[Congressional Record (Bound Edition), Volume 153 (2007), Part 2]
[Senate]
[Pages 1856-1871]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 100. Mr. REID (for Mr. Baucus) proposed an amendment to the bill 
H.R. 2, to amend the Fair Labor Standards Act of 1938 to provide for an 
increase in the Federal minimum wage; as follows:

       Strike all after the enacting clause and insert the 
     following:

                       TITLE I--FAIR MINIMUM WAGE

     SEC. 100. SHORT TITLE.

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

     SEC. 101. MINIMUM WAGE.

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

     SEC. 102. APPLICABILITY OF MINIMUM WAGE TO THE COMMONWEALTH 
                   OF THE NORTHERN MARIANA ISLANDS.

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

                TITLE II--SMALL BUSINESS TAX INCENTIVES

     SEC. 200. SHORT TITLE; AMENDMENT OF CODE.

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

            Subtitle A--Small Business Tax Relief Provisions

                       PART I--GENERAL PROVISIONS

     SEC. 201. EXTENSION OF INCREASED EXPENSING FOR SMALL 
                   BUSINESSES.

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

     SEC. 202. EXTENSION AND MODIFICATION OF 15-YEAR STRAIGHT-LINE 
                   COST RECOVERY FOR QUALIFIED LEASEHOLD 
                   IMPROVEMENTS AND QUALIFIED RESTAURANT 
                   IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST 
                   RECOVERY FOR CERTAIN IMPROVEMENTS TO RETAIL 
                   SPACE.

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


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

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

     SEC. 203. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL 
                   BUSINESS.

       (a) Cash Accounting Permitted.--
       (1) In general.--Section 446 (relating to general rule for 
     methods of accounting) is amended by adding at the end the 
     following new subsection:
       ``(g) Certain Small Business Taxpayers Permitted To Use 
     Cash Accounting Method Without Limitation.--
       ``(1) In general.--An eligible taxpayer shall not be 
     required to use an accrual method of accounting for any 
     taxable year.
       ``(2) Eligible taxpayer.--For purposes of this subsection, 
     a taxpayer is an eligible taxpayer with respect to any 
     taxable year if--
       ``(A) for each of the prior taxable years ending on or 
     after the date of the enactment of this subsection, the 
     taxpayer (or any predecessor) met the gross receipts test in 
     effect under section 448(c) for such taxable year, and
       ``(B) the taxpayer is not subject to section 447 or 448.''.
       (2) Expansion of gross receipts test.--
       (A) In general.--Paragraph (3) of section 448(b) (relating 
     to entities with gross receipts of not more than $5,000,000) 
     is amended to read as follows:
       ``(3) Entities meeting gross receipts test.--Paragraphs (1) 
     and (2) of subsection (a) shall not apply to any corporation 
     or partnership for any taxable year if, for each of the prior 
     taxable years ending on or after the date of the enactment of 
     the Small Business and Work Opportunity Act of 2007, the 
     entity (or any predecessor) met the gross receipts test in 
     effect under subsection (c) for such prior taxable year.''.
       (B) Conforming amendments.--Section 448(c) of such Code is 
     amended--
       (i) by striking ``$5,000,000'' in the heading thereof,
       (ii) by striking ``$5,000,000'' each place it appears in 
     paragraph (1) and inserting ``$10,000,000'', and
       (iii) by adding at the end the following new paragraph:
       ``(4) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2008, the dollar 
     amount contained in paragraph (1) shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar

[[Page 1857]]

     year in which the taxable year begins, by substituting 
     `calendar year 2007' for `calendar year 1992' in subparagraph 
     (B) thereof.

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

     SEC. 204. EXTENSION AND MODIFICATION OF COMBINED WORK 
                   OPPORTUNITY TAX CREDIT AND WELFARE-TO-WORK 
                   CREDIT.

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

     SEC. 205. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

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

     ``SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.

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

[[Page 1858]]

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

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

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

     Such assertion shall state that the organization has withheld 
     and made deposits of all taxes imposed by chapters 21, 22, 
     and 24 of the Internal Revenue Code in accordance with 
     regulations imposed by the Secretary for such calendar 
     quarter and such examination level attestation shall state 
     that such assertion is fairly stated, in all material 
     respects.
       ``(4) Controlled group rules.--For purposes of the 
     requirements of paragraphs (2) and (3), all professional 
     employer organizations that are members of a controlled group 
     within the meaning of sections 414(b) and (c) shall be 
     treated as a single organization.
       ``(5) Failure to file assertion and attestation.--If the 
     certified professional employer organization fails to file 
     the assertion and attestation required by paragraph (3) with 
     respect to any calendar quarter, then the requirements of 
     paragraph (3) with respect to such failure shall be treated 
     as not satisfied for the period beginning on the due date for 
     such attestation.
       ``(6) Review date.--For purposes of paragraph (3)(A), the 
     review date shall be 6 months after the completion of the 
     organization's fiscal year.
       ``(d) Suspension and Revocation Authority.--The Secretary 
     may suspend or revoke a certification of any person under 
     subsection (b) for purposes of section 3511 if the Secretary 
     determines that such person is not satisfying the 
     representations or requirements of subsections (b) or (c), or 
     fails to satisfy applicable accounting, reporting, payment, 
     or deposit requirements.
       ``(e) Work Site Employee.--For purposes of this title--
       ``(1) In general.--The term `work site employee' means, 
     with respect to a certified professional employer 
     organization, an individual who--
       ``(A) performs services for a customer pursuant to a 
     contract which is between such customer and the certified 
     professional employer organization and which meets the 
     requirements of paragraph (2), and
       ``(B) performs services at a work site meeting the 
     requirements of paragraph (3).
       ``(2) Service contract requirements.--A contract meets the 
     requirements of this paragraph with respect to an individual 
     performing services for a customer if such contract is in 
     writing and provides that the certified professional employer 
     organization shall--
       ``(A) assume responsibility for payment of wages to such 
     individual, without regard to the receipt or adequacy of 
     payment from the customer for such services,
       ``(B) assume responsibility for reporting, withholding, and 
     paying any applicable taxes under subtitle C, with respect to 
     such individual's wages, without regard to the receipt or 
     adequacy of payment from the customer for such services,
       ``(C) assume responsibility for any employee benefits which 
     the service contract may require the organization to provide, 
     without regard to the receipt or adequacy of payment from the 
     customer for such services,
       ``(D) assume responsibility for hiring, firing, and 
     recruiting workers in addition to the customer's 
     responsibility for hiring, firing and recruiting workers,
       ``(E) maintain employee records relating to such 
     individual, and
       ``(F) agree to be treated as a certified professional 
     employer organization for purposes of section 3511 with 
     respect to such individual.
       ``(3) Work site coverage requirement.--The requirements of 
     this paragraph are met with respect to an individual if at 
     least 85 percent of the individuals performing services for 
     the customer at the work site where such individual performs 
     services are subject to 1 or more contracts with the 
     certified professional employer organization which meet the 
     requirements of paragraph (2) (but not taking into account 
     those individuals who are excluded employees within the 
     meaning of section 414(q)(5)).
       ``(f) Determination of Employment Status.--Except to the 
     extent necessary for purposes of section 3511, nothing in 
     this section shall be construed to affect the determination 
     of who is an employee or employer for purposes of this title.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section.''.
       (c) Conforming Amendments.--
       (1) Section 3302 is amended by adding at the end the 
     following new subsection:
       ``(h) Treatment of Certified Professional Employer 
     Organizations.--If a certified professional employer 
     organization (as defined in section 7705), or a customer of 
     such organization, makes a contribution to the State's 
     unemployment fund with respect to a work site employee, such 
     organization shall be eligible for the credits available 
     under this section with respect to such contribution.''.
       (2) Section 3303(a) is amended--
       (A) by striking the period at the end of paragraph (3) and 
     inserting ``; and'' and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) if the taxpayer is a certified professional employer 
     organization (as defined in section 7705) that is treated as 
     the employer under section 3511, such certified professional 
     employer organization is permitted to collect and remit, in 
     accordance with paragraphs (1), (2), and (3), contributions 
     during the taxable year to the State unemployment fund with 
     respect to a work site employee.'', and
       (B) in the last sentence--
       (i) by striking ``paragraphs (1), (2), and (3)'' and 
     inserting ``paragraphs (1), (2), (3), and (4)'', and
       (ii) by striking ``paragraph (1), (2), or (3)'' and 
     inserting ``paragraph (1), (2), (3), or (4)''.
       (3) Section 6053(c) (relating to reporting of tips) is 
     amended by adding at the end the following new paragraph:
       ``(8) Certified professional employer organizations.--For 
     purposes of any report required by this subsection, in the 
     case of a certified professional employer organization that 
     is treated under section 3511 as the employer of a work site 
     employee, the customer

[[Page 1859]]

     with respect to whom a work site employee performs services 
     shall be the employer for purposes of reporting under this 
     section and the certified professional employer organization 
     shall furnish to the customer any information necessary to 
     complete such reporting no later than such time as the 
     Secretary shall prescribe.''.
       (d) Clerical Amendments.--
       (1) The table of sections for chapter 25 is amended by 
     adding at the end the following new item:

``Sec. 3511. Certified professional employer organizations.''.
       (2) The table of sections for chapter 79 is amended by 
     inserting after the item relating to section 7704 the 
     following new item:

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

                    PART II--SUBCHAPTER S PROVISIONS

     SEC. 211. CAPITAL GAIN OF S CORPORATION NOT TREATED AS 
                   PASSIVE INVESTMENT INCOME.

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

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

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

     SEC. 212. TREATMENT OF BANK DIRECTOR SHARES.

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

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

     SEC. 213. SPECIAL RULE FOR BANK REQUIRED TO CHANGE FROM THE 
                   RESERVE METHOD OF ACCOUNTING ON BECOMING S 
                   CORPORATION.

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

     SEC. 214. TREATMENT OF THE SALE OF INTEREST IN A QUALIFIED 
                   SUBCHAPTER S SUBSIDIARY.

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

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

[[Page 1860]]

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

     SEC. 215. ELIMINATION OF ALL EARNINGS AND PROFITS 
                   ATTRIBUTABLE TO PRE-1983 YEARS FOR CERTAIN 
                   CORPORATIONS.

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

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

     SEC. 216. EXPANSION OF QUALIFYING BENEFICIARIES OF AN 
                   ELECTING SMALL BUSINESS TRUST.

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

                     Subtitle B--Revenue Provisions

     SEC. 221. MODIFICATION OF EFFECTIVE DATE OF LEASING 
                   PROVISIONS OF THE AMERICAN JOBS CREATION ACT OF 
                   2004.

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

     SEC. 222. APPLICATION OF RULES TREATING INVERTED CORPORATIONS 
                   AS DOMESTIC CORPORATIONS TO CERTAIN 
                   TRANSACTIONS OCCURRING AFTER MARCH 20, 2002.

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

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

     SEC. 223. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES.

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

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

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

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

     SEC. 224. DENIAL OF DEDUCTION FOR CERTAIN FINES, PENALTIES, 
                   AND OTHER AMOUNTS.

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

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

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

       ``(a) Requirement of Reporting.--
       ``(1) In general.--The appropriate official of any 
     government or entity which is described in section 162(f)(4) 
     which is involved in a suit or agreement described in 
     paragraph (2) shall make a return in such form as determined 
     by the Secretary setting forth--

[[Page 1861]]

       ``(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 6050V 
     the following new item:

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

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

     SEC. 225. REVISION OF TAX RULES ON EXPATRIATION OF 
                   INDIVIDUALS.

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

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

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

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

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

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $1,000, such amount 
     shall be rounded to the next lower multiple of $1,000.
       ``(4) Election to continue to be taxed as united states 
     citizen.--
       ``(A) In general.--If a covered expatriate elects the 
     application of this paragraph--
       ``(i) this section (other than this paragraph and 
     subsection (i)) shall not apply to the expatriate, but
       ``(ii) in the case of property to which this section would 
     apply but for such election, the expatriate shall be subject 
     to tax under this title in the same manner as if the 
     individual were a United States citizen.
       ``(B) Requirements.--Subparagraph (A) shall not apply to an 
     individual unless the individual--
       ``(i) provides security for payment of tax in such form and 
     manner, and in such amount, as the Secretary may require,
       ``(ii) consents to the waiver of any right of the 
     individual under any treaty of the United States which would 
     preclude assessment or collection of any tax which may be 
     imposed by reason of this paragraph, and
       ``(iii) complies with such other requirements as the 
     Secretary may prescribe.
       ``(C) Election.--An election under subparagraph (A) shall 
     apply to all property to which this section would apply but 
     for the election and, once made, shall be irrevocable. Such 
     election shall also apply to property the basis of which is 
     determined in whole or in part by reference to the property 
     with respect to which the election was made.
       ``(b) Election To Defer Tax.--
       ``(1) In general.--If the taxpayer elects the application 
     of this subsection with respect to any property treated as 
     sold by reason of subsection (a), the payment of the 
     additional tax attributable to such property shall be 
     postponed until the due date of the return for the taxable 
     year in which such property is disposed of (or, in the case 
     of property disposed of in a transaction in which gain is not 
     recognized in whole or in part, until such other date as the 
     Secretary may prescribe).
       ``(2) Determination of tax with respect to property.--For 
     purposes of paragraph (1), the additional tax attributable to 
     any property is an amount which bears the same ratio to the 
     additional tax imposed by this chapter for the taxable year 
     solely by reason of subsection (a) as the gain taken into 
     account under subsection (a) with respect to such property 
     bears to the total gain taken into account under subsection 
     (a) with respect to all property to which subsection (a) 
     applies.
       ``(3) Termination of postponement.--No tax may be postponed 
     under this subsection later than the due date for the return 
     of tax imposed by this chapter for the taxable year which 
     includes the date of death of the expatriate (or, if earlier, 
     the time that the security provided with respect to the 
     property fails to meet the requirements of paragraph (4), 
     unless the taxpayer corrects such failure within the time 
     specified by the Secretary).
       ``(4) Security.--
       ``(A) In general.--No election may be made under paragraph 
     (1) with respect to any property unless adequate security is 
     provided to the Secretary with respect to such property.
       ``(B) Adequate security.--For purposes of subparagraph (A), 
     security with respect to any property shall be treated as 
     adequate security if--
       ``(i) it is a bond in an amount equal to the deferred tax 
     amount under paragraph (2) for the property, or
       ``(ii) the taxpayer otherwise establishes to the 
     satisfaction of the Secretary that the security is adequate.
       ``(5) Waiver of certain rights.--No election may be made 
     under paragraph (1) unless the taxpayer consents to the 
     waiver of any right under any treaty of the United States 
     which would preclude assessment or collection of any tax 
     imposed by reason of this section.
       ``(6) Elections.--An election under paragraph (1) shall 
     only apply to property described in the election and, once 
     made, is irrevocable. An election may be made under paragraph 
     (1) with respect to an interest in a trust with respect to 
     which gain is required to be recognized under subsection 
     (f)(1).
       ``(7) Interest.--For purposes of section 6601--
       ``(A) the last date for the payment of tax shall be 
     determined without regard to the election under this 
     subsection, and
       ``(B) section 6621(a)(2) shall be applied by substituting 
     `5 percentage points' for `3 percentage points' in 
     subparagraph (B) thereof.
       ``(c) Covered Expatriate.--For purposes of this section--
       ``(1) In general.--Except as provided in paragraph (2), the 
     term `covered expatriate' means an expatriate.
       ``(2) Exceptions.--An individual shall not be treated as a 
     covered expatriate if--

[[Page 1862]]

       ``(A) the individual--
       ``(i) became at birth a citizen of the United States and a 
     citizen of another country and, as of the expatriation date, 
     continues to be a citizen of, and is taxed as a resident of, 
     such other country, and
       ``(ii) has not been a resident of the United States (as 
     defined in section 7701(b)(1)(A)(ii)) during the 5 taxable 
     years ending with the taxable year during which the 
     expatriation date occurs, or
       ``(B)(i) the individual's relinquishment of United States 
     citizenship occurs before such individual attains age 18\1/
     2\, and
       ``(ii) the individual has been a resident of the United 
     States (as so defined) for not more than 5 taxable years 
     before the date of relinquishment.
       ``(d) Exempt Property; Special Rules for Pension Plans.--
       ``(1) Exempt property.--This section shall not apply to the 
     following:
       ``(A) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the day before the 
     expatriation date, meet the requirements of section 
     897(c)(2).
       ``(B) Specified property.--Any property or interest in 
     property not described in subparagraph (A) which the 
     Secretary specifies in regulations.
       ``(2) Special rules for certain retirement plans.--
       ``(A) In general.--If a covered expatriate holds on the day 
     before the expatriation date any interest in a retirement 
     plan to which this paragraph applies--
       ``(i) such interest shall not be treated as sold for 
     purposes of subsection (a)(1), but
       ``(ii) an amount equal to the present value of the 
     expatriate's nonforfeitable accrued benefit shall be treated 
     as having been received by such individual on such date as a 
     distribution under the plan.
       ``(B) Treatment of subsequent distributions.--In the case 
     of any distribution on or after the expatriation date to or 
     on behalf of the covered expatriate from a plan from which 
     the expatriate was treated as receiving a distribution under 
     subparagraph (A), the amount otherwise includible in gross 
     income by reason of the subsequent distribution shall be 
     reduced by the excess of the amount includible in gross 
     income under subparagraph (A) over any portion of such amount 
     to which this subparagraph previously applied.
       ``(C) Treatment of subsequent distributions by plan.--For 
     purposes of this title, a retirement plan to which this 
     paragraph applies, and any person acting on the plan's 
     behalf, shall treat any subsequent distribution described in 
     subparagraph (B) in the same manner as such distribution 
     would be treated without regard to this paragraph.
       ``(D) Applicable plans.--This paragraph shall apply to--
       ``(i) any qualified retirement plan (as defined in section 
     4974(c)),
       ``(ii) an eligible deferred compensation plan (as defined 
     in section 457(b)) of an eligible employer described in 
     section 457(e)(1)(A), and
       ``(iii) to the extent provided in regulations, any foreign 
     pension plan or similar retirement arrangements or programs.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Expatriate.--The term `expatriate' means--
       ``(A) any United States citizen who relinquishes 
     citizenship, and
       ``(B) any long-term resident of the United States who--
       ``(i) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(ii) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.
       ``(2) Expatriation date.--The term `expatriation date' 
     means--
       ``(A) the date an individual relinquishes United States 
     citizenship, or
       ``(B) in the case of a long-term resident of the United 
     States, the date of the event described in clause (i) or (ii) 
     of paragraph (1)(B).
       ``(3) Relinquishment of citizenship.--A citizen shall be 
     treated as relinquishing United States citizenship on the 
     earliest of--
       ``(A) the date the individual renounces such individual's 
     United States nationality before a diplomatic or consular 
     officer of the United States pursuant to paragraph (5) of 
     section 349(a) of the Immigration and Nationality Act (8 
     U.S.C. 1481(a)(5)),
       ``(B) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(C) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(D) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.

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

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

       ``(I) by the amount of taxes imposed by subparagraph (A) on 
     any distribution to the person holding the trust interest, 
     and
       ``(II) in the case of a person holding a nonvested 
     interest, to the extent provided in regulations, by the 
     amount of taxes imposed by subparagraph (A) on distributions 
     from 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

[[Page 1863]]

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

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

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

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

[[Page 1864]]

       (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. 226. LIMITATION ON ANNUAL AMOUNTS WHICH MAY BE DEFERRED 
                   UNDER NONQUALIFIED DEFERRED COMPENSATION 
                   ARRANGEMENTS.

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

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

       ``(ii) Base period.--

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

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

     SEC. 227. INCREASE IN CRIMINAL MONETARY PENALTY LIMITATION 
                   FOR THE UNDERPAYMENT OR OVERPAYMENT OF TAX DUE 
                   TO FRAUD.

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

[[Page 1865]]

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

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

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

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

     SEC. 229. 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. 230. 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. 231. EXTENSION OF IRS USER FEES.

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

     SEC. 232. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES 
                   FOR EMPLOYMENT TAX LIABILITIES.

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

     SEC. 233. MODIFICATIONS TO WHISTLEBLOWER REFORMS.

       (a) Modification of Tax Threshold for Awards.--Subparagraph 
     (B) of section 7623(b)(5), as added by the Tax Relief and 
     Health Care Act of 2006, is amended by striking 
     ``$2,000,000'' and inserting ``$20,000''.
       (b) Whistleblower Office.--
       (1) In general.--Section 7623 is amended by adding at the 
     end the following new subsections:
       ``(c) Whistleblower Office.--
       ``(1) In general.--There is established in the Internal 
     Revenue Service an office to be known as the `Whistleblower 
     Office' which--
       ``(A) shall at all times operate at the direction of the 
     Commissioner and coordinate and consult with other divisions 
     in the Internal Revenue Service as directed by the 
     Commissioner,
       ``(B) shall analyze information received from any 
     individual described in subsection (b) and either investigate 
     the matter itself or assign it to the appropriate Internal 
     Revenue Service office,
       ``(C) shall monitor any action taken with respect to such 
     matter,
       ``(D) shall inform such individual that it has accepted the 
     individual's information for further review,
       ``(E) may require such individual and any legal 
     representative of such individual to not disclose any 
     information so provided,
       ``(F) in its sole discretion, may ask for additional 
     assistance from such individual or any legal representative 
     of such individual, and
       ``(G) shall determine the amount to be awarded to such 
     individual under subsection (b).
       ``(2) Funding for office.--There is authorized to be 
     appropriated $10,000,000 for each fiscal year for the 
     Whistleblower Office. These funds shall be used to maintain 
     the Whistleblower Office and also to reimburse other Internal 
     Revenue Service offices for related costs, such as costs of 
     investigation and collection.
       ``(3) Request for assistance.--
       ``(A) In general.--Any assistance requested under paragraph 
     (1)(F) shall be under the direction and control of the 
     Whistleblower Office or the office assigned to investigate 
     the matter under subparagraph (A). No individual or legal 
     representative whose assistance is so requested may by reason 
     of such request represent himself or herself as an employee 
     of the Federal Government.
       ``(B) Funding of assistance.--From the amounts available 
     for expenditure under subsection (b), the Whistleblower 
     Office may, with the agreement of the individual described in 
     subsection (b), reimburse the costs incurred by any legal 
     representative of such individual in providing assistance 
     described in subparagraph (A).
       ``(d) Reports.--The Secretary shall each year conduct a 
     study and report to Congress on the use of this section, 
     including--
       ``(1) an analysis of the use of this section during the 
     preceding year and the results of such use, and
       ``(2) any legislative or administrative recommendations 
     regarding the provisions of this section and its 
     application.''.
       (2) Conforming amendment.--Section 406 of division A of the 
     Tax Relief and Health Care Act of 2006 is amended by striking 
     subsections (b) and (c).

[[Page 1866]]

       (3) Report on implementation.--Not later than 6 months 
     after the date of the enactment of this Act, the Secretary of 
     the Treasury shall submit to Congress a report on the 
     establishment and operation of the Whistleblower Office under 
     section 7623(c) of the Internal Revenue Code of 1986.
       (c) Publicity of Award Appeals.--Paragraph (4) of section 
     7623(b), as added by the Tax Relief and Health Care Act of 
     2006, is amended to read as follows:
       ``(4) Appeal of award determination.--
       ``(A) In general.--Any determination regarding an award 
     under paragraph (1), (2), or (3) may, within 30 days of such 
     determination, be appealed to the Tax Court (and the Tax 
     Court shall have jurisdiction with respect to such matter).
       ``(B) Publicity of appeals.--Notwithstanding sections 7458 
     and 7461, the Tax Court may, in order to preserve the 
     anonymity, privacy, or confidentiality of any person under 
     this subsection, provide by rules adopted under section 7453 
     that portions of filings, hearings, testimony, evidence, and 
     reports in connection with proceedings under this subsection 
     may be closed to the public or to inspection by the 
     public.''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to information 
     provided on or after the date of the enactment of this Act.
       (2) Publicity of award appeals.--The amendment made by 
     subsection (c) shall take effect as if included in the 
     amendments made by section 406 of the Tax Relief and Health 
     Care Act of 2006.

     SEC. 234. MODIFICATIONS OF DEFINITION OF EMPLOYEES COVERED BY 
                   DENIAL OF DEDUCTION FOR EXCESSIVE EMPLOYEE 
                   REMUNERATION.

       (a) In General.--Paragraph (3) of section 162(m) is amended 
     to read as follows:
       ``(3) Covered employee.--For purposes of this subsection, 
     the term `covered employee' means, with respect to any 
     taxpayer for any taxable year, an individual who--
       ``(A) was the chief executive officer of the taxpayer, or 
     an individual acting in such a capacity, at any time during 
     the taxable year,
       ``(B) is 1 of the 4 highest compensated officers of the 
     taxpayer for the taxable year (other than the individual 
     described in subparagraph (A)), or
       ``(C) was a covered employee of the taxpayer (or any 
     predecessor) for any preceding taxable year beginning after 
     December 31, 2006.

     In the case of an individual who was a covered employee for 
     any taxable year beginning after December 31, 2006, the term 
     `covered employee' shall include a beneficiary of such 
     employee with respect to any remuneration for services 
     performed by such employee as a covered employee (whether or 
     not such services are performed during the taxable year in 
     which the remuneration is paid).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.
                                 ______
                                 
  SA 101. Mr. McCONNELL (for Mr. Gregg (for himself, Mr. DeMint, Mr. 
McConnell, Mr. Lott, Mr. Kyl, Mrs. Hutchison, Mr. Cornyn, Mr. Allard, 
Mr. Crapo, Mr. Bunning, Mr. Vitter, Mr. Brownback, Mrs. Dole, Mr. 
Alexander, Mr. Thomas, Mr. Craig, Mr. Burr, Mr. McCain, Mr. Sununu, Mr. 
Enzi, Mr. Martinez, Mr. Chambliss, Mr. Sessions, Mr. Coleman, Mr. 
Graham, Mr. Voinovich, Mr. Isakson, Mr. Coburn, Mr. Ensign, and Mr. 
Thune)) proposed an amendment to amendment SA 100 proposed by Mr. Reid 
(for Mr. Baucus) to the bill H.R. 2, to amend the Fair Labor Standards 
Act of 1938 to provide for an increase in the Federal minimum wage; as 
follows:

       At the end, insert the following:

        TITLE ___--SECOND LOOK AT WASTEFUL SPENDING ACT OF 2007

     SEC. _01. SHORT TITLE.

       This title may be cited as the ``Second Look at Wasteful 
     Spending Act of 2007''.

     SEC. _02. ENHANCED RESCISSION AUTHORITY.

       (a) In General.--Title X of the Congressional Budget and 
     Impoundment Control Act of 1974 (2 U.S.C. 621 et seq.) is 
     amended by striking part C and inserting the following:

                ``PART C--ENHANCED RESCISSION AUTHORITY

     ``SEC. 1021. EXPEDITED CONSIDERATION OF CERTAIN PROPOSED 
                   RESCISSIONS.

       ``(a) Proposed Rescissions.--The President may send a 
     special message, at the time and in the manner provided in 
     subsection (b), that proposes to rescind dollar amounts of 
     discretionary budget authority, items of direct spending, and 
     targeted tax benefits.
       ``(b) Transmittal of Special Message.--
       ``(1) Special message.--
       ``(A) In general.--
       ``(i) Four messages.--The President may transmit to 
     Congress not to exceed 4 special messages per calendar year, 
     proposing to rescind dollar amounts of discretionary budget 
     authority, items of direct spending, and targeted tax 
     benefits.
       ``(ii) Timing.--Special messages may be transmitted under 
     clause (i)--

       ``(I) with the President's budget submitted pursuant to 
     section 1105 of title 31, United States Code; and
       ``(II) 3 other times as determined by the President.

       ``(iii) Limitations.--

       ``(I) In general.--Special messages shall be submitted 
     within 1 calendar year of the date of enactment of any dollar 
     amount of discretionary budget authority, item of direct 
     spending, or targeted tax benefit the President proposes to 
     rescind pursuant to this Act.
       ``(II) Resubmittal rejected.--If Congress rejects a bill 
     introduced under this part, the President may not resubmit 
     any of the dollar amounts of discretionary budget authority, 
     items of direct spending, or targeted tax benefits in that 
     bill under this part, or part B with respect to dollar 
     amounts of discretionary budget authority.
       ``(III) Resubmital after sine die.--If Congress does not 
     complete action on a bill introduced under this part because 
     Congress adjourns sine die, the President may resubmit some 
     or all of the dollar amounts of discretionary budget 
     authority, items of direct spending, and targeted tax 
     benefits in that bill in not more than 1 subsequent special 
     message under this part, or part B with respect to dollar 
     amounts of discretionary budget authority.

       ``(B) Contents of special message.--Each special message 
     shall specify, with respect to the dollar amount of 
     discretionary budget authority, item of direct spending, or 
     targeted tax benefit proposed to be rescinded--
       ``(i) the dollar amount of discretionary budget authority 
     available and proposed for rescission from accounts, 
     departments, or establishments of the government and the 
     dollar amount of the reduction in outlays that would result 
     from the enactment of such rescission of discretionary budget 
     authority for the time periods set forth in clause (iii);
       ``(ii) the specific items of direct spending and targeted 
     tax benefits proposed for rescission and the dollar amounts 
     of the reductions in budget authority and outlays or 
     increases in receipts that would result from enactment of 
     such rescission for the time periods set forth in clause 
     (iii);
       ``(iii) the budgetary effects of proposals for rescission, 
     estimated as of the date the President submits the special 
     message, relative to the most recent levels calculated 
     consistent with the methodology described in section 257 of 
     the Balanced Budget and Emergency Deficit Control Act of 1985 
     and included with a budget submission under section 1105(a) 
     of title 31, United States Code, for the time periods of--

       ``(I) the fiscal year in which the proposal is submitted; 
     and
       ``(II) each of the 10 following fiscal years beginning with 
     the fiscal year after the fiscal year in which the proposal 
     is submitted;

       ``(iv) any account, department, or establishment of the 
     Government to which such dollar amount of discretionary 
     budget authority or item of direct spending is available for 
     obligation, and the specific project or governmental 
     functions involved;
       ``(v) the reasons why such dollar amount of discretionary 
     budget authority or item of direct spending or targeted tax 
     benefit should be rescinded;
       ``(vi) the estimated fiscal and economic impacts, of the 
     proposed rescission;
       ``(vii) to the maximum extent practicable, all facts, 
     circumstances, and considerations relating to or bearing upon 
     the proposed rescission and the decision to effect the 
     proposed rescission, and the estimated effect of the proposed 
     rescission upon the objects, purposes, and programs for which 
     the budget authority or items of direct spending or targeted 
     tax benefits are provided; and
       ``(viii) a draft bill that, if enacted, would rescind the 
     budget authority, items of direct spending and targeted tax 
     benefits proposed to be rescinded in that special message.
       ``(2) Analysis by congressional budget office and joint 
     committee on taxation.--
       ``(A) In general.--Upon the receipt of a special message 
     under this part proposing to rescind dollar amounts of 
     discretionary budget authority, items of direct spending, and 
     targeted tax benefits--
       ``(i) the Director of the Congressional Budget Office shall 
     prepare an estimate of the savings in budget authority or 
     outlays resulting from such proposed rescission and shall 
     include in its estimate, an analysis prepared by the Joint 
     Committee on Taxation related to targeted tax benefits; and
       ``(ii) the Director of the Joint Committee on Taxation 
     shall prepare an estimate and forward such estimate to the 
     Congressional Budget Office, of the savings from repeal of 
     targeted tax benefits.
       ``(B) Methodology.--The estimates required by subparagraph 
     (A) shall be made relative to the most recent levels 
     calculated consistent with the methodology used to calculate 
     a baseline under section 257 of the Balanced Budget and 
     Emergency Control Act of 1985 and included with a budget 
     submission under section 1105(a) of title 31, United States 
     Code, and transmitted to the chairmen of the Committees on 
     the Budget of the House of Representatives and Senate.
       ``(3) Enactment of rescission bill.--
       ``(A) Deficit reduction.--Amounts of budget authority or 
     items of direct spending

[[Page 1867]]

     or targeted tax benefit that are rescinded pursuant to 
     enactment of a bill as provided under this part shall be 
     dedicated only to deficit reduction and shall not be used as 
     an offset for other spending increases or revenue reductions.
       ``(B) Adjustment of budget targets.--Not later than 5 days 
     after the date of enactment of a rescission bill as provided 
     under this part, the chairs of the Committees on the Budget 
     of the Senate and the House of Representatives shall revise 
     spending and revenue levels under section 311(a) of the 
     Congressional Budget Act of 1974 and adjust the committee 
     allocations under section 302(a) of the Congressional Budget 
     Act of 1974 or any other adjustments as may be appropriate to 
     reflect the rescission. The adjustments shall reflect the 
     budgetary effects of such rescissions as estimated by the 
     President pursuant to paragraph (1)(B)(iii). The appropriate 
     committees shall report revised allocations pursuant to 
     section 302(b) of the Congressional Budget Act of 1974. 
     Notwithstanding any other provision of law, the revised 
     allocations and aggregates shall be considered to have been 
     made under a concurrent resolution on the budget agreed to 
     under the Congressional Budget Act of 1974 and shall be 
     enforced under the procedures of that Act.
       ``(C) Adjustments to caps.--After enactment of a rescission 
     bill as provided under this part, the President shall revise 
     applicable limits under the Second Look at Wasteful Spending 
     Act of 2007, as appropriate.
       ``(c) Procedures for Expedited Consideration.--
       ``(1) In general.--
       ``(A) Introduction.--Before the close of the second day of 
     session of the Senate and the House of Representatives, 
     respectively, after the date of receipt of a special message 
     transmitted to Congress under subsection (b), the majority 
     leader of each House, for himself, or minority leader of each 
     House, for himself, or a Member of that House designated by 
     that majority leader or minority leader shall introduce (by 
     request) the President's draft bill to rescind the amounts of 
     budget authority or items of direct spending or targeted tax 
     benefits, as specified in the special message and the 
     President's draft bill. If the bill is not introduced as 
     provided in the preceding sentence in either House, then, on 
     the third day of session of that House after the date of 
     receipt of that special message, any Member of that House may 
     introduce the bill.
       ``(B) Referral and reporting.--
       ``(i) One committee.--The bill shall be referred by the 
     presiding officer to the appropriate committee. The committee 
     shall report the bill without any revision and with a 
     favorable, an unfavorable, or without recommendation, not 
     later than the fifth day of session of that House after the 
     date of introduction of the bill in that House. If the 
     committee fails to report the bill within that period, the 
     committee shall be automatically discharged from 
     consideration of the bill, and the bill shall be placed on 
     the appropriate calendar.
       ``(ii) Multiple committees.--

       ``(I) Referrals.--If a bill contains provisions in the 
     jurisdiction of more than 1 committee, the bill shall be 
     jointly referred to the committees of jurisdiction and the 
     Committee on the Budget.
       ``(II) Views of committee.--Any committee, other than the 
     Committee on the Budget, to which a bill is referred under 
     this clause may submit a favorable, an unfavorable 
     recommendation, without recommendation with respect to the 
     bill to the Committee on the Budget prior to the reporting or 
     discharge of the bill.
       ``(III) Reporting.--The Committee on the Budget shall 
     report the bill not later than the fifth day of session of 
     that House after the date of introduction of the bill in that 
     House, without any revision and with a favorable or 
     unfavorable recommendation, or with no recommendation, 
     together with the recommendations of any committee to which 
     the bill has been referred.
       ``(IV) Discharge.--If the Committee on the Budget fails to 
     report the bill within that period, the committee shall be 
     automatically discharged from consideration of the bill, and 
     the bill shall be placed on the appropriate calendar.

       ``(C) Final passage.--A vote on final passage of the bill 
     shall be taken in the Senate and the House of Representatives 
     on or before the close of the 10th day of session of that 
     House after the date of the introduction of the bill in that 
     House. If the bill is passed, the Clerk of the House of 
     Representatives shall cause the bill to be transmitted to the 
     Senate before the close of the next day of session of the 
     House.
       ``(2) Consideration in the house of representatives.--
       ``(A) Motion to proceed to consideration.--A motion in the 
     House of Representatives to proceed to the consideration of a 
     bill under this subsection shall be highly privileged and not 
     debatable. An amendment to the motion shall not be in order, 
     nor shall it be in order to move to reconsider the vote by 
     which the motion is agreed to or disagreed to.
       ``(B) Limits on debate.--Debate in the House of 
     Representatives on a bill under this subsection shall not 
     exceed 4 hours, which shall be divided equally between those 
     favoring and those opposing the bill. A motion further to 
     limit debate shall not be debatable. It shall not be in order 
     to move to recommit a bill under this subsection or to move 
     to reconsider the vote by which the bill is agreed to or 
     disagreed to.
       ``(C) Appeals.--Appeals from decisions of the chair 
     relating to the application of the Rules of the House of 
     Representatives to the procedure relating to a bill under 
     this part shall be decided without debate.
       ``(D) Application of house rules.--Except to the extent 
     specifically provided in this part, consideration of a bill 
     under this part shall be governed by the Rules of the House 
     of Representatives. It shall not be in order in the House of 
     Representatives to consider any bill introduced pursuant to 
     the provisions of this part under a suspension of the rules 
     or under a special rule.
       ``(3) Consideration in the senate.--
       ``(A) Motion to proceed to consideration.--A motion to 
     proceed to the consideration of a bill under this subsection 
     in the Senate shall not be debatable. A motion to proceed to 
     consideration of the bill may be made even though a previous 
     motion to the same effect has been disagreed to. It shall not 
     be in order to move to reconsider the vote by which the 
     motion to proceed is agreed to or disagreed to.
       ``(B) Limits on debate.--Debate in the Senate on a bill 
     under this subsection, and all debatable motions and appeals 
     in connection therewith, shall not exceed a total of 10 
     hours, equally divided and controlled in the usual form.
       ``(C) Debatable motions and appeals.--Debate in the Senate 
     on any debatable motion or appeal in connection with a bill 
     under this subsection shall be limited to not more than 1 
     hour from the time allotted for debate, to be equally divided 
     and controlled in the usual form.
       ``(D) Motion to limit debate.--A motion in the Senate to 
     further limit debate on a bill under this subsection is not 
     debatable.
       ``(E) Motion to recommit.--A motion to recommit a bill 
     under this subsection is not in order.
       ``(F) Consideration of the house bill.--
       ``(i) In general.--If the Senate has received the House 
     companion bill to the bill introduced in the Senate prior to 
     the vote required under paragraph (1)(C), then the Senate 
     shall consider, and the vote under paragraph (1)(C) shall 
     occur on, the House companion bill.
       ``(ii) Procedure after vote on senate bill.--If the Senate 
     votes, pursuant to paragraph (1)(C), on the bill introduced 
     in the Senate, the Senate bill shall be held pending receipt 
     of the House message on the bill. Upon receipt of the House 
     companion bill, the House bill shall be deemed to be 
     considered, read for the third time, and the vote on passage 
     of the Senate bill shall be considered to be the vote on the 
     bill received from the House.
       ``(4) Conference.--
       ``(A) Proceeding to conference.--If, after a bill is agreed 
     to in the Senate or House of Representatives, the bill has 
     been amended, the bill shall be deemed to be at a stage of 
     disagreement and motions to proceed to conference are deemed 
     to be agreed to. There shall be no motions to instruct. The 
     Senate and the House of Representatives shall appoint 
     conferees not later than 1 day of session after the vote of 
     the second House under paragraph (1)(C). Debate on any 
     debatable motion in relation to the conference report shall 
     be limited to 1 hour to be equally divided between and 
     controlled by the mover and manager of a bill, or their 
     designees.
       ``(B) Period of consideration.--A conference report on a 
     bill considered under this section shall be reported out not 
     later than 3 days of session after the vote of the second 
     House under paragraph (1)(C). If the 2 Houses are unable to 
     agree in conference, the committee on conference shall report 
     out the text of the President's original bill.
       ``(C) Scope of conference.--The matter committed to 
     conference for purposes of scope of conference shall be 
     limited to the matter stricken from the text of the bills 
     passed by the Senate and the House of Representatives.
       ``(D) Procedure.--Debate on a conference report on any bill 
     considered under this section shall be limited to 2 hours 
     equally divided between the manager of the conference report 
     and the minority leader, or his designee.
       ``(E) Final passage.--A vote on final passage of the 
     conference report shall be taken in the Senate and the House 
     of Representatives on or before the close of the 2nd day of 
     session of that House after the date the conference report is 
     submitted in that House. If the conference report is passed, 
     the Secretary of the Senate or the Clerk of the House of 
     Representatives, as the case may be, shall cause the 
     conference report to be transmitted to the other House before 
     the close of the next day of session of that House.
       ``(F) Action of second house.--
       ``(i) In general.--If the Senate has received from the 
     House, the conference report in relation to the special 
     message from the President, prior to the vote required under 
     subparagraph (E), then the Senate shall consider, and the 
     vote under subparagraph (E) shall occur on the House 
     conference report.

[[Page 1868]]

       ``(ii) Procedure after vote on senate conference report.--
     If the Senate votes, pursuant to subparagraph (E), on the 
     conference report in relation to the special message from the 
     President, then immediately following that vote, or upon 
     receipt of the House conference report, the House conference 
     report shall be deemed to be considered, read the third time, 
     and the vote on passage of the Senate conference report shall 
     be considered to be the vote on the conference report 
     received from the House.
       ``(d) Amendments and Divisions Prohibited.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     amendment to a bill considered under this section shall be in 
     order in either the Senate or the House of Representatives.
       ``(2) Motion to strike.--
       ``(A) Senate.--During consideration of a bill in the 
     Senate, any Member of the Senate may move to strike any 
     proposed rescission of a dollar amount of discretionary 
     budget authority, an item of direct spending, or a targeted 
     tax benefit if supported by 11 other Members.
       ``(B) House.--During consideration of a bill in the House 
     of Representatives, any Member of the House of 
     Representatives may move to strike any proposed rescission of 
     a dollar amount of discretionary budget authority, an item of 
     direct spending, or a targeted tax benefit if supported by 49 
     other Members.
       ``(3) No division.--It shall not be in order to demand a 
     division of any motions to strike in the Senate, or the 
     division of the question in the House of Representatives (or 
     in a Committee of the Whole).
       ``(4) No suspension.--No motion to suspend the application 
     of this subsection shall be in order in the Senate or in the 
     House of Representatives, nor shall it be in order in the 
     House of Representatives to suspend the application of this 
     subsection by unanimous consent.
       ``(e) Temporary Presidential Authority To Withhold.--
       ``(1) Availability.--The President may not withhold any 
     dollar amount of discretionary budget authority until the 
     President transmits and Congress receives a special message 
     pursuant to subsection (b). Upon receipt by Congress of a 
     special message pursuant to subsection (b), the President may 
     direct that any dollar amount of discretionary budget 
     authority proposed to be rescinded in that special message 
     shall be withheld from obligation for a period not to exceed 
     45 calendar days from the date of receipt by Congress.
       ``(2) Early availability.--The President may make any 
     dollar amount of discretionary budget authority withheld from 
     obligation pursuant to paragraph (1) available at an earlier 
     time if the President determines that continued withholding 
     would not further the purposes of this Act.
       ``(f) Temporary Presidential Authority To Suspend.--
       ``(1) Suspend.--
       ``(A) In general.--The President may not suspend the 
     execution of any item of direct spending or targeted tax 
     benefit until the President transmits and Congress receives a 
     special message pursuant to subsection (b). Upon receipt by 
     Congress of a special message, the President may suspend the 
     execution of any item of direct spending or targeted tax 
     benefit proposed to be rescinded in that message for a period 
     not to exceed 45 calendar days from the date of receipt by 
     Congress.
       ``(B) Limitation on 45-day period.--The 45-day period 
     described in subparagraph (A) shall be reduced by the number 
     of days contained in the period beginning on the effective 
     date of the item of direct spending or targeted tax benefit; 
     and ending on the date that is the later of--
       ``(i) the effective date of the item of direct spending or 
     targeted benefit; or
       ``(ii) the date that Congress receives the special message.
       ``(C) Clarification.--Notwithstanding subparagraph (B), in 
     the case of an item of direct spending or targeted tax 
     benefit with an effective date within 45 days after the date 
     of enactment, the beginning date of the period calculated 
     under subparagraph (B) shall be the date that is 45 days 
     after the date of enactment and the ending date shall be the 
     date that is the later of--
       ``(i) the date that is 45 days after enactment; or
       ``(ii) the date that Congress receives the special message.
       ``(2) Early availability.--The President may terminate the 
     suspension of any item of direct spending or targeted tax 
     benefit suspended pursuant to paragraph (1) at an earlier 
     time if the President determines that continuation of the 
     suspension would not further the purposes of this Act.
       ``(g) Definitions.--In this part:
       ``(1) Appropriation law.--The term `appropriation law' 
     means any general or special appropriation Act, and any Act 
     or joint resolution making supplemental, deficiency, or 
     continuing appropriations.
       ``(2) Calendar day.--The term `calendar day' means a 
     standard 24-hour period beginning at midnight.
       ``(3) Days of session.--The term `days of session' means 
     only those days on which both Houses of Congress are in 
     session.
       ``(4) Dollar amount of discretionary budget authority.--The 
     term `dollar amount of discretionary budget authority' means 
     the dollar amount of budget authority and obligation 
     limitations--
       ``(A) specified in an appropriation law, or the dollar 
     amount of budget authority required to be allocated by a 
     specific proviso in an appropriation law for which a specific 
     dollar figure was not included;
       ``(B) represented separately in any table, chart, or 
     explanatory text included in the statement of managers or the 
     governing committee report accompanying such law;
       ``(C) required to be allocated for a specific program, 
     project, or activity in a law (other than an appropriation 
     law) that mandates obligations from or within accounts, 
     programs, projects, or activities for which budget authority 
     or an obligation limitation is provided in an appropriation 
     law;
       ``(D) represented by the product of the estimated 
     procurement cost and the total quantity of items specified in 
     an appropriation law or included in the statement of managers 
     or the governing committee report accompanying such law; or
       ``(E) represented by the product of the estimated 
     procurement cost and the total quantity of items required to 
     be provided in a law (other than an appropriation law) that 
     mandates obligations from accounts, programs, projects, or 
     activities for which dollar amount of discretionary budget 
     authority or an obligation limitation is provided in an 
     appropriation law.
       ``(5) Rescind or rescission.--The term `rescind' or 
     `rescission' means--
       ``(A) in the case of a dollar amount of discretionary 
     budget authority, to reduce or repeal a provision of law to 
     prevent that budget authority or obligation limitation from 
     having legal force or effect; and
       ``(B) in the case of direct spending or targeted tax 
     benefit, to repeal a provision of law in order to prevent the 
     specific legal obligation of the United States from having 
     legal force or effect.
       ``(6) Direct spending.--The term `direct spending' means 
     budget authority provided by law (other than an appropriation 
     law), mandatory spending provided in appropriation Acts, and 
     entitlement authority.
       ``(7) Item of direct spending.--The term `item of direct 
     spending' means any specific provision of law enacted after 
     the effective date of the Second Look at Wasteful Spending 
     Act of 2007 that is estimated to result in an increase in 
     budget authority or outlays for direct spending relative to 
     the most recent levels calculated consistent with the 
     methodology described in section 257 of the Balanced Budget 
     and Emergency Deficit Control Act of 1985 and included with a 
     budget submission under section 1105(a) of title 31, United 
     States Code, and, with respect to estimates made after that 
     budget submission that are not included with it, estimates 
     consistent with the economic and technical assumptions 
     underlying the most recently submitted President's budget.
       ``(8) Suspend the execution.--The term `suspend the 
     execution' means, with respect to an item of direct spending 
     or a targeted tax benefit, to stop the carrying into effect 
     of the specific provision of law that provides such benefit.
       ``(9) Targeted tax benefit.--The term `targeted tax 
     benefit' means--
       ``(A) any revenue provision that has the practical effect 
     of providing more favorable tax treatment to a particular 
     taxpayer or limited group of taxpayers when compared with 
     other similarly situated taxpayers; or
       ``(B) any Federal tax provision which provides one 
     beneficiary temporary or permanent transition relief from a 
     change to the Internal Revenue Code of 1986.''.
       (b) Exercise of Rulemaking Powers.--Section 904 of the 
     Congressional Budget Act of 1974 (2 U.S.C. 621 note) is 
     amended--
       (1) in subsection (a), by striking ``and 1017'' and 
     inserting ``1017, and 1021''; and
       (2) in subsection (d), by striking ``section 1017'' and 
     inserting ``sections 1017 and 1021''.
       (c) Clerical Amendments.--
       (1) Short title.--Section 1(a) of the Congressional Budget 
     and Impoundment Control Act of 1974 is amended by--
       (A) striking ``Parts A and B'' before ``title X'' and 
     inserting ``Parts A, B, and C''; and
       (B) striking the last sentence and inserting at the end the 
     following new sentence: ``Part C of title X also may be cited 
     as the `Second Look at Wasteful Spending Act of 2007'.''.
       (2) Table of contents.--The table of contents set forth in 
     section 1(b) of the Congressional Budget and Impoundment 
     Control Act of 1974 is amended by deleting the contents for 
     part C of title X and inserting the following:

                ``Part C--Enhanced Rescission Authority

``Sec. 1021. Expedited consideration of certain proposed rescissions''.

       (d) Severability.--If any provision of this title or the 
     amendments made by it is held to be unconstitutional, the 
     remainder of this title and the amendments made by it shall 
     not be affected by the holding.
       (e) Effective Date and Expiration.--
       (1) Effective date.--The amendments made by this title 
     shall--
       (A) take effect on the date of enactment of this title; and
       (B) apply to any dollar amount of discretionary budget 
     authority, item of direct spending, or targeted tax benefit 
     provided in

[[Page 1869]]

     an Act enacted on or after the date of enactment of this 
     title.
       (2) Expiration.--The amendments made by this title shall 
     expire on December 31, 2010.
                                 ______
                                 
  SA 102. Mr. ROBERTS submitted an amendment intended to be proposed by 
him to the bill H.R. 2, to amend the Fair Labor Standards Act of 1938 
to provide for an increase in the Federal minimum wage; as follows:

       At the appropriate place, insert the following:

     SEC. __. SMALL BUSINESS CHILD CARE GRANT PROGRAM.

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

[[Page 1870]]

     to conducting studies required under, and the administration 
     of, this section.
       (m) Termination of Program.--The program established under 
     subsection (a) shall terminate on September 30, 2012.
                                 ______
                                 
  SA 103. Mr. ENZI (for Ms. Snowe (for herself, Mr. Enzi, and Ms. 
Landrieu)) proposed an amendment to amendment SA 100 proposed by Mr. 
Reid (for Mr. Baucus) to the bill H.R. 2, to amend the Fair Labor 
Standards Act of 1938 to provide for an increase in the Federal minimum 
wage; as follows:

       At the appropriate place, insert the following:

     SEC. __. ENHANCED COMPLIANCE ASSISTANCE FOR SMALL BUSINESSES.

       (a) In General.--Section 212 of the Small Business 
     Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 601 
     note) is amended by striking subsection (a) and inserting the 
     following:
       ``(a) Compliance Guide.--
       ``(1) In general.--For each rule or group of related rules 
     for which an agency is required to prepare a final regulatory 
     flexibility analysis under section 605(b) of title 5, United 
     States Code, the agency shall publish 1 or more guides to 
     assist small entities in complying with the rule and shall 
     entitle such publications `small entity compliance guides'.
       ``(2) Publication of guides.--The publication of each guide 
     under this subsection shall include--
       ``(A) the posting of the guide in an easily identified 
     location on the website of the agency; and
       ``(B) distribution of the guide to known industry contacts, 
     such as small entities, associations, or industry leaders 
     affected by the rule.
       ``(3) Publication date.--An agency shall publish each guide 
     (including the posting and distribution of the guide as 
     described under paragraph (2))--
       ``(A) on the same date as the date of publication of the 
     final rule (or as soon as possible after that date); and
       ``(B) not later than the date on which the requirements of 
     that rule become effective.
       ``(4) Compliance actions.--
       ``(A) In general.--Each guide shall explain the actions a 
     small entity is required to take to comply with a rule.
       ``(B) Explanation.--The explanation under subparagraph 
     (A)--
       ``(i) shall include a description of actions needed to meet 
     the requirements of a rule, to enable a small entity to know 
     when such requirements are met; and
       ``(ii) if determined appropriate by the agency, may include 
     a description of possible procedures, such as conducting 
     tests, that may assist a small entity in meeting such 
     requirements.
       ``(C) Procedures.--Procedures described under subparagraph 
     (B)(ii)--
       ``(i) shall be suggestions to assist small entities; and
       ``(ii) shall not be additional requirements relating to the 
     rule.
       ``(5) Agency preparation of guides.--The agency shall, in 
     its sole discretion, taking into account the subject matter 
     of the rule and the language of relevant statutes, ensure 
     that the guide is written using sufficiently plain language 
     likely to be understood by affected small entities. Agencies 
     may prepare separate guides covering groups or classes of 
     similarly affected small entities and may cooperate with 
     associations of small entities to develop and distribute such 
     guides. An agency may prepare guides and apply this section 
     with respect to a rule or a group of related rules.
       ``(6) Reporting.--Not later than 1 year after the date of 
     enactment of the Small Business Compliance Assistance 
     Enhancement Act of 2007, and annually thereafter, the head of 
     each agency shall submit a report to the Committee on Small 
     Business and Entrepreneurship of the Senate and the Committee 
     on Small Business of the House of Representatives describing 
     the status of the agency's compliance with paragraphs (1) 
     through (5).''.
       (b) Technical and Conforming Amendment.--Section 211(3) of 
     the Small Business Regulatory Enforcement Fairness Act of 
     1996 (5 U.S.C. 601 note) is amended by inserting ``and 
     entitled'' after ``designated''.
                                 ______
                                 
  SA 104. Mr. WYDEN (for himself, Mr. Smith, Mrs. Feinstein, and Mrs. 
Boxer)) submitted an amendment intended to be proposed by him to the 
bill H.R. 2, to amend the Fair Labor Standards Act of 1938 to provide 
for an increase in the Federal minimum wage; which was ordered to lie 
on the table; as follows:

       At the appropriate place, insert the following:

     SEC. ___. EXTENSION OF SECURE RURAL SCHOOLS AND COMMUNITY 
                   SELF-DETERMINATION ACT.

       (a) In General.--The Secure Rural Schools and Community 
     Self-Determination Act of 2000 (16 U.S.C. 500 note; Public 
     Law 106-393) is amended in sections 101(a), 102(b)(2), 
     103(b)(1), 203(a)(1), 207(a), 208, 303, and 401 by striking 
     ``2006'' each place it appears and inserting ``2007''.
       (b) Termination of Authority.--
       (1) Special projects on federal lands.--Section 208 of the 
     Secure Rural Schools and Community Self-Determination Act of 
     2000 (16 U.S.C. 500 note; Public Law 106-393) is amended in 
     the second sentence by striking ``2007'' and inserting 
     ``2008''.
       (2) County projects.--Section 303 of the Secure Rural 
     Schools and Community Self-Determination Act of 2000 (16 
     U.S.C. 500 note; Public Law 106-393) is amended in the second 
     sentence by striking ``2007'' and inserting ``2008''.
                                 ______
                                 
  SA 105. Mr. MARTINEZ submitted an amendment intended to be proposed 
by him to the bill H.R. 2, to amend the Fair Labor Standards Act of 
1938 to provide for an increase in the Federal minimum wage; which was 
ordered to lie on the table; as follows:

       At the appropriate place, insert the following:

     SEC. __. HOUSE PARENT EXCEPTION.

       Section 13(b)(24) of the Fair Labor Standards Act of 1938 
     (29 U.S.C. 212(b)(24)) is amended--
       (1) in the matter preceding subparagraph (A), by striking 
     ``and his spouse''; and
       (2) in the matter following subparagraph (B)--
       (A) by striking ``and his spouse reside'' and inserting 
     ``resides'';
       (B) by striking ``receive'' and inserting ``receives''; and
       (C) by striking ``are together'' and inserting ``is''.
                                 ______
                                 
  SA 106. Mr. SESSIONS (for himself, Mr. Kohl, and Mrs. Hutchison) 
proposed an amendment to amendment SA 100 proposed by Mr. Reid (for Mr. 
Baucus) to the bill H.R. 2, to amend the Fair Labor Standards Act of 
1938 to provide for an increase in the Federal minimum wage; as 
follows:

       At the appropriate place, insert the following:

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

       (a) Findings.--The Senate finds that--
       (1) the personal saving rate in the United States is at its 
     lowest point since the Great Depression, with the rate having 
     fallen into negative territory;
       (2) the United States ranks at the bottom of the Group of 
     Twenty (G-20) nations in terms of net national saving rate;
       (3) approximately half of all the working people of the 
     United States work for an employer that does not offer any 
     kind of retirement plan;
       (4) existing savings policies enacted by Congress provide 
     limited incentives to save for low- and moderate-income 
     families; and
       (5) the critically-important Social Security program was 
     never intended by Congress to be the sole source of 
     retirement income.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that--
       (1) there is a need for simple, easily-accessible and 
     productive savings vehicles for all the people of the United 
     States;
       (2) it is important to begin retirement saving as early as 
     possible to take full advantage of the power of compound 
     interest;
       (3) regularly contributing money to a financially-sound 
     investment account is effective in achieving one's retirement 
     goals; and
       (4) Congress should actively develop policies to enhance 
     personal savings for retirement.
                                 ______
                                 
  SA 107. Mr. SESSIONS proposed an amendment to amendment SA 100 
proposed by Mr. Reid (for Mr. Baucus) to the bill H.R. 2, to amend the 
Fair Labor Standards Act of 1938 to provide for an increase in the 
Federal minimum wage; as follows:

       At the appropriate place insert the following:

     SEC. __. ADDITIONAL REQUIREMENTS TO ENSURE GREATER USE OF 
                   ADVANCE PAYMENT OF EARNED INCOME CREDIT.

       Not later than January 1, 2010, the Secretary of the 
     Treasury by regulation shall require--
       (1) each employer of an employee who the employer 
     determines receives wages in an amount which indicates that 
     such employee would be eligible for the earned income credit 
     under section 32 of the Internal Revenue Code of 1986 to 
     provide such employee with a simplified application for an 
     earned income eligibility certificate, and
       (2) require each employee wishing to receive the earned 
     income tax credit to complete and return the application to 
     the employer within 30 days of receipt.

     Such regulations shall require an employer to provide such an 
     application within 30 days of the hiring date of an employee 
     and at least annually thereafter. Such regulations shall 
     further provide that, upon receipt of a completed form, an 
     employer shall provide for the advance payment of the earned 
     income credit as provided under section 3507 of the Internal 
     Revenue Code of 1986.

[[Page 1871]]



     SEC. __. EXTENSION OF ADVANCE PAYMENT OF EARNED INCOME CREDIT 
                   TO ALL ELIGIBLE TAXPAYERS.

       (a) In General.--Section 3507(b) of the Internal Revenue 
     Code of 1986 (relating to earned income eligibility 
     certificate) is amended by striking paragraph (2) and by 
     redesignating paragraphs (3) and (4) as paragraphs (2) and 
     (3), respectively.
       (b) Conforming Amendments.--
       (1) Section 3507(c)(2)(B) of the Internal Revenue Code of 
     1986 is amended by inserting ``has 1 or more qualifying 
     children and'' before ``is not married,''.
       (2) Section 3507(c)(2)(C) of such Code is amended by 
     striking ``the employee'' and inserting ``an employee with 1 
     or more qualifying children''.
       (3) Section 3507(f) of such Code is amended by striking 
     ``who have 1 or more qualifying children and''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.
                                 ______
                                 
  SA 108. Mr. SESSIONS proposed an amendment to amendment SA 100 
proposed by Mr. Reid (for Mr. Baucus) to the bill H.R. 2, to amend the 
Fair Labor Standards Act of 1938 to provide for an increase in the 
Federal minimum wage; as follows:

       At the appropriate place insert the following:

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

       Not later than 180 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall report to 
     Congress on a study of the costs and barriers to businesses 
     (with a special emphasis on small businesses) if the advance 
     earned income tax credit program (under section 3507 of the 
     Internal Revenue Code of 1986) included all recipients of the 
     earned income tax credit (under section 32 of such Code) and 
     what steps would be necessary to implement such inclusion.
                                 ______
                                 
  SA 109. Mr. REID proposed an amendment to the concurrent resolution 
H. Con. Res. 38, providing for a joint session of Congress to receive a 
message from the President, as follows:

       On page 1, line 3 strike ``Wednesday'' and insert Tuesday.
                                 ______
                                 
  SA 110. Mr. VITTER (for himself and Mr. Voinovich) submitted an 
amendment intended to be proposed by him to the bill H.R. 2, to amend 
the Fair Labor Standards Act of 1938 to provide for an increase in the 
Federal minimum wage; as follows:

       At the appropriate place, insert the following:

     SEC. __. SUSPENSION OF FINES FOR FIRST-TIME PAPERWORK 
                   VIOLATIONS BY SMALL BUSINESS CONCERNS.

       Section 3506 of title 44, United States Code (commonly 
     referred to as the ``Paperwork Reduction Act''), is amended 
     by adding at the end the following:
       ``(j) Small Businesses.--
       ``(1) Small business concern.--In this subsection, the term 
     `small business concern' means a business concern that meets 
     the requirements of section 3(a) of the Small Business Act 
     (15 U.S.C. 632(a)) and the regulations promulgated under that 
     section.
       ``(2) In general.--In the case of a first-time violation by 
     a small business concern of a requirement regarding the 
     collection of information by an agency, the head of that 
     agency shall not impose a civil fine on the small business 
     concern unless the head of the agency determines that--
       ``(A) the violation has the potential to cause serious harm 
     to the public interest;
       ``(B) failure to impose a civil fine would impede or 
     interfere with the detection of criminal activity;
       ``(C) the violation is a violation of an internal revenue 
     law or a law concerning the assessment or collection of any 
     tax, debt, revenue, or receipt;
       ``(D) the violation was not corrected on or before the date 
     that is 6 months after the date of receipt by the small 
     business concern of notification of the violation in writing 
     from the agency; or
       ``(E) except as provided in paragraph (3), the violation 
     presents a danger to the public health or safety.
       ``(3) Danger to public health or safety.--
       ``(A) In general.--In any case in which the head of an 
     agency determines under paragraph (2)(E) that a violation 
     presents a danger to the public health or safety, the head of 
     the agency may, notwithstanding paragraph (2)(E), determine 
     not to impose a civil fine on the small business concern if 
     the violation is corrected not later than 24 hours after 
     receipt by the small business owner of notification of the 
     violation in writing.
       ``(B) Considerations.--In determining whether to provide a 
     small business concern with 24 hours to correct a violation 
     under subparagraph (A), the head of an agency shall take into 
     account all of the facts and circumstances regarding the 
     violation, including--
       ``(i) the nature and seriousness of the violation, 
     including whether the violation is technical or inadvertent 
     or involves willful or criminal conduct;
       ``(ii) whether the small business concern has made a good 
     faith effort to comply with applicable laws and to remedy the 
     violation within the shortest practicable period of time; and
       ``(iii) whether the small business concern has obtained a 
     significant economic benefit from the violation.
       ``(C) Notice to congress.--In any case in which the head of 
     an agency imposes a civil fine on a small business concern 
     for a violation that presents a danger to the public health 
     or safety and does not provide the small business concern 
     with 24 hours to correct the violation under subparagraph 
     (A), the head of that agency shall notify Congress regarding 
     that determination not later than the date that is 60 days 
     after the date that the civil fine is imposed by that agency.
       ``(4) Limited to first-time violations.--
       ``(A) In general.--This subsection shall not apply to any 
     violation by a small business concern of a requirement 
     regarding collection of information by an agency if that 
     small business concern previously violated any requirement 
     regarding collection of information by that agency.
       ``(B) Other agencies.--For purposes of making a 
     determination under subparagraph (A), the head of an agency 
     shall not take into account any violation of a requirement 
     regarding collection of information by another agency.''.

                          ____________________