the appropriate place, insert the following:

     SEC. __. PAY-AS-YOU-GO POINT OF ORDER IN THE SENATE.

       (a) Point of Order.--
       (1) In general.--It shall not be in order in the Senate to 
     consider any direct spending or revenue legislation that 
     would increase the on-budget deficit or cause an on-budget 
     deficit for any 1 of the 3 applicable time periods as 
     measured in paragraphs (5) and (6).
       (2) Applicable time periods.--For purposes of this 
     subsection, the term ``applicable time period'' means any 1 
     of the 3 following periods:
       (A) The first year covered by the most recently adopted 
     concurrent resolution on the budget.
       (B) The period of the first 5 fiscal years covered by the 
     most recently adopted concurrent resolution on the budget.
       (C) The period of the 5 fiscal years following the first 5 
     fiscal years covered in the most recently adopted concurrent 
     resolution on the budget.
       (3) Direct-spending legislation.--For purposes of this 
     subsection and except as provided in paragraph (4), the term 
     ``direct-spending legislation'' means any bill, joint 
     resolution, amendment, motion, or conference report that 
     affects direct spending as that term is defined by, and 
     interpreted for purposes of, the Balanced Budget and 
     Emergency Deficit Control Act of 1985.
       (4) Exclusion.--For purposes of this subsection, the terms 
     ``direct-spending legislation'' and ``revenue legislation'' 
     do not include--
       (A) any concurrent resolution on the budget; or
       (B) any provision of legislation that affects the full 
     funding of, and continuation of, the deposit insurance 
     guarantee commitment in effect on the date of enactment of 
     the Budget Enforcement Act of 1990.
       (5) Baseline.--Estimates prepared pursuant to this section 
     shall--
       (A) use the baseline surplus or deficit used for the most 
     recently adopted concurrent resolution on the budget; and
       (B) be calculated under the requirements of subsections (b) 
     through (d) of section 257 of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 for fiscal years beyond 
     those covered by that concurrent resolution on the budget.
       (6) Prior surplus.--If direct spending or revenue 
     legislation increases the on-budget deficit or causes an on-
     budget deficit when taken individually, it must also increase 
     the on-budget deficit or cause an on-budget deficit when 
     taken together with all direct spending and revenue 
     legislation enacted since the beginning of the calendar year 
     not accounted for in the baseline under paragraph (5)(A), 
     except that direct spending or revenue effects resulting in 
     net deficit reduction enacted pursuant to reconciliation 
     instructions since the beginning of that same calendar year 
     shall not be available.
       (b) Waiver.--This section may be waived or suspended in the 
     Senate only by the affirmative vote of \3/5\ of the Members, 
     duly chosen and sworn.
       (c) Appeals.--Appeals in the Senate from the decisions of 
     the Chair relating to any provision of this section shall be 
     limited to 1 hour, to be equally divided between, and 
     controlled by, the appellant and the manager of the bill or 
     joint resolution, as the case may be. An affirmative vote of 
     \3/5\ of the Members of the Senate, duly chosen and sworn, 
     shall be required to sustain an appeal of the ruling of the 
     Chair on a point of order raised under this section.
       (d) Determination of Budget Levels.--For purposes of this 
     section, the levels of new budget authority, outlays, and 
     revenues for a fiscal year shall be determined on the basis 
     of estimates made by the Committee on the Budget of the 
     Senate.
       (e) Sunset.--This section shall expire on September 30, 
     2010.
                                 ______
                                 
  SA 2651. Mr. SUNUNU proposed an amendment to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; as follows:

       At the appropriate place, insert the following:

     SEC. __. REPEAL OF STATE AND LOCAL TAX EXEMPTION FOR FANNIE 
                   MAE AND FREDDIE MAC.

       (a) Fannie Mae.--Section 309(c) of the Federal National 
     Mortgage Association Charter Act (12 U.S.C. 1723a(c)) is 
     amended to read as follows:
       ``(c) [Repealed.]''.
       (b) Freddie Mac.--Section 303(e) of the Federal Home Loan 
     Mortgage Corporation Act (12 U.S.C. 1452(e)) is amended to 
     read as follows:
       ``(e) [Repealed.]''.
                                 ______
                                 
  SA 2652. Mrs. LINCOLN (for herself, Ms. Snowe, Mr. Obama, and Mr. 
Rockefeller) submitted an amendment intended to be proposed by her to 
the bill S. 2020, to provide for reconciliation pursuant to section 
202(b) of the concurrent resolution on the budget for fiscal year 2006; 
as follows:

       At the end of title IV, add the following:

     SEC. __. $10,000 INCOME THRESHOLD USED TO CALCULATE 
                   REFUNDABLE PORTION OF CHILD TAX CREDIT.

       (a) In General.--Section 24(d) (relating to portion of 
     credit refundable) is amended--
       (1) by striking ``as exceeds'' and all that follows through 
     ``, or'' in paragraph (1)(B)(i) and inserting ``as exceeds 
     $10,000, or'', and
       (2) by striking paragraph (3).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2004.
       (c) Application of Sunset to This Section.--Each amendment 
     made by this section shall be subject to title IX of the 
     Economic Growth and Tax Relief Reconciliation Act of 2001 to 
     the same extent and in the same manner as the provision of 
     such Act to which such amendment relates.
                                 ______
                                 
  SA 2653. Mr. BAUCUS (for Mr. Reid (for himself, Mr. Kerry, Mr. 
Lautenberg, Ms. Snowe, Mr. Salazar, Mr. Bingaman, Mr. Jeffords, Mr. 
Bayh, Mrs. Clinton, Mr. Harkin, Mrs. Feinstein, and Ms. Collins)) 
proposed an amendment to the bill S. 2020, to provide for 
reconciliation pursuant to section 202(b) of the concurrent resolution 
on the budget for fiscal year 2006; which was ordered to lie on the 
table; as follows:

       At the end of title IV, add the following:

 Subtitle B--Extending Tax Incentives for Renewable Energy Production 
                   and Energy Efficient Construction

     SECTION 411. EXTENSION OF RENEWABLE ENERGY PRODUCTION CREDIT 
                   THROUGH 2010.

       Paragraphs (1), (2), (3), (4), (5), (6), (7), and (9) of 
     section 45(d) (relating to qualified facilities) are amended 
     by striking ``2008'' each place it appears and inserting 
     ``2011''.

     SEC. 412. EXTENSION OF RENEWABLE ENERGY INVESTMENT TAX CREDIT 
                   THROUGH 2010.

       Paragraphs (2)(A)(i)(II) and (3)(A)(ii) (relating to energy 
     credit) is amended by striking ``2008'' both places it 
     appears and inserting ``2011''.

     SEC. 413. EXTENSION OF CLEAN RENEWABLE ENERGY BONDS THROUGH 
                   2010.

       Section 54(m) (relating to termination) is amended by 
     striking ``2007'' and inserting ``2010''.

     SEC. 414. EXTENSION OF ENERGY EFFICIENT COMMERCIAL BUILDINGS 
                   DEDUCTION THROUGH 2010.

       Section 179D(h) (relating to termination) is amended by 
     striking ``2007'' and inserting ``2010''.

     SEC. 415. EXTENSION OF NEW ENERGY EFFICIENT HOME CREDIT 
                   THROUGH 2010.

       Section 45L(g) (relating to termination) is amended by 
     striking ``2007'' and inserting ``2010''.

     SEC. 416. EXTENSION OF RESIDENTIAL RENEWABLE ENERGY EFFICIENT 
                   PROPERTY CREDIT THROUGH 2010.

       Section 25D(g) is amended to read as follows:
       ``(a) Termination.--The credit allowed under this section 
     shall not apply to--
       ``(1) property described in paragraph (1) or (2) of 
     subsection (d) placed in service after December 31, 2010, and
       ``(2) property described in subsection (d)(3) placed in 
     service after December 31, 2007.''.

     SEC. 417. EXTENSION OF NONBUSINESS ENERGY PROPERTY CREDIT 
                   THROUGH 2010.

       Section 25C(g) (relating to termination) is amended by 
     striking ``2007'' and inserting ``2010''.

     SEC. 418. MODIFICATIONS OF EFFECTIVE DATES OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

       (a) In General.--Section 849(b) of the American Jobs 
     Creation Act of 2004 is amended by adding at the end the 
     following new paragraph:
       ``(5) Leases to foreign entities.--In the case of tax-
     exempt use property leased to a tax-exempt entity which is a 
     foreign person or entity, the amendments made by this part 
     shall apply to taxable years beginning after December 31, 
     2004, with respect to leases entered into on or before March 
     12, 2004.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.
                                 ______
                                 
  SA 2654. Mr. GRASSLEY proposed an amendment to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; as follows:


[[Page 27148]]

       At the end of title IV, add the following:

     SEC. ___. SENSE OF THE SENATE.

       (a) Findings.--The Senate makes the following findings:
       (1) As many as 44,000,000 Americans are estimated to lack 
     health insurance during the course of the year, many of whom 
     are uninsured for a short period of time while a smaller 
     number face longer periods without coverage.
       (2) Rising health care costs contribute to the problem of 
     the uninsured and make it more difficult to find a simple 
     solution to make health care affordable.
       (3) There is not a one-size fits all solution to address 
     health care coverage issues.
       (4) Businesses have competing needs for their resources, 
     including investments to ensure their competitiveness and 
     providing health care coverage for their employees and 
     dependents.
       (5) Lower tax rates on dividends and capital gains saved 
     24,000,000 families an average of nearly $950 on their 2004 
     taxes, including about 7,000,000 seniors who saved, on 
     average, $1,230 each.
       (6) These pro-growth tax cuts have spurred economic 
     development and job creation and have been partly responsible 
     for an increase in tax receipts.
       (7) Of the more than 30,000,000 tax returns that included 
     dividend income, those with adjusted gross income of less 
     than $75,000 accounted for 64 percent, or over 19,000,000 of 
     such returns.
       (8) Of the nearly 23,000,000 tax returns that included 
     capital gains, 62 percent of these returns, or about 
     14,000,000, had less than $75,000 in adjusted gross income.
       (9) Allowing taxes to increase will make it harder for 
     employers and individuals to afford health care insurance, 
     leading to more individuals without health insurance.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that the Senate should--
       (1) prevent an increase in taxes on millions of Americans 
     by not allowing the tax policy enacted in 2003 to expire; and
       (2) extend tax policies that have proven to enhance 
     economic growth, create jobs, and improve business' and 
     individuals' ability to afford health insurance coverage; and
       (3) address the multiple aspects of our Nation's health 
     care crisis, including the need to make health care more 
     affordable, to expand coverage, and to strengthen the health 
     care safety net by--
       (A) promoting the use of health care technology, which will 
     help reduce medical errors that contribute to higher costs 
     and promote greater efficiency in care delivery;
       (B) providing new financial assistance and tax credits to 
     make health insurance more affordable;
       (C) creating financial incentives for young adults to 
     purchase lifetime, portable health insurance;
       (D) expanding health insurance coverage options for low-
     income entrepreneurs and self-employed individuals;
       (E) increasing access to specialty care within the health 
     care safety net by providing a tax deduction to physician 
     specialists who provide care for patients referred from 
     health care safety net providers;
       (F) reducing regulatory burdens on health care safety net 
     providers that lead to higher administrative costs and a 
     diversion of funds that could be spent on patient care; and
       (G) improving outreach efforts to maximize participation of 
     eligible beneficiaries in Federal health care safety net 
     programs.
                                 ______
                                 
  SA 2655. Mr. CRAIG (for himself and Mr. Rockefeller) submitted an 
amendment intended to be proposed by him to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; as follows:

       At the appropriate place, insert the following:

     SEC. __. SENSE OF CONGRESS REGARDING DOHA ROUND.

       (a) Findings.--The Congress makes the following findings:
       (1) Members of the World Trade Organization (WTO) are 
     currently engaged in a round of trade negotiations known as 
     the Doha Development Agenda (Doha Round).
       (2) The Doha Round includes negotiations aimed at 
     clarifying and improving disciplines under the Agreement on 
     Implementation of Article VI of the General Agreement on 
     Tariffs and Trade 1994 (Antidumping Agreement) and the 
     Agreement on Subsidies and Countervailing Measures (Subsidies 
     Agreement).
       (3) The WTO Ministerial Declaration adopted on November 14, 
     2001 (WTO Paper No. WT/MIN(01)/DEC/1) specifically provides 
     that the Doha Round negotiations are to preserve the ``basic 
     concepts, principles and effectiveness'' of the Antidumping 
     Agreement and the Subsidies Agreement.
       (4) In section 2102(b)(14)(A) of the Bipartisan Trade 
     Promotion Authority Act of 2002, the Congress mandated that 
     the principal negotiating objective of the United States with 
     respect to trade remedy laws was to ``preserve the ability of 
     the United States to enforce rigorously its trade laws . . . 
     and avoid agreements that lessen the effectiveness of 
     domestic and international disciplines on unfair trade, 
     especially dumping and subsidies''.
       (5) The countries that have been the most persistent and 
     egregious violators of international fair trade rules are 
     engaged in an aggressive effort to significantly weaken the 
     disciplines provided in the Antidumping Agreement and the 
     Subsidies Agreement and undermine the ability of the United 
     States to effectively enforce its trade remedy laws.
       (6) Chronic violators of fair trade disciplines have put 
     forward proposals that would substantially weaken United 
     States trade remedy laws and practices, including mandating 
     that unfair trade orders terminate after a set number of 
     years even if unfair trade and injury are likely to recur, 
     mandating that trade remedy duties reflect less than the full 
     margin of dumping or subsidization, mandating higher de 
     minimis levels of unfair trade, making cumulation of the 
     effects of imports from multiple countries more difficult in 
     unfair trade investigations, outlawing the critical practice 
     of ``zeroing'' in antidumping investigations, mandating the 
     weighing of causes, and mandating other provisions that make 
     it more difficult to prove injury.
       (7) United States trade remedy laws have already been 
     significantly weakened by numerous unjust and activist WTO 
     dispute settlement decisions which have created new 
     obligations to which the United States never agreed.
       (8) Trade remedy laws remain a critical resource for 
     American manufacturers, agricultural producers, and 
     aquacultural producers in responding to closed foreign 
     markets, subsidized imports, and other forms of unfair trade, 
     particularly in the context of the challenges currently faced 
     by these vital sectors of the United States economy.
       (9) The United States had a current account trade deficit 
     of approximately $668,000,000,000 in 2004, including a trade 
     deficit of almost $162,000,000,000 with China alone, as well 
     as a trade deficit of $40,000,000,000 in advanced technology.
       (10) United States manufacturers have lost over 3,000,000 
     jobs since June 2000, and United States manufacturing 
     employment is currently at its lowest level since 1950.
       (11) Many industries critical to United States national 
     security are at severe risk from unfair foreign competition.
       (12) The Congress strongly believes that the proposals put 
     forward by countries seeking to undermine trade remedy 
     disciplines in the Doha Round would result in serious harm to 
     the United States economy, including significant job losses 
     and trade disadvantages.
       (b) Sense of Congress.--It is the sense of Congress that--
       (1) the United States should not be a signatory to any 
     agreement or protocol with respect to the Doha Development 
     Round of the World Trade Organization negotiations, or any 
     other bilateral or multilateral trade negotiations, that--
       (A) adopts any proposal to lessen the effectiveness of 
     domestic and international disciplines on unfair trade or 
     safeguard provisions, including proposals--
       (i) mandating that unfair trade orders terminate after a 
     set number of years even if unfair trade and injury are 
     likely to recur;
       (ii) mandating that trade remedy duties reflect less than 
     the full margin of dumping or subsidization;
       (iii) mandating higher de minimis levels of unfair trade;
       (iv) making cumulation of the effects of imports from 
     multiple countries more difficult in unfair trade 
     investigations;
       (v) outlawing the critical practice of ``zeroing'' in 
     antidumping investigations; or
       (vi) mandating the weighing of causes or other provisions 
     making it more difficult to prove injury in unfair trade 
     cases; and
       (B) would lessen in any manner the ability of the United 
     States to enforce rigorously its trade laws, including the 
     antidumping, countervailing duty, and safeguard laws;
       (2) the United States trade laws and international rules 
     appropriately serve the public interest by offsetting 
     injurious unfair trade, and that further ``balancing 
     modifications'' or other similar provisions are unnecessary 
     and would add to the complexity and difficulty of achieving 
     relief against injurious unfair trade practices; and
       (3) the United States should ensure that any new agreement 
     relating to international disciplines on unfair trade or 
     safeguard provisions fully rectifies and corrects decisions 
     by WTO dispute settlement panels or the Appellate Body that 
     have unjustifiably and negatively impacted, or threaten to 
     negatively impact, United States law or practice, including a 
     law or practice with respect to foreign dumping or 
     subsidization.
                                 ______
                                 
  SA 2656. Ms. SNOWE (for herself and Ms. Collins) submitted an 
amendment intended to be proposed by her to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; which was ordered to lie 
on the table; as follows:

       On page 321, strike line 1 and all that follows through 
     page 323, line 6, and insert the following:

     SEC. __. INCREASED LIHEAP FUNDING FOR 2006.

       With respect to fiscal year 2006, in addition to amounts 
     appropriated under any other provision of law, for making 
     payments under

[[Page 27149]]

     title XXVI of the Omnibus Budget Reconciliation Act of 1981 
     (42 U.S.C. 8621 et seq.), $2,920,000,000, shall be 
     appropriated to distribute funds to all the States in 
     accordance with section 2604 of that Act (42 U.S.C. 8623) 
     (other than subsection (e) of such section).

     SEC.__. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE 
                   TO DUAL CAPACITY TAXPAYERS.

       (a) In General.--Section 901 (relating to credit for taxes 
     of foreign countries and of possessions of the United States) 
     is amended by redesignating subsection (m) as subsection (n) 
     and by inserting after subsection (l) the following new 
     subsection:
       ``(m) Special Rules Relating To Dual Capacity Taxpayers.--
       ``(1) General rule.--Notwithstanding any other provision of 
     this chapter, any amount paid or accrued by a dual capacity 
     taxpayer to a foreign country or possession of the United 
     States for any period shall not be considered a tax--
       ``(A) if, for such period, the foreign country or 
     possession does not impose a generally applicable income tax, 
     or
       ``(B) to the extent such amount exceeds the amount 
     (determined in accordance with regulations) which--
       ``(i) is paid by such dual capacity taxpayer pursuant to 
     the generally applicable income tax imposed by the country or 
     possession, or
       ``(ii) would be paid if the generally applicable income tax 
     imposed by the country or possession were applicable to such 
     dual capacity taxpayer.

     Nothing in this paragraph shall be construed to imply the 
     proper treatment of any such amount not in excess of the 
     amount determined under subparagraph (B).
       ``(2) Dual capacity taxpayer.--For purposes of this 
     subsection, the term `dual capacity taxpayer' means, with 
     respect to any foreign country or possession of the United 
     States, a person who--
       ``(A) is subject to a levy of such country or possession, 
     and
       ``(B) receives (or will receive) directly or indirectly a 
     specific economic benefit (as determined in accordance with 
     regulations) from such country or possession.
       ``(3) Generally applicable income tax.--For purposes of 
     this subsection--
       ``(A) In general.--The term `generally applicable income 
     tax' means an income tax (or a series of income taxes) which 
     is generally imposed under the laws of a foreign country or 
     possession on income derived from the conduct of a trade or 
     business within such country or possession.
       ``(B) Exceptions.--Such term shall not include a tax unless 
     it has substantial application, by its terms and in practice, 
     to--
       ``(i) persons who are not dual capacity taxpayers, and
       ``(ii) persons who are citizens or residents of the foreign 
     country or possession.''
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxes paid or accrued in taxable years beginning 
     after the date of the enactment of this Act.
       (2) Contrary treaty obligations upheld.--The amendments 
     made by this section shall not apply to the extent contrary 
     to any treaty obligation of the United States.

     SEC. __. RULES RELATING TO FOREIGN OIL AND GAS INCOME.

       (a) Separate Basket for Foreign Tax Credit.--
       (1) Years before 2007.--Paragraph (1) of section 904(d) 
     (relating to separate application of section with respect to 
     certain categories of income), as in effect for years 
     beginning before 2007, is amended by striking ``and'' at the 
     end of subparagraph (H), by redesignating subparagraph (I) as 
     subparagraph (J), and by inserting after subparagraph (H) the 
     following new subparagraph:
       ``(I) foreign oil and gas income, and''.
       (2) 2007 and after.--Paragraph (1) of section 904(d), as in 
     effect for years beginning after 2006, is amended by striking 
     ``and'' at the end of subparagraph (A), by striking the 
     period at the end of subparagraph (B) and inserting ``, 
     and'', and by adding at the end the following:
       ``(C) foreign oil and gas income.''
       (b) Definition.--
       (1) Years before 2007.--Paragraph (2) of section 904(d), as 
     in effect for years beginning before 2007, is amended by 
     redesignating subparagraphs (H) and (I) as subparagraphs (I) 
     and (J), respectively, and by inserting after subparagraph 
     (G) the following new subparagraph:
       ``(H) Foreign oil and gas income.--The term `foreign oil 
     and gas income' has the meaning given such term by section 
     954(g).''
       (2) 2007 and after.--Section 904(d)(2), as in effect for 
     years after 2006, is amended by redesignating subparagraphs 
     (J) and (K) as subparagraphs (K) and (L) and by inserting 
     after subparagraph (I) the following:
       ``(J) Foreign oil and gas income.--For purposes of this 
     section--
       ``(i) In general.--The term `foreign oil and gas income' 
     has the meaning given such term by section 954(g).
       ``(ii) Coordination.--Passive category income and general 
     category income shall not include foreign oil and gas income 
     (as so defined).''
       (c) Conforming Amendments.--
       (1) Section 904(d)(3)(F)(i) is amended by striking ``or 
     (E)'' and inserting ``(E), or (I)''.
       (2) Section 907(a) is hereby repealed.
       (3) Section 907(c)(4) is hereby repealed.
       (4) Section 907(f) is hereby repealed.
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after the date of the 
     enactment of this Act.
       (2) Years after 2006.--The amendments made by paragraphs 
     (1)(B) and (2)(B) shall apply to taxable years beginning 
     after December 31, 2006.
       (3) Transitional rules.--
       (A) Separate basket treatment.--Any taxes paid or accrued 
     in a taxable year beginning on or before the date of the 
     enactment of this Act, with respect to income which was 
     described in subparagraph (I) of section 904(d)(1) of such 
     Code (as in effect on the day before the date of the 
     enactment of this Act), shall be treated as taxes paid or 
     accrued with respect to foreign oil and gas income to the 
     extent the taxpayer establishes to the satisfaction of the 
     Secretary of the Treasury that such taxes were paid or 
     accrued with respect to foreign oil and gas income.
       (B) Carryovers.--Any unused oil and gas extraction taxes 
     which under section 907(f) of such Code (as so in effect) 
     would have been allowable as a carryover to the taxpayer's 
     first taxable year beginning after the date of the enactment 
     of this Act (without regard to the limitation of paragraph 
     (2) of such section 907(f) for first taxable year) shall be 
     allowed as carryovers under section 904(c) of such Code in 
     the same manner as if such taxes were unused taxes under such 
     section 904(c) with respect to foreign oil and gas extraction 
     income.
       (C) Losses.--The amendment made by subsection (c)(3) shall 
     not apply to foreign oil and gas extraction losses arising in 
     taxable years beginning on or before the date of the 
     enactment of this Act.

     SEC. __. REVALUATION OF LIFO INVENTORIES OF LARGE INTEGRATED 
                   OIL COMPANIES.

       (a) General Rule.--Notwithstanding any other provision of 
     law, if a taxpayer is an applicable integrated oil company 
     for its last taxable year ending in calendar year 2005, the 
     taxpayer shall--
       (1) increase, effective as of the close of such taxable 
     year, the value of each historic LIFO layer of inventories of 
     crude oil, natural gas, or any other petroleum product 
     (within the meaning of section 4611) by the layer adjustment 
     amount, and
       (2) decrease its cost of goods sold for such taxable year 
     by the aggregate amount of the increases under paragraph (1).

     If the aggregate amount of the increases under paragraph (1) 
     exceed the taxpayer's cost of goods sold for such taxable 
     year, the taxpayer's gross income for such taxable year shall 
     be increased by the amount of such excess.
       (b) Layer Adjustment Amount.--For purposes of this 
     section--
       (1) In general.--The term ``layer adjustment amount'' 
     means, with respect to any historic LIFO layer, the product 
     of--
       (A) $24.00, and
       (B) the number of barrels of crude oil (or in the case of 
     natural gas or other petroleum products, the number of 
     barrel-of-oil equivalents) represented by the layer.
       (2) Barrel-of-oil equivalent.--The term ``barrel-of-oil 
     equivalent'' has the meaning given such term by section 
     29(d)(5) (as in effect before its redesignation by the Energy 
     Tax Incentives Act of 2005).
       (c) Application of Requirement.--
       (1) No change in method of accounting.--Any adjustment 
     required by this section shall not be treated as a change in 
     method of accounting.
       (2) Underpayments of estimated tax.--No addition to the tax 
     shall be made under section 6655 of the Internal Revenue Code 
     of 1986 (relating to failure by corporation to pay estimated 
     tax) with respect to any underpayment of an installment 
     required to be paid with respect to the taxable year 
     described in subsection (a) to the extent such underpayment 
     was created or increased by this section.
       (d) Applicable Integrated Oil Company.--For purposes of 
     this section, the term ``applicable integrated oil company'' 
     means an integrated oil company (as defined in section 
     291(b)(4) of the Internal Revenue Code of 1986) which had 
     gross receipts in excess of $1,000,000,000 for its last 
     taxable year ending during calendar year 2005 and which has 
     an average daily worldwide production of crude oil of at 
     least 250,000 barrels for such taxable year. For purposes of 
     this subsection, all persons treated as a single employer 
     under subsections (a) and (b) of section 52 of the Internal 
     Revenue Code of 1986 shall be treated as 1 person and, in the 
     case of a short taxable year, the rule under section 
     448(c)(3)(B) shall apply.
                                 ______
                                 
  SA 2657. Mr. ROCKEFELLER (for himself, Mr. Hatch, Mr. Bond, Ms. 
Mikulski, Mr. Lott, Ms. Snowe, and Mrs. Feinstein) submitted an 
amendment intended to be proposed by him to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; which was ordered to lie 
on the table; as follows:


[[Page 27150]]

       At the end of title IV, insert the following:

     SECTION __. EXCLUSION OF GAIN FROM SALE OF A PRINCIPAL 
                   RESIDENCE BY CERTAIN EMPLOYEES OF THE 
                   INTELLIGENCE COMMUNITY.

       (a) In General.--Subparagraph (A) of section 121(d)(9) 
     (relating to exclusion of gain from sale of principal 
     residence) is amended by striking ``duty'' and all that 
     follows and inserting ``duty--
       ``(i) as a member of the uniformed services,
       ``(ii) as a member of the Foreign Service of the United 
     States, or
       ``(iii) as an employee of the intelligence community.''.
       (b) Employee of Intelligence Community Defined.--
     Subparagraph (C) of section 121(d)(9) is amended by 
     redesignating clause (iv) as clause (v) and by inserting 
     after clause (iii) the following new clause:
       ``(iv) Employee of intelligence community.--The term 
     `employee of the intelligence community' means an employee 
     (as defined by section 2105 of title 5, United States Code) 
     of--

       ``(I) the Office of the Director of National Intelligence,
       ``(II) the Central Intelligence Agency,
       ``(III) the National Security Agency,
       ``(IV) the Defense Intelligence Agency,
       ``(V) the National Geospatial-Intelligence Agency,
       ``(VI) the National Reconnaissance Office,
       ``(VII) any other office within the Department of Defense 
     for the collection of specialized national intelligence 
     through reconnaissance programs,
       ``(VIII) any of the intelligence elements of the Army, the 
     Navy, the Air Force, the Marine Corps, the Federal Bureau of 
     Investigation, the Department of Treasury, the Department of 
     Energy, and the Coast Guard,
       ``(IX) the Bureau of Intelligence and Research of the 
     Department of State, or
       ``(X) any of the elements of the Department of Homeland 
     Security concerned with the analyses of foreign intelligence 
     information.''.

       (c) Special Rule.--Subparagraph (C) of section 121(d)(9), 
     as amended by subsection (b), is amended by adding at the end 
     the following new clause:
       ``(vi) Special rule relating to intelligence community.--An 
     employee of the intelligence community shall not be treated 
     as serving on qualified extended duty unless--

       ``(I) for purposes of such duty such employee has moved 
     from 1 duty station to another, and
       ``(II) at least 1 of such duty stations is located outside 
     of the Washington, District of Columbia, and Baltimore 
     metropolitan statistical areas (as defined by the Secretary 
     of Commerce).''.

       (d) Conforming Amendment.--The heading for section 
     121(d)(9) is amended to read as follows: ``Uniformed 
     services, foreign service, and intelligence community''.
       (e) Effective Date; Special Rule.--
       (1) Effective date.--The amendments made by this section 
     shall take effect as if included in the amendments made by 
     section 312 of the Taxpayer Relief Act of 1997.
       (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.
                                 ______
                                 
  SA 2658. Mr. DAYTON submitted an amendment intended to be proposed by 
him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; as follows:

       At the end of the bill add the following:

     SECTION 1. VALUATION OF EMPLOYEE PERSONAL USE OF 
                   NONCOMMERCIAL AIRCRAFT.

       (a) In General.--For purposes of Federal income tax 
     inclusion, the value of any employee personal use of 
     noncommercial aircraft shall equal the excess (if any) of--
       (1) greater of--
       (A) the fair market value of such use, or
       (B) the actual cost of such use (including all fixed and 
     variable costs), over
       (2) any amount paid by or on behalf of such employee for 
     such use.
       (b) Effective Date.--Subsection (a) shall apply to * * *
                                 ______
                                 
  SA 2659. Mr. LAUTENBERG submitted an amendment intended to be 
proposed by him to the bill S. 2020, to provide for reconciliation 
pursuant to section 202(b) of the concurrent resolution on the budget 
for fiscal year 2006; which was ordered to lie on the table; as 
follows:

       At the appropriate place, insert the following:

     SEC. __. SENSE OF THE SENATE REGARDING TESTIMONY OF CERTAIN 
                   OIL COMPANY EXECUTIVES.

       (a) Findings.--The Senate makes the following findings:
       (1) On November 9, 2005, the Senate Committee on Energy and 
     Natural Resources and the Senate Committee on Commerce, 
     Science and Transportation held a joint hearing on ``Energy 
     Pricing and Profits''.
       (2) The chief executive officers of the 5 largest oil 
     companies appeared as witnesses at the joint hearing on 
     ``Energy Prices and Profits''.
       (3) Section 1001 of title 18, United States Code, prohibits 
     any ``materially false, fictitious, or fraudulent statement 
     or representation'' at a Senate hearing.
       (4) A White House document obtained by The Washington Post 
     contradicts the testimony of some of these witnesses.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that the Attorney General of the United States should 
     promptly begin an investigation to determine whether the 
     testimony given by any of the oil company executives at the 
     November 9, 2005, joint hearing (referred to in subsection 
     (a)(1)) violated section 1001 of title 18, United States 
     Code, or other applicable statutes.
                                 ______
                                 
  SA 2660. Mr. DODD (for himself and Ms. Mikulski) submitted an 
amendment intended to be proposed by him to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; which was ordered to lie 
on the table; as follows:

       At the end of title IV, add the following:

     SEC. 405. MODIFICATION OF TAX RATES ON CAPITAL GAINS AND 
                   DIVIDENDS FOR INDIVIDUALS WITH $1,000,000 OR 
                   MORE OF TAXABLE INCOME.

       (a) Modification of Tax Rates on Capital Gains and 
     Dividends for Individuals With $1,000,000 or More of Taxable 
     Income.--
       (1) In general.--Section 1(h) is amended by adding at the 
     end the following new paragraph:
       ``(12) Modified rates for individuals with $1,000,000 or 
     more of taxable income.--If a taxpayer has taxable income of 
     $1,000,000 or more for any taxable year--
       ``(A) paragraph (11) (relating to dividends taxed as 
     capital gain) shall not apply to any qualified dividend 
     income of the taxpayer for the taxable year, and
       ``(B) paragraph (1)(C) shall be applied by substituting `20 
     percent' for `15 percent' with respect to the adjusted net 
     capital gain of the taxpayer for the taxable year, determined 
     by only taking into account gain or loss properly allocable 
     to the portion of the taxable year after December 31, 2005.''
       (2) Application to minimum tax.--Section 55(b)(3) is 
     amended by adding at the end the following new sentence: ``In 
     the case of a taxpayer with alternative minimum taxable 
     income of $1,000,000 or more for any taxable year, the rules 
     of section 1(h)(12) shall apply for purposes of this 
     paragraph.''
       (3) Effective dates.--
       (A) Capital gains.--Section 1(h)(12)(B) of the Internal 
     Revenue Code of 1986 (as added by paragraph (1)) shall apply 
     to taxable years beginning after December 31, 2005.
       (B) Dividend rates.--Section 1(h)(12)(A) of such Code (as 
     added by paragraph (1)) shall apply to dividends received 
     after December 31, 2005.
       (4) Application of jgtrra sunset.--The amendment made by 
     this subsection shall be subject to section 303 of the Jobs 
     and Growth Tax Relief Reconciliation Act of 2003 to the same 
     extent and in the same manner as the provision of such Act to 
     which such amendment relates.
       (b) Dedication of Resulting Revenues.--
       (1) No child left behind trust fund.--Subchapter A of 
     chapter 98 (relating to trust fund code) is amended by adding 
     at the end the following new section:

     ``SEC. 9511. NO CHILD LEFT BEHIND TRUST FUND.

       ``(a) Creation of Trust Fund.--There is established in the 
     Treasury of the United States a trust fund to be known as the 
     `No Child Left Behind Trust Fund', consisting of any amount 
     appropriated or credited to the Trust Fund as provided in 
     this section or section 9602(b).
       ``(b) Transfers to Trust Fund.--There are hereby 
     appropriated to the No Child Left Behind Trust Fund the 
     following amounts equivalent to the increased revenues 
     received in the Treasury as the result of the amendment made 
     by section 405(a) of the Tax Relief Act of 2005:
       ``(1) In the case of fiscal year 2006, $4,085,000,000.
       ``(2) In the case of fiscal year 2007, $4,543,000,000.
       ``(3) In the case of fiscal year 2008, $4,725,000,000.
       ``(c) Expenditures From Trust Fund.--Amounts in the No 
     Child Left Behind Trust Fund shall be available for fiscal 
     years beginning after 2005, as provided by appropriation 
     Acts, to carry out programs under the Elementary and 
     Secondary Education Act of 1965 in accordance with the 
     provisions of, and amendments made by, the No Child Left 
     Behind Act of 2001.''.
       (2) Military restoration trust fund.--Subchapter A of 
     chapter 98 (relating to trust fund code), as amended by 
     paragraph (1), is amended by adding at the end the following 
     new section:

     ``SEC. 9512. MILITARY RESTORATION TRUST FUND.

       ``(a) Creation of Trust Fund.--There is established in the 
     Treasury of the United

[[Page 27151]]

     States a trust fund to be known as the `Military Restoration 
     Trust Fund', consisting of any amount appropriated or 
     credited to the Trust Fund as provided in this section or 
     section 9602(b).
       ``(b) Transfers to Trust Fund.--There are hereby 
     appropriated to the Military Restoration Trust Fund the 
     following amounts equivalent to the increased revenues 
     received in the Treasury as the result of the amendment made 
     by section 405(a) of the Tax Relief Act of 2005:
       ``(1) In the case of fiscal year 2006, $4,085,000,000.
       ``(2) In the case of fiscal year 2007, $4,543,000,000.
       ``(3) In the case of fiscal year 2008, $4,725,000,000.
       ``(c) Expenditures From Trust Fund.--Amounts in the 
     Military Restoration Trust Fund shall be available for fiscal 
     years beginning after 2005, as provided by appropriation 
     Acts, to replenish equipment and vehicle stocks of the Marine 
     Corps and the Army (including the National Guard and Reserve) 
     that have been damaged or destroyed as a result of Operation 
     Iraqi Freedom and Operation Enduring Freedom.''.
       (3) Clerical amendments.--The table of sections for such 
     subchapter is amended by adding at the end the following new 
     items:

``Sec. 9511. No Child Left Behind Trust Fund.
``Sec. 9512. Military Restoration Trust Fund.''.
                                 ______
                                 
  SA 2661. Mr. DAYTON submitted an amendment intended to be proposed by 
him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       On page 235, between lines 13 and 14, insert the following:

     SEC. __. VALUATION OF EMPLOYEE PERSONAL USE OF NONCOMMERCIAL 
                   AIRCRAFT.

       (a) In General.--For purposes of Federal income tax 
     inclusion, the value of any employee personal use of 
     noncommercial aircraft shall equal the excess (if any) of--
       (1) greater of--
       (A) the fair market value of such use, or
       (B) the actual cost of such use (including all fixed and 
     variable costs), over
       (2) any amount paid by or on behalf of such employee for 
     such use.
       (b) Effective Date.--Subsection (a) shall apply to use 
     after the date of the enactment of this Act.
                                 ______
                                 
  SA 2662. Ms. COLLINS submitted an amendment intended to be proposed 
by her to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, insert the following:

     SEC. __. SENSE OF THE SENATE REGARDING THE DEDICATION OF 
                   EXCESS FUNDS .

       It is the sense of the Senate that any increases in 
     revenues to the Treasury as a result of this Act and the 
     amendments made by this Act that exceed the amounts specified 
     in the reconciliation instructions shall be dedicated to the 
     Low-Income Home Energy Assistance Program, in an amount not 
     to exceed the amount which is $2,900,000,000 more than the 
     funding levels established for such Program for fiscal year 
     2005.
                                 ______
                                 
  SA 2663. Mr. HATCH submitted an amendment intended to be proposed by 
him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       On page 84, strike lines 20 through 25, and on page 85, 
     strike lines 1 through 5.
                                 ______
                                 
  SA 2664. Mr. LEVIN submitted an amendment intended to be proposed by 
him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

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

     SEC. 504. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS.

       (a) Penalty for Promoting Abusive Tax Shelters.--Section 
     6700 (relating to promoting abusive tax shelters, etc.) is 
     amended--
       (1) by redesignating subsections (b) and (c) as subsections 
     (d) and (e), respectively,
       (2) by striking ``a penalty'' and all that follows through 
     the period in the first sentence of subsection (a) and 
     inserting ``a penalty determined under subsection (b)'', and
       (3) by inserting after subsection (a) the following new 
     subsections:
       ``(b) Amount of Penalty; Calculation of Penalty; Liability 
     for Penalty.--
       ``(1) Amount of penalty.--The amount of the penalty imposed 
     by subsection (a) shall not exceed the greater of--
       ``(A) 100 percent of the gross income derived (or to be 
     derived) from such activity by the person or persons subject 
     to such penalty, and
       ``(B) if readily subject to calculation, the total amount 
     of underpayment by the taxpayer (including penalties, 
     interest, and taxes) in connection with such activity.
       ``(2) Calculation of penalty.--The penalty amount 
     determined under paragraph (1) shall be calculated with 
     respect to each instance of an activity described in 
     subsection (a), each instance in which income was derived by 
     the person or persons subject to such penalty, and each 
     person who participated in such an activity.
       ``(3) Liability for penalty.--If more than 1 person is 
     liable under subsection (a) with respect to such activity, 
     all such persons shall be jointly and severally liable for 
     the penalty under such subsection.
       ``(c) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (b) Conforming Amendment.--Section 6700(a) is amended by 
     striking the last sentence.
       (c) Effective Date.--The amendments made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.

     SEC. 505. PENALTY FOR AIDING AND ABETTING THE UNDERSTATEMENT 
                   OF TAX LIABILITY.

       (a) In General.--Section 6701(a) (relating to imposition of 
     penalty) is amended--
       (1) by striking ``preparation or presentation of'' and 
     inserting ``tax liability reflected in'' in paragraph (1),
       (2) by inserting ``aid, assistance, procurement, or advice 
     with respect to such'' before ``portion'' both places it 
     appears in paragraphs (2) and (3), and
       (3) by inserting ``instance of aid, assistance, 
     procurement, or advice or each such'' before ``document'' in 
     the matter following paragraph (3).
       (b) Amount of Penalty.--Subsection (b) of section 6701 
     (relating to penalties for aiding and abetting understatement 
     of tax liability) is amended to read as follows:
       ``(b) Amount of Penalty; Calculation of Penalty; Liability 
     for Penalty.--
       ``(1) Amount of penalty.--The amount of the penalty imposed 
     by subsection (a) shall not exceed the greater of--
       ``(A) 100 percent of the gross income derived (or to be 
     derived) from such aid, assistance, procurement, or advice 
     provided by the person or persons subject to such penalty, 
     and
       ``(B) if readily subject to calculation, the total amount 
     of underpayment by the taxpayer (including penalties, 
     interest, and taxes) in connection with the understatement of 
     the liability for tax.
       ``(2) Calculation of penalty.--The penalty amount 
     determined under paragraph (1) shall be calculated with 
     respect to each instance of aid, assistance, procurement, or 
     advice described in subsection (a), each instance in which 
     income was derived by the person or persons subject to such 
     penalty, and each person who made such an understatement of 
     the liability for tax.
       ``(3) Liability for penalty.--If more than 1 person is 
     liable under subsection (a) with respect to providing such 
     aid, assistance, procurement, or advice, all such persons 
     shall be jointly and severally liable for the penalty under 
     such subsection.''.
       (c) Penalty Not Deductible.--Section 6701 is amended by 
     adding at the end the following new subsection:
       ``(g) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to activities after the date of the enactment of 
     this Act.
                                 ______
                                 
  SA 2665. Mr. HARKIN (for himself and Mr. Obama) submitted an 
amendment intended to be proposed by him to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; as follows:

       At the end of title IV, add the following:

     SEC. __. RESTORATION OF THE PHASEOUT OF PERSONAL EXEMPTIONS 
                   AND THE OVERALL LIMITATION ON ITEMIZED 
                   DEDUCTION; REDUCTION IN INCOME THRESHOLD USED 
                   TO CALCULATE REFUNDABLE PORTION OF CHILD TAX 
                   CREDIT.

       (a) Restoration of the Phaseout of Personal Exemptions and 
     the Overall Limitation on Itemized Deductions.--

[[Page 27152]]

       (1) Restoration of phaseout of personal exemptions.--
       (A) In general.--Paragraph (3) of section 151(d) (relating 
     to exemption amount) is amended by striking subparagraphs (E) 
     and (F).
       (B) Effective date.--The amendment made by this paragraph 
     shall apply to taxable years beginning after December 31, 
     2005.
       (2) Restoration of phaseout of overall limitation on 
     itemized deductions.--
       (A) In general.--Section 68 is amended by striking 
     subsections (f) and (g).
       (B) Effective date.--The amendment made by this paragraph 
     shall apply to taxable years beginning after December 31, 
     2005.
       (b) Reduction in Income Threshold Used to Calculate 
     Refundable Portion of Child Tax Credit.--
       (1) In general.--Section 24(d) (relating to portion of 
     credit refundable) is amended--
       (A) by striking ``as exceeds'' and all that follows through 
     ``, or'' in paragraph (1)(B)(i) and inserting ``as exceeds 
     $9,000 (or $10,000 in the case of taxable years beginning in 
     2006), or'',
       (B) by striking ``2001, the $10,000 amount'' in paragraph 
     (3) and inserting ``2006, the $9,000 amount'', and
       (C) by striking ``2000'' in paragraph (3)(B) and inserting 
     ``2005''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to taxable years beginning after December 31, 
     2005.
       (3) Application of sunset to this section.--Each amendment 
     made by this subsection shall be subject to title IX of the 
     Economic Growth and Tax Relief Reconciliation Act of 2001 to 
     the same extent and in the same manner as the provision of 
     such Act to which such amendment relates.
                                 ______
                                 
  SA 2666. Mr. PRYOR (for himself and Mr. Coleman) submitted an 
amendment intended to be proposed by him to the bill S. 2020, to 
provide for reconciliation pursuant to section 202(b) of the concurrent 
resolution on the budget for fiscal year 2006; which was ordered to lie 
on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

       (a) In General.--Subpart H of part IV of subchapter A of 
     chapter 1 (relating to credits against tax) is amended by 
     adding at the end the following new section:

     ``SEC. 54A. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a rural renaissance bond on a credit allowance date of 
     such bond, which occurs during the taxable year, there shall 
     be allowed as a credit against the tax imposed by this 
     chapter for such taxable year an amount equal to the sum of 
     the credits determined under subsection (b) with respect to 
     credit allowance dates during such year on which the taxpayer 
     holds such bond.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any credit allowance 
     date for a rural renaissance bond is 25 percent of the annual 
     credit determined with respect to such bond.
       ``(2) Annual credit.--The annual credit determined with 
     respect to any rural renaissance bond is the product of--
       ``(A) the credit rate determined by the Secretary under 
     paragraph (3) for the day on which such bond was sold, 
     multiplied by
       ``(B) the outstanding face amount of the bond.
       ``(3) Determination.--For purposes of paragraph (2), with 
     respect to any rural renaissance bond, the Secretary shall 
     determine daily or caused to be determined daily a credit 
     rate which shall apply to the first day on which there is a 
     binding, written contract for the sale or exchange of the 
     bond. The credit rate for any day is the credit rate which 
     the Secretary or the Secretary's designee estimates will 
     permit the issuance of rural renaissance bonds with a 
     specified maturity or redemption date without discount and 
     without interest cost to the qualified issuer.
       ``(4) Credit allowance date.--For purposes of this section, 
     the term `credit allowance date' means--
       ``(A) March 15,
       ``(B) June 15,
       ``(C) September 15, and
       ``(D) December 15.

     Such term also includes the last day on which the bond is 
     outstanding.
       ``(5) Special rule for issuance and redemption.--In the 
     case of a bond which is issued during the 3-month period 
     ending on a credit allowance date, the amount of the credit 
     determined under this subsection with respect to such credit 
     allowance date shall be a ratable portion of the credit 
     otherwise determined based on the portion of the 3-month 
     period during which the bond is outstanding. A similar rule 
     shall apply when the bond is redeemed or matures.
       ``(c) Limitation Based on Amount of Tax.--The credit 
     allowed under subsection (a) for any taxable year shall not 
     exceed the excess of--
       ``(1) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(2) the sum of the credits allowable under this part 
     (other than subpart C thereof, relating to refundable 
     credits).
       ``(d) Rural Renaissance Bond.--For purposes of this 
     section--
       ``(1) In general.--The term `rural renaissance bond' means 
     any bond issued as part of an issue if--
       ``(A) the bond is issued by a qualified issuer,
       ``(B) 95 percent or more of the proceeds from the sale of 
     such issue are to be used for capital expenditures incurred 
     for 1 or more qualified projects,
       ``(C) the qualified issuer designates such bond for 
     purposes of this section and the bond is in registered form, 
     and
       ``(D) the issue meets the requirements of subsections (e) 
     and (h).
       ``(2) Qualified project; special use rules.--
       ``(A) In general.--The term `qualified project' means 1 or 
     more projects described in subparagraph (B) located in a 
     rural area.
       ``(B) Projects described.--A project described in this 
     subparagraph is--
       ``(i) a water or waste treatment project,
       ``(ii) an affordable housing project,
       ``(iii) a community facility project, including hospitals, 
     fire and police stations, and nursing and assisted-living 
     facilities,
       ``(iv) a value-added agriculture or renewable energy 
     facility project for agricultural producers or farmer-owned 
     entities, including any project to promote the production, 
     processing, or retail sale of ethanol (including fuel at 
     least 85 percent of the volume of which consists of ethanol), 
     biodiesel, animal waste, biomass, raw commodities, or wind as 
     a fuel,
       ``(v) a distance learning or telemedicine project,
       ``(vi) a rural utility infrastructure project, including 
     any electric or telephone system,
       ``(vii) a project to expand broadband technology,
       ``(viii) a rural teleworks project, and
       ``(ix) any project described in any preceding clause 
     carried out by the Delta Regional Authority.
       ``(C) Special rules.--For purposes of this paragraph--
       ``(i) any project described in subparagraph (B)(iv) for a 
     farmer-owned entity may be considered a qualified project if 
     such entity is located in a rural area, or in the case of a 
     farmer-owned entity the headquarters of which are located in 
     a nonrural area, if the project is located in a rural area, 
     and
       ``(ii) any project for a farmer-owned entity which is a 
     facility described in subparagraph (B)(iv) for agricultural 
     producers may be considered a qualified project regardless of 
     whether the facility is located in a rural or nonrural area.
       ``(3) Special use rules.--
       ``(A) Refinancing rules.--For purposes of paragraph (1)(B), 
     a qualified project may be refinanced with proceeds of a 
     rural renaissance bond only if the indebtedness being 
     refinanced (including any obligation directly or indirectly 
     refinanced by such indebtedness) was originally incurred 
     after the date of the enactment of this section.
       ``(B) Reimbursement.--For purposes of paragraph (1)(B), a 
     rural renaissance bond may be issued to reimburse a borrower 
     for amounts paid after the date of the enactment of this 
     section with respect to a qualified project, but only if--
       ``(i) prior to the payment of the original expenditure, the 
     borrower declared its intent to reimburse such expenditure 
     with the proceeds of a rural renaissance bond,
       ``(ii) not later than 60 days after payment of the original 
     expenditure, the qualified issuer adopts an official intent 
     to reimburse the original expenditure with such proceeds, and
       ``(iii) the reimbursement is made not later than 18 months 
     after the date the original expenditure is paid.
       ``(C) Treatment of changes in use.--For purposes of 
     paragraph (1)(B), the proceeds of an issue shall not be 
     treated as used for a qualified project to the extent that a 
     borrower takes any action within its control which causes 
     such proceeds not to be used for a qualified project. The 
     Secretary shall prescribe regulations specifying remedial 
     actions that may be taken (including conditions to taking 
     such remedial actions) to prevent an action described in the 
     preceding sentence from causing a bond to fail to be a rural 
     renaissance bond.
       ``(e) Maturity Limitations.--
       ``(1) Duration of term.--A bond shall not be treated as a 
     rural renaissance bond if the maturity of such bond exceeds 
     the maximum term determined by the Secretary under paragraph 
     (2) with respect to such bond.
       ``(2) Maximum term.--During each calendar month, the 
     Secretary shall determine the maximum term permitted under 
     this paragraph for bonds issued during the following calendar 
     month. Such maximum term shall be the term which the 
     Secretary estimates will result in the present value of the 
     obligation to repay the principal on the bond being equal to 
     50 percent of the face amount of such bond. Such present 
     value shall be determined without regard to the requirements 
     of subsection (f)(3) and using as a discount rate the average 
     annual interest rate of tax-exempt obligations having a term 
     of 10 years or more which are issued during the month. If the 
     term as so determined is not a multiple of a whole year, such 
     term shall be rounded to the next highest whole year.

[[Page 27153]]

       ``(3) Ratable principal amortization required.--A bond 
     shall not be treated as a rural renaissance bond unless it is 
     part of an issue which provides for an equal amount of 
     principal to be paid by the qualified issuer during each 
     calendar year that the issue is outstanding.
       ``(f) Limitation on Amount of Bonds Designated.--
       ``(1) National limitation.--There is a rural renaissance 
     bond limitation of $200,000,000.
       ``(2) Allocation by secretary.--The Secretary shall 
     allocate the amount described in paragraph (1) among 
     qualified issuers in such manner as the Secretary determines 
     appropriate.
       ``(g) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to the taxpayer 
     under this section (determined without regard to subsection 
     (c)) and the amount so included shall be treated as interest 
     income.
       ``(h) Special Rules Relating to Expenditures.--
       ``(1) In general.--An issue shall be treated as meeting the 
     requirements of this subsection if, as of the date of 
     issuance, the qualified issuer reasonably expects--
       ``(A) at least 95 percent of the proceeds from the sale of 
     the issue are to be spent for 1 or more qualified projects 
     within the 5-year period beginning on the date of issuance of 
     the rural renaissance bond,
       ``(B) a binding commitment with a third party to spend at 
     least 10 percent of the proceeds from the sale of the issue 
     will be incurred within the 6-month period beginning on the 
     date of issuance of the rural renaissance bond or, in the 
     case of a rural renaissance bond, the proceeds of which are 
     to be loaned to 2 or more borrowers, such binding commitment 
     will be incurred within the 6-month period beginning on the 
     date of the loan of such proceeds to a borrower, and
       ``(C) such projects will be completed with due diligence 
     and the proceeds from the sale of the issue will be spent 
     with due diligence.
       ``(2) Extension of period.--Upon submission of a request 
     prior to the expiration of the period described in paragraph 
     (1)(A), the Secretary may extend such period if the qualified 
     issuer establishes that the failure to satisfy the 5-year 
     requirement is due to reasonable cause and the related 
     projects will continue to proceed with due diligence.
       ``(3) Failure to spend required amount of bond proceeds 
     within 5 years.--To the extent that less than 95 percent of 
     the proceeds of such issue are expended by the close of the 
     5-year period beginning on the date of issuance (or if an 
     extension has been obtained under paragraph (2), by the close 
     of the extended period), the qualified issuer shall redeem 
     all of the nonqualified bonds within 90 days after the end of 
     such period. For purposes of this paragraph, the amount of 
     the nonqualified bonds required to be redeemed shall be 
     determined in the same manner as under section 142.
       ``(i) Special Rules Relating to Arbitrage.--A bond which is 
     part of an issue shall not be treated as a rural renaissance 
     bond unless, with respect to the issue of which the bond is a 
     part, the qualified issuer satisfies the arbitrage 
     requirements of section 148 with respect to proceeds of the 
     issue.
       ``(j) Qualified Issuer.--For purposes of this section--
       ``(1) In general.--The term `qualified issuer' means any 
     not-for-profit cooperative lender which has as of the date of 
     the enactment of this section received a guarantee under 
     section 306 of the Rural Electrification Act and which meets 
     the requirement of paragraph (2).
       ``(2) User fee requirement.--The requirement of this 
     paragraph is met if the issuer of any rural rennaissance bond 
     makes grants for qualified projects as defined under 
     subsection (d)(2) on a semi-annual basis every year that such 
     bond is outstanding in an annual amount equal to one-half of 
     the rate on United States Treasury Bills of the same maturity 
     multiplied by the outstanding principle balance of rural 
     rennaissance bonds issued by such issuer.
       ``(k) Special Rules Relating to Pool Bonds.--No portion of 
     a pooled financing bond may be allocable to loan unless the 
     borrower has entered into a written loan commitment for such 
     portion prior to the issue date of such issue.
       ``(l) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Bond.--The term `bond' includes any obligation.
       ``(2) Pooled financing bond.--The term `pooled financing 
     bond' shall have the meaning given such term by section 
     149(f)(4)(A).
       ``(3) Rural area.--The term `rural area' means any area 
     other than--
       ``(A) a city or town which has a population of greater than 
     50,000 inhabitants, or
       ``(B) the urbanized area contiguous and adjacent to such a 
     city or town.
       ``(4) Partnership; s corporation; and other pass-thru 
     entities.--
       ``(A) In general.--Under regulations prescribed by the 
     Secretary, in the case of a partnership, trust, S 
     corporation, or other pass-thru entity, rules similar to the 
     rules of section 41(g) shall apply with respect to the credit 
     allowable under subsection (a).
       ``(B) No basis adjustment.--In the case of a bond held by a 
     partnership or an S corporation, rules similar to the rules 
     under section 1397E(i) shall apply.
       ``(5) Bonds held by regulated investment companies.--If any 
     rural renaissance bond is held by a regulated investment 
     company, the credit determined under subsection (a) shall be 
     allowed to shareholders of such company under procedures 
     prescribed by the Secretary.
       ``(6) Reporting.--Issuers of rural renaissance bonds shall 
     submit reports similar to the reports required under section 
     149(e).''.
       (b) Reporting.--Subsection (d) of section 6049 (relating to 
     returns regarding payments of interest) is amended by adding 
     at the end the following new paragraph:
       ``(9) Reporting of credit on rural renaissance bonds.--
                                 ______
                                 
  SA 2667. Ms. SNOWE (for herself, Mr. Bingaman, Ms. Collins, and Mr. 
Reed) proposed an amendment to the bill S. 2020, to provide for 
reconciliation pursuant to section 202(b) of the concurrent resolution 
on the budget for fiscal year 2006; as follows:

       At the end of title IV add the following:

     SEC. __. IMPOSITION OF WITHHOLDING ON CERTAIN PAYMENTS MADE 
                   BY GOVERNMENT ENTITIES AND FUNDING OF LIHEAP 
                   TRUST FUND.

       (a) Imposition of Withholding on Certain Payments Made by 
     Government Entities.--
       (1) In general.--Section 3402 is amended by adding at the 
     end the following new subsection:
       ``(t) Extension of Withholding to Certain Payments Made by 
     Government Entities.--
       ``(1) General rule.--The Government of the United States, 
     every State, every political subdivision thereof, and every 
     instrumentality of the foregoing (including multi-State 
     agencies) making any payment for goods and services which is 
     subject to withholding shall deduct and withhold form such 
     payment a tax in an amount equal to 1.75 percent of such 
     payment.
       ``(2) Exceptions.--Paragraph (1) shall not apply to any 
     payment--
       ``(A) except as provided in subparagraph (B), which is 
     subject to withholding under any other provision of this 
     chapter or chapter 3,
       ``(B) which is subject to withholding under section 3406 
     and from which amounts are being withheld under such section,
       ``(C) of interest,
       ``(D) for real property,
       ``(E) to any tax-exempt entity, foreign government, or 
     other entity subject to the requirements of paragraph (1),
       ``(F) made pursuant to a classified or confidential 
     contract (as defined in section 6050M(e)(3)), and
       ``(G) made by a political subdivision of a State (or any 
     instrumentality thereof) which makes less than $100,000,000 
     of such payments annually.
       ``(3) Coordination with other sections.--For purposes of 
     sections 3403 and 3404 and for purposes of so much of 
     subtitle F (except section 7205) as relates to this chapter, 
     payments to any person of any payment for goods and services 
     which is subject to withholding shall be treated as if such 
     payments were wages paid by an employer to an employee.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to payments made after December 31, 2005.
       (b) Low Income Home Energy Assistance Trust Fund.--
       (1) In general.--Subchapter A of chapter 98 (relating to 
     trust fund code) is amended by adding at the end the 
     following new section:

     ``SEC. 9511. LOW-INCOME HOME ENERGY ASSISTANCE TRUST FUND.

       ``(a) Creation of Trust Fund.--There is established in the 
     Treasury of the United States a trust fund to be known as the 
     `Low-Income Home Energy Assistance Trust Fund', consisting of 
     any amount appropriated or credited to the Trust Fund as 
     provided in this section or section 9602(b).
       ``(b) Transfers to Trust Fund.--There are hereby 
     appropriated to the Low-Income Home Energy Assistance Trust 
     Fund amounts equivalent to the increased revenues received in 
     the Treasury as the result of the amendment made by section 
     410(a) of the Tax Relief Act of 2005.
       ``(c) Expenditures From Trust Fund.--Amounts in the Low 
     Income Home Energy Assistance Trust Fund not to exceed 
     $2,920,000,000 shall be available for fiscal year 2006, as 
     provided by appropriation Acts, to carry out the program 
     under the Low-Income Home Energy Assistance Act of 1981 
     through the distribution of funds to all the States in 
     accordance with section 2604 of that Act (42 U.S.C. 8623) 
     (other than subsection (e) of such section), but only if not 
     less than $1,880,000,000 has been appropriated for such 
     program for such fiscal year.''.
       (2) Clerical amendment.--The table of sections for such 
     subchapter is amended by adding at the end the following new 
     item:

``Sec. 9511. Low-Income Home Energy Assistance Trust Fund.''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by subsection (a) 
     shall take effect as if included in the enactment of the 
     American Jobs Creation Act of 2004.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall take effect on the date of the enactment of this Act.

[[Page 27154]]


                                 ______
                                 
  SA 2668. Mr. DORGAN submitted an amendment intended to be proposed by 
him to the bill S. 2020, to provide for reconciliation pursuant to 
section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; which was ordered to lie on the table; as follows:

       At the end of title IV, insert the following:

     SEC. __. REPEAL OF REDUCTION IN CREDIT FOR QUALIFIED ELECTRIC 
                   VEHICLES.

       (a) In General.--Section 30(b) (relating to limitations on 
     credit for qualified electric vehicles) is amended by 
     striking paragraph (2) and by redesignating paragraph (3) as 
     paragraph (2).
       (b) Effective Date.--The amendments made by this section 
     shall apply to vehicles placed in service after December 31, 
     2005.
                                 ______
                                 
  SA 2669. Ms. LANDRIEU (for herself and Mr. Vitter) proposed an 
amendment to the bill S. 2020, to provide for reconciliation pursuant 
to section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; as follows:

       On page 35, between lines 16 and 17, insert the following:

     SEC. 104. HOUSING RELIEF FOR INDIVIDUALS AFFECTED BY 
                   HURRICANE KATRINA.

       (a) Exclusion of Employer Provided Housing for Individual 
     Affected by Hurricane Katrina.--
       (1) In general.--For purposes of the Internal Revenue Code 
     of 1986, gross income of a qualified employee shall not 
     include the value of any lodging furnished to such employee, 
     such employee's spouse, or any of such employee's dependents 
     by or on behalf of a qualified employer for any month during 
     the taxable year.
       (2) Limitation.--The amount which may be excluded under 
     subsection (a) for any month for which lodging is furnished 
     during the taxable year shall not exceed $600.
       (3) Treatment of exclusion.--For purposes of the Internal 
     Revenue Code of 1986 (other than sections 3121(a)(19) and 
     3306(b)(14), an exclusion under subsection (a) shall be 
     treated as an exclusion under section 119 of such Code.
       (b) Employer Credit for Housing Employees Affected by 
     Hurricane Katrina.--
       (1) In general.--In the case of a qualified employer, there 
     shall be allowed as a credit against the tax imposed by 
     chapter 1 of the Internal Revenue Code of 1986 for any month 
     during the taxable year an amount equal to 30 percent of any 
     amount which is excludable from the gross income of a 
     qualified employee of such employer under subsection (a).
       (2) Certain rules to apply.--For purposes of this section, 
     rules similar to the rules of section 280C(a) of such Code 
     shall apply.
       (3) Credit to be part of general business credit.--The 
     credit allowed under this section shall be added to the 
     current year business credit under section 38(b) of such Code 
     and shall be treated as a credit allowed under subpart D of 
     part IV of subchapter A of such Code.
       (c) Qualified Employee.--For purposes of this section, the 
     term ``qualified employee'' means, with respect to any month, 
     an individual--
       (1) who had a principal residence (as defined in section 
     121 of the Internal Revenue Code of 1986) in the go zone (as 
     defined in section 1400N(1) of such Code) on August 28, 2005, 
     and
       (2) who performs not less than 80 percent of the employment 
     services for a qualified employer in the Hurricane Katrina 
     disaster area (as so defined).
       (d) Qualified Employer.--For purposes of this section, the 
     term ``qualified employer'' means any employer with a trade 
     or business located in the Hurricane Katrina disaster area 
     (as so defined).
       (e) Application of Section.--This section shall apply to 
     lodging provided--
       (1) after the date of the enactment of this Act, and
       (2) before the date which is 6 months after the date of the 
     enactment of this Act, and
       (3) no credit with respect to such lodging shall be claimed 
     before October 1, 2006.
                                 ______
                                 
  SA 2670. Mr. GRASSLEY (for himself and Mr. Baucus) proposed an 
amendment to the bill S. 2020, to provide for reconciliation pursuant 
to section 202(b) of the concurrent resolution on the budget for fiscal 
year 2006; as follows:

       On page 82, between lines 20 and 21, insert the following:

     SEC. 224. EXTENSION OF FULL CREDIT FOR QUALIFIED ELECTRIC 
                   VEHICLES.

       (a) In General.--Section 30(b) (relating to limitations) is 
     amended by striking paragraph (2) and by redesignating 
     paragraph (3) as paragraph (2).
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2005.
       On page 107, between lines 4 and 5, insert the following:

     SEC. 307. ENCOURAGEMENT OF CONTRIBUTIONS OF CAPITAL GAIN REAL 
                   PROPERTY MADE FOR CONSERVATION PURPOSES.

       (a) In General.--
       (1) Individuals.--Paragraph (1) of subsection 170(b) 
     (relating to percentage limitations) is amended by 
     redesignating subparagraphs (E) and (F) as subparagraphs (F) 
     and (G), respectively, and by inserting after subparagraph 
     (D) the following new subparagraph:
       ``(E) Contributions of qualified conservation 
     contributions.--
       ``(i) In general.--Any qualified conservation contribution 
     (as defined in subsection (h)(1)) to an organization 
     described in subparagraph (A) shall be allowed to the extent 
     the aggregate of such contributions does not exceed the 
     excess of 50 percent of the taxpayer's contribution base over 
     the amount of all other charitable contributions allowable 
     under this paragraph.
       ``(ii) Carryover.--If the aggregate amount of contributions 
     described in clause (i) exceeds the limitation of clause (i), 
     such excess shall be treated (in a manner consistent with the 
     rules of subsection (d)(1)) as a charitable contribution to 
     which clause (i) applies in each of the 15 succeeding years 
     in order of time.
       ``(iii) Coordination with other subparagraphs.--For 
     purposes of applying this subsection and subsection (d)(1), 
     contributions described in clause (i) shall not be treated as 
     described in subparagraph (A), (B), (C), or (D).
       ``(iv) Qualified farmer or rancher.--

       ``(I) In general.--If the individual is a qualified farmer 
     or rancher for the taxable year in which the contribution is 
     made, clause (i) shall be applied by substituting `100 
     percent' for `50 percent'.
       ``(II) Definition.--For purposes of subclause (I), the term 
     `qualified farmer or rancher' means a taxpayer whose gross 
     income from the trade or business of farming (within the 
     meaning of section 2032A(e)(5)) is greater than 50 percent of 
     the taxpayer's gross income for the taxable year.''.

       (2) Corporations.--Paragraph (2) of section 170(b) is 
     amended to read as follows:
       ``(2) Corporations.--In the case of a corporation--
       ``(A) In general.--The total deductions under subsection 
     (a) for any taxable year (other than for contributions to 
     which subparagraph (B) applies) shall not exceed 10 percent 
     of the taxpayer's taxable income.
       ``(B) Qualified conservation contributions by certain 
     corporate farmers and ranchers.--
       ``(i) In general.--Any qualified conservation contribution 
     (as defined in subsection (h)(1)) made--

       ``(I) by a corporation which, for the taxable year during 
     which the contribution is made, is a qualified farmer or 
     rancher (as defined in paragraph (1)(E)(iv)(II)) and the 
     stock of which is not readily tradable on an established 
     securities market at any time during such year, and
       ``(II) to an organization described in paragraph (1)(A),

     shall be allowed to the extent the aggregate of such 
     contributions does not exceed the excess of the taxpayer's 
     taxable income over the amount of charitable contributions 
     allowable under subparagraph (A).
       ``(ii) Carryover.--If the aggregate amount of contributions 
     described in clause (i) exceeds the limitation of clause (i), 
     such excess shall be treated (in a manner consistent with the 
     rules of subsection (d)(2)) as a charitable contribution to 
     which clause (i) applies in each of the 15 succeeding years 
     in order of time.
       ``(C) Taxable income.--For purposes of this paragraph, 
     taxable income shall be computed without regard to--
       ``(i) this section,
       ``(ii) part VIII (except section 248),
       ``(iii) any net operating loss carrryback to the taxable 
     year under section 172,
       ``(iv) section 199, and
       ``(v) any capital loss carryback to the taxable year under 
     section 1212(a)(1).''.
       (b) Conforming Amendments.--
       (1) The second sentence of clause (i) of section 
     170(b)(1)(C) is amended by striking ``subparagraph (D)'' and 
     inserting ``subparagraph (D) or (E)''.
       (2) Clause (i) of section 170(b)(1)(D) is amended by 
     striking ``subparagraph (A)'' and inserting ``subparagraphs 
     (A) or (E)''.
       (3) Paragraph (2) of section 170(d) is amended by striking 
     ``subsection (b)(2)'' each place it appears and inserting 
     ``subsection (b)(2)(A)''.
       (4) Section 545(b)(2) is amended by striking ``and (D)'' 
     and inserting ``(D), and (E)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2005, and before January 1, 2008.

     SEC. 308. ENHANCED DEDUCTION FOR CHARITABLE CONTRIBUTION OF 
                   LITERARY, MUSICAL, ARTISTIC, AND SCHOLARLY 
                   COMPOSITIONS.

       (a) In General.--Subsection (e) of section 170 (relating to 
     certain contributions of ordinary income and capital gain 
     property), as amended by this section 33 of this Act, is 
     amended by adding at the end the following new paragraph:
       ``(18) Special rule for certain contributions of literary, 
     musical, artistic, or scholarly compositions.--
       ``(A) In general.--In the case of a qualified artistic 
     charitable contribution--

[[Page 27155]]

       ``(i) the amount of such contribution taken into account 
     under this section shall be the fair market value of the 
     property contributed (determined at the time of such 
     contribution), and
       ``(ii) no reduction in the amount of such contribution 
     shall be made under paragraph (1).
       ``(B) Qualified artistic charitable contribution.--For 
     purposes of this paragraph, the term `qualified artistic 
     charitable contribution' means a charitable contribution of 
     any literary, musical, artistic, or scholarly composition, or 
     similar property, or the copyright thereon (or both), but 
     only if--
       ``(i) such property was created by the personal efforts of 
     the taxpayer making such contribution no less than 18 months 
     prior to such contribution,
       ``(ii) the taxpayer--

       ``(I) has received a qualified appraisal of the fair market 
     value of such property in accordance with the regulations 
     under this section, and
       ``(II) attaches to the taxpayer's income tax return for the 
     taxable year in which such contribution was made a copy of 
     such appraisal,

       ``(iii) the donee is an organization described in 
     subsection (b)(1)(A),
       ``(iv) the use of such property by the donee is related to 
     the purpose or function constituting the basis for the 
     donee's exemption under section 501 (or, in the case of a 
     governmental unit, to any purpose or function described under 
     section 501(c)),
       ``(v) the taxpayer receives from the donee a written 
     statement representing that the donee's use of the property 
     will be in accordance with the provisions of clause (iv), and
       ``(vi) the written appraisal referred to in clause (ii) 
     includes evidence of the extent (if any) to which property 
     created by the personal efforts of the taxpayer and of the 
     same type as the donated property is or has been--

       ``(I) owned, maintained, and displayed by organizations 
     described in subsection (b)(1)(A), and
       ``(II) sold to or exchanged by persons other than the 
     taxpayer, donee, or any related person (as defined in section 
     465(b)(3)(C)).

       ``(C) Maximum dollar limitation; no carryover of increased 
     deduction.--The increase in the deduction under this section 
     by reason of this paragraph for any taxable year--
       ``(i) shall not exceed the artistic adjusted gross income 
     of the taxpayer for such taxable year, and
       ``(ii) shall not be taken into account in determining the 
     amount which may be carried from such taxable year under 
     subsection (d).
       ``(D) Artistic adjusted gross income.--For purposes of this 
     paragraph, the term `artistic adjusted gross income' means 
     that portion of the adjusted gross income of the taxpayer for 
     the taxable year attributable to--
       ``(i) income from the sale or use of property created by 
     the personal efforts of the taxpayer which is of the same 
     type as the donated property, and
       ``(ii) income from teaching, lecturing, performing, or 
     similar activity with respect to property described in clause 
     (i).
       ``(E) Paragraph not to apply to certain contributions.--
     Subparagraph (A) shall not apply to any charitable 
     contribution of any letter, memorandum, or similar property 
     which was written, prepared, or produced by or for an 
     individual while the individual is an officer or employee of 
     any person (including any government agency or 
     instrumentality) unless such letter, memorandum, or similar 
     property is entirely personal.
       ``(F) Copyright treated as separate property for partial 
     interest rule.--In the case of a qualified artistic 
     charitable contribution, the tangible literary, musical, 
     artistic, or scholarly composition, or similar property and 
     the copyright on such work shall be treated as separate 
     properties for purposes of this paragraph and subsection 
     (f)(3).
       ``(G) Termination.--This paragraph shall not apply to 
     contributions made after December 31, 2007.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after December 31, 2005.

     SEC. 309. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS 
                   EXCLUDED FROM GROSS INCOME.

       (a) In General.--Part III of subchapter B of chapter 1 is 
     amended by inserting after section 139A the following new 
     section:

     ``SEC. 139B. MILEAGE REIMBURSEMENTS TO CHARITABLE VOLUNTEERS.

       ``(a) In General.--Gross income of an individual does not 
     include amounts received, from an organization described in 
     section 170(c), as reimbursement of operating expenses with 
     respect to use of a passenger automobile for the benefit of 
     such organization. The preceding sentence shall apply only to 
     the extent that the expenses which are reimbursed would be 
     deductible under this chapter if section 274(d) were 
     applied--
       ``(1) by using the standard business mileage rate 
     established under such section, and
       ``(2) as if the individual were an employee of an 
     organization not described in section 170(c).
       ``(b) Application to Volunteer Services Only.--Subsection 
     (a) shall not apply with respect to any expenses relating to 
     the performance of services for compensation.
       ``(c) No Double Benefit.--A taxpayer may not claim a 
     deduction or credit under any other provision of this title 
     with respect to the expenses under subsection (a).
       ``(d) Exemption From Reporting Requirements.--Section 6041 
     shall not apply with respect to reimbursements excluded from 
     income under subsection (a).
       ``(e) Termination.--This section shall not apply to taxable 
     years beginning after December 31, 2007.''.
       (b) Clerical Amendment.--The table of sections for part III 
     of subchapter B of chapter 1 is amended by inserting after 
     the item relating to section 139 the following new item:

``Sec. 139A. Mileage reimbursements to charitable volunteers''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 310. ALTERNATIVE PERCENTAGE LIMITATION FOR CORPORATE 
                   CHARITABLE CONTRIBUTIONS TO THE MATHEMATICS AND 
                   SCIENCE PARTNERSHIP PROGRAM.

       (a) In General.--Section 170(b) (related to percentage 
     limitations) is amended by adding at the end the following 
     new paragraph:
       ``(3) Special rule for corporate contributions to the 
     mathematics and science partnership program.--
       ``(A) In general.--In the case of a corporation which makes 
     an eligible mathematics and science contribution--
       ``(i) the limitation under paragraph (2) shall apply 
     separately with respect to all such contributions and all 
     other charitable contributions, and
       ``(ii) paragraph (2) shall be applied with respect to all 
     eligible mathematics and science contributions by 
     substituting `15 percent' for `10 percent'.
       ``(B) Eligible mathematics and science contribution.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `eligible mathematics and science contribution' means a 
     charitable contribution (other than a contribution of used 
     equipment) to a qualified partnership for the purpose of an 
     activity described in section 2202(c) of the Elementary and 
     Secondary Education Act of 1965.
       ``(ii) Qualified partnership.--The term `qualified 
     partnership' means an eligible partnership (within the 
     meaning of section 2201(b)(1) of the Elementary and Secondary 
     Education Act of 1965), but only to the extent that such 
     partnership does not include a person other than a person 
     described in paragraph (1)(A).
       ``(C) Termination.--This paragraph shall not apply to any 
     contributions made in taxable years beginning after December 
     31, 2006.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2005.
       On page 149, line 7, strike ``$100'' and insert ``$250''.
       Beginning on page 150, line 4, strike all through page 151, 
     line 2 and insert the following:

     SEC. 318. MODIFICATION OF RECORDKEEPING REQUIREMENTS FOR 
                   CERTAIN CHARITABLE CONTRIBUTIONS.

       (a) Recordkeeping Requirement.--Subsection (f) of section 
     170, as amended by section 317 of this Act, is amended by 
     adding at the end the following new paragraph:
       ``(16) Recordkeeping.--No deduction shall be allowed under 
     subsection (a) for any contribution of a cash, check, or 
     other monetary gift unless the donor maintains as a record of 
     such contribution--
       ``(A) a cancelled check, or
       ``(B) a receipt or a letter or other written communication 
     from the donee showing the name of the donee organization, 
     the date of the contribution, and the amount of the 
     contribution.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made in taxable years beginning 
     after the date of the enactment of this Act.
       On page 172, after line 21, add the following:

     SEC. 322. EXPANSION OF THE BASE OF TAX ON PRIVATE FOUNDATION 
                   NET INVESTMENT INCOME.

       (a) Gross Investment Income.--
       (1) In general.--Paragraph (2) of section 4940(c) (relating 
     to gross investment income) is amended by adding at the end 
     the following new sentence: ``Such term shall also include 
     income from sources similar to those in the preceding 
     sentence.''.
       (2) Conforming amendment.--Subsection (e) of section 509 
     (relating to gross investment income) is amended by adding at 
     the end the following new sentence: ``Such term shall also 
     include income from sources similar to those in the preceding 
     sentence.''.
       (b) Capital Gain Net Income.--Paragraph (4) of section 
     4940(c) (relating to capital gains and losses) is amended--
       (1) in subparagraph (A), by striking ``used for the 
     production of interest, dividends, rents, and royalties'' and 
     inserting ``used for the production of gross investment 
     income (as defined in paragraph (2))'', and
       (2) in subparagraph (C), by inserting ``or carrybacks'' 
     after ``carryovers''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

[[Page 27156]]



     SEC. 323. DEFINITION OF CONVENTION OR ASSOCIATION OF 
                   CHURCHES.

       Section 7701 (relating to definitions) is amended by 
     redesignating subsection(o) as subsection (p) and by 
     inserting after subsection (n) the following new subsection:
       ``(o) Convention or Association of Churches.--For purposes 
     of this title, any organization which is otherwise a 
     convention or association of churches shall not fail to so 
     qualify merely because the membership of such organization 
     includes individuals as well as churches or because 
     individuals have voting rights in such organization.''.

     SEC. 324. NOTIFICATION REQUIREMENT FOR ENTITIES NOT CURRENTLY 
                   REQUIRED TO FILE.

       (a) In General.--Section 6033 (relating to returns by 
     exempt organizations), as amended by section 346 of this Act, 
     is amended by redesignating subsection (j) as subsection (k) 
     and by inserting after subsection (i) the following new 
     subsection:
       ``(j) Additional Notification Requirements.--Any 
     organization the gross receipts of which in any taxable year 
     result in such organization being referred to in subsection 
     (a)(3)(A)(ii) or (a)(3)(B)--
       ``(1) shall furnish annually, at such time and in such 
     manner as the Secretary may by forms or regulations 
     prescribe, information setting forth--
       ``(A) the legal name of the organization,
       ``(B) any name under which such organization operates or 
     does business,
       ``(C) the organization's mailing address and Internet web 
     site address (if any),
       ``(D) the organization's taxpayer identification number,
       ``(E) the name and address of a principal officer, and
       ``(F) evidence of the continuing basis for the 
     organization's exemption from the filing requirements under 
     subsection (a)(1), and
       ``(2) upon the termination of the existence of the 
     organization, shall furnish notice of such termination.''.
       (b) Loss of Exempt Status for Failure To File Return or 
     Notice.--Section 6033 (relating to returns by exempt 
     organizations), as amended by subsection (a), is amended by 
     redesignating subsection (k) as subsection (l) and by 
     inserting after subsection (j) the following new subsection:
       ``(k) Loss of Exempt Status for Failure To File Return or 
     Notice.--
       ``(1) In general.--If an organization described in 
     subsection (a)(1) or (i) fails to file an annual return or 
     notice required under either subsection for 3 consecutive 
     years, such organization's status as an organization exempt 
     from tax under section 501(a) shall be considered revoked on 
     and after the date set by the Secretary for the filing of the 
     third annual return or notice. The Secretary shall publish 
     and maintain a list of any organization the status of which 
     is so revoked.
       ``(2) Application necessary for reinstatement.--Any 
     organization the tax-exempt status of which is revoked under 
     paragraph (1) must apply in order to obtain reinstatement of 
     such status regardless of whether such organization was 
     originally required to make such an application.
       ``(3) Retroactive reinstatement if reasonable cause shown 
     for failure.--If upon application for reinstatement of status 
     as an organization exempt from tax under section 501(a), an 
     organization described in paragraph (1) can show to the 
     satisfaction of the Secretary evidence of reasonable cause 
     for the failure described in such paragraph, the 
     organization's exempt status may, in the discretion of the 
     Secretary, be reinstated effective from the date of the 
     revocation under such paragraph.''.
       (c) No Declaratory Judgment Relief.--Section 7428(b) 
     (relating to limitations) is amended by adding at the end the 
     following new paragraph:
       ``(4) Nonapplication for certain revocations.--No action 
     may be brought under this section with respect to any 
     revocation of status described in section 6033(k)(1).''.
       (d) No Inspection Requirement.--Section 6104(b) (relating 
     to inspection of annual information returns) is amended by 
     inserting ``(other than subsection (j) thereof)'' after 
     ``6033''.
       (e) No Disclosure Requirement.--Section 6104(d)(3) 
     (relating to exceptions from disclosure requirements) is 
     amended by redesignating subparagraph (B) as subparagraph (C) 
     and by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Nondisclosure of annual notices.--Paragraph (1) shall 
     not require the disclosure of any notice required under 
     section 6033(j).''.
       (f) No Monetary Penalty for Failure To Notify.--Section 
     6652(c)(1) (relating to annual returns under section 6033 or 
     6012(a)(6)) is amended by adding at the end the following new 
     subparagraph:
       ``(E) No penalty for certain annual notices.--This 
     paragraph shall not apply with respect to any notice required 
     under section 6033(j).''.
       (g) Secretarial Outreach Requirements.--
       (1) Notice requirement.--The Secretary of the Treasury 
     shall notify in a timely manner every organization described 
     in section 6033(j) of the Internal Revenue Code of 1986 (as 
     added by this section) of the requirement under such section 
     6033(j) and of the penalty established under section 
     6033(k)--
       (A) by mail, in the case of any organization the identity 
     and address of which is included in the list of exempt 
     organizations maintained by the Secretary, and
       (B) by Internet or other means of outreach, in the case of 
     any other organization.
       (2) Loss of status penalty for failure to file return.--The 
     Secretary of the Treasury shall publicize in a timely manner 
     in appropriate forms and instructions and through other 
     appropriate means, the penalty established under section 
     6033(k) of such Code for the failure to file a return under 
     section 6033(a)(1) of such Code.
       (h) Effective Date.--The amendments made by this section 
     shall apply to notices and returns with respect to annual 
     periods beginning after 2005

     SEC. 325. DISCLOSURE TO STATE OFFICIALS OF PROPOSED ACTIONS 
                   RELATED TO EXEMPT ORGANIZATIONS.

       (a) In General.--Subsection (c) of section 6104 is amended 
     by striking paragraph (2) and inserting the following new 
     paragraphs:
       ``(2) Disclosure of proposed actions related to charitable 
     organizations.--
       ``(A) Specific notifications.--In the case of an 
     organization to which paragraph (1) applies, the Secretary 
     may disclose to the appropriate State officer--
       ``(i) a notice of proposed refusal to recognize such 
     organization as an organization described in section 
     501(c)(3) or a notice of proposed revocation of such 
     organization's recognition as an organization exempt from 
     taxation,
       ``(ii) the issuance of a letter of proposed deficiency of 
     tax imposed under section 507 or chapter 41 or 42, and
       ``(iii) the names, addresses, and taxpayer identification 
     numbers of organizations which have applied for recognition 
     as organizations described in section 501(c)(3).
       ``(B) Additional disclosures.--Returns and return 
     information of organizations with respect to which 
     information is disclosed under subparagraph (A) may be made 
     available for inspection by or disclosed to an appropriate 
     State officer.
       ``(C) Procedures for disclosure.--Information may be 
     inspected or disclosed under subparagraph (A) or (B) only--
       ``(i) upon written request by an appropriate State officer, 
     and
       ``(ii) for the purpose of, and only to the extent necessary 
     in, the administration of State laws regulating such 
     organizations.

     Such information may only be inspected by or disclosed to 
     representatives of the appropriate State officer designated 
     as the individuals who are to inspect or to receive the 
     returns or return information under this paragraph on behalf 
     of such officer. Such representatives shall not include any 
     contractor or agent.
       ``(D) Disclosures other than by request.--The Secretary may 
     make available for inspection or disclose returns and return 
     information of an organization to which paragraph (1) applies 
     to an appropriate State officer of any State if the Secretary 
     determines that such inspection or disclosure may facilitate 
     the resolution of Federal or State issues relating to the 
     tax-exempt status of such organization.
       ``(3) Disclosure with respect to certain other exempt 
     organizations.--Upon written request by an appropriate State 
     officer, the Secretary may make available for inspection or 
     disclosure returns and return information of an organization 
     described in paragraph (2), (4), (6), (7), (8), (10), or (13) 
     of section 501(c) for the purpose of, and to the extent 
     necessary in, the administration of State laws regulating the 
     solicitation or administration of the charitable funds or 
     charitable assets of such organizations. Such information may 
     be inspected only by or disclosed only to representatives of 
     the appropriate State officer designated as the individuals 
     who are to inspect or to receive the returns or return 
     information under this paragraph on behalf of such officer. 
     Such representatives shall not include any contractor or 
     agent.
       ``(4) Use in civil judicial and administrative 
     proceedings.--Returns and return information disclosed 
     pursuant to this subsection may be disclosed in civil 
     administrative and civil judicial proceedings pertaining to 
     the enforcement of State laws regulating such organizations 
     in a manner prescribed by the Secretary similar to that for 
     tax administration proceedings under section 6103(h)(4).
       ``(5) No disclosure if impairment.--Returns and return 
     information shall not be disclosed under this subsection, or 
     in any proceeding described in paragraph (4), to the extent 
     that the Secretary determines that such disclosure would 
     seriously impair Federal tax administration.
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Return and return information.--The terms `return' 
     and `return information' have the respective meanings given 
     to such terms by section 6103(b).
       ``(B) Appropriate state officer.--The term `appropriate 
     State officer' means--
       ``(i) the State attorney general,
       ``(ii) the State tax officer,
       ``(iii) in the case of an organization to which paragraph 
     (1) applies, any other State official charged with overseeing 
     organizations of the type described in section 501(c)(3), and
       ``(iv) in the case of an organization to which paragraph 
     (3) applies, the head of an agency designated by the State 
     attorney

[[Page 27157]]

     general as having primary responsibility for overseeing the 
     solicitation of funds for charitable purposes.''.
       (b) Conforming Amendments.--
       (1) Subparagraph (A) of section 6103(p)(3) is amended by 
     inserting ``an section 6104(c)'' after ``section'' in the 
     first sentence.
       (2) Paragraph (4) of section 6103(p) is amended--
       (A) in the matter preceding subparagraph (A), by inserting 
     ``, or any appropriate State officer (as defined in section 
     6104(c)),'' before ``or any other person'',
       (B) in subparagraph (F)(i), by inserting ``or any 
     appropriate State officer (as defined in section 6104(c)),'' 
     before ``or any other person'', and
       (C) in the matter following subparagraph (F), by inserting 
     ``, an appropriate State officer (as defined in section 
     6104(c)),'' after ``including an agency'' each place it 
     appear.
       (3) The heading for paragraph (1) of section 6104(c) is 
     amended by inserting ``for charitable organizations'' after 
     ``rule''.
       (4) Paragraph (2) of section 7213(a) is amended by 
     inserting ``or under section 6104(c)'' after ``6103''.
       (5) Paragraph (2) of section 7213A(a) is amended by 
     inserting ``or 6104(c)'' after ``6103''.
       (6) Paragraph (2) of section 7431(a) is amended by 
     inserting ``(including any disclosure in violation of section 
     6014(c)'' after ``6103''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act 
     but shall not apply to requests made before such date.
       On page 174, line 4, strike ``121st day'' and insert 
     ``181st day''.
       On page 174, line 6, strike ``121st day'' and insert 
     ``181st day''.
       On page 174, line 10, strike ``121st day'' and insert 
     ``181st day''.
       On page 174, line 12, strike ``121st day'' and insert 
     ``181st day''.
       On page 176, line 25, strike ``5'' and insert ``the 
     applicable percentage''.
       On page 177, line 1, strike ``percent''.
       On page 178, line 2, strike ``5 percent'' and insert ``the 
     applicable percentage''.
       On page 178, between lines 4 and 5, insert the following:
       ``(4) Applicable percentage.--For purposes of paragraphs 
     (1) and (3), the applicable percentage is--
       ``(A) 3 percent for the first taxable year beginning after 
     the date of the enactment of this section,
       ``(B) 4 percent for the second taxable year beginning after 
     such date, and
       ``(C) 5 percent for any taxable year beginning after the 
     second taxable year beginning after such date.
       On page 178, strike lines 9 through 15 and insert the 
     following:
       ``(A) any amount paid by the sponsoring organization from a 
     donor advised fund--
       ``(i) to any organization described in section 170(b)(1)(A) 
     (other than any organization described in section 509(a)(3)) 
     or any sponsoring organization if such amount is for 
     maintenance in a donor advised fund), and
       ``(ii) notwithstanding clause (i), to any organization 
     described section 170(f)(17)(B)(ii), but only to the extent 
     not prohibited by regulations, and
       On page 179, strike lines 1 through 3 and insert the 
     following:
       ``(2) Distributions to sponsoring organizations.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     such term shall include any distribution to a sponsoring 
     organization.
       ``(B) Organization level distributions.--For purposes of 
     subsection (c)(1)(B), such term shall not include any 
     distribution to a sponsoring organization unless such 
     distribution is designated for use in connection with a 
     charitable program of such organization.
       On page 185, line 9, strike ``section 4967(g)(2)(C)'' and 
     insert ``section 4967(g)(2)(A)(iii)''.
       On page 186, strike lines 7 through 14 and insert the 
     following:
       ``(c) Taxable Distribution.--For purposes of this 
     subsection--
       ``(1) In general.--The term `taxable distribution' means 
     any distribution from a donor advised fund to any person 
     other than the sponsoring organization's non donor advised 
     funds or accounts or organizations described in section 
     170(b)(1)(A) (other than any organization described in 
     section 509(a)(3) or any sponsoring organization if such 
     amount is for maintenance in a donor advised fund).
       ``(2) Exception.--Notwithstanding paragraph (1), such term 
     shall not include any distribution from a donor advised fund 
     to any organization described section 170(f)(17)(B)(ii) to 
     the extent such distribution is not prohibited under 
     regulations.
       On page 189, line 17, strike ``121st day'' and insert 
     ``181st day''.
       On page 190, line 22, strike ``4967(g)(2)(C)'' and insert 
     ``4967(g)(2)(A)(iii)''.
       On page 192, lines 18 and 19, strike ``provided by the 
     sponsoring organization in connection with'' and insert 
     ``from''.
       Beginning on page 193, line 17 strike all through page 196, 
     line 4 and insert the following:

     SEC. 333. TREATMENT OF CHARITABLE CONTRIBUTION DEDUCTIONS TO 
                   DONOR ADVISED FUNDS.

       (a) Income.--Section 170(f) (relating to disallowance of 
     deduction in certain cases and special rules), as amended by 
     section 318 of this Act, is amended by adding at the end the 
     following new paragraph:
       ``(17) Contributions to donor advised funds.--
       ``(A) In general.--A deduction otherwise allowed under 
     subsection (a) for any contribution to a sponsoring 
     organization (as defined in section 4967(g)(1)) to be 
     maintained in any donor advised fund (as defined in section 
     4967(g)(2)) of such organization shall only be allowed if--
       ``(i) such sponsoring organization is not described in 
     paragraph (3), (4), or (5) of subsection (c) or section 
     509(a)(3), and
       ``(ii) the taxpayer obtains a contemporaneous written 
     acknowledgment (determined under rules similar to the rules 
     of paragraph (8)(C) from the sponsoring organization that 
     such organization has exclusive legal control over the assets 
     contributed.
       ``(B) Contributions to type i or type ii supporting 
     organizations.--
       ``(i) In general.--Notwithstanding subparagraph (A)(i), a 
     contribution to a sponsoring organization (as so defined) 
     described in clause (ii) to be maintained in any donor 
     advised fund (as so defined) of such organization shall be 
     allowed to the extent not prohibited by regulations.
       ``(ii) Organization described.--An organization is 
     described in this clause if the organization meets the 
     requirements of subparagraphs (A) and (C) of section 
     509(a)(3) and is--

       ``(I) operated, supervised, or controlled by one or more 
     organizations described in paragraph (1) or (2) of section 
     509(a), or
       ``(II) supervised or controlled in connection with one or 
     more such organizations.''.

       (b) Estate.--Section 2055(e) is amended by adding at the 
     end the following new paragraph:
       ``(5) Contributions to donor advised funds.--
       ``(A) In general.--A deduction otherwise allowed under 
     subsection (a) for any contribution to a sponsoring 
     organization (as defined in section 4967(g)(1)) to be 
     maintained in any donor advised fund (as defined in section 
     4967(g)(2)) of such organization shall only be allowed if--
       ``(i) such sponsoring organization is not described in 
     paragraph (3) or(4) of subsection (a) or section 509(a)(3), 
     and
       ``(ii) the taxpayer obtains a contemporaneous written 
     acknowledgment (determined under rules similar to the rules 
     of section 170(f)(8)(C)) from the sponsoring organization 
     that such organization has exclusive legal control over the 
     assets contributed.
       ``(B) Contributions to type i or type ii supporting 
     organizations.--
       ``(i) In general.--Notwithstanding subparagraph (A)(i), a 
     contribution to a sponsoring organization (as so defined) 
     described in clause (ii) to be maintained in any donor 
     advised fund (as so defined) of such organization shall be 
     allowed to the extent not prohibited by regulations.
       ``(ii) Organization described.--An organization is 
     described in this clause if the organization meets the 
     requirements of subparagraphs (A) and (C) of section 
     509(a)(3) and is--

       ``(I) operated, supervised, or controlled by one or more 
     organizations described in paragraph (1) or (2) of section 
     509(a), or
       ``(II) supervised or controlled in connection with one or 
     more such organizations.''.

       (c) Gift.--Section 2522(c) is amended by adding at the end 
     the following new paragraph:
       ``(13) Contributions to donor advised funds.--
       ``(A) In general.--A deduction otherwise allowed under 
     subsection (a) for any contribution to a sponsoring 
     organization (as defined in section 4967(g)(1)) to be 
     maintained in any donor advised fund (as defined in section 
     4967(g)(2)) of such organization shall only be allowed if--
       ``(i) such sponsoring organization is not described in 
     paragraph (3) or (4) of subsection (a) or section 509(a)(3), 
     and
       ``(ii) the taxpayer obtains a contemporaneous written 
     acknowledgment (determined under rules similar to the rules 
     of section 170(f)(8)(C)) from the sponsoring organization 
     that such organization has exclusive legal control over the 
     assets contributed.
       ``(B) Contributions to type i or type ii supporting 
     organizations.--
       ``(i) In general.--Notwithstanding subparagraph (A)(i), a 
     contribution to a sponsoring organization (as so defined) 
     described in clause (ii) to be maintained in any donor 
     advised fund (as so defined) of such organization shall be 
     allowed to the extent not prohibited by regulations.
       ``(ii) Organization described.--An organization is 
     described in this clause if the organization meets the 
     requirements of subparagraphs (A) and (C) of section 
     509(a)(3) and is--

       ``(I) operated, supervised, or controlled by one or more 
     organizations described in paragraph (1) or (2) of section 
     509(a), or
       ``(II) supervised or controlled in connection with one or 
     more such organizations.''.

       (d) Regulations.--The regulations prescribed under sections 
     170(f)(17)(B)(i), 2055(e)(5)(B)(i), 2522(c)(13)(B)(i), 
     4967(e)(i)(A)(ii), and 4968(c)(2) of the Internal Revenue 
     Code of 1986 shall deny a deduction for contributions to 
     sponsoring organizations (as defined in section 4967(g)(1) of 
     such Code) which are described in section 170(f)(17)(B)(ii) 
     of such Code and shall apply

[[Page 27158]]

     excise taxes to distributions from donor advised funds (as 
     defined in section 4967(g)(2) of such Code) and sponsoring 
     organizations (as so defined) to organizations so described 
     in cases where the donor of the contributions or the donor or 
     donor advisor of the amounts distributed directly or 
     indirectly controls a supported organization (as defined in 
     section 509(f)(3) of such Code) of such organization.
       (e) Effective Date.--The amendments made by this section 
     shall apply to contributions made after the date which is 180 
     days after the date of the enactment of this Act.
       On page 205, line 16, strike ``5 percent'' and insert ``the 
     applicable percentage''.
       On page 206, between lines 11 and 12, insert the following:
       ``(3) Applicable percentage.--For purposes of paragraph 
     (1)(A)(ii), the applicable percentage is--
       ``(A) 3 percent for the first taxable year beginning after 
     the date of the enactment of this section,
       ``(B) 4 percent for the second taxable year beginning after 
     such date, and
       ``(C) 5 percent for any taxable year beginning after the 
     second taxable year beginning after such date.
       On page 206, strike lines 18 through 22 and insert the 
     following:
       ``(2) Administrative and operating expenses.--Reasonable 
     and necessary administrative expenses of a type III 
     supporting organization shall be treated as a qualifying 
     distribution to a supported organization.
       On page 214, line 6, strike ``any''.
       On page 216, strike line 24 and insert the following:
       ``(5) Special rule for certain holdings of type iii 
     supporting organizations.--For purposes of this subsection, 
     the term `excess business holdings' shall not include any 
     holdings of a type III supporting organization (as defined in 
     section 4959(h)(2)) in any business enterprise if the 
     holdings are held for the benefit of the community pursuant 
     to the direction of a State attorney general or a State 
     official with jurisdiction over the type III supporting 
     organization.
       ``(6) Present holdings.--For purposes of
       On page 219, strike lines 5 through 9 and insert the 
     following:
       (a) Requirement to File Return.--Subparagraph (B) of 
     section 6033(a)(3), as redesignated by section 311, is 
     amended by inserting ``(other than an organization described 
     in section 509(a)(3))'' after ``paragraph (1)''.
       Beginning on page 225, line 9, strike all through page 230, 
     line 21 and insert the following:

     SEC. 402. MODIFICATION TO S CORPORATION PASSIVE INVESTMENT 
                   INCOME RULES.

       (a) Increased Percentage Limit.--Paragraph (2) of section 
     1375(a) is amended by striking ``25 PERCENT'' and inserting 
     ``60 PERCENT''.
       (b) Repeal of Excessive Passive Income as a Termination 
     Event.--
       (1) In general.--Section 1362(d) is amended by striking 
     paragraph (3).
       (2) Conforming amendment.--Subsection (b) of section 1375 
     is amended by striking paragraphs (3) and (4) and inserting 
     the following new paragraph:
       ``(3) Passive investment income defined.--
       ``(A) Except as otherwise provided in this paragraph, the 
     term `passive investment income' means gross receipts derived 
     from royalties, rents, dividends, interest, and annuities.
       ``(B) Exception for interest on notes from sales of 
     inventory.--The term `passive investment income' shall not 
     include interest on any obligation acquired in the ordinary 
     course of the corporation's trade or business from its sale 
     of property described in section 1221(a)(1).
       ``(C) Treatment of certain lending or finance companies.--
     If the S corporation meets the requirements of section 
     542(c)(6) for the taxable year, the term `passive investment 
     income' shall not include gross receipts for the taxable year 
     which are derived directly from the active and regular 
     conduct of a lending or finance business (as defined in 
     section 542(d)(1)).
       ``(D) Treatment of certain dividends.--If an S corporation 
     holds stock in a C corporation meeting the requirements of 
     section 1504(a)(2), the term `passive investment income' 
     shall not include dividends from such C corporation to the 
     extent such dividends are attributable to the earnings and 
     profits of such C corporation derived from the active conduct 
     of a trade or business.
       ``(E) Exception for banks, etc.--In the case of a bank (as 
     defined in section 581), a bank holding company (within the 
     meaning of section 2(a) of the Bank Holding Company Act of 
     1956 (12 U.S.C. 1841(a))), or a financial holding company 
     (within the meaning of section 2(p) of such Act), the term 
     `passive investment income' shall not include--
       ``(i) interest income earned by such bank or company, or
       ``(ii) dividends on assets required to be held by such bank 
     or company, including stock in the Federal Reserve Bank, the 
     Federal Home Loan Bank, or the Federal Agricultural Mortgage 
     Bank or participation certificates issued by a Federal 
     Intermediate Credit Bank.
       ``(F) Coordination with section 1374.--The amount of 
     passive investment income shall be determined by not taking 
     into account any recognized built-in gain or loss of the S 
     corporation for any taxable year in the recognition period. 
     Terms used in the preceding sentence shall have the same 
     respective meanings as when used in section 1374.''.
       (c) Conforming Amendments.--
       (1) Subparagraph (J) of section 26(b)(2) is amended by 
     striking ``25 percent'' and inserting ``60 percent''.
       (2) Clause (i) of section 1042(c)(4)(A) is amended by 
     striking ``section 1362(d)(3)(C)'' and inserting ``section 
     1375(b)(3)''.
       (3) Subparagraph (B) of section 1362(f)(1) is amended by 
     striking ``or (3)''.
       (4) Clause (i) of section 1375(b)(1)(A) is amended by 
     striking ``25 percent'' and inserting ``60 percent''.
       (5) Subsection (d) of section 1375 is amended by striking 
     ``subchapter C'' both places it appears and inserting 
     ``accumulated''.
       (6) The heading for section 1375 is amended by striking 
     ``25 PERCENT'' and inserting ``60 PERCENT''.
       (7) The item relating to section 1375 in the table of 
     sections for part III of subchapter S of chapter 1 is amended 
     by striking ``25 percent'' and inserting ``60 percent''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.
       On page 235, in between lines 13 and 14, insert the 
     following:

     SEC. 405. MODIFICATION OF BOND RULE.

       In the case of bonds issued after the date of the enactment 
     of this Act and before August 31, 2009--
       (1) the requirement of paragraph (1) of section 648 of the 
     Deficit Reduction Act of 1984 (98 Stat. 941) shall be treated 
     as met with respect to the securities or obligations referred 
     to in such section if such securities or obligations are held 
     in a fund the annual distributions from which cannot exceed 7 
     percent of the average fair market value of the assets held 
     in such fund except to the extent distributions are necessary 
     to pay debt service on the bond issue,
       (2) paragraph (3) of such section shall be applied by 
     substituting ``distributions from'' for ``the investment 
     earnings of'' both places it appears, and
       (3) Paragraph (4) of such section shall be applied by 
     substituting ``March 1, 1985'' for ``October 9, 1969''.

     SEC. 406. TREATMENT OF CERTAIN STOCK OPTION PLANS UNDER 
                   NONQUALIFIED DEFERRED COMPENSATION RULES.

       (a) In General.--The Secretary of the Treasury shall modify 
     the regulations under section 409A of the Internal Revenue 
     Code of 1986 to extend to applicable foreign option plans the 
     exception under such section for incentive stock options 
     under section 422 of such Code and options granted under an 
     employee stock purchase plan meeting the requirements of 
     section 423 of such Code. Such extension shall be subject to 
     such terms and conditions as may be prescribed in such 
     regulations.
       (b) Applicable Foreign Option Plans.--For purposes of 
     subsection (a)--
       (1) In general.--The term ``applicable foreign option 
     plan'' means a plan providing for the issuance of employee 
     stock options--
       (A) which is established under the laws of a foreign 
     jurisdiction, and
       (B) which, under such laws or the terms of the plan (or 
     both), is subject to requirements substantially similar to 
     the requirements under section 422 or 423 of such Code.
       (2) Substantially similar.--A plan shall not be treated as 
     subject to substantially similar requirements under paragraph 
     (1)(B) unless--
       (A) the plan is required to cover substantially all 
     employees,
       (B) in the case of an option under an employee stock 
     purchase plan, the plan is required to provide an option 
     price which is not less than the amount specified in section 
     423(b)(6) of such Code, except that such section shall be 
     applied by substituting ``80 percent'' for ``85 percent'' 
     each place it appears,
       (C) the plan is required to provide coverage of individuals 
     who, but for the exception of the application of section 409A 
     of such Code by reason of this section, would be subject to 
     tax under such section with respect to the plan, and
       (D) the plan meets such other requirements as the Secretary 
     of the Treasury prescribes in the regulations under 
     subsection (a).

     SEC. 407. SENSE OF THE SENATE REGARDING THE DEDICATION OF 
                   EXCESS FUNDS.

       It is the sense of the Senate that any increases in 
     revenues to the Treasury as a result of this Act and the 
     amendments made by this Act that exceed the amounts specified 
     in the reconciliation instructions shall be dedicated to the 
     Low-Income Home Energy Assistance Program, in an amount not 
     to exceed the amount which is $2,900,000,000 more than the 
     funding levels established for such Program for fiscal year 
     2005.
       Beginning on page 236, line 17, strike all through page 
     239, line 6 and insert the following:

     SEC. 502. MODIFICATION OF EFFECTIVE DATE OF EXCEPTION FROM 
                   SUSPENSION RULES FOR CERTAIN LISTED AND 
                   REPORTABLE TRANSACTIONS.

       (a) Effective Date Modification.--
       (1) In general.--Paragraph (2) of section 903(d) of the 
     American Jobs Creation Act of 2004 is amended to read as 
     follows:

[[Page 27159]]

       ``(2) Exception for reportable or listed transactions.--
       ``(A) In general.--The amendments made by subsection (c) 
     shall apply with respect to interest accruing after October 
     3, 2004.
       ``(B) Special rule for certain listed and reportable 
     transactions.--
       ``(i) In general.--Except as provided in clause (ii), the 
     amendments made by subsection (c) shall also apply with 
     respect to interest accruing on or before October 3, 2004.
       ``(ii) Participants in settlement initiatives.--Clause (i) 
     shall not apply to any transaction if, as of January 23, 
     2006--

       ``(I) the taxpayer is participating in a settlement 
     initiative described in Internal Revenue Service Announcement 
     2005-80 with respect to such transaction, or
       ``(II) the taxpayer has entered into a settlement agreement 
     pursuant to such an initiative.

       ``(iii) Termination of exception.--Clause (ii)(I) shall not 
     apply to any taxpayer if, after January 23, 2006, the 
     taxpayer withdraws from, or terminates, participation in the 
     initiative or the Secretary of the Treasury or the 
     Secretary's delegate determines that a settlement agreement 
     will not be reached pursuant to the initiative within a 
     reasonable period of time.''.
       (2) Effective date.--The amendment made by this subsection 
     shall take effect as if included in the provisions of the 
     American Jobs Creation Act of 2004 to which it relates.
       (b) Treatment of Amended Returns and Other Similar Notices 
     of Additional Tax Owed.--
       (1) In general.--Section 6404(g)(1) (relating to 
     suspension) is amended by adding at the end the following new 
     sentence: ``If, after the return for a taxable year is filed, 
     the taxpayer provides to the Secretary 1 or more signed 
     written documents showing that the taxpayer owes an 
     additional amount of tax for the taxable year, clause (i) 
     shall be applied by substituting the date the last of the 
     documents was provided for the date on which the return is 
     filed.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to documents provided on or after the date of the 
     enactment of this Act.
       On page 244, after line 24, insert the following:

     SEC. 504. PENALTY FOR PROMOTING ABUSIVE TAX SHELTERS.

       (a) Penalty for Promoting Abusive Tax Shelters.--Section 
     6700 (relating to promoting abusive tax shelters, etc.) is 
     amended--
       (1) by redesignating subsections (b) and (c) as subsections 
     (d) and (e), respectively,
       (2) by striking ``a penalty'' and all that follows through 
     the period in the first sentence of subsection (a) and 
     inserting ``a penalty determined under subsection (b)'', and
       (3) by inserting after subsection (a) the following new 
     subsections:
       ``(b) Amount of Penalty; Calculation of Penalty; Liability 
     for Penalty.--
       ``(1) Amount of penalty.--The amount of the penalty imposed 
     by subsection (a) shall be 100 percent of the gross income 
     derived (or to be derived) from such activity by the person 
     or persons subject to such penalty.
       ``(2) Calculation of penalty.--The penalty amount 
     determined under paragraph (1) shall be calculated with 
     respect to each instance of an activity described in 
     subsection (a), each instance in which income was derived by 
     the person or persons subject to such penalty, and each 
     person who participated in such an activity.
       ``(3) Liability for penalty.--If more than 1 person is 
     liable under subsection (a) with respect to such activity, 
     all such persons shall be jointly and severally liable for 
     the penalty under such subsection.
       ``(c) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (b) Conforming Amendment.--Section 6700(a) is amended by 
     striking the last sentence.
       (c) Effective Date.--The amendments made by this section 
     shall apply to the activities described in paragraphs (1) and 
     (2) of section 6700(a) of the Internal Revenue Code of 1986 
     and after the date of the enactment of this Act.

     SEC. 505. PENALTY FOR AIDING AND ABETTING THE UNDERSTATEMENT 
                   OF TAX LIABILITY.

       (a) In General.--Section 6701(a) (relating to imposition of 
     penalty) is amended--
       (1) by inserting ``, or tax liability reflected in,'' after 
     ``the preparation or presentation of'' in paragraph (1),
       (2) by inserting ``aid, assistance, procurement, or advice 
     with respect to such'' before ``portion'' both places it 
     appears in paragraphs (2) and (3), and
       (3) by inserting ``instance of aid, assistance, 
     procurement, or advice or each such'' before ``document'' in 
     the matter following paragraph (3).
       (b) Amount of Penalty.--Subsection (b) of section 6701 
     (relating to penalties for aiding and abetting understatement 
     of tax liability) is amended to read as follows:
       ``(b) Amount of Penalty; Calculation of Penalty; Liability 
     for Penalty.--
       ``(1) Amount of penalty.--The amount of the penalty imposed 
     by subsection (a) shall be 100 percent of the gross income 
     derived (or to be derived) from such aid, assistance, 
     procurement, or advice provided by the person or persons 
     subject to such penalty.
       ``(2) Calculation of penalty.--The penalty amount 
     determined under paragraph (1) shall be calculated with 
     respect to each instance of aid, assistance, procurement, or 
     advice described in subsection (a), each instance in which 
     income was derived by the person or persons subject to such 
     penalty, and each person who made such an understatement of 
     the liability for tax.
       ``(3) Liability for penalty.--If more than 1 person is 
     liable under subsection (a) with respect to providing such 
     aid, assistance, procurement, or advice, all such persons 
     shall be jointly and severally liable for the penalty under 
     such subsection.''.
       (c) Penalty Not Deductible.--Section 6701 is amended by 
     adding at the end the following new subsection:
       ``(g) Penalty Not Deductible.--The payment of any penalty 
     imposed under this section or the payment of any amount to 
     settle or avoid the imposition of such penalty shall not be 
     considered an ordinary and necessary expense in carrying on a 
     trade or business for purposes of this title and shall not be 
     deductible by the person who is subject to such penalty or 
     who makes such payment.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to the activities described in section 6701(a) of 
     the Internal Revenue Code of 1986 after the date of the 
     enactment of this Act.
       Beginning on page 261, line 20, strike all through page 
     264, line 14, and insert the following:

     SEC. 531. INCREASE IN CRIMINAL MONETARY PENALTY LIMITATION 
                   FOR THE UNDERPAYMENT OR OVERPAYMENT OF TAX DUE 
                   TO FRAUD.

       (a) In General.--Section 7206 (relating to fraud and false 
     statements) is amended--
       (1) by striking ``Any person who--'' and inserting ``(a) In 
     General.--Any person who--'', and
       (2) by adding at the end the following new subsection:
       ``(b) Increase in Monetary Limitation for Underpayment or 
     Overpayment of Tax Due to Fraud.--If any portion of any 
     underpayment (as defined in section 6664(a)) or overpayment 
     (as defined in section 6401(a)) of tax required to be shown 
     on a return is attributable to fraudulent action described in 
     subsection (a), the applicable dollar amount under subsection 
     (a) shall in no event be less than an amount equal to such 
     portion. A rule similar to the rule under section 6663(b) 
     shall apply for purposes of determining the portion so 
     attributable.''.
       (b) Increase in Penalties.--
       (1) Attempt to evade or defeat tax.--Section 7201 is 
     amended--
       (A) by striking ``$100,000'' and inserting ``$500,000'',
       (B) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (C) by striking ``5 years'' and inserting ``10 years''.
       (2) Willful failure to file return, supply information, or 
     pay tax.--Section 7203 is amended--
       (A) in the first sentence--
       (i) by striking ``Any person'' and inserting the following:
       ``(a) In General.--Any person'', and
       (ii) by striking ``$25,000'' and inserting ``$50,000'',
       (B) in the third sentence, by striking ``section'' and 
     inserting ``subsection'', and
       (C) by adding at the end the following new subsection:
       ``(b) Aggravated Failure to File.--
       ``(1) In general.--In the case of any failure described in 
     paragraph (2), the first sentence of subsection (a) shall be 
     applied by substituting--
       ``(A) `felony' for `misdemeanor',
       ``(B) `$500,000 ($1,000,000' for `$25,000 ($100,000', and
       ``(C) `10 years' for `1 year'.
       ``(2) Failure described.--A failure described in this 
     paragraph is a failure to make a return described in 
     subsection (a) for a period of 3 or more consecutive taxable 
     years.''.
       (3) Fraud and false statements.--Section 7206(a) (as 
     redesignated by subsection (a)) is amended--
       (A) by striking ``$100,000'' and inserting ``$500,000'',
       (B) by striking ``$500,000'' and inserting ``$1,000,000'', 
     and
       (C) by striking ``3 years'' and inserting ``5 years''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to actions, and failures to act, occurring after 
     the date of the enactment of this Act.
       On page 276, line 20, strike ``$1,250'' and insert 
     ``$2,000''.
       On page 276, line 22, strike ``$25'' and insert ``$40''.
       On page 323, after line 20, insert the following:

     SEC. 563. APPLICATION OF FIRPTA TO REGULATED INVESTMENT 
                   COMPANIES.

       (a) In General.--Subclause (II) of section 897(h)(4)(A)(i) 
     (defining qualified investment entity) is amended by 
     inserting ``which is a United States real property holding 
     corporation or which would be a United States real

[[Page 27160]]

     property holding corporation if the exceptions provided in 
     subsections (c)(3) and (h)(2) did not apply to interests in 
     any real estate investment trust or regulated investment 
     company'' after ``regulated investment company''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions with respect to taxable years 
     beginning after December 31, 2004.

     SEC. 564. TREATMENT OF DISTRIBUTIONS ATTRIBUTABLE TO FIRPTA 
                   GAINS.

       (a) Qualified Investment Entity.--
       (1) In general.--Section 897(h)(1) is amended--
       (A) by striking ``a nonresident alien individual or a 
     foreign corporation'' in the first sentence and inserting ``a 
     nonresident alien individual, a foreign corporation, or other 
     qualified investment entity'',
       (B) by striking ``such nonresident alien individual or 
     foreign corporation'' in the first sentence and inserting 
     ``such nonresident alien individual, foreign corporation, or 
     other qualified investment entity'', and
       (C) by striking the second sentence and inserting the 
     following new sentence: ``Notwithstanding the preceding 
     sentence, any distribution by a qualified investment entity 
     to a nonresident alien, a foreign corporation, or other 
     qualified investment entity with respect to any class of 
     stock which is regularly traded on an established securities 
     market located in the United States shall not be treated as 
     gain recognized from the sale or exchange of a United States 
     real property interest if the shareholder did not own more 
     than 5 percent of such class of stock at any time during the 
     1 year period ending on the date of such distribution.''.
       (2) Application after 2007.--Clause (ii) of section 
     897(h)(4)(A) is amended by adding at the end the following 
     new sentence: ``Notwithstanding the preceding sentence, an 
     entity described in clause (i)(II) shall be treated as a 
     qualified investment entity for purposes of applying 
     paragraph (1) in any case in which a real estate investment 
     trust makes a distribution to an entity described in clause 
     (i)(II).''.
       (b) Treatment of Certain Distributions as Dividends.--
       (1) In general.--Section 852(b)(3) (relating to capital 
     gains) is amended by adding at the end the following new 
     subparagraph:
       ``(E) Certain distributions.--In the case of a distribution 
     to which section 897 does not apply by reason of the second 
     sentence of section 897(h)(1), the amount of such 
     distribution which would be included in computing long-term 
     capital gains for the shareholder under subparagraph (B) or 
     (D) (without regard to this subparagraph)--
       ``(i) shall not be included in computing such shareholder's 
     long-term capital gains, and
       ``(ii) shall be included in such shareholder's gross income 
     as a dividend from the regulated investment company.''.
       (2) Conforming amendment.--Section 871(k)(2) (relating to 
     short-term capital gain dividends) is amended by adding at 
     the end the following new subparagraph:
       ``(E) Certain distributions.--In the case of a distribution 
     to which section 897 does not apply by reason of the second 
     sentence of section 897(h)(1), the amount which would be 
     treated as a short-term capital gain dividend to the 
     shareholder (without regard to this subparagraph)--
       ``(i) shall not be treated as a short-term capital gain 
     dividend, and
       ``(ii) shall be included in such shareholder's gross income 
     as a dividend from the regulated investment company.''.
       (c) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     of qualified investment entities beginning after the date of 
     the enactment of this Act.
       (2) Dividends.--The amendments made by subsection (b) shall 
     apply to dividends with respect to taxable years of regulated 
     investment companies beginning after December 31, 2004.

     SEC. 565. PREVENTION OF AVOIDANCE OF TAX ON INVESTMENTS OF 
                   FOREIGN PERSONS IN UNITED STATES REAL PROPERTY 
                   THROUGH WASH SALE TRANSACTIONS.

       (a) In General.--Section 897(h) of the Internal Revenue 
     Code of 1986 (relating to special rules in certain investment 
     entities) is amended by redesignating paragraph (4) as 
     paragraph (5) and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) Treatment of certain wash sale transactions.--
       ``(A) In general.--If an interest in a domestically 
     controlled qualified investment entity is disposed of in an 
     applicable wash sale transaction, the taxpayer shall, for 
     purposes of this section, be treated as having gain from the 
     sale or exchange of a United States real property interest in 
     an amount equal to the portion of the distribution described 
     in subparagraph (B) with respect to such interest which, but 
     for the disposition, would have been treated by the taxpayer 
     as gain from the sale or exchange of a United States real 
     property interest under paragraph (1).
       ``(B) Applicable wash sales transaction.--For purposes of 
     this paragraph--
       ``(i) In general.--The term `applicable wash sales 
     transaction' means any transaction (or series of 
     transactions) under which a nonresident alien individual or 
     foreign corporation--

       ``(I) disposes of an interest in a domestically controlled 
     qualified investment entity during the 30-day period 
     preceding a distribution which is to be made with respect to 
     the interest and any portion of which, but for the 
     disposition, would have been treated by the taxpayer as gain 
     from the sale or exchange of a United States real property 
     interest under paragraph (1), and
       ``(II) acquires an identical interest in such entity during 
     the 60-day period beginning with the 1st day of the 30-day 
     period described in subclause (I).

     For purposes of subclause (II), a nonresident alien 
     individual or foreign corporation shall be treated as having 
     acquired any interest acquired by a person related (within 
     the meaning of section 465(b)(3)(C)) to the individual or 
     corporation.
       ``(ii) Exception where distribution actually received.--A 
     transaction shall not be treated as an applicable wash sales 
     transaction if the nonresident alien individual or foreign 
     corporation receives the distribution described in clause 
     (i)(I) with respect to either the interest which was disposed 
     of, or acquired, in the transaction.
       ``(iii) Exception for certain publicly traded stock.--A 
     transaction shall not be treated as an applicable wash sales 
     transaction if it involves the disposition of any class of 
     stock in a qualified investment entity which is regularly 
     traded on an established securities market within the United 
     States but only if the nonresident alien individual or 
     foreign corporation did not own more than 5 percent of such 
     class of stock at any time during the 1-year period ending on 
     the date of the distribution described in clause (i)(I).''.
       (b) No Withholding Required.--Section 1445(b) of the 
     Internal Revenue Code of 1986 (relating to exemptions) is 
     amended by adding at the end the following new paragraph:
       ``(8) Applicable wash sales transactions.--No person shall 
     be required to deduct and withhold any amount under 
     subsection (a) with respect to a disposition which is treated 
     as a disposition of a United States real property interest 
     solely by reason of section 897(h)(4).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to dispositions after December 31, 2005, in 
     taxable years ending after such date.

     SEC. 566. MODIFICATIONS TO RULES RELATING TO TAXATION OF 
                   DISTRIBUTIONS OF STOCK AND SECURITIES OF A 
                   CONTROLLED CORPORATION.

       (a) Modification of Active Business Definition Under 
     Section 355.--
       (1) In general.--Section 355(b) (defining active conduct of 
     a trade or business) is amended by adding at the end the 
     following new paragraph:
       ``(3) Special rules relating to active business 
     requirement.--
       ``(A) In general.--For purposes of determining whether a 
     corporation meets the requirement of paragraph (2)(A), all 
     members of such corporation's separate affiliated group shall 
     be treated as 1 corporation. For purposes of the preceding 
     sentence, the term `separate affiliated group' means, with 
     respect to any corporation, the affiliated group which would 
     be determined under section 1504(a) if such corporation were 
     the common parent and section 1504(b) did not apply.
       ``(B) Control.--For purposes of paragraph (2)(D), all 
     distributee corporations which are members of the same 
     affiliated group (as defined in section 1504(a) without 
     regard to section 1504(b)) shall be treated as 1 distributee 
     corporation.''.
       (2) Conforming amendments.--
       (A) Subparagraph (A) of section 355(b)(2) is amended to 
     read as follows:
       ``(A) it is engaged in the active conduct of a trade or 
     business,''.
       (B) Section 355(b)(2) of such Code is amended by striking 
     the last sentence.
       (3) Effective dates.--
       (A) In general.--The amendments made by this subsection 
     shall apply--
       (i) to distributions after the date of the enactment of 
     this Act, and before January 1, 2010, and
       (ii) for purposes of determining the continued 
     qualification under section 355(b)(2)(A) of the Internal 
     Revenue Code of 1986 (as amended by paragraph (2)(A)) of 
     distributions made before such date, as a result of an 
     acquisition, disposition, or other restructuring after such 
     date and before January 1, 2010.
       (B) Transition rule.--The amendments made by this 
     subsection shall not apply to any distribution pursuant to a 
     transaction which is--
       (i) made pursuant to an agreement which was binding on such 
     date of enactment and at all times thereafter,
       (ii) described in a ruling request submitted to the 
     Internal Revenue Service on or before such date, or
       (iii) described on or before such date in a public 
     announcement or in a filing with the Securities and Exchange 
     Commission.
       (C) Elections.--
       (i) Out of transition relief.--Subparagraph (B) shall not 
     apply if the distributing corporation elects not to have such 
     subparagraph apply to distributions of such corporation. Any 
     such election, once made, shall be irrevocable.

[[Page 27161]]

       (ii) Application to prior distributions.--Subparagraph 
     (A)(ii) shall not apply to a distributing or controlled 
     corporation if the corporation elects not to have such 
     subparagraph apply to such corporation. Any such election, 
     once made, shall be irrevocable.
       (b) Section 355 Not to Apply to Distributions if the 
     Distributing or Controlled Corporation Is a Disqualified 
     Investment Corporation.--
       (1) In general.--Section 355 (relating to distributions of 
     stock and securities of a controlled corporation) is amended 
     by adding at the end the following new subsection:
       ``(g) Section Not to Apply to Distributions Involving 
     Disqualified Investment Corporations.--
       ``(1) In general.--This section (and so much of section 356 
     as relates to this section) shall not apply to any 
     distribution which is part of a transaction if--
       ``(A) either the distributing corporation or controlled 
     corporation is, immediately after the transaction, a 
     disqualified investment corporation, and
       ``(B) any person holds, immediately after the transaction, 
     a 50-percent or greater interest in any disqualified 
     investment corporation, but only if such person did not hold 
     such an interest in such corporation immediately before the 
     transaction.
       ``(2) Disqualified investment corporation.--For purposes of 
     this subsection--
       ``(A) In general.--The term `disqualified investment 
     corporation' means any distributing or controlled corporation 
     if the fair market value of the investment assets of the 
     corporation is 75 percent or more of the fair market value of 
     all assets of the corporation.
       ``(B) Investment assets.--
       ``(i) In general.--Except as otherwise provided in this 
     subparagraph, the term `investment assets' means--

       ``(I) cash,
       ``(II) any stock or securities in a corporation,
       ``(III) any interest in a partnership,
       ``(IV) any debt instrument or other evidence of 
     indebtedness,
       ``(V) any option, forward or futures contract, notional 
     principal contract, or derivative,
       ``(VI) foreign currency, or
       ``(VII) any similar asset.

       ``(ii) Exception for assets used in active conduct of 
     certain financial trades or businesses.--Such term shall not 
     include any asset which is held for use in the active and 
     regular conduct of--

       ``(I) a lending or finance business (within the meaning of 
     section 954(h)(4)),
       ``(II) a banking business through a bank (as defined in 
     section 581), a domestic building and loan association 
     (within the meaning of section 7701(a)(19)), or any similar 
     institution specified by the Secretary, or
       ``(III) an insurance business if the conduct of the 
     business is licensed, authorized, or regulated by an 
     applicable insurance regulatory body.

     This clause shall only apply with respect to any business if 
     substantially all of the income of the business is derived 
     from persons who are not related (within the meaning of 
     section 267(b) or 707(b)(1)) to the person conducting the 
     business.
       ``(iii) Exception for securities marked to market.--Such 
     term shall not include any security (as defined in section 
     475(c)(2)) which is held by a dealer in securities and to 
     which section 475(a) applies.
       ``(iv) Stock or securities in a 25-percent controlled 
     entity.--

       ``(I) In general.--Such term shall not include any stock 
     and securities in, or any asset described in subclause (IV) 
     or (V) of clause (i) issued by, a corporation which is a 25-
     percent controlled entity with respect to the distributing or 
     controlled corporation.
       ``(II) Look-thru rule.--The distributing or controlled 
     corporation shall, for purposes of applying this subsection, 
     be treated as owning its ratable share of the assets of any 
     25-percent controlled entity.
       ``(III) 25-percent controlled entity.--For purposes of this 
     clause, the term `25-percent controlled entity' means, with 
     respect to any distributing or controlled corporation, any 
     corporation with respect to which the distributing or 
     controlled corporation owns directly or indirectly stock 
     meeting the requirements of section 1504(a)(2), except that 
     such section shall be applied by substituting `25 percent' 
     for `80 percent' and without regard to stock described in 
     section 1504(a)(4).

       ``(v) Interests in certain partnerships.--

       ``(I) In general.--Such term shall not include any interest 
     in a partnership, or any debt instrument or other evidence of 
     indebtedness, issued by the partnership, if 1 or more of the 
     trades or businesses of the partnership are (or, without 
     regard to the 5-year requirement under subsection (b)(2)(B), 
     would be) taken into account by the distributing or 
     controlled corporation, as the case may be, in determining 
     whether the requirements of subsection (b) are met with 
     respect to the distribution.
       ``(II) Look-thru rule.--The distributing or controlled 
     corporation shall, for purposes of applying this subsection, 
     be treated as owning its ratable share of the assets of any 
     partnership described in subclause (I).

       ``(3) 50-percent or greater interest.--For purposes of this 
     subsection--
       ``(A) In general.--The term `50-percent or greater 
     interest' has the meaning given such term by subsection 
     (d)(4).
       ``(B) Attribution rules.--The rules of section 318 shall 
     apply for purposes of determining ownership of stock for 
     purposes of this paragraph.
       ``(4) Transaction.--For purposes of this subsection, the 
     term `transaction' includes a series of transactions.
       ``(5) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out, or prevent the 
     avoidance of, the purposes of this subsection, including 
     regulations--
       ``(A) to carry out, or prevent the avoidance of, the 
     purposes of this subsection in cases involving--
       ``(i) the use of related persons, intermediaries, pass-thru 
     entities, options, or other arrangements, and
       ``(ii) the treatment of assets unrelated to the trade or 
     business of a corporation as investment assets if, prior to 
     the distribution, investment assets were used to acquire such 
     unrelated assets,
       ``(B) which in appropriate cases exclude from the 
     application of this subsection a distribution which does not 
     have the character of a redemption which would be treated as 
     a sale or exchange under section 302, and
       ``(C) which modify the application of the attribution rules 
     applied for purposes of this subsection.''.
       (2) Effective dates.--
       (A) In general.--The amendments made by this subsection 
     shall apply to distributions after the date of the enactment 
     of this Act.
       (B) Transition rule.--The amendments made by this 
     subsection shall not apply to any distribution pursuant to a 
     transaction which is--
       (i) made pursuant to an agreement which was binding on such 
     date of enactment and at all times thereafter,
       (ii) described in a ruling request submitted to the 
     Internal Revenue Service on or before such date, or
       (iii) described on or before such date in a public 
     announcement or in a filing with the Securities and Exchange 
     Commission.

     SEC. 567. AMORTIZATION OF EXPENSES INCURRED IN CREATING OR 
                   ACQUIRING MUSIC OR MUSIC COPYRIGHTS.

       (a) In General.--Section 263A (relating to capitalization 
     and inclusion in inventory costs of certain expenses) is 
     amended by redesignating subsection (i) as subsection (j) and 
     by adding after subsection (h) the following new subsection:
       ``(i) Special Rules for Certain Musical Works and 
     Copyrights.--
       ``(1) In general.--If--
       ``(A) any expense is paid or incurred by the taxpayer in 
     creating or acquiring any musical composition (including any 
     accompanying words) or any copyright with respect to a 
     musical composition, and
       ``(B) such expense is required to be capitalized under this 
     section,

     then, notwithstanding section 167(g), the amount capitalized 
     shall be amortized ratably over the 5-year period beginning 
     with the month in which the composition or copyright was 
     acquired (or, in the case of expenses paid or incurred in 
     connection with the creation of a musical composition, the 5-
     taxable-year period beginning with the taxable year in which 
     the expenses were paid or incurred).
       ``(2) Exceptions.--Paragraph (1) shall not apply to any 
     expense--
       ``(A) which is a qualified creative expense under 
     subsection (h),
       ``(B) to which a simplified procedure established under 
     subsection (j)(2) applies,
       ``(C) which is an amortizable section 197 intangible (as 
     defined in section 197(c)), or
       ``(D) which, without regard to this section, would not be 
     allowable as a deduction.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to expenses paid or incurred after December 31, 
     2005, in taxable years ending after such date.

     SEC. 568. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

       (a) In General.--Subpart H of part IV of subchapter A of 
     chapter 1 (relating to credits against tax) is amended by 
     adding at the end the following new section:

     ``SEC. 54A. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a rural renaissance bond on a credit allowance date of 
     such bond, which occurs during the taxable year, there shall 
     be allowed as a credit against the tax imposed by this 
     chapter for such taxable year an amount equal to the sum of 
     the credits determined under subsection (b) with respect to 
     credit allowance dates during such year on which the taxpayer 
     holds such bond.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any credit allowance 
     date for a rural renaissance bond is 25 percent of the annual 
     credit determined with respect to such bond.
       ``(2) Annual credit.--The annual credit determined with 
     respect to any rural renaissance bond is the product of--
       ``(A) the credit rate determined by the Secretary under 
     paragraph (3) for the day on which such bond was sold, 
     multiplied by
       ``(B) the outstanding face amount of the bond.

[[Page 27162]]

       ``(3) Determination.--For purposes of paragraph (2), with 
     respect to any rural renaissance bond, the Secretary shall 
     determine daily or caused to be determined daily a credit 
     rate which shall apply to the first day on which there is a 
     binding, written contract for the sale or exchange of the 
     bond. The credit rate for any day is the credit rate which 
     the Secretary or the Secretary's designee estimates will 
     permit the issuance of rural renaissance bonds with a 
     specified maturity or redemption date without discount and 
     without interest cost to the qualified issuer.
       ``(4) Credit allowance date.--For purposes of this section, 
     the term `credit allowance date' means--
       ``(A) March 15,
       ``(B) June 15,
       ``(C) September 15, and
       ``(D) December 15.

     Such term also includes the last day on which the bond is 
     outstanding.
       ``(5) Special rule for issuance and redemption.--In the 
     case of a bond which is issued during the 3-month period 
     ending on a credit allowance date, the amount of the credit 
     determined under this subsection with respect to such credit 
     allowance date shall be a ratable portion of the credit 
     otherwise determined based on the portion of the 3-month 
     period during which the bond is outstanding. A similar rule 
     shall apply when the bond is redeemed or matures.
       ``(c) Limitation Based on Amount of Tax.--The credit 
     allowed under subsection (a) for any taxable year shall not 
     exceed the excess of--
       ``(1) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(2) the sum of the credits allowable under this part 
     (other than subpart C thereof, relating to refundable 
     credits).
       ``(d) Rural Renaissance Bond.--For purposes of this 
     section--
       ``(1) In general.--The term `rural renaissance bond' means 
     any bond issued as part of an issue if--
       ``(A) the bond is issued by a qualified issuer,
       ``(B) 95 percent or more of the proceeds from the sale of 
     such issue are to be used for capital expenditures incurred 
     for 1 or more qualified projects,
       ``(C) the qualified issuer designates such bond for 
     purposes of this section and the bond is in registered form, 
     and
       ``(D) the issue meets the requirements of subsections (e) 
     and (h).
       ``(2) Qualified project; special use rules.--
       ``(A) In general.--The term `qualified project' means 1 or 
     more projects described in subparagraph (B) located in a 
     rural area.
       ``(B) Projects described.--A project described in this 
     subparagraph is--
       ``(i) a water or waste treatment project,
       ``(ii) an affordable housing project,
       ``(iii) a community facility project, including hospitals, 
     fire and police stations, and nursing and assisted-living 
     facilities,
       ``(iv) a value-added agriculture or renewable energy 
     facility project for agricultural producers or farmer-owned 
     entities, including any project to promote the production, 
     processing, or retail sale of ethanol (including fuel at 
     least 85 percent of the volume of which consists of ethanol), 
     biodiesel, animal waste, biomass, raw commodities, or wind as 
     a fuel,
       ``(v) a distance learning or telemedicine project,
       ``(vi) a rural utility infrastructure project, including 
     any electric or telephone system,
       ``(vii) a project to expand broadband technology,
       ``(viii) a rural teleworks project, and
       ``(ix) any project described in any preceding clause 
     carried out by the Delta Regional Authority.
       ``(C) Special rules.--For purposes of this paragraph--
       ``(i) any project described in subparagraph (B)(iv) for a 
     farmer-owned entity may be considered a qualified project if 
     such entity is located in a rural area, or in the case of a 
     farmer-owned entity the headquarters of which are located in 
     a nonrural area, if the project is located in a rural area, 
     and
       ``(ii) any project for a farmer-owned entity which is a 
     facility described in subparagraph (B)(iv) for agricultural 
     producers may be considered a qualified project regardless of 
     whether the facility is located in a rural or nonrural area.
       ``(3) Special use rules.--
       ``(A) Refinancing rules.--For purposes of paragraph (1)(B), 
     a qualified project may be refinanced with proceeds of a 
     rural renaissance bond only if the indebtedness being 
     refinanced (including any obligation directly or indirectly 
     refinanced by such indebtedness) was originally incurred 
     after the date of the enactment of this section.
       ``(B) Reimbursement.--For purposes of paragraph (1)(B), a 
     rural renaissance bond may be issued to reimburse a borrower 
     for amounts paid after the date of the enactment of this 
     section with respect to a qualified project, but only if--
       ``(i) prior to the payment of the original expenditure, the 
     borrower declared its intent to reimburse such expenditure 
     with the proceeds of a rural renaissance bond,
       ``(ii) not later than 60 days after payment of the original 
     expenditure, the qualified issuer adopts an official intent 
     to reimburse the original expenditure with such proceeds, and
       ``(iii) the reimbursement is made not later than 18 months 
     after the date the original expenditure is paid.
       ``(C) Treatment of changes in use.--For purposes of 
     paragraph (1)(B), the proceeds of an issue shall not be 
     treated as used for a qualified project to the extent that a 
     borrower takes any action within its control which causes 
     such proceeds not to be used for a qualified project. The 
     Secretary shall prescribe regulations specifying remedial 
     actions that may be taken (including conditions to taking 
     such remedial actions) to prevent an action described in the 
     preceding sentence from causing a bond to fail to be a rural 
     renaissance bond.
       ``(e) Maturity Limitations.--
       ``(1) Duration of term.--A bond shall not be treated as a 
     rural renaissance bond if the maturity of such bond exceeds 
     the maximum term determined by the Secretary under paragraph 
     (2) with respect to such bond.
       ``(2) Maximum term.--During each calendar month, the 
     Secretary shall determine the maximum term permitted under 
     this paragraph for bonds issued during the following calendar 
     month. Such maximum term shall be the term which the 
     Secretary estimates will result in the present value of the 
     obligation to repay the principal on the bond being equal to 
     50 percent of the face amount of such bond. Such present 
     value shall be determined without regard to the requirements 
     of subsection (f)(3) and using as a discount rate the average 
     annual interest rate of tax-exempt obligations having a term 
     of 10 years or more which are issued during the month. If the 
     term as so determined is not a multiple of a whole year, such 
     term shall be rounded to the next highest whole year.
       ``(3) Ratable principal amortization required.--A bond 
     shall not be treated as a rural renaissance bond unless it is 
     part of an issue which provides for an equal amount of 
     principal to be paid by the qualified issuer during each 
     calendar year that the issue is outstanding.
       ``(f) Limitation on Amount of Bonds Designated.--
       ``(1) National limitation.--There is a rural renaissance 
     bond limitation of $200,000,000.
       ``(2) Allocation by secretary.--The Secretary shall 
     allocate the amount described in paragraph (1) among 
     qualified projects in such manner as the Secretary determines 
     appropriate.
       ``(g) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to the taxpayer 
     under this section (determined without regard to subsection 
     (c)) and the amount so included shall be treated as interest 
     income.
       ``(h) Special Rules Relating to Expenditures.--
       ``(1) In general.--An issue shall be treated as meeting the 
     requirements of this subsection if, as of the date of 
     issuance, the qualified issuer reasonably expects--
       ``(A) at least 95 percent of the proceeds from the sale of 
     the issue are to be spent for 1 or more qualified projects 
     within the 5-year period beginning on the date of issuance of 
     the rural renaissance bond,
       ``(B) a binding commitment with a third party to spend at 
     least 10 percent of the proceeds from the sale of the issue 
     will be incurred within the 6-month period beginning on the 
     date of issuance of the rural renaissance bond or, in the 
     case of a rural renaissance bond, the proceeds of which are 
     to be loaned to 2 or more borrowers, such binding commitment 
     will be incurred within the 6-month period beginning on the 
     date of the loan of such proceeds to a borrower, and
       ``(C) such projects will be completed with due diligence 
     and the proceeds from the sale of the issue will be spent 
     with due diligence.
       ``(2) Extension of period.--Upon submission of a request 
     prior to the expiration of the period described in paragraph 
     (1)(A), the Secretary may extend such period if the qualified 
     issuer establishes that the failure to satisfy the 5-year 
     requirement is due to reasonable cause and the related 
     projects will continue to proceed with due diligence.
       ``(3) Failure to spend required amount of bond proceeds 
     within 5 years.--To the extent that less than 95 percent of 
     the proceeds of such issue are expended by the close of the 
     5-year period beginning on the date of issuance (or if an 
     extension has been obtained under paragraph (2), by the close 
     of the extended period), the qualified issuer shall redeem 
     all of the nonqualified bonds within 90 days after the end of 
     such period. For purposes of this paragraph, the amount of 
     the nonqualified bonds required to be redeemed shall be 
     determined in the same manner as under section 142.
       ``(i) Special Rules Relating to Arbitrage.--A bond which is 
     part of an issue shall not be treated as a rural renaissance 
     bond unless, with respect to the issue of which the bond is a 
     part, the qualified issuer satisfies the arbitrage 
     requirements of section 148 with respect to proceeds of the 
     issue.
       ``(j) Qualified Issuer.--For purposes of this section--
       ``(1) In general.--The term `qualified issuer' means any 
     not-for-profit cooperative lender which has as of the date of 
     the enactment of this section received a guarantee under 
     section 306 of the Rural Electrification Act and which meets 
     the requirement of paragraph (2).

[[Page 27163]]

       ``(2) User fee requirement.--The requirement of this 
     paragraph is met if the issuer of any rural renaissance bond 
     makes grants for qualified projects as defined under 
     subsection (d)(2) on a semi-annual basis every year that such 
     bond is outstanding in an annual amount equal to one-half of 
     the rate on United States Treasury Bills of the same maturity 
     multiplied by the outstanding principle balance of rural 
     renaissance bonds issued by such issuer.
       ``(k) Special Rules Relating to Pool Bonds.--No portion of 
     a pooled financing bond may be allocable to loan unless the 
     borrower has entered into a written loan commitment for such 
     portion prior to the issue date of such issue.
       ``(l) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Bond.--The term `bond' includes any obligation.
       ``(2) Pooled financing bond.--The term `pooled financing 
     bond' shall have the meaning given such term by section 
     149(f)(4)(A).
       ``(3) Rural area.--The term `rural area' means any area 
     other than--
       ``(A) a city or town which has a population of greater than 
     50,000 inhabitants, or
       ``(B) the urbanized area contiguous and adjacent to such a 
     city or town.
       ``(4) Partnership; s corporation; and other pass-thru 
     entities.--
       ``(A) In general.--Under regulations prescribed by the 
     Secretary, in the case of a partnership, trust, S 
     corporation, or other pass-thru entity, rules similar to the 
     rules of section 41(g) shall apply with respect to the credit 
     allowable under subsection (a).
       ``(B) No basis adjustment.--In the case of a bond held by a 
     partnership or an S corporation, rules similar to the rules 
     under section 1397E(i) shall apply.
       ``(5) Bonds held by regulated investment companies.--If any 
     rural renaissance bond is held by a regulated investment 
     company, the credit determined under subsection (a) shall be 
     allowed to shareholders of such company under procedures 
     prescribed by the Secretary.
       ``(6) Reporting.--Issuers of rural renaissance bonds shall 
     submit reports similar to the reports required under section 
     149(e).''.
       (b) Reporting.--Subsection (d) of section 6049 (relating to 
     returns regarding payments of interest) is amended by adding 
     at the end the following new paragraph:
       ``(9) Reporting of credit on rural renaissance bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest' includes amounts includible in gross income under 
     section 54(f) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 54(b)(4)).
       ``(B) Reporting to corporations, etc.--Except as otherwise 
     provided in regulations, in the case of any interest 
     described in subparagraph (A), subsection (b)(4) shall be 
     applied without regard to subparagraphs (A), (H), (I), (J), 
     (K), and (L)(i) of such subsection.
       ``(C) Regulatory authority.--The Secretary may prescribe 
     such regulations as are necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations which 
     require more frequent or more detailed reporting.''.
       (c) Conforming Amendment.--The table of sections for 
     subpart H of part IV of subchapter A of chapter 1 is amended 
     by adding at the end the following new item:

``Sec. 54A. Credit to holders of rural renaissance bonds.''.

       (d) Issuance of Regulations.--The Secretary of Treasury 
     shall issue regulations required under section 54A of the 
     Internal Revenue Code of 1986 (as added by this section) not 
     later than 120 days after the date of the enactment of this 
     Act.
       (e) Effective Date.--The amendments made by this section 
     shall apply to bonds issued after the date of the enactment 
     of this Act and before January 1, 2010.

     SEC. 569. MODIFICATION OF TREATMENT OF LOANS TO QUALIFIED 
                   CONTINUING CARE FACILITIES.

       (a) In General.--Subsection (g) of section 7872 is amended 
     to read as follows:
       ``(g) Exception for Loans to Qualified Continuing Care 
     Facilities.--
       ``(1) In general.--This section shall not apply for any 
     calendar year to any below-market loan owed by a facility 
     which on the last day of such year is a continuing care 
     facility, if such loan was made pursuant to a continuing care 
     contract and if the lender (or the lender's spouse) attains 
     age 62 before the close of such year.
       ``(2) Continuing care contract.--For purposes of this 
     section, the term `continuing care contract' means a written 
     contract between an individual and a qualified continuing 
     care facility under which--
       ``(A) the individual or individual's spouse may use a 
     qualified continuing care facility for their life or lives,
       ``(B) the individual or individual's spouse will be 
     provided with housing in an independent living unit (which 
     has additional available facilities outside such unit for the 
     provision of meals and other personal care), an assisted 
     living facility or a nursing facility, as is available in the 
     continuing care facility, as appropriate for the health of 
     such individual or individual's spouse, and
       ``(C) the individual or individual's spouse will be 
     provided assisted living or nursing care as the health of 
     such individual or individual's spouse requires, and as is 
     available in the continuing care facility.
       ``(3) Qualified continuing care facility.--
       ``(A) In general.--For purposes of this section, the term 
     `qualified continuing care facility' means 1 or more 
     facilities--
       ``(i) which are designed to provide services under 
     continuing care contracts,
       ``(ii) that include an independent living unit, plus an 
     assisted living or nursing facility, or both, and
       ``(iii) substantially all of the independent living unit 
     residents of which are covered by continuing care contracts.
       ``(B) Nursing homes excluded.--The term `qualified 
     continuing care facility' shall not include any facility 
     which is of a type which is traditionally considered a 
     nursing home.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to loans made after December 31, 2005.

     SEC. 570. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 
                   APPLICABLE TO LARGE INTEGRATED OIL COMPANIES 
                   WHICH ARE DUAL CAPACITY TAXPAYERS.

       (a) In General.--Section 901 (relating to credit for taxes 
     of foreign countries and of possessions of the United 
     States), as amended by this Act, is amended by redesignating 
     subsections (m) and (n) as subsections (n) and (o), 
     respectively, and by inserting after subsection (l) the 
     following new subsection:
       ``(m) Special Rules Relating To Large Integrated Oil 
     Companies Which Are Dual Capacity Taxpayers.--
       ``(1) General rule.--Notwithstanding any other provision of 
     this chapter, any amount paid or accrued by a dual capacity 
     taxpayer which is a large integrated oil company to a foreign 
     country or possession of the United States for any period 
     shall not be considered a tax--
       ``(A) if, for such period, the foreign country or 
     possession does not impose a generally applicable income tax, 
     or
       ``(B) to the extent such amount exceeds the amount 
     (determined in accordance with regulations) which--
       ``(i) is paid by such dual capacity taxpayer pursuant to 
     the generally applicable income tax imposed by the country or 
     possession, or
       ``(ii) would be paid if the generally applicable income tax 
     imposed by the country or possession were applicable to such 
     dual capacity taxpayer.

     Nothing in this paragraph shall be construed to imply the 
     proper treatment of any such amount not in excess of the 
     amount determined under subparagraph (B).
       ``(2) Dual capacity taxpayer.--For purposes of this 
     subsection, the term `dual capacity taxpayer' means, with 
     respect to any foreign country or possession of the United 
     States, a person who--
       ``(A) is subject to a levy of such country or possession, 
     and
       ``(B) receives (or will receive) directly or indirectly a 
     specific economic benefit (as determined in accordance with 
     regulations) from such country or possession.
       ``(3) Generally applicable income tax.--For purposes of 
     this subsection--
       ``(A) In general.--The term `generally applicable income 
     tax' means an income tax (or a series of income taxes) which 
     is generally imposed under the laws of a foreign country or 
     possession on income derived from the conduct of a trade or 
     business within such country or possession.
       ``(B) Exceptions.--Such term shall not include a tax unless 
     it has substantial application, by its terms and in practice, 
     to--
       ``(i) persons who are not dual capacity taxpayers, and
       ``(ii) persons who are citizens or residents of the foreign 
     country or possession.
       ``(4) Large integrated oil company.--For purposes of this 
     subsection, the term `large integrated oil company' means, 
     with respect to any taxable year, an integrated oil company 
     (as defined in section 291(b)(4)) which--
       ``(A) had gross receipts in excess of $1,000,000,000 for 
     such taxable year, and
       ``(B) has an average daily worldwide production of crude 
     oil of at least 500,000 barrels for such taxable year.''
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxes paid or accrued in taxable years beginning 
     after the date of the enactment of this Act.
       (2) Contrary treaty obligations upheld.--The amendments 
     made by this section shall not apply to the extent contrary 
     to any treaty obligation of the United States.

     SEC. 571. EXCLUSION OF GAIN FROM SALE OF A PRINCIPAL 
                   RESIDENCE BY CERTAIN EMPLOYEES OF THE 
                   INTELLIGENCE COMMUNITY.

       (a) In General.--Subparagraph (A) of section 121(d)(9) 
     (relating to exclusion of gain from sale of principal 
     residence) is amended by striking ``duty'' and all that 
     follows and inserting ``duty--
       ``(i) as a member of the uniformed services,
       ``(ii) as a member of the Foreign Service of the United 
     States, or
       ``(iii) as an employee of the intelligence community.''.
       (b) Employee of Intelligence Community Defined.--
     Subparagraph (C) of section 121(d)(9) is amended by 
     redesignating clause (iv) as clause (v) and by inserting 
     after clause (iii) the following new clause:

[[Page 27164]]

       ``(iv) Employee of intelligence community.--The term 
     `employee of the intelligence community' means an employee 
     (as defined by section 2105 of title 5, United States Code) 
     of--

       ``(I) the Office of the Director of National Intelligence,
       ``(II) the Central Intelligence Agency,
       ``(III) the National Security Agency,
       ``(IV) the Defense Intelligence Agency,
       ``(V) the National Geospatial-Intelligence Agency,
       ``(VI) the National Reconnaissance Office,
       ``(VII) any other office within the Department of Defense 
     for the collection of specialized national intelligence 
     through reconnaissance programs,
       ``(VIII) any of the intelligence elements of the Army, the 
     Navy, the Air Force, the Marine Corps, the Federal Bureau of 
     Investigation, the Department of Treasury, the Department of 
     Energy, and the Coast Guard,
       ``(IX) the Bureau of Intelligence and Research of the 
     Department of State, or
       ``(X) any of the elements of the Department of Homeland 
     Security concerned with the analyses of foreign intelligence 
     information.''.

       (c) Special Rule.--Subparagraph (C) of section 121(d)(9), 
     as amended by subsection (b), is amended by adding at the end 
     the following new clause:
       ``(vi) Special rule relating to intelligence community.--An 
     employee of the intelligence community shall not be treated 
     as serving on qualified extended duty unless--

       ``(I) for purposes of such duty such employee has moved 
     from 1 duty station to another, and
       ``(II) at least 1 of such duty stations is located outside 
     of the Washington, District of Columbia, and Baltimore 
     metropolitan statistical areas (as defined by the Secretary 
     of Commerce).''.

       (d) Conforming Amendment.--The heading for section 
     121(d)(9) is amended to read as follows: ``Uniformed 
     services, foreign service, and intelligence community''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to sales or exchanges after the date of the 
     enactment of this Act.

     SEC. 572. DISABILITY PREFERENCE PROGRAM FOR TAX COLLECTION 
                   CONTRACTS.

       (a) In General.--The Secretary of the Treasury shall not 
     enter into any qualified tax collection contract after April 
     1, 2006, until the Secretary implements a disability 
     preference program that meets the requirements of subsection 
     (b).
       (b) Disability Preference Program Requirements.--
       (1) In general.--A disability preference program meets the 
     requirements of this subsection if such program requires that 
     not less than 10 percent of the accounts of each dollar value 
     category are awarded to persons described in paragraph (2).
       (2) Person described.--For purposes of paragraph (1), a 
     person is described in this paragraph if--
       (A) as of the date any qualified tax collection contract is 
     awarded--
       (i) such person employs not less than 50 severely disabled 
     individuals within the United States; or
       (ii) not less than 30 percent of the employees of such 
     person within the United States are severely disabled 
     individuals;
       (B) such person agrees as a condition of the qualified tax 
     collection contract that not more than 90 days after the date 
     such contract is awarded, not less than 35 percent of the 
     employees of such person employed in connection with 
     providing services under such contract shall--
       (i) be hired after the date such contract is awarded; and
       (ii) be severely disabled individuals; and
       (C) such person is otherwise qualified to perform the 
     services required.
       (c) Definitions.--For purposes of this section--
       (1) Qualified tax collection contract.--The term 
     ``qualified tax collection contract'' shall have the meaning 
     given such term under section 6306(b) of the Internal Revenue 
     Code of 1986.
       (2) Dollar value category.--The term ``dollar value 
     category'' means the dollar ranges of accounts for collection 
     as determined and assigned by the Secretary under section 
     6306(b)(1)(B) of the Internal Revenue Code of 1986 with 
     respect to a qualified tax collection contract.
       (3) Severely disabled individual.--The term ``severely 
     disabled individual'' means--
       (A) a veteran of the United States armed forces with a 
     disability of 50 percent or greater--
       (i) determined by the Secretary of Veterans Affairs to be 
     service-connected; or
       (ii) deemed by law to be service-connected; or
       (B) any individual who is a disabled beneficiary (as 
     defined in section 1148(k)(2) of the Social Security Act (42 
     U.S.C. 1320b-19(k)(2))) or who would be considered to be such 
     a disabled beneficiary but for having income or resources in 
     excess of the income or resources eligibility limits 
     established under title XVI of the Social Security Act (42 
     U.S.C. 1381 et seq.), respectively.

           TITLE VI--COMPLIANCE WITH CONGRESSIONAL BUDGET ACT

     SEC. 601. SUNSET OF CERTAIN PROVISIONS AND AMENDMENTS.

       The provisions of, and amendments made by, title I, title 
     II, subtitle A of title III, and title IV shall not apply to 
     taxable years beginning after September 30, 2010, and the 
     Internal Revenue Code of 1986 shall be applied and 
     administered to such years as if such provisions and 
     amendments had never been enacted.
                                 ______
                                 
  SA 2671. Mr. FRIST (for Mr. Enzi) proposed an amendment to the bill 
S. 1418, to enhance the adoption of a nationwide interoperable health 
information technology system and to improve the quality and reduce the 
costs of health care in the United States; as follows:

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Wired for Health Care 
     Quality Act''.

     SEC. 2. IMPROVING HEALTH CARE QUALITY, SAFETY, AND 
                   EFFICIENCY.

       The Public Health Service Act (42 U.S.C. 201 et seq.) is 
     amended by adding at the end the following:

        ``TITLE XXIX--HEALTH INFORMATION TECHNOLOGY AND QUALITY

     ``SEC. 2901. DEFINITIONS.

       ``In this title:
       ``(1) Health care provider.--The term `health care 
     provider' means a hospital, skilled nursing facility, home 
     health entity, health care clinic, federally qualified health 
     center, group practice (as defined in section 1877(h)(4) of 
     the Social Security Act), a pharmacist, a pharmacy, a 
     laboratory, a physician (as defined in section 1861(r) of the 
     Social Security Act), a practitioner (as defined in section 
     1842(b)(18)(CC) of the Social Security Act), a health 
     facility operated by or pursuant to a contract with the 
     Indian Health Service, a rural health clinic, and any other 
     category of facility or clinician determined appropriate by 
     the Secretary.
       ``(2) Health information.--The term `health information' 
     has the meaning given such term in section 1171(4) of the 
     Social Security Act.
       ``(3) Health insurance plan.--The term `health insurance 
     plan' means--
       ``(A) a health insurance issuer (as defined in section 
     2791(b)(2));
       ``(B) a group health plan (as defined in section 
     2791(a)(1)); and
       ``(C) a health maintenance organization (as defined in 
     section 2791(b)(3)).
       ``(4) Individually identifiable health information.--The 
     term `individually identifiable health information' has the 
     meaning given such term in section 1171 of the Social 
     Security Act.
       ``(5) Laboratory.--The term `laboratory' has the meaning 
     given that term in section 353.
       ``(6) Pharmacist.--The term `pharmacist' has the meaning 
     given that term in section 804 of the Federal Food, Drug, and 
     Cosmetic Act.
       ``(7) Qualified health information technology.--The term 
     `qualified health information technology' means a 
     computerized system (including hardware and software) that--
       ``(A) protects the privacy and security of health 
     information;
       ``(B) maintains and provides permitted access to health 
     information in an electronic format;
       ``(C) incorporates decision support to reduce medical 
     errors and enhance health care quality;
       ``(D) complies with the standards adopted by the Federal 
     Government under section 2903; and
       ``(E) allows for the reporting of quality measures under 
     section 2907.
       ``(8) State.--The term `State' means each of the several 
     States, the District of Columbia, Puerto Rico, the Virgin 
     Islands, Guam, American Samoa, and the Northern Mariana 
     Islands.

     ``SEC. 2902. OFFICE OF THE NATIONAL COORDINATOR OF HEALTH 
                   INFORMATION TECHNOLOGY.

       ``(a) Office of National Health Information Technology.--
     There is established within the Office of the Secretary an 
     Office of the National Coordinator of Health Information 
     Technology (referred to in this section as the `Office'). The 
     Office shall be headed by a National Coordinator who shall be 
     appointed by the Secretary and shall report directly to the 
     Secretary.
       ``(b) Purpose.--It shall be the purpose of the Office to 
     coordinate with relevant Federal agencies and private 
     entities and oversee programs and activities to develop a 
     nationwide interoperable health information technology 
     infrastructure that--
       ``(1) ensures that patients' individually identifiable 
     health information is secure and protected;
       ``(2) improves health care quality, reduces medical errors, 
     and advances the delivery of patient-centered medical care;
       ``(3) reduces health care costs resulting from 
     inefficiency, medical errors, inappropriate care, and 
     incomplete information;
       ``(4) ensures that appropriate information to help guide 
     medical decisions is available at the time and place of care;

[[Page 27165]]

       ``(5) promotes a more effective marketplace, greater 
     competition, and increased choice through the wider 
     availability of accurate information on health care costs, 
     quality, and outcomes;
       ``(6) improves the coordination of care and information 
     among hospitals, laboratories, physician offices, and other 
     entities through an effective infrastructure for the secure 
     and authorized exchange of health care information;
       ``(7) improves public health reporting and facilitates the 
     early identification and rapid response to public health 
     threats and emergencies, including bioterror events and 
     infectious disease outbreaks;
       ``(8) facilitates health research; and
       ``(9) promotes prevention of chronic diseases.
       ``(c) Duties of the National Coordinator.--The National 
     Coordinator shall--
       ``(1) serve as the principal advisor to the Secretary 
     concerning the development, application, and use of health 
     information technology, and coordinate and oversee the health 
     information technology programs of the Department;
       ``(2) facilitate the adoption of a nationwide, 
     interoperable system for the electronic exchange of health 
     information;
       ``(3) ensure the adoption and implementation of standards 
     for the electronic exchange of health information to reduce 
     cost and improve health care quality;
       ``(4) ensure that health information technology policy and 
     programs of the Department are coordinated with those of 
     relevant executive branch agencies (including Federal 
     commissions) with a goal of avoiding duplication of efforts 
     and of helping to ensure that each agency undertakes health 
     information technology activities primarily within the areas 
     of its greatest expertise and technical capability;
       ``(5) to the extent permitted by law, coordinate outreach 
     and consultation by the relevant executive branch agencies 
     (including Federal commissions) with public and private 
     parties of interest, including consumers, payers, employers, 
     hospitals and other health care providers, physicians, 
     community health centers, laboratories, vendors and other 
     stakeholders;
       ``(6) advise the President regarding specific Federal 
     health information technology programs; and
       ``(7) prepare the reports described under section 2903(i) 
     (excluding paragraph (4) of such section).
       ``(d) Detail of Federal Employees.--
       ``(1) In general.--Upon the request of the National 
     Coordinator, the head of any Federal agency is authorized to 
     detail, with or without reimbursement from the Office, any of 
     the personnel of such agency to the Office to assist it in 
     carrying out its duties under this section.
       ``(2) Effect of detail.--Any detail of personnel under 
     paragraph (1) shall--
       ``(A) not interrupt or otherwise affect the civil service 
     status or privileges of the Federal employee; and
       ``(B) be in addition to any other staff of the Department 
     employed by the National Coordinator.
       ``(3) Acceptance of detailees.--Notwithstanding any other 
     provision of law, the Office may accept detailed personnel 
     from other Federal agencies without regard to whether the 
     agency described under paragraph (1) is reimbursed.
       ``(e) Rule of Construction.--Nothing in this section shall 
     be construed to require the duplication of Federal efforts 
     with respect to the establishment of the Office, regardless 
     of whether such efforts were carried out prior to or after 
     the enactment of this title.
       ``(f) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section, 
     $5,000,000 for fiscal year 2006, $5,000,000 for fiscal year 
     2007, and such sums as may be necessary for each of fiscal 
     years 2008 through 2010.

     ``SEC. 2903. AMERICAN HEALTH INFORMATION COLLABORATIVE.

       ``(a) Purpose.--The Secretary shall establish the public-
     private American Health Information Collaborative (referred 
     to in this section as the `Collaborative') to--
       ``(1) advise the Secretary and recommend specific actions 
     to achieve a nationwide interoperable health information 
     technology infrastructure;
       ``(2) serve as a forum for the participation of a broad 
     range of stakeholders to provide input on achieving the 
     interoperability of health information technology; and
       ``(3) recommend standards (including content, 
     communication, and security standards) for the electronic 
     exchange of health information (including for the reporting 
     of quality data under section 2907) for adoption by the 
     Federal Government and voluntary adoption by private 
     entities.
       ``(b) Composition.--
       ``(1) In general.--The Collaborative shall be composed of 
     members of the public and private sectors to be appointed by 
     the Secretary, including representatives from--
       ``(A) consumer or patient organizations;
       ``(B) organizations with expertise in privacy and security;
       ``(C) health care providers;
       ``(D) health insurance plans or other third party payors;
       ``(E) information technology vendors; and
       ``(F) purchasers or employers.
       ``(2) Participation.--In appointing members under paragraph 
     (1), and in developing the procedures for conducting the 
     activities of the Collaborative, the Secretary shall ensure a 
     balance among various sectors of the health care system so 
     that no single sector unduly influences the recommendations 
     of the Collaborative.
       ``(3) Terms.--Members appointed under paragraph (1) shall 
     serve for 2 year terms, except that any member appointed to 
     fill a vacancy for an unexpired term shall be appointed for 
     the remainder of such term. A member may serve for not to 
     exceed 180 days after the expiration of such member's term or 
     until a successor has been appointed.
       ``(4) Outside involvement.--With respect to the functions 
     of the Collaborative, the Secretary shall ensure an adequate 
     opportunity for the participation of outside advisors, 
     including individuals with expertise in--
       ``(A) health information privacy;
       ``(B) health information security;
       ``(C) health care quality and patient safety, including 
     individuals with expertise in utilizing health information 
     technology to improve health care quality and patient safety;
       ``(D) data exchange; and
       ``(E) developing health information technology standards 
     and new health information technology.
       ``(c) Recommendations and Policies.--Not later than 1 year 
     after the date of enactment of this title, and annually 
     thereafter, the Collaborative shall recommend to the 
     Secretary uniform national policies for adoption by the 
     Federal Government and voluntary adoption by private entities 
     to support the widespread adoption of health information 
     technology, including--
       ``(1) protection of individually identifiable health 
     information through privacy and security practices;
       ``(2) measures to prevent unauthorized access to health 
     information, including unauthorized access through the use of 
     certain peer-to-peer file-sharing applications;
       ``(3) methods to notify patients if their individually 
     identifiable health information is wrongfully disclosed;
       ``(4) methods to facilitate secure patient access to health 
     information;
       ``(5) fostering the public understanding of health 
     information technology;
       ``(6) the ongoing harmonization of industry-wide health 
     information technology standards;
       ``(7) recommendations for a nationwide interoperable health 
     information technology infrastructure;
       ``(8) the identification and prioritization of specific use 
     cases for which health information technology is valuable, 
     beneficial, and feasible;
       ``(9) recommendations for the establishment of an entity to 
     ensure the continuation of the functions of the 
     Collaborative; and
       ``(10) other policies (including recommendations for 
     incorporating health information technology into the 
     provision of care and the organization of the health care 
     workplace) determined to be necessary by the Collaborative.
       ``(d) Standards.--
       ``(1) Existing standards.--The standards adopted by the 
     Consolidated Health Informatics Initiative shall be deemed to 
     have been recommended by the Collaborative under this 
     section.
       ``(2) First year review.--Not later than 1 year after the 
     date of enactment of this title, the Collaborative shall--
       ``(A) review existing standards (including content, 
     communication, and security standards) for the electronic 
     exchange of health information;
       ``(B) identify deficiencies and omissions in such existing 
     standards; and
       ``(C) identify duplication and overlap in such existing 
     standards;
     and recommend new standards and modifications to such 
     existing standards as necessary.
       ``(3) Ongoing review.--Beginning 1 year after the date of 
     enactment of this title, and annually thereafter, the 
     Collaborative shall--
       ``(A) review existing standards (including content, 
     communication, and security standards) for the electronic 
     exchange of health information;
       ``(B) identify deficiencies and omissions in such existing 
     standards; and
       ``(C) identify duplication and overlap in such existing 
     standards;
     and recommend new standards and modifications to such 
     existing standards as necessary.
       ``(4) Limitation.--The standards and timeframe for adoption 
     described in this section shall be consistent with any 
     standards developed pursuant to the Health Insurance 
     Portability and Accountability Act of 1996.
       ``(e) Federal Action.--Not later than 90 days after the 
     issuance of a recommendation from the Collaborative under 
     subsection (d)(2), the Secretary of Health and Human 
     Services, the Secretary of Veterans Affairs, and the 
     Secretary of Defense, in collaboration with representatives 
     of other relevant Federal agencies, as determined appropriate 
     by the Secretary, shall jointly review such recommendations. 
     If appropriate, the Secretary shall provide for the adoption 
     by the

[[Page 27166]]

     Federal Government of any standard or standards contained in 
     such recommendation.
       ``(f) Coordination of Federal Spending.--
       ``(1) In general.--Not later than 1 year after the adoption 
     by the Federal Government of a recommendation as provided for 
     in subsection (e), and in compliance with chapter 113 of 
     title 40, United States Code, no Federal agency shall expend 
     Federal funds for the purchase of any new health information 
     technology or health information technology system for 
     clinical care or for the electronic retrieval, storage, or 
     exchange of health information that is not consistent with 
     applicable standards adopted by the Federal Government under 
     subsection (e).
       ``(2) Rule of construction.--Nothing in paragraph (1) shall 
     be construed to restrict the purchase of minor (as determined 
     by the Secretary) hardware or software components in order to 
     modify, correct a deficiency in, or extend the life of 
     existing hardware or software.
       ``(g) Coordination of Federal Data Collection.--Not later 
     than 3 years after the adoption by the Federal Government of 
     a recommendation as provided for in subsection (e), all 
     Federal agencies collecting health data for the purposes of 
     quality reporting, surveillance, epidemiology, adverse event 
     reporting, research, or for other purposes determined 
     appropriate by the Secretary, shall comply with standards 
     adopted under subsection (e).
       ``(h) Voluntary Adoption.--
       ``(1) In general.--Any standards adopted by the Federal 
     Government under subsection (e) shall be voluntary with 
     respect to private entities.
       ``(2) Rule of construction.--Nothing in this section shall 
     be construed to require that a private entity that enters 
     into a contract with the Federal Government adopt the 
     standards adopted by the Federal Government under this 
     section with respect to activities not related to the 
     contract.
       ``(3) Limitation.--Private entities that enter into a 
     contract with the Federal Government shall adopt the 
     standards adopted by the Federal Government under this 
     section for the purpose of activities under such Federal 
     contract.
       ``(i) Reports.--The Secretary shall submit to the Committee 
     on Health, Education, Labor, and Pensions and the Committee 
     on Finance of the Senate and the Committee on Energy and 
     Commerce and the Committee on Ways and Means of the House of 
     Representatives, on an annual basis, a report that--
       ``(1) describes the specific actions that have been taken 
     by the Federal Government and private entities to facilitate 
     the adoption of an interoperable nationwide system for the 
     electronic exchange of health information;
       ``(2) describes barriers to the adoption of such a 
     nationwide system;
       ``(3) contains recommendations to achieve full 
     implementation of such a nationwide system; and
       ``(4) contains a plan and progress toward the establishment 
     of an entity to ensure the continuation of the functions of 
     the Collaborative.
       ``(j) Application of FACA.--The Federal Advisory Committee 
     Act (5 U.S.C. App.) shall apply to the Collaborative, except 
     that the term provided for under section 14(a)(2) shall be 5 
     years.
       ``(k) Rule of Construction.--Nothing in this section shall 
     be construed to require the duplication of Federal efforts 
     with respect to the establishment of the Collaborative, 
     regardless of whether such efforts were carried out prior to 
     or after the enactment of this title.
       ``(l) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section, 
     $4,000,000 for fiscal year 2006, $4,000,000 for fiscal year 
     2007, and such sums as may be necessary for each of fiscal 
     years 2008 through 2010.

     ``SEC. 2904. IMPLEMENTATION AND CERTIFICATION OF HEALTH 
                   INFORMATION STANDARDS.

       ``(a) Implementation.--
       ``(1) In general.--The Secretary, based upon the 
     recommendations of the Collaborative, shall develop criteria 
     to ensure uniform and consistent implementation of any 
     standards for the electronic exchange of health information 
     voluntarily adopted by private entities in technical 
     conformance with such standards adopted under this title.
       ``(2) Implementation assistance.--The Secretary may 
     recognize a private entity or entities to assist private 
     entities in the implementation of the standards adopted under 
     this title using the criteria developed by the Secretary 
     under this section.
       ``(b) Certification.--
       ``(1) In general.--The Secretary, based upon the 
     recommendations of the Collaborative, shall develop criteria 
     to ensure and certify that hardware and software that claim 
     to be in compliance with applicable standards for the 
     electronic exchange of health information adopted under this 
     title have established and maintained such compliance in 
     technical conformance with such standards.
       ``(2) Certification assistance.--The Secretary may 
     recognize a private entity or entities to assist in the 
     certification described under paragraph (1) using the 
     criteria developed by the Secretary under this section.
       ``(c) Outside Involvement.--The Secretary, through 
     consultation with the Collaborative, may accept 
     recommendations on the development of the criteria under 
     subsections (a) and (b) from a Federal agency or private 
     entity.

     ``SEC. 2905. GRANTS TO FACILITATE THE WIDESPREAD ADOPTION OF 
                   INTEROPERABLE HEALTH INFORMATION TECHNOLOGY.

       ``(a) Competitive Grants to Facilitate the Widespread 
     Adoption of Health Information Technology.--
       ``(1) In general.--The Secretary may award competitive 
     grants to eligible entities to facilitate the purchase and 
     enhance the utilization of qualified health information 
     technology systems to improve the quality and efficiency of 
     health care.
       ``(2) Eligibility.--To be eligible to receive a grant under 
     paragraph (1) an entity shall--
       ``(A) submit to the Secretary an application at such time, 
     in such manner, and containing such information as the 
     Secretary may require;
       ``(B) submit to the Secretary a strategic plan for the 
     implementation of data sharing and interoperability measures;
       ``(C) be a--
       ``(i) not for profit hospital, including a federally 
     qualified health center (as defined in section 1861(aa)(4) of 
     the Social Security Act);
       ``(ii) individual or group practice; or
       ``(iii) another health care provider not described in 
     clause (i) or (ii);
       ``(D) adopt the standards adopted by the Federal Government 
     under section 2903;
       ``(E) implement the measures adopted under section 2907 and 
     report to the Secretary on such measures;
       ``(F) agree to notify patients if their individually 
     identifiable health information is wrongfully disclosed;
       ``(G) demonstrate significant financial need; and
       ``(H) provide matching funds in accordance with paragraph 
     (4).
       ``(3) Use of funds.--Amounts received under a grant under 
     this subsection shall be used to facilitate the purchase and 
     enhance the utilization of qualified health information 
     technology systems and training personnel in the use of such 
     technology.
       ``(4) Matching requirement.--To be eligible for a grant 
     under this subsection an entity shall contribute non-Federal 
     contributions to the costs of carrying out the activities for 
     which the grant is awarded in an amount equal to $1 for each 
     $3 of Federal funds provided under the grant.
       ``(5) Preference in awarding grants.--In awarding grants 
     under this subsection the Secretary shall give preference 
     to--
       ``(A) eligible entities that are located in rural, 
     frontier, and other underserved areas as determined by the 
     Secretary;
       ``(B) eligible entities that will link, to the extent 
     practicable, the qualified health information system to local 
     or regional health information plan or plans; and
       ``(C) with respect to an entity described in subsection 
     (a)(2)(C)(iii), a nonprofit health care provider.
       ``(b) Competitive Grants to States for the Development of 
     State Loan Programs to Facilitate the Widespread Adoption of 
     Health Information Technology.--
       ``(1) In general.--The Secretary may award competitive 
     grants to States for the establishment of State programs for 
     loans to health care providers to facilitate the purchase and 
     enhance the utilization of qualified health information 
     technology.
       ``(2) Establishment of fund.--To be eligible to receive a 
     competitive grant under this subsection, a State shall 
     establish a qualified health information technology loan fund 
     (referred to in this subsection as a `State loan fund') and 
     comply with the other requirements contained in this section. 
     A grant to a State under this subsection shall be deposited 
     in the State loan fund established by the State. No funds 
     authorized by other provisions of this title to be used for 
     other purposes specified in this title shall be deposited in 
     any State loan fund.
       ``(3) Eligibility.--To be eligible to receive a grant under 
     paragraph (1) a State shall--
       ``(A) submit to the Secretary an application at such time, 
     in such manner, and containing such information as the 
     Secretary may require;
       ``(B) submit to the Secretary a strategic plan in 
     accordance with paragraph (4);
       ``(C) establish a qualified health information technology 
     loan fund in accordance with paragraph (2);
       ``(D) require that health care providers receiving such 
     loans--
       ``(i) link, to the extent practicable, the qualified health 
     information system to a local or regional health information 
     network;
       ``(ii) consult with the Health Information Technology 
     Resource Center established in section 914(d) to access the 
     knowledge and experience of existing initiatives regarding 
     the successful implementation and effective use of health 
     information technology; and
       ``(iii) agree to notify patients if their individually 
     identifiable health information is wrongfully disclosed;
       ``(E) require that health care providers receiving such 
     loans adopt the standards

[[Page 27167]]

     adopted by the Federal Government under section 2903;
       ``(F) require that health care providers receiving such 
     loans implement the measures adopted under section 2907 and 
     report to the Secretary on such measures; and
       ``(G) provide matching funds in accordance with paragraph 
     (8).
       ``(4) Strategic plan.--
       ``(A) In general.--A State that receives a grant under this 
     subsection shall annually prepare a strategic plan that 
     identifies the intended uses of amounts available to the 
     State loan fund of the State.
       ``(B) Contents.--A strategic plan under subparagraph (A) 
     shall include--
       ``(i) a list of the projects to be assisted through the 
     State loan fund in the first fiscal year that begins after 
     the date on which the plan is submitted;
       ``(ii) a description of the criteria and methods 
     established for the distribution of funds from the State loan 
     fund; and
       ``(iii) a description of the financial status of the State 
     loan fund and the short-term and long-term goals of the State 
     loan fund.
       ``(5) Use of funds.--
       ``(A) In general.--Amounts deposited in a State loan fund, 
     including loan repayments and interest earned on such 
     amounts, shall be used only for awarding loans or loan 
     guarantees, or as a source of reserve and security for 
     leveraged loans, the proceeds of which are deposited in the 
     State loan fund established under paragraph (1). Loans under 
     this section may be used by a health care provider to 
     facilitate the purchase and enhance the utilization of 
     qualified health information technology and training of 
     personnel in the use of such technology.
       ``(B) Limitation.--Amounts received by a State under this 
     subsection may not be used--
       ``(i) for the purchase or other acquisition of any health 
     information technology system that is not a qualified health 
     information technology system;
       ``(ii) to conduct activities for which Federal funds are 
     expended under this title, or the amendments made by the 
     Wired for Health Care Quality Act; or
       ``(iii) for any purpose other than making loans to eligible 
     entities under this section.
       ``(6) Types of assistance.--Except as otherwise limited by 
     applicable State law, amounts deposited into a State loan 
     fund under this subsection may only be used for the 
     following:
       ``(A) To award loans that comply with the following:
       ``(i) The interest rate for each loan shall be less than or 
     equal to the market interest rate.
       ``(ii) The principal and interest payments on each loan 
     shall commence not later than 1 year after the loan was 
     awarded, and each loan shall be fully amortized not later 
     than 10 years after the date of the loan.
       ``(iii) The State loan fund shall be credited with all 
     payments of principal and interest on each loan awarded from 
     the fund.
       ``(B) To guarantee, or purchase insurance for, a local 
     obligation (all of the proceeds of which finance a project 
     eligible for assistance under this subsection) if the 
     guarantee or purchase would improve credit market access or 
     reduce the interest rate applicable to the obligation 
     involved.
       ``(C) As a source of revenue or security for the payment of 
     principal and interest on revenue or general obligation bonds 
     issued by the State if the proceeds of the sale of the bonds 
     will be deposited into the State loan fund.
       ``(D) To earn interest on the amounts deposited into the 
     State loan fund.
       ``(7) Administration of state loan funds.--
       ``(A) Combined financial administration.--A State may (as a 
     convenience and to avoid unnecessary administrative costs) 
     combine, in accordance with State law, the financial 
     administration of a State loan fund established under this 
     subsection with the financial administration of any other 
     revolving fund established by the State if otherwise not 
     prohibited by the law under which the State loan fund was 
     established.
       ``(B) Cost of administering fund.--Each State may annually 
     use not to exceed 4 percent of the funds provided to the 
     State under a grant under this subsection to pay the 
     reasonable costs of the administration of the programs under 
     this section, including the recovery of reasonable costs 
     expended to establish a State loan fund which are incurred 
     after the date of enactment of this title.
       ``(C) Guidance and regulations.--The Secretary shall 
     publish guidance and promulgate regulations as may be 
     necessary to carry out the provisions of this subsection, 
     including--
       ``(i) provisions to ensure that each State commits and 
     expends funds allotted to the State under this subsection as 
     efficiently as possible in accordance with this title and 
     applicable State laws; and
       ``(ii) guidance to prevent waste, fraud, and abuse.
       ``(D) Private sector contributions.--
       ``(i) In general.--A State loan fund established under this 
     subsection may accept contributions from private sector 
     entities, except that such entities may not specify the 
     recipient or recipients of any loan issued under this 
     subsection.
       ``(ii) Availability of information.--A State shall make 
     publicly available the identity of, and amount contributed 
     by, any private sector entity under clause (i) and may issue 
     letters of commendation or make other awards (that have no 
     financial value) to any such entity.
       ``(8) Matching requirements.--
       ``(A) In general.--The Secretary may not make a grant under 
     paragraph (1) to a State unless the State agrees to make 
     available (directly or through donations from public or 
     private entities) non-Federal contributions in cash toward 
     the costs of the State program to be implemented under the 
     grant in an amount equal to not less than $1 for each $1 of 
     Federal funds provided under the grant.
       ``(B) Determination of amount of non-federal 
     contribution.--In determining the amount of non-Federal 
     contributions that a State has provided pursuant to 
     subparagraph (A), the Secretary may not include any amounts 
     provided to the State by the Federal Government.
       ``(9) Preference in awarding grants.--The Secretary may 
     give a preference in awarding grants under this subsection to 
     States that adopt value-based purchasing programs to improve 
     health care quality.
       ``(10) Reports.--The Secretary shall annually submit to the 
     Committee on Health, Education, Labor, and Pensions and the 
     Committee on Finance of the Senate, and the Committee on 
     Energy and Commerce and the Committee on Ways and Means of 
     the House of Representatives, a report summarizing the 
     reports received by the Secretary from each State that 
     receives a grant under this subsection.
       ``(c) Competitive Grants for the Implementation of Regional 
     or Local Health Information Technology Plans.--
       ``(1) In general.--The Secretary may award competitive 
     grants to eligible entities to implement regional or local 
     health information plans to improve health care quality and 
     efficiency through the electronic exchange of health 
     information pursuant to the standards, protocols, and other 
     requirements adopted by the Secretary under sections 2903 and 
     2907.
       ``(2) Eligibility.--To be eligible to receive a grant under 
     paragraph (1) an entity shall--
       ``(A) demonstrate financial need to the Secretary;
       ``(B) demonstrate that one of its principal missions or 
     purposes is to use information technology to improve health 
     care quality and efficiency;
       ``(C) adopt bylaws, memoranda of understanding, or other 
     charter documents that demonstrate that the governance 
     structure and decisionmaking processes of such entity allow 
     for participation on an ongoing basis by multiple 
     stakeholders within a community, including--
       ``(i) physicians (as defined in section 1861(r) of the 
     Social Security Act), including physicians that provide 
     services to low income and underserved populations;
       ``(ii) hospitals (including hospitals that provide services 
     to low income and underserved populations);
       ``(iii) pharmacists or pharmacies;
       ``(iv) health insurance plans;
       ``(v) health centers (as defined in section 330(b)) and 
     Federally qualified health centers (as defined in section 
     1861(aa)(4) of the Social Security Act);
       ``(vi) rural health clinics (as defined in section 1861(aa) 
     of the Social Security Act);
       ``(vii) patient or consumer organizations;
       ``(viii) employers; and
       ``(ix) any other health care providers or other entities, 
     as determined appropriate by the Secretary;
       ``(D) demonstrate the participation, to the extent 
     practicable, of stakeholders in the electronic exchange of 
     health information within the local or regional plan pursuant 
     to paragraph (2)(C);
       ``(E) adopt nondiscrimination and conflict of interest 
     policies that demonstrate a commitment to open, fair, and 
     nondiscriminatory participation in the health information 
     plan by all stakeholders;
       ``(F) adopt the standards adopted by the Secretary under 
     section 2903;
       ``(G) require that health care providers receiving such 
     grants implement the measures adopted under section 2907 and 
     report to the Secretary on such measures;
       ``(H) agree to notify patients if their individually 
     identifiable health information is wrongfully disclosed;
       ``(I) facilitate the electronic exchange of health 
     information within the local or regional area and among local 
     and regional areas;
       ``(J) prepare and submit to the Secretary an application in 
     accordance with paragraph (3); and
       ``(K) agree to provide matching funds in accordance with 
     paragraph (5).
       ``(3) Application.--
       ``(A) In general.--To be eligible to receive a grant under 
     paragraph (1), an entity shall submit to the Secretary an 
     application at such time, in such manner, and containing such 
     information as the Secretary may require.
       ``(B) Required information.--At a minimum, an application 
     submitted under this paragraph shall include--
       ``(i) clearly identified short-term and long-term 
     objectives of the regional or local health information plan;

[[Page 27168]]

       ``(ii) a technology plan that complies with the standards 
     adopted under section 2903 and that includes a descriptive 
     and reasoned estimate of costs of the hardware, software, 
     training, and consulting services necessary to implement the 
     regional or local health information plan;
       ``(iii) a strategy that includes initiatives to improve 
     health care quality and efficiency, including the use and 
     reporting of health care quality measures adopted under 
     section 2907;
       ``(iv) a plan that describes provisions to encourage the 
     implementation of the electronic exchange of health 
     information by all physicians, including single physician 
     practices and small physician groups participating in the 
     health information plan;
       ``(v) a plan to ensure the privacy and security of personal 
     health information that is consistent with Federal and State 
     law;
       ``(vi) a governance plan that defines the manner in which 
     the stakeholders shall jointly make policy and operational 
     decisions on an ongoing basis;
       ``(vii) a financial or business plan that describes--

       ``(I) the sustainability of the plan;
       ``(II) the financial costs and benefits of the plan; and
       ``(III) the entities to which such costs and benefits will 
     accrue; and

       ``(viii) in the case of an applicant entity that is unable 
     to demonstrate the participation of all stakeholders pursuant 
     to paragraph (2)(C), the justification from the entity for 
     any such nonparticipation.
       ``(4) Use of funds.--Amounts received under a grant under 
     paragraph (1) shall be used to establish and implement a 
     regional or local health information plan in accordance with 
     this subsection.
       ``(5) Matching requirement.--
       ``(A) In general.--The Secretary may not make a grant under 
     this subsection to an entity unless the entity agrees that, 
     with respect to the costs to be incurred by the entity in 
     carrying out the infrastructure program for which the grant 
     was awarded, the entity will make available (directly or 
     through donations from public or private entities) non-
     Federal contributions toward such costs in an amount equal to 
     not less than 50 percent of such costs ($1 for each $2 of 
     Federal funds provided under the grant).
       ``(B) Determination of amount contributed.--Non-Federal 
     contributions required under subparagraph (A) may be in cash 
     or in kind, fairly evaluated, including equipment, 
     technology, or services. Amounts provided by the Federal 
     Government, or services assisted or subsidized to any 
     significant extent by the Federal Government, may not be 
     included in determining the amount of such non-Federal 
     contributions.
       ``(d) Reports.--Not later than 1 year after the date on 
     which the first grant is awarded under this section, and 
     annually thereafter during the grant period, an entity that 
     receives a grant under this section shall submit to the 
     Secretary a report on the activities carried out under the 
     grant involved. Each such report shall include--
       ``(1) a description of the financial costs and benefits of 
     the project involved and of the entities to which such costs 
     and benefits accrue;
       ``(2) an analysis of the impact of the project on health 
     care quality and safety;
       ``(3) a description of any reduction in duplicative or 
     unnecessary care as a result of the project involved;
       ``(4) a description of the efforts of recipients under this 
     section to facilitate secure patient access to health 
     information; and
       ``(5) other information as required by the Secretary.
       ``(e) Requirement to Achieve Quality Improvement.--The 
     Secretary shall annually evaluate the activities conducted 
     under this section and shall, in awarding grants, implement 
     the lessons learned from such evaluation in a manner so that 
     awards made subsequent to each such evaluation are made in a 
     manner that, in the determination of the Secretary, will 
     result in the greatest improvement in quality measures under 
     section 2907.
       ``(f) Limitation.--An eligible entity may only receive one 
     non-renewable grant under subsection (a), one non-renewable 
     grant under subsection (b), and one non-renewable grant under 
     subsection (c).
       ``(g) Authorization of Appropriations.--
       ``(1) In general.--For the purpose of carrying out this 
     section, there is authorized to be appropriated $116,000,000 
     for fiscal year 2006, $141,000,000 for fiscal year 2007, and 
     such sums as may be necessary for each of fiscal years 2008 
     through 2010.
       ``(2) Availability.--Amounts appropriated under paragraph 
     (1) shall remain available through fiscal year 2010.

     ``SEC. 2906. DEMONSTRATION PROGRAM TO INTEGRATE INFORMATION 
                   TECHNOLOGY INTO CLINICAL EDUCATION.

       ``(a) In General.--The Secretary may award grants under 
     this section to carry out demonstration projects to develop 
     academic curricula integrating qualified health information 
     technology systems in the clinical education of health 
     professionals. Such awards shall be made on a competitive 
     basis and pursuant to peer review.
       ``(b) Eligibility.--To be eligible to receive a grant under 
     subsection (a), an entity shall--
       ``(1) submit to the Secretary an application at such time, 
     in such manner, and containing such information as the 
     Secretary may require;
       ``(2) submit to the Secretary a strategic plan for 
     integrating qualified health information technology in the 
     clinical education of health professionals and for ensuring 
     the consistent utilization of decision support software to 
     reduce medical errors and enhance health care quality;
       ``(3) be--
       ``(A) a health professions school;
       ``(B) a school of nursing; or
       ``(C) an institution with a graduate medical education 
     program;
       ``(4) provide for the collection of data regarding the 
     effectiveness of the demonstration project to be funded under 
     the grant in improving the safety of patients, the efficiency 
     of health care delivery, and in increasing the likelihood 
     that graduates of the grantee will adopt and incorporate 
     health information technology, and implement the quality 
     measures adopted under section 2907, in the delivery of 
     health care services; and
       ``(5) provide matching funds in accordance with subsection 
     (c).
       ``(c) Use of Funds.--
       ``(1) In general.--With respect to a grant under subsection 
     (a), an eligible entity shall--
       ``(A) use grant funds in collaboration with 2 or more 
     disciplines; and
       ``(B) use grant funds to integrate qualified health 
     information technology into community-based clinical 
     education.
       ``(2) Limitation.--An eligible entity shall not use amounts 
     received under a grant under subsection (a) to purchase 
     hardware, software, or services.
       ``(d) Matching Funds.--
       ``(1) In general.--The Secretary may award a grant to an 
     entity under this section only if the entity agrees to make 
     available non-Federal contributions toward the costs of the 
     program to be funded under the grant in an amount that is not 
     less than $1 for each $2 of Federal funds provided under the 
     grant.
       ``(2) Determination of amount contributed.--Non-Federal 
     contributions under paragraph (1) may be in cash or in kind, 
     fairly evaluated, including equipment or services. Amounts 
     provided by the Federal Government, or services assisted or 
     subsidized to any significant extent by the Federal 
     Government, may not be included in determining the amount of 
     such contributions.
       ``(e) Evaluation.--The Secretary shall take such action as 
     may be necessary to evaluate the projects funded under this 
     section and publish, make available, and disseminate the 
     results of such evaluations on as wide a basis as is 
     practicable.
       ``(f) Reports.--Not later than 1 year after the date of 
     enactment of this title, and annually thereafter, the 
     Secretary shall submit to the Committee on Health, Education, 
     Labor, and Pensions and the Committee on Finance of the 
     Senate, and the Committee on Energy and Commerce and the 
     Committee on Ways and Means of the House of Representatives a 
     report that--
       ``(1) describes the specific projects established under 
     this section; and
       ``(2) contains recommendations for Congress based on the 
     evaluation conducted under subsection (e).
       ``(g) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section, $5,000,000 for 
     fiscal year 2007, and such sums as may be necessary for each 
     of fiscal years 2008 through 2010.
       ``(h) Sunset.--This section shall not apply after September 
     30, 2010.

     ``SEC. 2907. QUALITY MEASURES.

       ``(a) In General.--The Secretary shall develop quality 
     measures, including measures to assess the effectiveness, 
     timeliness, patient self-management, patient centeredness, 
     efficiency, and safety, for the purpose of measuring the 
     quality of care patients receive.
       ``(b) Requirements.--The Secretary shall ensure that the 
     quality measures developed under this section comply with the 
     following:
       ``(1) Measures.--
       ``(A) Requirements.--In developing the quality measures 
     under this section, the Secretary shall, to the extent 
     feasible, ensure that--
       ``(i) such measures are evidence based, reliable, and 
     valid;
       ``(ii) such measures are consistent with the purposes 
     described in section 2902(b);
       ``(iii) such measures include measures of clinical 
     processes and outcomes, patient experience, efficiency, and 
     equity; and
       ``(iv) such measures include measures of overuse and 
     underuse of health care items and services.
       ``(2) Priorities.--In developing the quality measures under 
     this section, the Secretary shall ensure that priority is 
     given to--
       ``(A) measures with the greatest potential impact for 
     improving the quality and efficiency of care provided under 
     this Act;
       ``(B) measures that may be rapidly implemented by group 
     health plans, health insurance issuers, physicians, 
     hospitals, nursing homes, long-term care providers, and other 
     providers; and
       ``(C) measures which may inform health care decisions made 
     by consumers and patients.

[[Page 27169]]

       ``(3) Risk adjustment.--The Secretary shall establish 
     procedures to account for differences in patient health 
     status, patient characteristics, and geographic location. To 
     the extent practicable, such procedures shall recognize 
     existing procedures.
       ``(4) Maintenance.--The Secretary shall, as determined 
     appropriate, but in no case more often than once during each 
     12-month period, update the quality measures, including 
     through the addition of more accurate and precise measures 
     and the retirement of existing outdated measures.
       ``(5) Relationship with programs under the social security 
     act.--The Secretary shall ensure that the quality measures 
     developed under this section--
       ``(A) complement quality measures developed by the 
     Secretary under programs administered by the Secretary under 
     the Social Security Act, including programs under titles 
     XVIII, XIX, and XXI of such Act; and
       ``(B) do not conflict with the needs and priorities of the 
     programs under titles XVIII, XIX, and XXI of such Act, as set 
     forth by the Administrator of the Centers for Medicare & 
     Medicaid Services.
       ``(c) Required Considerations in Developing and Updating 
     the Measures.--In developing and updating the quality 
     measures under this section, the Secretary may take into 
     account--
       ``(1) any demonstration or pilot program conducted by the 
     Secretary relating to measuring and rewarding quality and 
     efficiency of care;
       ``(2) any existing activities conducted by the Secretary 
     relating to measuring and rewarding quality and efficiency;
       ``(3) any existing activities conducted by private 
     entities, including health insurance plans and payors;
       ``(4) the report by the Institute of Medicine of the 
     National Academy of Sciences under section 238(b) of the 
     Medicare Prescription Drug, Improvement, and Modernization 
     Act of 2003; and
       ``(5) issues of data collection and reporting, including 
     the feasibility of collecting and reporting data on measures.
       ``(d) Solicitation of Advice and Recommendations.--On and 
     after July 1, 2006, the Secretary shall consult with the 
     following regarding the development, updating, and use of 
     quality measures developed under this section:
       ``(1) Health insurance plans and health care providers, 
     including such plans and providers with experience in the 
     care of the frail elderly and individuals with multiple 
     complex chronic conditions, or groups representing such 
     health insurance plans and providers.
       ``(2) Groups representing patients and consumers.
       ``(3) Purchasers and employers or groups representing 
     purchasers or employers.
       ``(4) Organizations that focus on quality improvement as 
     well as the measurement and reporting of quality measures.
       ``(5) Organizations that certify and license health care 
     providers.
       ``(6) State government public health programs.
       ``(7) Individuals or entities skilled in the conduct and 
     interpretation of biomedical, health services, and health 
     economics research and with expertise in outcomes and 
     effectiveness research and technology assessment.
       ``(8) Individuals or entities involved in the development 
     and establishment of standards and certification for health 
     information technology systems and clinical data.
       ``(9) Individuals or entities with experience with--
       ``(A) urban health care issues;
       ``(B) safety net health care issues; and
       ``(C) rural and frontier health care issues.
       ``(e) Use of Quality Measures.--
       ``(1) In general.--For purposes of activities conducted or 
     supported by the Secretary under this Act, the Secretary 
     shall, to the extent practicable, adopt and utilize the 
     quality measures developed under this section.
       ``(2) Collaborative agreements.--With respect to activities 
     conducted or supported by the Secretary under this Act, the 
     Secretary may establish collaborative agreements with private 
     entities, including group health plans and health insurance 
     issuers, providers, purchasers, consumer organizations, and 
     entities receiving a grant under section 2905, to--
       ``(A) encourage the use of the quality measures adopted by 
     the Secretary under this section; and
       ``(B) foster uniformity between the health care quality 
     measures utilized by private entities.
       ``(3) Reporting.--The Secretary shall implement procedures 
     to enable the Department of Health and Human Services to 
     accept the electronic submission of data for purposes of--
       ``(A) quality measurement using the quality measures 
     developed under this section and using the standards adopted 
     by the Federal Government under section 2903; and
       ``(B) for reporting measures used to make value-based 
     payments under programs under the Social Security Act.
       ``(f) Dissemination of Information.--Beginning on January 
     1, 2008, in order to make comparative quality information 
     available to health care consumers, health professionals, 
     public health officials, researchers, and other appropriate 
     individuals and entities, the Secretary shall provide for the 
     dissemination, aggregation, and analysis of quality measures 
     collected under section 2905 and the dissemination of 
     recommendations and best practices derived in part from such 
     analysis.
       ``(g) Technical Assistance.--The Secretary shall provide 
     technical assistance to public and private entities to enable 
     such entities to--
       ``(1) implement and use evidence-based guidelines with the 
     greatest potential to improve health care quality, 
     efficiency, and patient safety; and
       ``(2) establish mechanisms for the rapid dissemination of 
     information regarding evidence-based guidelines with the 
     greatest potential to improve health care quality, 
     efficiency, and patient safety.
       ``(h) Rule of Construction.--Nothing in this title shall be 
     construed as prohibiting the Secretary, acting through the 
     Administrator of the Centers for Medicare & Medicaid 
     Services, from developing quality measures (and timing 
     requirements for reporting such measures) for use under 
     programs administered by the Secretary under the Social 
     Security Act, including programs under titles XVIII, XIX, and 
     XXI of such Act.''.

     SEC. 3. LICENSURE AND THE ELECTRONIC EXCHANGE OF HEALTH 
                   INFORMATION.

       (a) In General.--The Secretary of Health and Human Services 
     shall carry out, or contract with a private entity to carry 
     out, a study that examines--
       (1) the variation among State laws that relate to the 
     licensure, registration, and certification of medical 
     professionals; and
       (2) how such variation among State laws impacts the secure 
     electronic exchange of health information--
       (A) among the States; and
       (B) between the States and the Federal Government.
       (b) Report and Recommendations.--Not later than 1 year 
     after the date of enactment of this Act, the Secretary of 
     Health and Human Services shall publish a report that--
       (1) describes the results of the study carried out under 
     subsection (a); and
       (2) makes recommendations to States regarding the 
     harmonization of State laws based on the results of such 
     study.

     SEC. 4. ENSURING PRIVACY AND SECURITY.

       Nothing in this Act (or the amendments made by this Act) 
     shall be construed to affect the scope, substance, or 
     applicability of--
       (1) section 264 of the Health Insurance Portability and 
     Accountability Act of 1996;
       (2) sections 1171 through 1179 of the Social Security Act; 
     and
       (3) any regulation issued pursuant to any such section.

     SEC. 5. GAO STUDY.

       Not later than 6 months after the date of enactment of this 
     Act, the Comptroller General of the United States shall 
     submit to Congress a report on the necessity and workability 
     of requiring health plans (as defined in section 1171 of the 
     Social Security Act (42 U.S.C. 1320d)), health care 
     clearinghouses (as defined in such section 1171), and health 
     care providers (as defined in such section 1171) who transmit 
     health information in electronic form, to notify patients if 
     their individually identifiable health information (as 
     defined in such section 1171) is wrongfully disclosed.

     SEC. 6. STUDY OF REIMBURSEMENT INCENTIVES.

       The Secretary of Health and Human Services shall carry out, 
     or contract with a private entity to carry out, a study that 
     examines methods to create efficient reimbursement incentives 
     for improving health care quality in Federally qualified 
     health centers, rural health clinics, and free clinics.

     SEC. 7. HEALTH INFORMATION TECHNOLOGY RESOURCE CENTER.

       Section 914 of the Public Health Service Act (42 U.S.C. 
     299b-3) is amended by adding at the end the following:
       ``(d) Health Information Technology Resource Center.--
       ``(1) In general.--The Secretary, acting through the 
     Director, shall develop a Health Information Technology 
     Resource Center to provide technical assistance and develop 
     best practices to support and accelerate efforts to adopt, 
     implement, and effectively use interoperable health 
     information technology in compliance with section 2903 and 
     2907.
       ``(2) Purposes.--The purpose of the Center is to--
       ``(A) provide a forum for the exchange of knowledge and 
     experience;
       ``(B) accelerate the transfer of lessons learned from 
     existing public and private sector initiatives, including 
     those currently receiving Federal financial support;
       ``(C) assemble, analyze, and widely disseminate evidence 
     and experience related to the adoption, implementation, and 
     effective use of interoperable health information technology.
       ``(D) provide for the establishment of regional and local 
     health information networks to facilitate the development of 
     interoperability across health care settings and improve the 
     quality of health care;
       ``(E) provide for the development of solutions to barriers 
     to the exchange of electronic health information; and
       ``(F) conduct other activities identified by the States, 
     local or regional health information networks, or health care 
     stakeholders

[[Page 27170]]

     as a focus for developing and sharing best practices.
       ``(3) Support for activities.--To provide support for the 
     activities of the Center, the Director shall modify the 
     requirements, if necessary, that apply to the National 
     Resource Center for Health Information Technology to provide 
     the necessary infrastructure to support the duties and 
     activities of the Center and facilitate information exchange 
     across the public and private sectors.
       ``(4) Rule of construction.--Nothing in this subsection 
     shall be construed to require the duplication of Federal 
     efforts with respect to the establishment of the Center, 
     regardless of whether such efforts were carried out prior to 
     or after the enactment of this subsection.
       ``(e) Technical Assistance Telephone Number or Website.--
     The Secretary shall establish a toll-free telephone number or 
     Internet website to provide health care providers and 
     patients with a single point of contact to--
       ``(1) learn about Federal grants and technical assistance 
     services related to interoperable health information 
     technology;
       ``(2) learn about qualified health information technology 
     and the quality measures adopted by the Federal Government 
     under sections 2903 and 2907;
       ``(3) learn about regional and local health information 
     networks for assistance with health information technology; 
     and
       ``(4) disseminate additional information determined by the 
     Secretary.
       ``(f) Authorization of Appropriations.--There is authorized 
     to be appropriated, such sums as may be necessary for each of 
     fiscal years 2006 and 2007 to carry out this subsection.''.

     SEC. 8. REAUTHORIZATION OF INCENTIVE GRANTS REGARDING 
                   TELEMEDICINE.

       Section 330L(b) of the Public Health Service Act (42 U.S.C. 
     254c-18(b)) is amended by striking ``2002 through 2006'' and 
     inserting ``2006 through 2010''.

                          ____________________