[Congressional Record (Bound Edition), Volume 155 (2009), Part 23]
[House]
[Pages 30792-30815]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       TAX EXTENDERS ACT OF 2009

  Mr. RANGEL. Mr. Speaker, pursuant to House Resolution 955, I call up 
the bill (H.R. 4213) to amend the Internal Revenue Code of 1986 to 
extend certain expiring provisions, and for other purposes, and ask for 
its immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore (Mr. Driehaus). Pursuant to House Resolution 
955, the bill is considered read.
  The text of the bill is as follows:

                               H.R. 4213

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

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

       (a) Short Title.--This Act may be cited as the ``Tax 
     Extenders Act of 2009''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

                      TITLE I--GENERAL PROVISIONS

                   Subtitle A--Individual Tax Relief

Sec. 101. Deduction of State and local sales taxes.
Sec. 102. Additional standard deduction for State and local real 
              property taxes.
Sec. 103. Above-the-line deduction for qualified tuition and related 
              expenses.
Sec. 104. Deduction for certain expenses of elementary and secondary 
              school teachers.

                    Subtitle B--Business Tax Relief

Sec. 111. Research credit.
Sec. 112. Exceptions for active financing income.
Sec. 113. Look-thru treatment of payments between related controlled 
              foreign corporations under foreign personal holding 
              company rules.
Sec. 114. 15-year straight-line cost recovery for qualified leasehold 
              improvements, qualified restaurant buildings and 
              improvements, and qualified retail improvements.
Sec. 115. 7-year recovery period for motorsports entertainment 
              complexes.
Sec. 116. Railroad track maintenance credit.
Sec. 117. Special expensing rules for certain film and television 
              productions.
Sec. 118. Expensing of environmental remediation costs.
Sec. 119. Mine rescue team training credit.
Sec. 120. Election to expense advanced mine safety equipment.
Sec. 121. Employer wage credit for employees who are active duty 
              members of the uniformed services.
Sec. 122. 5-year depreciation for farming business machinery and 
              equipment.
Sec. 123. Treatment of certain dividends and assets of regulated 
              investment companies.
Sec. 124. Look-thru of certain regulated investment company stock in 
              determining gross estate of nonresidents.
Sec. 125. RIC qualified investment entity treatment under FIRPTA.
Sec. 126. Suspension of limitation on percentage depletion for oil and 
              gas from marginal wells.

                   Subtitle C--Charitable Provisions

Sec. 131. Contributions of capital gain real property made for 
              conservation purposes.
Sec. 132. Enhanced charitable deduction for contributions of food 
              inventory.
Sec. 133. Enhanced charitable deduction for contributions of book 
              inventories to public schools.
Sec. 134. Enhanced charitable deduction for corporate contributions of 
              computer technology and equipment for educational 
              purposes.
Sec. 135. Tax-free distributions from individual retirement plans for 
              charitable purposes.
Sec. 136. Modification of tax treatment of certain payments to 
              controlling exempt organizations.

[[Page 30793]]

Sec. 137. Exclusion of gain or loss on sale or exchange of certain 
              brownfield sites from unrelated business taxable income.
Sec. 138. Basis adjustment to stock of S corporations making charitable 
              contributions of property.

                  Subtitle D--Miscellaneous Provisions

Sec. 141. Indian employment tax credit.
Sec. 142. Accelerated depreciation for business property on an Indian 
              reservation.
Sec. 143. Deduction allowable with respect to income attributable to 
              domestic production activities in Puerto Rico.
Sec. 144. Temporary increase in limit on cover over of rum excise taxes 
              to Puerto Rico and the Virgin Islands.
Sec. 145. American Samoa economic development credit.

               TITLE II--COMMUNITY ASSISTANCE PROVISIONS

Sec. 201. Empowerment zone tax incentives.
Sec. 202. Renewal community tax incentives.
Sec. 203. New markets tax credit.
Sec. 204. Tax incentives for investment in the District of Columbia.
Sec. 205. Tax incentives for New York Liberty Zone.
Sec. 206. Tax incentives for the Gulf Opportunity Zone.
Sec. 207. Election for refundable low-income housing credit for 2010.

                 TITLE III--DISASTER RELIEF PROVISIONS

Sec. 301. Deductibility of personal casualty losses attributable to 
              federally declared disasters.
Sec. 302. Expensing of certain qualified disaster expenses.
Sec. 303. 5-year carryback of net operating losses attributable to 
              Federally declared disasters.
Sec. 304. Waiver of certain mortgage revenue bond requirements for 
              residences located in Federally declared disaster areas.
Sec. 305. Expensing and special depreciation allowance for qualified 
              disaster assistance property.

                      TITLE IV--ENERGY PROVISIONS

Sec. 401. Incentives for biodiesel and renewable diesel.
Sec. 402. Alternative motor vehicle credit for heavy hybrids.
Sec. 403. Alternative fuel credit for natural gas and liquified 
              petroleum gas.
Sec. 404. Special rule for sales or dispositions to implement FERC or 
              State electric restructuring policy for qualified 
              electric utilities.

                TITLE V--FOREIGN ACCOUNT TAX COMPLIANCE

         Subtitle A--Increased Disclosure of Beneficial Owners

Sec. 501. Reporting on certain foreign accounts.
Sec. 502. Repeal of certain foreign exceptions to registered bond 
              requirements.

       Subtitle B--Under Reporting With Respect to Foreign Assets

Sec. 511. Disclosure of information with respect to foreign financial 
              assets.
Sec. 512. Penalties for underpayments attributable to undisclosed 
              foreign financial assets.
Sec. 513. Modification of statute of limitations for significant 
              omission of income in connection with foreign assets.

                Subtitle C--Other Disclosure Provisions

Sec. 521. Reporting of activities with respect to passive foreign 
              investment companies.
Sec. 522. Secretary permitted to require financial institutions to file 
              certain returns related to withholding on foreign 
              transfers electronically.

            Subtitle D--Provisions Related to Foreign Trusts

Sec. 531. Clarifications with respect to foreign trusts which are 
              treated as having a United States beneficiary.
Sec. 532. Presumption that foreign trust has United States beneficiary.
Sec. 533. Uncompensated use of trust property.
Sec. 534. Reporting requirement of United States owners of foreign 
              trusts.
Sec. 535. Minimum penalty with respect to failure to report on certain 
              foreign trusts.

   Subtitle E--Substitute Dividends and Dividend Equivalent Payments 
            Received by Foreign Persons Treated as Dividends

Sec. 541. Substitute dividends and dividend equivalent payments 
              received by foreign persons treated as dividends.

                   TITLE VI--OTHER REVENUE PROVISIONS

 Subtitle A--Partnership Interests Held by Partners Providing Services

Sec. 601. Partnership interests transferred in connection with 
              performance of services.
Sec. 602. Income of partners for performing investment management 
              services treated as ordinary income received for 
              performance of services.

       Subtitle B--Time for Payment of Corporate Estimated Taxes

Sec. 611. Time for payment of corporate estimated taxes.

                   Subtitle C--Tax Expenditure Study

Sec. 621. Findings.
Sec. 622. Study of extended tax expenditures.

                      TITLE I--GENERAL PROVISIONS

                   Subtitle A--Individual Tax Relief

     SEC. 101. DEDUCTION OF STATE AND LOCAL SALES TAXES.

       (a) In General.--Subparagraph (I) of section 164(b)(5) is 
     amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

     SEC. 102. ADDITIONAL STANDARD DEDUCTION FOR STATE AND LOCAL 
                   REAL PROPERTY TAXES.

       (a) In General.--Subparagraph (C) of section 63(c)(1) is 
     amended by striking ``or 2009'' and inserting ``, 2009, or 
     2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

     SEC. 103. ABOVE-THE-LINE DEDUCTION FOR QUALIFIED TUITION AND 
                   RELATED EXPENSES.

       (a) In General.--Subsection (e) of section 222 is amended 
     by striking ``December 31, 2009'' and inserting ``December 
     31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

     SEC. 104. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND 
                   SECONDARY SCHOOL TEACHERS.

       (a) In General.--Subparagraph (D) of section 62(a)(2) is 
     amended by striking ``or 2009'' and inserting ``2009, or 
     2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

                    Subtitle B--Business Tax Relief

     SEC. 111. RESEARCH CREDIT.

       (a) In General.--Subparagraph (B) of section 41(h)(1) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Conforming Amendment.--Subparagraph (D) of section 
     45C(b)(1) is amended by striking ``December 31, 2009'' and 
     inserting ``December 31, 2010''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to amounts paid or incurred after December 31, 
     2009.

     SEC. 112. EXCEPTIONS FOR ACTIVE FINANCING INCOME.

       (a) In General.--Sections 953(e)(10) and 954(h)(9) are each 
     amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (b) Conforming Amendment.--Section 953(e)(10) is amended by 
     striking ``December 31, 2009'' and inserting ``December 31, 
     2010''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2009, and to taxable years of 
     United States shareholders with or within which any such 
     taxable year of such foreign corporation ends.

     SEC. 113. LOOK-THRU TREATMENT OF PAYMENTS BETWEEN RELATED 
                   CONTROLLED FOREIGN CORPORATIONS UNDER FOREIGN 
                   PERSONAL HOLDING COMPANY RULES.

       (a) In General.--Subparagraph (C) of section 954(c)(6) is 
     amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after December 31, 2009, and to taxable years of 
     United States shareholders with or within which any such 
     taxable year of such foreign corporation ends.

     SEC. 114. 15-YEAR STRAIGHT-LINE COST RECOVERY FOR QUALIFIED 
                   LEASEHOLD IMPROVEMENTS, QUALIFIED RESTAURANT 
                   BUILDINGS AND IMPROVEMENTS, AND QUALIFIED 
                   RETAIL IMPROVEMENTS.

       (a) In General.--Clauses (iv), (v), and (ix) of section 
     168(e)(3)(E) are each amended by striking ``January 1, 2010'' 
     and inserting ``January 1, 2011''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2009.

     SEC. 115. 7-YEAR RECOVERY PERIOD FOR MOTORSPORTS 
                   ENTERTAINMENT COMPLEXES.

       (a) In General.--Subparagraph (D) of section 168(i)(15) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service after December 31, 
     2009.

     SEC. 116. RAILROAD TRACK MAINTENANCE CREDIT.

       (a) In General.--Subsection (f) of section 45G is amended 
     by striking ``January 1, 2010'' and inserting ``January 1, 
     2011''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to expenditures paid or incurred in taxable years 
     beginning after December 31, 2009.

[[Page 30794]]



     SEC. 117. SPECIAL EXPENSING RULES FOR CERTAIN FILM AND 
                   TELEVISION PRODUCTIONS.

       (a) In General.--Subsection (f) of section 181 is amended 
     by striking ``December 31, 2009'' and inserting ``December 
     31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to productions commencing after December 31, 
     2009.

     SEC. 118. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

       (a) In General.--Subsection (h) of section 198 is amended 
     by striking ``December 31, 2009'' and inserting ``December 
     31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to expenditures paid or incurred after December 
     31, 2009.

     SEC. 119. MINE RESCUE TEAM TRAINING CREDIT.

       (a) In General.--Subsection (e) of section 45N is amended 
     by striking ``December 31, 2009'' and inserting ``December 
     31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

     SEC. 120. ELECTION TO EXPENSE ADVANCED MINE SAFETY EQUIPMENT.

       (a) In General.--Subsection (g) of section 179E is amended 
     by striking ``December 31, 2009'' and inserting ``December 
     31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service after December 31, 
     2009.

     SEC. 121. EMPLOYER WAGE CREDIT FOR EMPLOYEES WHO ARE ACTIVE 
                   DUTY MEMBERS OF THE UNIFORMED SERVICES.

       (a) In General.--Subsection (f) of section 45P is amended 
     by striking ``December 31, 2009'' and inserting ``December 
     31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to payments made after December 31, 2009.

     SEC. 122. 5-YEAR DEPRECIATION FOR FARMING BUSINESS MACHINERY 
                   AND EQUIPMENT.

       (a) In General.--Clause (vii) of section 168(e)(3)(B) is 
     amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service after December 31, 
     2009.

     SEC. 123. TREATMENT OF CERTAIN DIVIDENDS AND ASSETS OF 
                   REGULATED INVESTMENT COMPANIES.

       (a) In General.--Paragraphs (1)(C) and (2)(C) of section 
     871(k) are each amended by striking ``December 31, 2009'' and 
     inserting ``December 31, 2010''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

     SEC. 124. LOOK-THRU OF CERTAIN REGULATED INVESTMENT COMPANY 
                   STOCK IN DETERMINING GROSS ESTATE OF 
                   NONRESIDENTS.

       (a) In General.--Paragraph (3) of section 2105(d) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying after December 31, 
     2009.

     SEC. 125. RIC QUALIFIED INVESTMENT ENTITY TREATMENT UNDER 
                   FIRPTA.

       (a) In General.--Clause (ii) of section 897(h)(4)(A) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions made after December 31, 2009.

     SEC. 126. SUSPENSION OF LIMITATION ON PERCENTAGE DEPLETION 
                   FOR OIL AND GAS FROM MARGINAL WELLS.

       (a) In General.--Clause (ii) of section 613A(c)(6)(H) is 
     amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

                   Subtitle C--Charitable Provisions

     SEC. 131. CONTRIBUTIONS OF CAPITAL GAIN REAL PROPERTY MADE 
                   FOR CONSERVATION PURPOSES.

       (a) In General.--Clause (vi) of section 170(b)(1)(E) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Contributions by Certain Corporate Farmers and 
     Ranchers.--Clause (iii) of section 170(b)(2)(B) is amended by 
     striking ``December 31, 2009'' and inserting ``December 31, 
     2010''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2009.

     SEC. 132. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF 
                   FOOD INVENTORY.

       (a) In General.--Clause (iv) of section 170(e)(3)(C) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after December 31, 2009.

     SEC. 133. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS OF 
                   BOOK INVENTORIES TO PUBLIC SCHOOLS.

       (a) In General.--Clause (iv) of section 170(e)(3)(D) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after December 31, 2009.

     SEC. 134. ENHANCED CHARITABLE DEDUCTION FOR CORPORATE 
                   CONTRIBUTIONS OF COMPUTER TECHNOLOGY AND 
                   EQUIPMENT FOR EDUCATIONAL PURPOSES.

       (a) In General.--Subparagraph (G) of section 170(e)(6) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2009.

     SEC. 135. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT 
                   PLANS FOR CHARITABLE PURPOSES.

       (a) In General.--Subparagraph (F) of section 408(d)(8) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions made in taxable years beginning 
     after December 31, 2009.

     SEC. 136. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS 
                   TO CONTROLLING EXEMPT ORGANIZATIONS.

       (a) In General.--Clause (iv) of section 512(b)(13)(E) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to payments received or accrued after December 
     31, 2009.

     SEC. 137. EXCLUSION OF GAIN OR LOSS ON SALE OR EXCHANGE OF 
                   CERTAIN BROWNFIELD SITES FROM UNRELATED 
                   BUSINESS TAXABLE INCOME.

       (a) In General.--Subparagraph (K) of section 512(b)(19) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property acquired after December 31, 2009.

     SEC. 138. BASIS ADJUSTMENT TO STOCK OF S CORPORATIONS MAKING 
                   CHARITABLE CONTRIBUTIONS OF PROPERTY.

       (a) In General.--Paragraph (2) of section 1367(a) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2009.

                  Subtitle D--Miscellaneous Provisions

     SEC. 141. INDIAN EMPLOYMENT TAX CREDIT.

       (a) In General.--Subsection (f) of section 45A is amended 
     by striking ``December 31, 2009'' and inserting ``December 
     31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

     SEC. 142. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON 
                   AN INDIAN RESERVATION.

       (a) In General.--Paragraph (8) of section 168(j) is amended 
     by striking ``December 31, 2009'' and inserting ``December 
     31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service after December 31, 
     2009.

     SEC. 143. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME 
                   ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES 
                   IN PUERTO RICO.

       (a) In General.--Subparagraph (C) of section 199(d)(8) is 
     amended--
       (1) by striking ``first 4 taxable years'' and inserting 
     ``first 5 taxable years'', and
       (2) by striking ``January 1, 2010'' and inserting ``January 
     1, 2011''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

     SEC. 144. TEMPORARY INCREASE IN LIMIT ON COVER OVER OF RUM 
                   EXCISE TAXES TO PUERTO RICO AND THE VIRGIN 
                   ISLANDS.

       (a) In General.--Paragraph (1) of section 7652(f) is 
     amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to distilled spirits brought into the United 
     States after December 31, 2009.

     SEC. 145. AMERICAN SAMOA ECONOMIC DEVELOPMENT CREDIT.

       (a) In General.--Subsection (d) of section 119 of division 
     A of the Tax Relief and Health Care Act of 2006 is amended--
       (1) by striking ``first 4 taxable years'' and inserting 
     ``first 5 taxable years'', and
       (2) by striking ``January 1, 2010'' and inserting ``January 
     1, 2011''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

               TITLE II--COMMUNITY ASSISTANCE PROVISIONS

     SEC. 201. EMPOWERMENT ZONE TAX INCENTIVES.

       (a) In General.--Clause (i) of section 1391(d)(1)(A) is 
     amended by striking ``December 31, 2009'' and inserting 
     ``December 31, 2010''.
       (b) Increased Exclusion of Gain on Stock of Empowerment 
     Zone Businesses.--Subparagraph (C) of section 1202(a)(2) is 
     amended--
       (1) by striking ``December 31, 2014'' and inserting 
     ``December 31, 2015'', and
       (2) by striking ``2014'' in the heading and inserting 
     ``2015''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to periods after December 31, 2009.

     SEC. 202. RENEWAL COMMUNITY TAX INCENTIVES.

       (a) In General.--Subsection (b) of section 1400E is 
     amended--

[[Page 30795]]

       (1) by striking ``December 31, 2009'' in paragraphs (1)(A) 
     and (3) and inserting ``December 31, 2010'', and
       (2) by striking ``January 1, 2010'' in paragraph (3) and 
     inserting ``January 1, 2011''.
       (b) Zero-Percent Capital Gains Rate.--
       (1) Acquisition dates.--Paragraphs (2)(A)(i), (3)(A), 
     (4)(A)(i), and (4)(B)(i) of section 1400F(b) are each amended 
     by striking ``January 1, 2010'' and inserting ``January 1, 
     2011''.
       (2) Limitation on period of gains.--Paragraph (2) of 
     section 1400F(c) is amended--
       (A) by striking ``December 31, 2014'' and inserting 
     ``December 31, 2015'', and
       (B) by striking ``2014'' in the heading and inserting 
     ``2015''.
       (3) Clerical amendment.--Subsection (d) of section 1400F is 
     amended by striking ``and `December 31, 2014' for `December 
     31, 2014'''.
       (c) Commercial Revitalization Deduction.--Subsection (g) of 
     section 1400I is amended by striking ``December 31, 2009'' 
     and inserting ``December 31, 2010''.
       (d) Increased Expensing Under Section 179.--Subparagraph 
     (A) of section 1400J(b)(1) is amended by striking ``January 
     1, 2010'' and inserting ``January 1, 2011''.
       (e) Effective Dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to periods after December 31, 2009.
       (2) Acquisitions.--The amendments made by subsection (b)(1) 
     and (d) shall apply to acquisitions after December 31, 2009.
       (3) Commercial revitalization deduction.--The amendment 
     made by subsection (c) shall apply to building placed in 
     service after December 31, 2009.

     SEC. 203. NEW MARKETS TAX CREDIT.

       (a) In General.--Subparagraph (F) of section 45D(f)(1) is 
     amended by inserting ``and 2010'' after ``2009''.
       (b) Carryover of Unused Limitation.--Paragraph (3) of 
     section 45D(f) is amended by striking ``2014'' and inserting 
     ``2015''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years beginning after 2009.

     SEC. 204. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF 
                   COLUMBIA.

       (a) In General.--Subsection (f) of section 1400 is amended 
     by striking ``December 31, 2009'' each place it appears and 
     inserting ``December 31, 2010''.
       (b) Tax-Exempt DC Empowerment Zone Bonds.--Subsection (b) 
     of section 1400A is amended by striking ``December 31, 2009'' 
     and inserting ``December 31, 2010''.
       (c) Zero-Percent Capital Gains Rate.--
       (1) Acquisition dates.--Paragraphs (2)(A)(i), (3)(A), 
     (4)(A)(i), and (4)(B)(i)(I) of section 1400B(b) are each 
     amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (2) Limitation on period of zero-percent capital gains.--
       (A) In general.--Paragraph (2) of section 1400B(e) is 
     amended--
       (i) by striking ``December 31, 2014'' and inserting 
     ``December 31, 2015'', and
       (ii) by striking ``2014'' in the heading and inserting 
     ``2015''.
       (B) Interests in partnership and s corporations.--Paragraph 
     (2) of section 1400B(g) is amended by striking ``December 31, 
     2014'' and inserting ``December 31, 2015''.
       (d) First-Time Homebuyer Credit.--Subsection (i) of section 
     1400C is amended by striking ``January 1, 2010'' and 
     inserting ``January 1, 2011''.
       (e) Effective Dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to periods after December 31, 2009.
       (2) Tax-exempt dc empowerment zone bonds.--The amendment 
     made by subsection (b) shall apply to bonds issued after 
     December 31, 2009.
       (3) Acquisition dates for zero-percent capital gains 
     rate.--The amendments made by subsection (c)(1) shall apply 
     to property acquired or substantially improved after December 
     31, 2009.
       (4) First-time homebuyer credit.--The amendment made by 
     subsection (d) shall apply to property purchased after 
     December 31, 2009.

     SEC. 205. TAX INCENTIVES FOR NEW YORK LIBERTY ZONE.

       (a) Bonus Depreciation for Nonresidential Real Property and 
     Residential Rental Property.--Subparagraph (A) of section 
     1400L(b)(2) is amended by striking ``December 31, 2009'' in 
     the last sentence and inserting ``December 31, 2010''.
       (b) Tax-Exempt Bond Financing.--Subparagraph (D) of section 
     1400L(d)(2) is amended by striking ``January 1, 2010'' and 
     inserting ``January 1, 2011''.
       (c) Effective Dates.--
       (1) Bonus depreciation.--The amendment made by subsection 
     (a) shall apply to property placed in service after December 
     31, 2009.
       (2) Tax-exempt bond financing.--The amendment made by 
     subsection (b) shall apply to bonds issued after December 31, 
     2009.

     SEC. 206. TAX INCENTIVES FOR THE GULF OPPORTUNITY ZONE.

       (a) Work Opportunity Tax Credit for Core Disaster Area.--
     Paragraph (1) of section 201(b) of the Katrina Emergency Tax 
     Relief Act of 2005 is amended by striking ``4-year'' and 
     inserting ``5-year''.
       (b) Increase in Rehabilitation Credit.--Subsection (h) of 
     section 1400N is amended by striking ``December 31, 2009'' 
     and inserting ``December 31, 2010''.
       (c) Effective Dates.--
       (1) Work opportunity tax credit.--The amendment made by 
     subsection (a) shall apply to individuals hired on or after 
     August 28, 2009.
       (2) Rehabilitation credit.--The amendment made by 
     subsection (b) shall apply to amounts paid or incurred after 
     December 31, 2009.

     SEC. 207. ELECTION FOR REFUNDABLE LOW-INCOME HOUSING CREDIT 
                   FOR 2010.

       (a) In General.--Section 42 is amended by redesignating 
     subsection (n) as subsection (o) and by inserting after 
     subsection (m) the following new subsection:
       ``(n) Election for Refundable Credits.--
       ``(1) In general.--The housing credit agency of each State 
     shall be allowed a credit in an amount equal to such State's 
     2010 low-income housing refundable credit election amount 
     which shall be payable by the Secretary as provided in 
     paragraph (5).
       ``(2) 2010 low-income housing refundable credit election 
     amount.--For purposes of this subsection, the term `2010 low-
     income housing refundable credit election amount' means, with 
     respect to any State, such amount as the State may elect 
     which does not exceed 85 percent of the product of--
       ``(A) the sum of--
       ``(i) 100 percent of the State housing credit ceiling for 
     2010 which is attributable to amounts described in clauses 
     (i) and (iii) of subsection (h)(3)(C), and
       ``(ii) 40 percent of the State housing credit ceiling for 
     2010 which is attributable to amounts described in clauses 
     (ii) and (iv) of such subsection, multiplied by
       ``(B) 10.
       ``(3) Coordination with non-refundable credit.--For 
     purposes of this section, the amounts described in clauses 
     (i) through (iv) of subsection (h)(3)(C) with respect to any 
     State for 2010 shall each be reduced by so much of such 
     amount as is taken into account in determining the amount of 
     the credit allowed with respect to such State under paragraph 
     (1).
       ``(4) Special rule for basis.--Basis of a qualified low-
     income building shall not be reduced by the amount of any 
     payment made under this subsection.
       ``(5) Payment of credit; use to finance low-income 
     buildings.--The Secretary shall pay to the housing credit 
     agency of each State an amount equal to the credit allowed 
     under paragraph (1). Rules similar to the rules of 
     subsections (c) and (d) of section 1602 of the American 
     Recovery and Reinvestment Tax Act of 2009 shall apply with 
     respect to any payment made under this paragraph, except that 
     such subsection (d) shall be applied by substituting `January 
     1, 2012' for `January 1, 2011'.''.
       (b) Conforming Amendment.--Section 1324(b)(2) of title 31, 
     United States Code, is amended by inserting ``42(n),'' after 
     ``36A,''.

                 TITLE III--DISASTER RELIEF PROVISIONS

     SEC. 301. DEDUCTIBILITY OF PERSONAL CASUALTY LOSSES 
                   ATTRIBUTABLE TO FEDERALLY DECLARED DISASTERS.

       (a) In General.--Subclause (I) of section 165(h)(3)(B)(i) 
     is amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (b) Extension of $500 Limitation.--Paragraph (1) of section 
     165(h) is amended by striking ``December 31, 2009'' and 
     inserting ``December 31, 2010''.
       (c) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to losses attributable to disasters occurring after December 
     31, 2009.
       (2) Extension of $500 limitation.--The amendment made by 
     subsection (b) shall apply to taxable years beginning after 
     December 31, 2009.

     SEC. 302. EXPENSING OF CERTAIN QUALIFIED DISASTER EXPENSES.

       (a) In General.--Subparagraph (A) of section 198A(b)(2) is 
     amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to expenditures on account of disasters occurring 
     after December 31, 2009.

     SEC. 303. 5-YEAR CARRYBACK OF NET OPERATING LOSSES 
                   ATTRIBUTABLE TO FEDERALLY DECLARED DISASTERS.

       (a) In General.--Subclause (I) of section 172(j)(1)(A)(i) 
     is amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to losses attributable to disasters occurring 
     after December 31, 2009.

     SEC. 304. WAIVER OF CERTAIN MORTGAGE REVENUE BOND 
                   REQUIREMENTS FOR RESIDENCES LOCATED IN 
                   FEDERALLY DECLARED DISASTER AREAS.

       (a) In General.--Paragraph (11) of section 143(k) is 
     amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (b) Special Rule for Residences Destroyed in Federally 
     Declared Disaster Areas.--Paragraph (13) of section 143(k), 
     as redesignated under subsection (c), is amended by striking 
     ``January 1, 2010'' in subparagraphs (A)(i) and (B)(i) and 
     inserting ``January 1, 2011''.
       (c) Technical Amendment.--Subsection (k) of section 143 is 
     amended by redesignating

[[Page 30796]]

     the second paragraph (12) (relating to special rules for 
     residences destroyed in Federally declared disasters) as 
     paragraph (13).
       (d) Effective Dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to bonds issued after December 31, 2009.
       (2) Residences destroyed in federally declared disaster 
     areas.--The amendments made by subsection (b) shall apply 
     with respect to disasters occurring after December 31, 2009.
       (3) Technical amendment.--The amendment made by subsection 
     (c) shall take effect as if included in section 709 of the 
     Tax Extenders and Alternative Minimum Tax Relief Act of 2008.

     SEC. 305. EXPENSING AND SPECIAL DEPRECIATION ALLOWANCE FOR 
                   QUALIFIED DISASTER ASSISTANCE PROPERTY.

       (a) In General.--Subclause (I) of section 168(n)(2)(A)(ii) 
     is amended by striking ``January 1, 2010'' and inserting 
     ``January 1, 2011''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to disasters occurring after December 31, 2009.

                      TITLE IV--ENERGY PROVISIONS

     SEC. 401. INCENTIVES FOR BIODIESEL AND RENEWABLE DIESEL.

       (a) Credits for Biodiesel and Renewable Diesel Used as 
     Fuel.--Subsection (g) of section 40A is amended by striking 
     ``December 31, 2009'' and inserting ``December 31, 2010''.
       (b) Excise Tax Credits and Payments for Biodiesel and 
     Renewable Diesel Fuel Mixtures.--
       (1) Paragraph (6) of section 6426(c) is amended by striking 
     ``December 31, 2009'' and inserting ``December 31, 2010''.
       (2) Subparagraph (B) of section 6427(e)(6) is amended by 
     striking ``December 31, 2009'' and inserting ``December 31, 
     2010''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to sales and uses after December 31, 2009.

     SEC. 402. ALTERNATIVE MOTOR VEHICLE CREDIT FOR HEAVY HYBRIDS.

       (a) In General.--Paragraph (3) of section 30B(k) is amended 
     by striking ``December 31, 2009'' and inserting ``December 
     31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property purchased after December 31, 2009.

     SEC. 403. ALTERNATIVE FUEL CREDIT FOR NATURAL GAS AND 
                   LIQUIFIED PETROLEUM GAS.

       (a) In General.--Paragraph (5) of section 6426(d) is 
     amended by striking ``after December 31, 2009'' and all that 
     follows and inserting ``after--
       ``(A) September 30, 2014, in the case of liquefied 
     hydrogen,
       ``(B) December 31, 2010, in the case of--
       ``(i) compressed or liquified natural gas, and
       ``(ii) liquified petroleum gas (other than for use as fuel 
     in a forklift), and
       ``(C) December 31, 2009, in any other case.''.
       (b) Payment Authority.--Paragraph (6) of section 6427(e) is 
     amended by striking ``and'' at the end of subparagraph (C), 
     by striking the period at the end of subparagraph (D) and 
     inserting a comma and by adding at the end the following new 
     subparagraphs:
       ``(E) any alternative fuel (as so defined) involving 
     compressed or liquified natural gas sold or used after 
     December 31, 2010, and
       ``(F) any alternative fuel (as so defined) involving 
     liquified petroleum gas (other than for use as fuel in a 
     forklift) sold or used after December 31, 2010.''.
       (c) Conforming Amendment.--Subparagraph (C) of section 
     6427(e)(6) is amended by inserting ``(E), or (F)'' after 
     ``subparagraph (D)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to fuel sold or used after December 31, 2009.

     SEC. 404. SPECIAL RULE FOR SALES OR DISPOSITIONS TO IMPLEMENT 
                   FERC OR STATE ELECTRIC RESTRUCTURING POLICY FOR 
                   QUALIFIED ELECTRIC UTILITIES.

       (a) In General.--Paragraph (3) of section 451(i) is amended 
     by striking ``January 1, 2010'' and inserting ``January 1, 
     2011''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to dispositions after December 31, 2009.

                TITLE V--FOREIGN ACCOUNT TAX COMPLIANCE

         Subtitle A--Increased Disclosure of Beneficial Owners

     SEC. 501. REPORTING ON CERTAIN FOREIGN ACCOUNTS.

       (a) In General.--The Internal Revenue Code of 1986 is 
     amended by inserting after chapter 3 the following new 
     chapter:

  ``CHAPTER 4--TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN ACCOUNTS

``Sec. 1471. Withholdable payments to foreign financial institutions.
``Sec. 1472. Withholdable payments to other foreign entities.
``Sec. 1473. Definitions.
``Sec. 1474. Special rules.

     ``SEC. 1471. WITHHOLDABLE PAYMENTS TO FOREIGN FINANCIAL 
                   INSTITUTIONS.

       ``(a) In General.--In the case of any withholdable payment 
     to a foreign financial institution which does not meet the 
     requirements of subsection (b), the withholding agent with 
     respect to such payment shall deduct and withhold from such 
     payment a tax equal to 30 percent of the amount of such 
     payment.
       ``(b) Reporting Requirements, etc.--
       ``(1) In general.--The requirements of this subsection are 
     met with respect to any foreign financial institution if an 
     agreement is in effect between such institution and the 
     Secretary under which such institution agrees--
       ``(A) to obtain such information regarding each holder of 
     each account maintained by such institution as is necessary 
     to determine which (if any) of such accounts are United 
     States accounts,
       ``(B) to comply with such verification and due diligence 
     procedures as the Secretary may require with respect to the 
     identification of United States accounts,
       ``(C) in the case of any United States account maintained 
     by such institution, to report on an annual basis the 
     information described in subsection (c) with respect to such 
     account,
       ``(D) to deduct and withhold a tax equal to 30 percent of--
       ``(i) any passthru payment which is made by such 
     institution to a recalcitrant account holder or another 
     foreign financial institution which does not meet the 
     requirements of this subsection, and
       ``(ii) in the case of any passthru payment which is made by 
     such institution to a foreign financial institution which has 
     in effect an election under paragraph (3) with respect to 
     such payment, so much of such payment as is allocable to 
     accounts held by recalcitrant account holders or foreign 
     financial institutions which do not meet the requirements of 
     this subsection,
       ``(E) to comply with requests by the Secretary for 
     additional information with respect to any United States 
     account maintained by such institution, and
       ``(F) in any case in which any foreign law would (but for a 
     waiver described in clause (i)) prevent the reporting of any 
     information referred to in this subsection or subsection (c) 
     with respect to any United States account maintained by such 
     institution--
       ``(i) to attempt to obtain a valid and effective waiver of 
     such law from each holder of such account, and
       ``(ii) if a waiver described in clause (i) is not obtained 
     from each such holder within a reasonable period of time, to 
     close such account.

     Any agreement entered into under this subsection may be 
     terminated by the Secretary upon a determination by the 
     Secretary that the foreign financial institution is out of 
     compliance with such agreement.
       ``(2) Financial institutions deemed to meet requirements in 
     certain cases.--A foreign financial institution may be 
     treated by the Secretary as meeting the requirements of this 
     subsection if--
       ``(A) such institution--
       ``(i) complies with such procedures as the Secretary may 
     prescribe to ensure that such institution does not maintain 
     United States accounts, and
       ``(ii) meets such other requirements as the Secretary may 
     prescribe with respect to accounts of other foreign financial 
     institutions maintained by such institution, or
       ``(B) such institution is a member of a class of 
     institutions with respect to which the Secretary has 
     determined that the application of this section is not 
     necessary to carry out the purposes of this section.
       ``(3) Election to be withheld upon rather than withhold on 
     payments to recalcitrant account holders and nonparticipating 
     foreign financial institutions.--In the case of a foreign 
     financial institution which meets the requirements of this 
     subsection and such other requirements as the Secretary may 
     provide and which elects the application of this paragraph--
       ``(A) the requirements of paragraph (1)(D) shall not apply,
       ``(B) the withholding tax imposed under subsection (a) 
     shall apply with respect to any withholdable payment to such 
     institution to the extent such payment is allocable to 
     accounts held by recalcitrant account holders or foreign 
     financial institutions which do not meet the requirements of 
     this subsection, and
       ``(C) the agreement described in paragraph (1) shall--
       ``(i) require such institution to notify the withholding 
     agent with respect to each such payment of the institution's 
     election under this paragraph and such other information as 
     may be necessary for the withholding agent to determine the 
     appropriate amount to deduct and withhold from such payment, 
     and
       ``(ii) include a waiver of any right under any treaty of 
     the United States with respect to any amount deducted and 
     withheld pursuant to an election under this paragraph.

     To the extent provided by the Secretary, the election under 
     this paragraph may be made with respect to certain classes or 
     types of accounts of the foreign financial institution.
       ``(c) Information Required To Be Reported on United States 
     Accounts.--
       ``(1) In general.--The agreement described in subsection 
     (b) shall require the foreign financial institution to report 
     the following with respect to each United States account 
     maintained by such institution:

[[Page 30797]]

       ``(A) The name, address, and TIN of each account holder 
     which is a specified United States person and, in the case of 
     any account holder which is a United States owned foreign 
     entity, the name, address, and TIN of each substantial United 
     States owner of such entity.
       ``(B) The account number.
       ``(C) The account balance or value (determined at such time 
     and in such manner as the Secretary may provide).
       ``(D) The gross receipts and gross withdrawals or payments 
     from the account (determined for such period and in such 
     manner as the Secretary may provide).
       ``(2) Election to be subject to same reporting as united 
     states financial institutions.--In the case of a foreign 
     financial institution which elects the application of this 
     paragraph--
       ``(A) subparagraphs (C) and (D) of paragraph (1) shall not 
     apply, and
       ``(B) the agreement described in subsection (b) shall 
     require such foreign financial institution to report such 
     information with respect to each United States account 
     maintained by such institution as such institution would be 
     required to report under sections 6041, 6042, 6045, and 6049 
     if--
       ``(i) such institution were a United States person, and
       ``(ii) each holder of such account which is a specified 
     United States person or United States owned foreign entity 
     were a natural person and citizen of the United States.

     An election under this paragraph shall be made at such time, 
     in such manner, and subject to such conditions as the 
     Secretary may provide.
       ``(3) Separate requirements for qualified intermediaries.--
     In the case of a foreign financial institution which is 
     treated as a qualified intermediary by the Secretary for 
     purposes of section 1441 and the regulations issued 
     thereunder, the requirements of this section shall be in 
     addition to any reporting or other requirements imposed by 
     the Secretary for purposes of such treatment.
       ``(d) Definitions.--For purposes of this section--
       ``(1) United states account.--
       ``(A) In general.--The term `United States account' means 
     any financial account which is held by one or more specified 
     United States persons or United States owned foreign 
     entities.
       ``(B) Exception for certain accounts held by individuals.--
     Unless the foreign financial institution elects to not have 
     this subparagraph apply, such term shall not include any 
     depository account maintained by such financial institution 
     if--
       ``(i) each holder of such account is a natural person, and
       ``(ii) with respect to each holder of such account, the 
     aggregate value of all depository accounts held (in whole or 
     in part) by such holder and maintained by the same financial 
     institution which maintains such account does not exceed 
     $50,000.

     To the extent provided by the Secretary, financial 
     institutions which are members of the same expanded 
     affiliated group shall be treated for purposes of clause (ii) 
     as a single financial institution.
       ``(C) Elimination of duplicative reporting requirements.--
     Such term shall not include any financial account in a 
     foreign financial institution if--
       ``(i) such account is held by another financial institution 
     which meets the requirements of subsection (b), or
       ``(ii) the holder of such account is otherwise subject to 
     information reporting requirements which the Secretary 
     determines would make the reporting required by this section 
     with respect to United States accounts duplicative.
       ``(2) Financial account.--The term `financial account' 
     means, with respect to any financial institution--
       ``(A) any depository account maintained by such financial 
     institution,
       ``(B) any custodial account maintained by such financial 
     institution, and
       ``(C) except as otherwise provided by the Secretary, any 
     equity or debt interest in such financial institution (other 
     than interests which are regularly traded on an established 
     securities market).

     Any equity or debt interest which constitutes a financial 
     account under subparagraph (C) with respect to any financial 
     institution shall be treated for purposes of this section as 
     maintained by such financial institution.
       ``(3) United states owned foreign entity.--The term `United 
     States owned foreign entity' means any foreign entity which 
     has one or more substantial United States owners.
       ``(4) Foreign financial institution.--The term `foreign 
     financial institution' means any financial institution which 
     is a foreign entity. Except as otherwise provided by the 
     Secretary, such term shall not include a financial 
     institution which is organized under the laws of any 
     possession of the United States.
       ``(5) Financial institution.--Except as otherwise provided 
     by the Secretary, the term `financial institution' means any 
     entity that--
       ``(A) accepts deposits in the ordinary course of a banking 
     or similar business,
       ``(B) is engaged in the business of holding financial 
     assets for the account of others, or
       ``(C) is engaged (or holding itself out as being engaged) 
     primarily in the business of investing, reinvesting, or 
     trading in securities (as defined in section 475(c)(2) 
     without regard to the last sentence thereof), partnership 
     interests, commodities (as defined in section 475(e)(2)), or 
     any interest (including a futures or forward contract or 
     option) in such securities, partnership interests, or 
     commodities.
       ``(6) Recalcitrant account holder.--The term `recalcitrant 
     account holder' means any account holder which--
       ``(A) fails to comply with reasonable requests for the 
     information referred to in subsection (b)(1)(A) or (c)(1)(A), 
     or
       ``(B) fails to provide a waiver described in subsection 
     (b)(1)(F) upon request.
       ``(7) Passthru payment.--The term `passthru payment' means 
     any withholdable payment or other payment which is 
     attributable to a withholdable payment.
       ``(e) Affiliated Groups.--
       ``(1) In general.--The requirements of subsections (b) and 
     (c)(1) shall apply--
       ``(A) with respect to United States accounts maintained by 
     the foreign financial institution, and
       ``(B) except as otherwise provided by the Secretary, with 
     respect to United States accounts maintained by each other 
     foreign financial institution (other than any foreign 
     financial institution which meets the requirements of 
     subsection (b)) which is a member of the same expanded 
     affiliated group as such foreign financial institution.
       ``(2) Expanded affiliated group.--For purposes of this 
     section, the term `expanded affiliated group' means an 
     affiliated group as defined in section 1504(a), determined--
       ``(A) by substituting `more than 50 percent' for `at least 
     80 percent' each place it appears, and
       ``(B) without regard to paragraphs (2) and (3) of section 
     1504(b).

     A partnership or any other entity (other than a corporation) 
     shall be treated as a member of an expanded affiliated group 
     if such entity is controlled (within the meaning of section 
     954(d)(3)) by members of such group (including any entity 
     treated as a member of such group by reason of this 
     sentence).
       ``(f) Exception for Certain Payments.--Subsection (a) shall 
     not apply to any payment if the beneficial owner of such 
     payment is--
       ``(1) any foreign government, any political subdivision of 
     a foreign government, or any wholly owned agency or 
     instrumentality of any one or more of the foregoing,
       ``(2) any international organization or any wholly owned 
     agency or instrumentality thereof,
       ``(3) any foreign central bank of issue, or
       ``(4) any other class of persons identified by the 
     Secretary for purposes of this subsection as posing a low 
     risk of tax evasion.

     ``SEC. 1472. WITHHOLDABLE PAYMENTS TO OTHER FOREIGN ENTITIES.

       ``(a) In General.--In the case of any withholdable payment 
     to a non-financial foreign entity, if--
       ``(1) the beneficial owner of such payment is such entity 
     or any other non-financial foreign entity, and
       ``(2) the requirements of subsection (b) are not met with 
     respect to such beneficial owner,

     then the withholding agent with respect to such payment shall 
     deduct and withhold from such payment a tax equal to 30 
     percent of the amount of such payment.
       ``(b) Requirements for Waiver of Withholding.--The 
     requirements of this subsection are met with respect to the 
     beneficial owner of a payment if--
       ``(1) such beneficial owner or the payee provides the 
     withholding agent with either--
       ``(A) a certification that such beneficial owner does not 
     have any substantial United States owners, or
       ``(B) the name, address, and TIN of each substantial United 
     States owner of such beneficial owner,
       ``(2) the withholding agent does not know, or have reason 
     to know, that any information provided under paragraph (1) is 
     incorrect, and
       ``(3) the withholding agent reports the information 
     provided under paragraph (1)(B) to the Secretary in such 
     manner as the Secretary may provide.
       ``(c) Exceptions.--Subsection (a) shall not apply to--
       ``(1) except as otherwise provided by the Secretary, any 
     payment beneficially owned by--
       ``(A) any corporation the stock of which is regularly 
     traded on an established securities market,
       ``(B) any corporation which is a member of the same 
     expanded affiliated group (as defined in section 1471(e)(2) 
     without regard to the last sentence thereof) as a corporation 
     described in subparagraph (A),
       ``(C) any entity which is organized under the laws of a 
     possession of the United States and which is wholly owned by 
     one or more bona fide residents (as defined in section 
     937(a)) of such possession,
       ``(D) any foreign government, any political subdivision of 
     a foreign government, or any wholly owned agency or 
     instrumentality of any one or more of the foregoing,

[[Page 30798]]

       ``(E) any international organization or any wholly owned 
     agency or instrumentality thereof,
       ``(F) any foreign central bank of issue, or
       ``(G) any other class of persons identified by the 
     Secretary for purposes of this subsection, and
       ``(2) any class of payments identified by the Secretary for 
     purposes of this subsection as posing a low risk of tax 
     evasion.
       ``(d) Non-Financial Foreign Entity.--For purposes of this 
     section, the term `non-financial foreign entity' means any 
     foreign entity which is not a financial institution (as 
     defined in section 1471(d)(5)).

     ``SEC. 1473. DEFINITIONS.

       ``For purposes of this chapter--
       ``(1) Withholdable payment.--Except as otherwise provided 
     by the Secretary--
       ``(A) In general.--The term `withholdable payment' means--
       ``(i) any payment of interest (including any original issue 
     discount), dividends, rents, salaries, wages, premiums, 
     annuities, compensations, remunerations, emoluments, and 
     other fixed or determinable annual or periodical gains, 
     profits, and income, if such payment is from sources within 
     the United States, and
       ``(ii) any gross proceeds from the sale or other 
     disposition of any property of a type which can produce 
     interest or dividends from sources within the United States.
       ``(B) Exception for income connected with united states 
     business.--Such term shall not include any item of income 
     which is taken into account under section 871(b)(1) or 
     882(a)(1) for the taxable year.
       ``(C) Special rule for sourcing interest paid by foreign 
     branches of domestic financial institutions.--Subparagraph 
     (B) of section 861(a)(1) shall not apply.
       ``(2) Substantial united states owner.--
       ``(A) In general.--The term `substantial United States 
     owner' means--
       ``(i) with respect to any corporation, any specified United 
     States person which owns, directly or indirectly, more than 
     10 percent of the stock of such corporation (by vote or 
     value),
       ``(ii) with respect to any partnership, any specified 
     United States person which owns, directly or indirectly, more 
     than 10 percent of the profits interests or capital interests 
     in such partnership, and
       ``(iii) in the case of a trust--

       ``(I) any specified United States person treated as an 
     owner of any portion of such trust under subpart E of part I 
     of subchapter J of chapter 1, and
       ``(II) to the extent provided by the Secretary in 
     regulations or other guidance, any specified United States 
     person which holds, directly or indirectly, more than 10 
     percent of the beneficial interests of such trust.

       ``(B) Special rule for investment vehicles.--In the case of 
     any financial institution described in section 1471(d)(5)(C), 
     clauses (i), (ii), and (iii) of subparagraph (A) shall be 
     applied by substituting `0 percent' for `10 percent'.
       ``(3) Specified united states person.--Except as otherwise 
     provided by the Secretary, the term `specified United States 
     person' means any United States person other than--
       ``(A) any corporation the stock of which is regularly 
     traded on an established securities market,
       ``(B) any corporation which is a member of the same 
     expanded affiliated group (as defined in section 1471(e)(2) 
     without regard to the last sentence thereof) as a corporation 
     the stock of which is regularly traded on an established 
     securities market,
       ``(C) any organization exempt from taxation under section 
     501(a) or an individual retirement plan,
       ``(D) the United States or any wholly owned agency or 
     instrumentality thereof,
       ``(E) any State, the District of Columbia, any possession 
     of the United States, any political subdivision of any of the 
     foregoing, or any wholly owned agency or instrumentality of 
     any one or more of the foregoing,
       ``(F) any bank (as defined in section 581),
       ``(G) any real estate investment trust (as defined in 
     section 856),
       ``(H) any regulated investment company (as defined in 
     section 851),
       ``(I) any common trust fund (as defined in section 584(a)), 
     and
       ``(J) any trust which--
       ``(i) is exempt from tax under section 664(c), or
       ``(ii) is described in section 4947(a)(1).
       ``(4) Withholding agent.--The term `withholding agent' 
     means all persons, in whatever capacity acting, having the 
     control, receipt, custody, disposal, or payment of any 
     withholdable payment.
       ``(5) Foreign entity.--The term `foreign entity' means any 
     entity which is not a United States person.

     ``SEC. 1474. SPECIAL RULES.

       ``(a) Liability for Withheld Tax.--Every person required to 
     deduct and withhold any tax under this chapter is hereby made 
     liable for such tax and is hereby indemnified against the 
     claims and demands of any person for the amount of any 
     payments made in accordance with the provisions of this 
     chapter.
       ``(b) Credits and Refunds.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     determination of whether any tax deducted and withheld under 
     this chapter results in an overpayment by the beneficial 
     owner of the payment to which such tax is attributable shall 
     be made as if such tax had been deducted and withheld under 
     subchapter A of chapter 3.
       ``(2) Special rule where foreign financial institution is 
     beneficial owner of payment.--
       ``(A) In general.--In the case of any tax properly deducted 
     and withheld under section 1471 from a specified financial 
     institution payment--
       ``(i) if the foreign financial institution referred to in 
     subparagraph (B) with respect to such payment is entitled to 
     a reduced rate of tax with respect to such payment by reason 
     of any treaty obligation of the United States--

       ``(I) the amount of any credit or refund with respect to 
     such tax shall not exceed the amount of credit or refund 
     attributable to such reduction in rate, and
       ``(II) no interest shall be allowed or paid with respect to 
     such credit or refund, and

       ``(ii) if such foreign financial institution is not so 
     entitled, no credit or refund shall be allowed or paid with 
     respect to such tax.
       ``(B) Specified financial institution payment.--The term 
     `specified financial institution payment' means any payment 
     if the beneficial owner of such payment is a foreign 
     financial institution.
       ``(3) Requirement to identify substantial united states 
     owners.--No credit or refund shall be allowed or paid with 
     respect to any tax properly deducted and withheld under this 
     chapter unless the beneficial owner of the payment provides 
     the Secretary such information as the Secretary may require 
     to determine whether such beneficial owner is a United States 
     owned foreign entity (as defined in section 1471(d)(3)) and 
     the identity of any substantial United States owners of such 
     entity.
       ``(c) Confidentiality of Information.--
       ``(1) In general.--For purposes of this chapter, rules 
     similar to the rules of section 3406(f) shall apply.
       ``(2) Disclosure of list of participating foreign financial 
     institutions permitted.--The identity of a foreign financial 
     institution which meets the requirements of section 1471(b) 
     shall not be treated as return information for purposes of 
     section 6103.
       ``(d) Coordination With Other Withholding Provisions.--The 
     Secretary shall provide for the coordination of this chapter 
     with other withholding provisions under this title, including 
     providing for the proper crediting of amounts deducted and 
     withheld under this chapter against amounts required to be 
     deducted and withheld under such other provisions.
       ``(e) Treatment of Withholding Under Agreements.--Any tax 
     deducted and withheld pursuant to an agreement described in 
     section 1471(b) shall be treated for purposes of this title 
     as a tax deducted and withheld by a withholding agent under 
     section 1471(a).
       ``(f) Regulations.--The Secretary shall prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the purposes of this chapter.''.
       (b) Special Rule for Interest on Overpayments.--Subsection 
     (e) of section 6611 is amended by adding at the end the 
     following new paragraph:
       ``(4) Certain withholding taxes.--In the case of any 
     overpayment resulting from tax deducted and withheld under 
     chapter 3 or 4, paragraphs (1), (2), and (3) shall be applied 
     by substituting `180 days' for `45 days' each place it 
     appears.''.
       (c) Conforming Amendments.--
       (1) Section 6414 is amended by inserting ``or 4'' after 
     ``chapter 3''.
       (2) Paragraph (1) of section 6501(b) is amended by 
     inserting ``4,'' after ``chapter 3,''.
       (3) Paragraph (2) of section 6501(b) is amended--
       (A) by inserting ``4,'' after ``chapter 3,'' in the text 
     thereof, and
       (B) by striking ``taxes and tax imposed by chapter 3'' in 
     the heading thereof and inserting ``and withholding taxes''.
       (4) Paragraph (3) of section 6513(b) is amended--
       (A) by inserting ``or 4'' after ``chapter 3'', and
       (B) by inserting ``or 1474(b)'' after ``section 1462''.
       (5) Subsection (c) of section 6513 is amended by inserting 
     ``4,'' after ``chapter 3,''.
       (6) Paragraph (1) of section 6724(d) is amended by 
     inserting ``under chapter 4 or'' after ``filed with the 
     Secretary'' in the last sentence thereof.
       (7) Paragraph (2) of section 6724(d) is amended by 
     inserting ``or 4'' after ``chapter 3''.
       (8) The table of chapters of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new item:

``Chapter 4. Taxes To Enforce Reporting on Certain Foreign Accounts.''.

       (d) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to payments made after December 31, 2012.
       (2) Grandfathered treatment of outstanding obligations.--
     The amendments made by this section shall not require any 
     amount to be deducted or withheld from any payment under any 
     obligation outstanding

[[Page 30799]]

     on the date which is 2 years after the date of the enactment 
     of this Act.
       (3) Interest on overpayments.--The amendment made by 
     subsection (b) shall apply--
       (A) in the case of such amendment's application to 
     paragraph (1) of section 6611(e) of the Internal Revenue Code 
     of 1986, to returns the due date for which (determined 
     without regard to extensions) is after the date of the 
     enactment of this Act,
       (B) in the case of such amendment's application to 
     paragraph (2) of such section, to claims for credit or refund 
     of any overpayment filed after the date of the enactment of 
     this Act (regardless of the taxable period to which such 
     refund relates), and
       (C) in the case of such amendment's application to 
     paragraph (3) of such section, to refunds paid after the date 
     of the enactment of this Act (regardless of the taxable 
     period to which such refund relates).

     SEC. 502. REPEAL OF CERTAIN FOREIGN EXCEPTIONS TO REGISTERED 
                   BOND REQUIREMENTS.

       (a) Repeal of Exception to Denial of Deduction for Interest 
     on Non-Registered Bonds.--
       (1) In general.--Paragraph (2) of section 163(f) is amended 
     by striking subparagraph (B) and by redesignating 
     subparagraph (C) as subparagraph (B).
       (2) Conforming amendments.--
       (A) Subparagraph (A) of section 163(f)(2) is amended by 
     inserting ``or'' at the end of clause (ii), by striking ``, 
     or'' at the end of clause (iii) and inserting a period, and 
     by striking clause (iv).
       (B) Subparagraph (B) of section 163(f)(2), as redesignated 
     by paragraph (1), is amended--
       (i) by striking ``, and subparagraph (B),'' in the matter 
     preceding clause (i), and
       (ii) by amending clause (i) to read as follows:
       ``(i) such obligation is of a type which the Secretary has 
     determined by regulations to be used frequently in avoiding 
     Federal taxes, and''.
       (C) Sections 165(j)(2)(A) and 1287(b)(1) are each amended 
     by striking ``except that clause (iv) of subparagraph (A), 
     and subparagraph (B), of such section shall not apply''.
       (b) Repeal of Treatment as Portfolio Debt.--
       (1) In general.--Paragraph (2) of section 871(h) is amended 
     to read as follows:
       ``(2) Portfolio interest.--For purposes of this subsection, 
     the term `portfolio interest' means any interest (including 
     original issue discount) which--
       ``(A) would be subject to tax under subsection (a) but for 
     this subsection, and
       ``(B) is paid on an obligation--
       ``(i) which is in registered form, and
       ``(ii) with respect to which--

       ``(I) the United States person who would otherwise be 
     required to deduct and withhold tax from such interest under 
     section 1441(a) receives a statement (which meets the 
     requirements of paragraph (5)) that the beneficial owner of 
     the obligation is not a United States person, or
       ``(II) the Secretary has determined that such a statement 
     is not required in order to carry out the purposes of this 
     subsection.''.

       (2) Conforming amendments.--
       (A) Section 871(h)(3)(A) is amended by striking 
     ``subparagraph (A) or (B) of''.
       (B) Paragraph (2) of section 881(c) is amended to read as 
     follows:
       ``(2) Portfolio interest.--For purposes of this subsection, 
     the term `portfolio interest' means any interest (including 
     original issue discount) which--
       ``(A) would be subject to tax under subsection (a) but for 
     this subsection, and
       ``(B) is paid on an obligation--
       ``(i) which is in registered form, and
       ``(ii) with respect to which--

       ``(I) the person who would otherwise be required to deduct 
     and withhold tax from such interest under section 1442(a) 
     receives a statement which meets the requirements of section 
     871(h)(5) that the beneficial owner of the obligation is not 
     a United States person, or
       ``(II) the Secretary has determined that such a statement 
     is not required in order to carry out the purposes of this 
     subsection.''.

       (c) Dematerialized Book Entry Systems Treated as Registered 
     Form.--Paragraph (3) of section 163(f) is amended by 
     inserting ``, except that a dematerialized book entry system 
     shall be treated as a book entry system described in such 
     section'' before the period at the end.
       (d) Repeal of Exception to Requirement That Treasury 
     Obligations Be in Registered Form.--
       (1) In general.--Subsection (g) of section 3121 of title 
     31, United States Code, is amended by striking paragraph (2) 
     and by redesignating paragraphs (3) and (4) as paragraphs (2) 
     and (3), respectively.
       (2) Conforming amendments.--Paragraph (1) of section 
     3121(g) of such title is amended--
       (A) by adding ``or'' at the end of subparagraph (A),
       (B) by striking ``; or'' at the end of subparagraph (B) and 
     inserting a period, and
       (C) by striking subparagraph (C).
       (e) Preservation of Exception for Excise Tax Purposes.--
     Paragraph (1) of section 4701(b) is amended to read as 
     follows:
       ``(1) Registration-required obligation.--
       ``(A) In general.--The term `registration-required 
     obligation' has the same meaning as when used in section 
     163(f), except that such term shall not include any 
     obligation which--
       ``(i) is required to be registered under section 149(a), or
       ``(ii) is described in subparagraph (B).
       ``(B) Certain obligations not included.--An obligation is 
     described in this subparagraph if--
       ``(i) there are arrangements reasonably designed to ensure 
     that such obligation will be sold (or resold in connection 
     with the original issue) only to a person who is not a United 
     States person,
       ``(ii) interest on such obligation is payable only outside 
     the United States and its possessions, and
       ``(iii) on the face of such obligation there is a statement 
     that any United States person who holds such obligation will 
     be subject to limitations under the United States income tax 
     laws.''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to obligations issued after the date which is 2 
     years after the date of the enactment of this Act.

       Subtitle B--Under Reporting With Respect to Foreign Assets

     SEC. 511. DISCLOSURE OF INFORMATION WITH RESPECT TO FOREIGN 
                   FINANCIAL ASSETS.

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

     ``SEC. 6038D. INFORMATION WITH RESPECT TO FOREIGN FINANCIAL 
                   ASSETS.

       ``(a) In General.--Any individual who, during any taxable 
     year, holds any interest in a specified foreign financial 
     asset shall attach to such person's return of tax imposed by 
     subtitle A for such taxable year the information described in 
     subsection (c) with respect to each such asset if the 
     aggregate value of all such assets exceeds $50,000 (or such 
     higher dollar amount as the Secretary may prescribe).
       ``(b) Specified Foreign Financial Assets.--For purposes of 
     this section, the term `specified foreign financial asset' 
     means--
       ``(1) any financial account (as defined in section 
     1471(d)(2)) maintained by a foreign financial institution (as 
     defined in section 1471(d)(4)), and
       ``(2) any of the following assets which are not held in an 
     account maintained by a financial institution (as defined in 
     section 1471(d)(5))--
       ``(A) any stock or security issued by a person other than a 
     United States person,
       ``(B) any financial instrument or contract held for 
     investment that has an issuer or counterparty which is other 
     than a United States person, and
       ``(C) any interest in a foreign entity (as defined in 
     section 1473).
       ``(c) Required Information.--The information described in 
     this subsection with respect to any asset is:
       ``(1) In the case of any account, the name and address of 
     the financial institution in which such account is maintained 
     and the number of such account.
       ``(2) In the case of any stock or security, the name and 
     address of the issuer and such information as is necessary to 
     identify the class or issue of which such stock or security 
     is a part.
       ``(3) In the case of any other instrument, contract, or 
     interest--
       ``(A) such information as is necessary to identify such 
     instrument, contract, or interest, and
       ``(B) the names and addresses of all issuers and 
     counterparties with respect to such instrument, contract, or 
     interest.
       ``(4) The maximum value of the asset during the taxable 
     year.
       ``(d) Penalty for Failure To Disclose.--
       ``(1) In general.--If any individual fails to furnish the 
     information described in subsection (c) with respect to any 
     taxable year at the time and in the manner described in 
     subsection (a), such person shall pay a penalty of $10,000.
       ``(2) Increase in penalty where failure continues after 
     notification.--If any failure described in paragraph (1) 
     continues for more than 90 days after the day on which the 
     Secretary mails notice of such failure to the individual, 
     such individual shall pay a penalty (in addition to the 
     penalties under paragraph (1)) of $10,000 for each 30-day 
     period (or fraction thereof) during which such failure 
     continues after the expiration of such 90-day period. The 
     penalty imposed under this paragraph with respect to any 
     failure shall not exceed $50,000.
       ``(e) Presumption That Value of Specified Foreign Financial 
     Assets Exceeds Dollar Threshold.--If--
       ``(1) the Secretary determines that an individual has an 
     interest in one or more specified foreign financial assets, 
     and

       ``(2) such individual does not provide sufficient 
     information to demonstrate the aggregate value of such 
     assets,
     then the aggregate value of such assets shall be treated as 
     being in excess of $50,000 (or such higher dollar amount as 
     the Secretary prescribes for purposes of subsection (a)) for 
     purposes of assessing the penalties imposed under this 
     section.

[[Page 30800]]

       ``(f) Application to Certain Entities.--To the extent 
     provided by the Secretary in regulations or other guidance, 
     the provisions of this section shall apply to any domestic 
     entity which is formed or availed of for purposes of holding, 
     directly or indirectly, specified foreign financial assets, 
     in the same manner as if such entity were an individual.
       ``(g) Reasonable Cause Exception.--No penalty shall be 
     imposed by this section on any failure which is shown to be 
     due to reasonable cause and not due to willful neglect. The 
     fact that a foreign jurisdiction would impose a civil or 
     criminal penalty on the taxpayer (or any other person) for 
     disclosing the required information is not reasonable cause.
       ``(h) Regulations.--The Secretary shall prescribe such 
     regulations or other guidance as may be necessary or 
     appropriate to carry out the purposes of this section, 
     including regulations or other guidance which provide 
     appropriate exceptions from the application of this section 
     in the case of--
       ``(1) classes of assets identified by the Secretary, 
     including any assets with respect to which the Secretary 
     determines that disclosure under this section would be 
     duplicative of other disclosures,
       ``(2) nonresident aliens, and
       ``(3) bona fide residents of any possession of the United 
     States.''.
       (b) Clerical Amendment.--The table of sections for subpart 
     A of part III of subchapter A of chapter 61 is amended by 
     inserting after the item relating to section 6038C the 
     following new item:

``Sec. 6038D. Information with respect to foreign financial assets.''.

       (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. 512. PENALTIES FOR UNDERPAYMENTS ATTRIBUTABLE TO 
                   UNDISCLOSED FOREIGN FINANCIAL ASSETS.

       (a) In General.--Section 6662 is amended--
       (1) in subsection (b), by inserting after paragraph (5) the 
     following new paragraph:
       ``(6) Any undisclosed foreign financial asset 
     understatement.'', and
       (2) by adding at the end the following new subsection:
       ``(i) Undisclosed Foreign Financial Asset Understatement.--
       ``(1) In general.--For purposes of this section, the term 
     `undisclosed foreign financial asset understatement' means, 
     for any taxable year, the portion of the understatement for 
     such taxable year which is attributable to any transaction 
     involving an undisclosed foreign financial asset.
       ``(2) Undisclosed foreign financial asset.--For purposes of 
     this subsection, the term `undisclosed foreign financial 
     asset' means, with respect to any taxable year, any asset 
     with respect to which information was required to be provided 
     under section 6038, 6038B, 6038D, 6046A, or 6048 for such 
     taxable year but was not provided by the taxpayer as required 
     under the provisions of those sections.
       ``(3) Increase in penalty for undisclosed foreign financial 
     asset understatements.--In the case of any portion of an 
     underpayment which is attributable to any undisclosed foreign 
     financial asset understatement, subsection (a) shall be 
     applied with respect to such portion by substituting `40 
     percent' for `20 percent'.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 513. MODIFICATION OF STATUTE OF LIMITATIONS FOR 
                   SIGNIFICANT OMISSION OF INCOME IN CONNECTION 
                   WITH FOREIGN ASSETS.

       (a) Extension of Statute of Limitations.--
       (1) In general.--Paragraph (1) of section 6501(e) is 
     amended by redesignating subparagraphs (A) and (B) as 
     subparagraphs (B) and (C), respectively, and by inserting 
     before subparagraph (B) (as so redesignated) the following 
     new subparagraph:
       ``(A) General rule.--If the taxpayer omits from gross 
     income an amount properly includible therein and--
       ``(i) such amount is in excess of 25 percent of the amount 
     of gross income stated in the return, or
       ``(ii) such amount--

       ``(I) is attributable to one or more assets with respect to 
     which information is required to be reported under section 
     6038D (or would be so required if such section were applied 
     without regard to the dollar threshold specified in 
     subsection (a) thereof and without regard to any exceptions 
     provided pursuant to subsection (h)(1) thereof), and
       ``(II) is in excess of $5,000,

     the tax may be assessed, or a proceeding in court for 
     collection of such tax may be begun without assessment, at 
     any time within 6 years after the return was filed.''.
       (2) Conforming amendments.--
       (A) Subparagraph (B) of section 6501(e)(1), as redesignated 
     by paragraph (1), is amended by striking all that precedes 
     clause (i) and inserting the following:
       ``(B) Determination of gross income.--For purposes of 
     subparagraph (A)--''.
       (B) Paragraph (2) of section 6229(c) is amended by striking 
     ``which is in excess of 25 percent of the amount of gross 
     income stated in its return'' and inserting ``and such amount 
     is described in clause (i) or (ii) of section 
     6501(e)(1)(A)''.
       (b) Additional Reports Subject to Extended Period.--
     Paragraph (8) of section 6501(c) is amended--
       (1) by inserting ``pursuant to an election under section 
     1295(b) or'' before ``under section 6038'',
       (2) by inserting ``1298(f),'' before ``6038'', and
       (3) by inserting ``6038D,'' after ``6038B,''.
       (c) Clarifications Related to Failure To Disclose Foreign 
     Transfers.--Paragraph (8) of section 6501(c) is amended by 
     striking ``event'' and inserting ``tax return, event,''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) returns filed after the date of the enactment of this 
     Act; and
       (2) returns filed on or before such date if the period 
     specified in section 6501 of the Internal Revenue Code of 
     1986 (determined without regard to such amendments) for 
     assessment of such taxes has not expired as of such date.

                Subtitle C--Other Disclosure Provisions

     SEC. 521. REPORTING OF ACTIVITIES WITH RESPECT TO PASSIVE 
                   FOREIGN INVESTMENT COMPANIES.

       (a) In General.--Section 1298 is amended by redesignating 
     subsection (f) as subsection (g) and by inserting after 
     subsection (e) the following new subsection:
       ``(f) Reporting Requirement.--Except as otherwise provided 
     by the Secretary, each United States person who is a 
     shareholder of a passive foreign investment company shall 
     file an annual report containing such information as the 
     Secretary may require.''.
       (b) Conforming Amendment.--Subsection (e) of section 1291 
     is amended by striking ``, (d), and (f)'' and inserting ``and 
     (d)''.
       (c) Effective Date.--The amendments made by this section 
     take effect on the date of the enactment of this Act.

     SEC. 522. SECRETARY PERMITTED TO REQUIRE FINANCIAL 
                   INSTITUTIONS TO FILE CERTAIN RETURNS RELATED TO 
                   WITHHOLDING ON FOREIGN TRANSFERS 
                   ELECTRONICALLY.

       (a) In General.--Subsection (e) of section 6011 is amended 
     by adding at the end the following new paragraph:
       ``(3) Special rule for returns filed by financial 
     institutions with respect to withholding on foreign 
     transfers.--Paragraph (2)(A) shall not apply to any return 
     filed by a financial institution (as defined in section 
     1471(d)(5)) with respect to tax for which such institution is 
     made liable under section 1461 or 1474(a).''.
       (b) Conforming Amendment.--Subsection (c) of section 6724 
     is amended by inserting ``or with respect to a return 
     described in section 6011(e)(3)''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to returns the due date for which (determined 
     without regard to extensions) is after the date of the 
     enactment of this Act.

            Subtitle D--Provisions Related to Foreign Trusts

     SEC. 531. CLARIFICATIONS WITH RESPECT TO FOREIGN TRUSTS WHICH 
                   ARE TREATED AS HAVING A UNITED STATES 
                   BENEFICIARY.

       (a) In General.--Paragraph (1) of section 679(c) is amended 
     by adding at the end the following:

     ``For purposes of subparagraph (A), an amount shall be 
     treated as accumulated for the benefit of a United States 
     person even if the United States person's interest in the 
     trust is contingent on a future event.''.
       (b) Clarification Regarding Discretion To Identify 
     Beneficiaries.--Subsection (c) of section 679 is amended by 
     adding at the end the following new paragraph:
       ``(4) Special rule in case of discretion to identify 
     beneficiaries.--For purposes of paragraph (1)(A), if any 
     person has the discretion (by authority given in the trust 
     agreement, by power of appointment, or otherwise) of making a 
     distribution from the trust to, or for the benefit of, any 
     person, such trust shall be treated as having a beneficiary 
     who is a United States person unless--
       ``(A) the terms of the trust specifically identify the 
     class of persons to whom such distributions may be made, and
       ``(B) none of those persons are United States persons 
     during the taxable year.''.
       (c) Clarification That Certain Agreements and 
     Understandings Are Terms of the Trust.--Subsection (c) of 
     section 679, as amended by subsection (b), is amended by 
     adding at the end the following new paragraph:
       ``(5) Certain agreements and understandings treated as 
     terms of the trust.--For purposes of paragraph (1)(A), if any 
     United States person who directly or indirectly transfers 
     property to the trust is directly or indirectly involved in 
     any agreement or understanding (whether written, oral, or 
     otherwise) that may result in the income or corpus of the 
     trust being paid or accumulated to or for the benefit of a 
     United States person, such agreement or understanding shall 
     be treated as a term of the trust.''.

     SEC. 532. PRESUMPTION THAT FOREIGN TRUST HAS UNITED STATES 
                   BENEFICIARY.

       (a) In General.--Section 679 is amended by redesignating 
     subsection (d) as subsection (e)

[[Page 30801]]

     and inserting after subsection (c) the following new 
     subsection:
       ``(d) Presumption That Foreign Trust Has United States 
     Beneficiary.--If a United States person directly or 
     indirectly transfers property to a foreign trust (other than 
     a trust described in section 6048(a)(3)(B)(ii)), the 
     Secretary may treat such trust as having a United States 
     beneficiary for purposes of applying this section to such 
     transfer unless such person--
       ``(1) submits such information to the Secretary as the 
     Secretary may require with respect to such transfer, and
       ``(2) demonstrates to the satisfaction of the Secretary 
     that such trust satisfies the requirements of subparagraphs 
     (A) and (B) of subsection (c)(1).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transfers of property after the date of the 
     enactment of this Act.

     SEC. 533. UNCOMPENSATED USE OF TRUST PROPERTY.

       (a) In General.--Paragraph (1) of section 643(i) is 
     amended--
       (1) by striking ``directly or indirectly to'' and inserting 
     ``(or permits the use of any other trust property) directly 
     or indirectly to or by'', and
       (2) by inserting ``(or the fair market value of the use of 
     such property)'' after ``the amount of such loan''.
       (b) Exception for Compensated Use.--Paragraph (2) of 
     section 643(i) is amended by adding at the end the following 
     new subparagraph:
       ``(E) Exception for compensated use of property.--In the 
     case of the use of any trust property other than a loan of 
     cash or marketable securities, paragraph (1) shall not apply 
     to the extent that the trust is paid the fair market value of 
     such use within a reasonable period of time of such use.''.
       (c) Application to Grantor Trusts.--Subsection (c) of 
     section 679, as amended by section 531, is amended by adding 
     at the end the following new paragraph:
       ``(6) Uncompensated use of trust property treated as a 
     payment.--For purposes of this subsection, a loan of cash or 
     marketable securities (or the use of any other trust 
     property) directly or indirectly to or by any United States 
     person (whether or not a beneficiary under the terms of the 
     trust) shall be treated as paid or accumulated for the 
     benefit of a United States person. The preceding sentence 
     shall not apply to the extent that the United States person 
     repays the loan at a market rate of interest (or pays the 
     fair market value of the use of such property) within a 
     reasonable period of time.''.
       (d) Conforming Amendments.--Paragraph (3) of section 643(i) 
     is amended--
       (1) by inserting ``(or use of property)'' after ``If any 
     loan'',
       (2) by inserting ``or the return of such property'' before 
     ``shall be disregarded'', and
       (3) by striking ``regarding loan principal'' in the heading 
     thereof.
       (e) Effective Date.--The amendments made by this section 
     shall apply to loans made, and uses of property, after the 
     date of the enactment of this Act.

     SEC. 534. REPORTING REQUIREMENT OF UNITED STATES OWNERS OF 
                   FOREIGN TRUSTS.

       (a) In General.--Paragraph (1) of section 6048(b) is 
     amended by inserting ``shall submit such information as the 
     Secretary may prescribe with respect to such trust for such 
     year and'' before ``shall be responsible to ensure''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 535. MINIMUM PENALTY WITH RESPECT TO FAILURE TO REPORT 
                   ON CERTAIN FOREIGN TRUSTS.

       (a) In General.--Subsection (a) of section 6677 is 
     amended--
       (1) by inserting ``the greater of $10,000 or'' before ``35 
     percent'', and
       (2) by striking the last sentence and inserting the 
     following: ``At such time as the gross reportable amount with 
     respect to any failure can be determined by the Secretary, 
     any subsequent penalty imposed under this subsection with 
     respect to such failure shall be reduced as necessary to 
     assure that the aggregate amount of such penalties do not 
     exceed the gross reportable amount (and to the extent that 
     such aggregate amount already exceeds the gross reportable 
     amount the Secretary shall refund such excess to the 
     taxpayer).''
       (b) Effective Date.--The amendments made by this section 
     shall apply to notices and returns required to be filed after 
     December 31, 2009.

   Subtitle E--Substitute Dividends and Dividend Equivalent Payments 
            Received by Foreign Persons Treated as Dividends

     SEC. 541. SUBSTITUTE DIVIDENDS AND DIVIDEND EQUIVALENT 
                   PAYMENTS RECEIVED BY FOREIGN PERSONS TREATED AS 
                   DIVIDENDS.

       (a) In General.--Section 871 is amended by redesignating 
     subsection (l) as subsection (m) and by inserting after 
     subsection (k) the following new subsection:
       ``(l) Treatment of Dividend Equivalent Payments.--
       ``(1) In general.--For purposes of this section, sections 
     881 and 4948(a), and chapters 3 and 4, a dividend equivalent 
     shall be treated as a dividend from sources within the United 
     States.
       ``(2) Dividend equivalent.--For purposes of this 
     subsection, the term `dividend equivalent' means--
       ``(A) any substitute dividend,
       ``(B) any payment made pursuant to a specified notional 
     principal contract that (directly or indirectly) is 
     contingent upon, or determined by reference to, the payment 
     of a dividend from sources within the United States, and
       ``(C) any other payment determined by the Secretary to be 
     substantially similar to a payment described in subparagraph 
     (A) or (B).
       ``(3) Specified notional principal contract.--For purposes 
     of this subsection, the term `specified notional principal 
     contract' means--
       ``(A) any notional principal contract if--
       ``(i) in connection with entering into such contract, any 
     long party transfers the underlying security,
       ``(ii) in connection with the termination of such contract, 
     any short party transfers the underlying security to any long 
     party,
       ``(iii) the underlying security is not readily tradable on 
     an established securities market,
       ``(iv) in connection with entering into such contract, the 
     underlying security is posted as collateral by any short 
     party to the contract, or
       ``(v) such contract is identified by the Secretary as a 
     specified notional principal contract,
       ``(B) in the case of payments made after the date which is 
     2 years after the date of the enactment of this subsection, 
     any notional principal contract unless the Secretary 
     determines that such contract is of a type which does not 
     have the potential for tax avoidance.
       ``(4) Definitions.--For purposes of paragraph (3)(A)--
       ``(A) Long party.--The term `long party' means, with 
     respect to any underlying security of any notional principal 
     contract, any party to the contract which is entitled to 
     receive any payment pursuant to such contract which is 
     contingent upon, or determined by reference to, the payment 
     of a dividend from sources within the United States with 
     respect to such underlying security.
       ``(B) Short party.--The term `short party' means, with 
     respect to any underlying security of any notional principal 
     contract, any party to the contract which is not a long party 
     with respect to such underlying security.
       ``(C) Underlying security.--The term `underlying security' 
     means, with respect to any notional principal contract, the 
     security with respect to which the dividend referred to in 
     paragraph (2)(B) is paid. For purposes of this paragraph, any 
     index or fixed basket of securities shall be treated as a 
     single security.
       ``(5) Payments determined on gross basis.--For purposes of 
     this subsection, the term `payment' includes any gross amount 
     which is used in computing any net amount which is 
     transferred to or from the taxpayer.
       ``(6) Prevention of over-withholding.--In the case of any 
     chain of dividend equivalents one or more of which is subject 
     to tax under this section or section 881, the Secretary may 
     reduce such tax, but only to the extent that the taxpayer can 
     establish that such tax has been paid with respect to another 
     dividend equivalent in such chain. For purposes of this 
     paragraph, a dividend shall be treated as a dividend 
     equivalent.
       ``(7) Coordination with chapters 3 and 4.--For purposes of 
     chapters 3 and 4, each person that is a party to any contract 
     or other arrangement that provides for the payment of a 
     dividend equivalent shall be treated as having control of 
     such payment.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to payments made on or after the date that is 90 
     days after the date of the enactment of this Act.

                   TITLE VI--OTHER REVENUE PROVISIONS

 Subtitle A--Partnership Interests Held by Partners Providing Services

     SEC. 601. PARTNERSHIP INTERESTS TRANSFERRED IN CONNECTION 
                   WITH PERFORMANCE OF SERVICES.

       (a) Modification to Election To Include Partnership 
     Interest in Gross Income in Year of Transfer.--Subsection (c) 
     of section 83 is amended by redesignating paragraph (4) as 
     paragraph (5) and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) Partnership interests.--Except as provided by the 
     Secretary, in the case of any transfer of an interest in a 
     partnership in connection with the provision of services to 
     (or for the benefit of) such partnership--
       ``(A) the fair market value of such interest shall be 
     treated for purposes of this section as being equal to the 
     amount of the distribution which the partner would receive if 
     the partnership sold (at the time of the transfer) all of its 
     assets at fair market value and distributed the proceeds of 
     such sale (reduced by the liabilities of the partnership) to 
     its partners in liquidation of the partnership, and
       ``(B) the person receiving such interest shall be treated 
     as having made the election under subsection (b)(1) unless 
     such person makes an election under this paragraph to have 
     such subsection not apply.''.
       (b) Conforming Amendment.--Paragraph (2) of section 83(b) 
     is amended by inserting

[[Page 30802]]

     ``or subsection (c)(4)(B)'' after ``paragraph (1)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to interests in partnerships transferred after 
     the date of the enactment of this Act.

     SEC. 602. INCOME OF PARTNERS FOR PERFORMING INVESTMENT 
                   MANAGEMENT SERVICES TREATED AS ORDINARY INCOME 
                   RECEIVED FOR PERFORMANCE OF SERVICES.

       (a) In General.--Part I of subchapter K of chapter 1 is 
     amended by adding at the end the following new section:

     ``SEC. 710. SPECIAL RULES FOR PARTNERS PROVIDING INVESTMENT 
                   MANAGEMENT SERVICES TO PARTNERSHIP.

       ``(a) Treatment of Distributive Share of Partnership 
     Items.--For purposes of this title, in the case of an 
     investment services partnership interest--
       ``(1) In general.--Notwithstanding section 702(b)--
       ``(A) any net income with respect to such interest for any 
     partnership taxable year shall be treated as ordinary income, 
     and
       ``(B) any net loss with respect to such interest for such 
     year, to the extent not disallowed under paragraph (2) for 
     such year, shall be treated as an ordinary loss.

     All items of income, gain, deduction, and loss which are 
     taken into account in computing net income or net loss shall 
     be treated as ordinary income or ordinary loss (as the case 
     may be).
       ``(2) Treatment of losses.--
       ``(A) Limitation.--Any net loss with respect to such 
     interest shall be allowed for any partnership taxable year 
     only to the extent that such loss does not exceed the excess 
     (if any) of--
       ``(i) the aggregate net income with respect to such 
     interest for all prior partnership taxable years, over
       ``(ii) the aggregate net loss with respect to such interest 
     not disallowed under this subparagraph for all prior 
     partnership taxable years.
       ``(B) Carryforward.--Any net loss for any partnership 
     taxable year which is not allowed by reason of subparagraph 
     (A) shall be treated as an item of loss with respect to such 
     partnership interest for the succeeding partnership taxable 
     year.
       ``(C) Basis adjustment.--No adjustment to the basis of a 
     partnership interest shall be made on account of any net loss 
     which is not allowed by reason of subparagraph (A).
       ``(D) Prior partnership years.--Any reference in this 
     paragraph to prior partnership taxable years shall only 
     include prior partnership taxable years to which this section 
     applies.
       ``(3) Net income and loss.--For purposes of this section--
       ``(A) Net income.--The term `net income' means, with 
     respect to any investment services partnership interest for 
     any partnership taxable year, the excess (if any) of--
       ``(i) all items of income and gain taken into account by 
     the holder of such interest under section 702 with respect to 
     such interest for such year, over
       ``(ii) all items of deduction and loss so taken into 
     account.
       ``(B) Net loss.--The term `net loss' means, with respect to 
     such interest for such year, the excess (if any) of the 
     amount described in subparagraph (A)(ii) over the amount 
     described in subparagraph (A)(i).
       ``(b) Dispositions of Partnership Interests.--
       ``(1) Gain.--Any gain on the disposition of an investment 
     services partnership interest shall be treated as ordinary 
     income and shall be recognized notwithstanding any other 
     provision of this subtitle.
       ``(2) Loss.--Any loss on the disposition of an investment 
     services partnership interest shall be treated as an ordinary 
     loss to the extent of the excess (if any) of--
       ``(A) the aggregate net income with respect to such 
     interest for all partnership taxable years, over
       ``(B) the aggregate net loss with respect to such interest 
     allowed under subsection (a)(2) for all partnership taxable 
     years.
       ``(3) Disposition of portion of interest.--In the case of 
     any disposition of an investment services partnership 
     interest, the amount of net loss which otherwise would have 
     (but for subsection (a)(2)(C)) applied to reduce the basis of 
     such interest shall be disregarded for purposes of this 
     section for all succeeding partnership taxable years.
       ``(4) Distributions of partnership property.--In the case 
     of any distribution of property by a partnership with respect 
     to any investment services partnership interest held by a 
     partner--
       ``(A) the excess (if any) of--
       ``(i) the fair market value of such property at the time of 
     such distribution, over
       ``(ii) the adjusted basis of such property in the hands of 
     the partnership,

     shall be taken into account as an increase in such partner's 
     distributive share of the taxable income of the partnership 
     (except to the extent such excess is otherwise taken into 
     account in determining the taxable income of the 
     partnership),
       ``(B) such property shall be treated for purposes of 
     subpart B of part II as money distributed to such partner in 
     an amount equal to such fair market value, and
       ``(C) the basis of such property in the hands of such 
     partner shall be such fair market value.

     Subsection (b) of section 734 shall be applied without regard 
     to the preceding sentence.
       ``(5) Application of section 751.--In applying section 
     751(a), an investment services partnership interest shall be 
     treated as an inventory item.
       ``(c) Investment Services Partnership Interest.--For 
     purposes of this section--
       ``(1) In general.--The term `investment services 
     partnership interest' means any interest in a partnership 
     which is held (directly or indirectly) by any person if it 
     was reasonably expected (at the time that such person 
     acquired such interest) that such person (or any person 
     related to such person) would provide (directly or 
     indirectly) a substantial quantity of any of the following 
     services with respect to assets held (directly or indirectly) 
     by the partnership:
       ``(A) Advising as to the advisability of investing in, 
     purchasing, or selling any specified asset.
       ``(B) Managing, acquiring, or disposing of any specified 
     asset.
       ``(C) Arranging financing with respect to acquiring 
     specified assets.
       ``(D) Any activity in support of any service described in 
     subparagraphs (A) through (C).

     For purposes of this paragraph, the term `specified asset' 
     means securities (as defined in section 475(c)(2) without 
     regard to the last sentence thereof), real estate held for 
     rental or investment, interests in partnerships, commodities 
     (as defined in section 475(e)(2)), or options or derivative 
     contracts with respect to any of the foregoing.
       ``(2) Exception for certain capital interests.--
       ``(A) In general.--In the case of any portion of an 
     investment services partnership interest which is a qualified 
     capital interest, all items of income, gain, loss, and 
     deduction which are allocated to such qualified capital 
     interest shall not be taken into account under subsection (a) 
     if--
       ``(i) allocations of items are made by the partnership to 
     such qualified capital interest in the same manner as such 
     allocations are made to other qualified capital interests 
     held by partners who do not provide any services described in 
     paragraph (1) and who are not related to the partner holding 
     the qualified capital interest, and
       ``(ii) the allocations made to such other interests are 
     significant compared to the allocations made to such 
     qualified capital interest.
       ``(B) Special rule for no or insignificant allocations to 
     nonservice providers.--To the extent provided by the 
     Secretary in regulations or other guidance, in any case in 
     which the requirements of subparagraph (A)(ii) are not 
     satisfied, items of income, gain, loss, and deduction shall 
     not be taken into account under subsection (a) to the extent 
     that such items are properly allocable under such regulations 
     or other guidance to qualified capital interests.
       ``(C) Special rule for dispositions.--In the case of any 
     investment services partnership interest any portion of which 
     is a qualified capital interest, subsection (b) shall not 
     apply to so much of any gain or loss as bears the same 
     proportion to the entire amount of such gain or loss as--
       ``(i) the distributive share of gain or loss that would 
     have been allocable to the qualified capital interest under 
     subparagraph (A) if the partnership sold all of its assets 
     immediately before the disposition, bears to
       ``(ii) the distributive share of gain or loss that would 
     have been so allocable to the investment services partnership 
     interest of which such qualified capital interest is a part.
       ``(D) Qualified capital interest.--For purposes of this 
     paragraph, the term `qualified capital interest' means so 
     much of a partner's interest in the capital of the 
     partnership as is attributable to--
       ``(i) the fair market value of any money or other property 
     contributed to the partnership in exchange for such interest 
     (determined without regard to section 752(a)) ,
       ``(ii) any amounts which have been included in gross income 
     under section 83 with respect to the transfer of such 
     interest, and
       ``(iii) the excess (if any) of--

       ``(I) any items of income and gain taken into account under 
     section 702 with respect to such interest for taxable years 
     to which this section applies, over
       ``(II) any items of deduction and loss so taken into 
     account.

     The qualified capital interest shall be reduced by 
     distributions from the partnership with respect to such 
     interest for taxable years to which this section applies and 
     by the excess (if any) of the amount described in clause 
     (iii)(II) over the amount described in clause (iii)(I).
       ``(E) Treatment of certain loans.--
       ``(i) Proceeds of partnership loans not treated as 
     qualified capital interest of service providing partners.--
     For purposes of this paragraph, an investment services 
     partnership interest shall not be treated as a qualified 
     capital interest to the extent that such interest is acquired 
     in connection with the proceeds of any loan or other advance 
     made or guaranteed, directly or indirectly, by any other 
     partner or the partnership (or any person related to any such 
     other partner or the partnership).

[[Page 30803]]

       ``(ii) Reduction in allocations to qualified capital 
     interests for loans from nonservice providing partners to the 
     partnership.--For purposes of this paragraph, any loan or 
     other advance to the partnership made or guaranteed, directly 
     or indirectly, by a partner not providing services described 
     in paragraph (1) to the partnership (or any person related to 
     such partner) shall be taken into account in determining the 
     qualified capital interests of the partners in the 
     partnership.
       ``(3) Related persons.--A person shall be treated as 
     related to another person if the relationship between such 
     persons would result in a disallowance of losses under 
     section 267 or 707(b).
       ``(d) Other Income and Gain in Connection With Investment 
     Management Services.--
       ``(1) In general.--If--
       ``(A) a person performs (directly or indirectly) investment 
     management services for any entity,
       ``(B) such person holds (directly or indirectly) a 
     disqualified interest with respect to such entity, and
       ``(C) the value of such interest (or payments thereunder) 
     is substantially related to the amount of income or gain 
     (whether or not realized) from the assets with respect to 
     which the investment management services are performed,

     any income or gain with respect to such interest shall be 
     treated as ordinary income. Rules similar to the rules of 
     subsection (c)(2) shall apply for purposes of this 
     subsection.
       ``(2) Definitions.--For purposes of this subsection--
       ``(A) Disqualified interest.--
       ``(i) In general.--The term `disqualified interest' means, 
     with respect to any entity--

       ``(I) any interest in such entity other than indebtedness,
       ``(II) convertible or contingent debt of such entity,
       ``(III) any option or other right to acquire property 
     described in subclause (I) or (II), and
       ``(IV) any derivative instrument entered into (directly or 
     indirectly) with such entity or any investor in such entity.

       ``(ii) Exceptions.--Such term shall not include--

       ``(I) a partnership interest,
       ``(II) except as provided by the Secretary, any interest in 
     a taxable corporation, and
       ``(III) except as provided by the Secretary, stock in an S 
     corporation.

       ``(B) Taxable corporation.--The term `taxable corporation' 
     means--
       ``(i) a domestic C corporation, or
       ``(ii) a foreign corporation substantially all of the 
     income of which is--

       ``(I) effectively connected with the conduct of a trade or 
     business in the United States, or
       ``(II) subject to a comprehensive foreign income tax (as 
     defined in section 457A(d)(2)).

       ``(C) Investment management services.--The term `investment 
     management services' means a substantial quantity of any of 
     the services described in subsection (c)(1).
       ``(e) Regulations.--The Secretary shall prescribe such 
     regulations or other guidance as is necessary or appropriate 
     to carry out the purposes of this section, including 
     regulations or other guidance to--
       ``(1) provide modifications to the application of this 
     section (including treating related persons as not related to 
     one another) to the extent such modification is consistent 
     with the purposes of this section,
       ``(2) prevent the avoidance of the purposes of this 
     section, and
       ``(3) coordinate this section with the other provisions of 
     this title.
       ``(f) Cross Reference.--For 40 percent penalty on certain 
     underpayments due to the avoidance of this section, see 
     section 6662.''.
       (b) Income From Investment Services Partnership Interests 
     Not Treated as Qualifying Income of Publicly Traded 
     Partnerships.--Subsection (d) of section 7704 is amended by 
     adding at the end the following new paragraph:
       ``(6) Income from investment services partnership interests 
     not qualified.--
       ``(A) In general.--Items of income and gain shall not be 
     treated as qualifying income if such items are treated as 
     ordinary income by reason of the application of section 710 
     (relating to special rules for partners providing investment 
     management services to partnership).
       ``(B) Special rules for certain partnerships.--
       ``(i) Certain partnerships owned by real estate investment 
     trusts.--Subparagraph (A) shall not apply in the case of a 
     partnership which meets each of the following requirements:

       ``(I) Such partnership is treated as publicly traded under 
     this section solely by reason of interests in such 
     partnership being convertible into interests in a real estate 
     investment trust which is publicly traded.
       ``(II) 50 percent or more of the capital and profits 
     interests of such partnership are owned, directly or 
     indirectly, at all times during the taxable year by such real 
     estate investment trust (determined with the application of 
     section 267(c)).
       ``(III) Such partnership meets the requirements of 
     paragraphs (2), (3), and (4) of section 856(c).

       ``(ii) Certain partnerships owning other publicly traded 
     partnerships.--Subparagraph (A) shall not apply in the case 
     of a partnership which meets each of the following 
     requirements:

       ``(I) Substantially all of the assets of such partnership 
     consist of interests in one or more publicly traded 
     partnerships (determined without regard to subsection 
     (b)(2)).
       ``(II) Substantially all of the income of such partnership 
     is ordinary income or section 1231 gain (as defined in 
     section 1231(a)(3)).

       ``(C) Transitional rule.--In the case of a partnership 
     which is a publicly traded partnership on the date of the 
     enactment of this paragraph, subparagraph (A) shall not apply 
     to any taxable year of the partnership beginning before the 
     date which is 10 years after the date of the enactment of 
     this paragraph.''.
       (c) Imposition of Penalty on Underpayments.--
       (1) In general.--Subsection (b) of section 6662, as amended 
     by section 512, is amended by inserting after paragraph (6) 
     the following new paragraph:
       ``(7) The application of subsection (d) of section 710 or 
     the regulations prescribed under section 710(e) to prevent 
     the avoidance of the purposes of section 710.''.
       (2) Amount of penalty.--
       (A) In general.--Section 6662, as amended by section 512, 
     is amended by adding at the end the following new subsection:
       ``(j) Increase in Penalty in Case of Property Transferred 
     for Investment Management Services.--In the case of any 
     portion of an underpayment to which this section applies by 
     reason of subsection (b)(7), subsection (a) shall be applied 
     with respect to such portion by substituting `40 percent' for 
     `20 percent'.''.
       (B) Conforming amendments.--Subparagraph (B) of section 
     6662A(e)(2) is amended--
       (i) by striking ``section 6662(h)'' and inserting 
     ``subsection (h) or (i) of section 6662'', and
       (ii) by striking ``gross valuation misstatement penalty'' 
     in the heading and inserting ``certain increased underpayment 
     penalties''.
       (3) Special rules for application of reasonable cause 
     exception.--Subsection (c) of section 6664 is amended--
       (A) by redesignating paragraphs (2) and (3) as paragraphs 
     (3) and (4), respectively,
       (B) by striking ``paragraph (2)'' in paragraph (4), as so 
     redesignated, and inserting ``paragraph (3)'', and
       (C) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) Special rule for underpayments attributable to 
     investment management services.--
       ``(A) In general.--Paragraph (1) shall not apply to any 
     portion of an underpayment to which this section applies by 
     reason of subsection (b)(7) unless--
       ``(i) the relevant facts affecting the tax treatment of the 
     item are adequately disclosed,
       ``(ii) there is or was substantial authority for such 
     treatment, and
       ``(iii) the taxpayer reasonably believed that such 
     treatment was more likely than not the proper treatment.
       ``(B) Rules relating to reasonable belief.--Rules similar 
     to the rules of subsection (d)(3) shall apply for purposes of 
     subparagraph (A)(iii).''.
       (d) Income and Loss From Investment Services Partnership 
     Interests Taken Into Account in Determining Net Earnings From 
     Self-Employment.--
       (1) Internal revenue code.--Section 1402(a) is amended by 
     striking ``and'' at the end of paragraph (16), by striking 
     the period at the end of paragraph (17) and inserting ``; 
     and'', and by inserting after paragraph (17) the following 
     new paragraph:
       ``(18) notwithstanding the preceding provisions of this 
     subsection, in the case of any individual engaged in the 
     trade or business of providing services described in section 
     710(c)(1) with respect to any entity, any amount treated as 
     ordinary income or ordinary loss of such individual under 
     section 710 with respect to such entity shall be taken into 
     account in determining the net earnings from self-employment 
     of such individual.''.
       (2) Social security act.--Section 211(a) of the Social 
     Security Act is amended by inserting after paragraph (16) the 
     following new paragraph:
       ``(17) Notwithstanding the preceding provisions of this 
     subsection, in the case of any individual engaged in the 
     trade or business of providing services described in section 
     710(c)(1) of the Internal Revenue Code of 1986 with respect 
     to any entity, any amount treated as ordinary income or 
     ordinary loss of such individual under section 710 of such 
     Code with respect to such entity shall be taken into account 
     in determining the net earnings from self-employment of such 
     individual.''.
       (e) Conforming Amendments.--
       (1) Subsection (d) of section 731 is amended by inserting 
     ``section 710(b)(4) (relating to distributions of partnership 
     property),'' after ``to the extent otherwise provided by''.
       (2) Section 741 is amended by inserting ``or section 710 
     (relating to special rules for partners providing investment 
     management services to partnership)'' before the period at 
     the end.

[[Page 30804]]

       (3) The table of sections for part I of subchapter K of 
     chapter 1 is amended by adding at the end the following new 
     item:

``Sec. 710. Special rules for partners providing investment management 
              services to partnership.''.

       (f) Effective Date.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to taxable years ending after December 31, 2009.
       (2) Partnership taxable years which include effective 
     date.--In applying section 710(a) of the Internal Revenue 
     Code of 1986 (as added by this section) in the case of any 
     partnership taxable year which includes December 31, 2009, 
     the amount of the net income referred to in such section 
     shall be treated as being the lesser of the net income for 
     the entire partnership taxable year or the net income 
     determined by only taking into account items attributable to 
     the portion of the partnership taxable year which is after 
     such date.
       (3) Dispositions of partnership interests.--Section 710(b) 
     of the Internal Revenue Code of 1986 (as added by this 
     section) shall apply to dispositions and distributions after 
     December 31, 2009.
       (4) Other income and gain in connection with investment 
     management services.--Section 710(d) of such Code (as added 
     by this section) shall take effect on January 1, 2010.
       (5) Publicly traded partnerships.--The amendment made by 
     subsection (b) shall apply to taxable years beginning after 
     December 31, 2009.

       Subtitle B--Time for Payment of Corporate Estimated Taxes

     SEC. 611. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.

       The percentage under paragraph (1) of section 202(b) of the 
     Corporate Estimated Tax Shift Act of 2009 in effect on the 
     date of the enactment of this Act is increased by 26.5 
     percentage points.

                   Subtitle C--Tax Expenditure Study

     SEC. 621. FINDINGS.

       Congress finds the following:
       (1) Currently, the aggregate cost of Federal tax 
     expenditures rivals, or even exceeds, the amount of total 
     Federal discretionary spending.
       (2) Given the escalating public debt, a critical 
     examination of this use of taxpayer dollars is essential.
       (3) Additionally, tax expenditures can complicate the 
     Internal Revenue Code of 1986 for taxpayers and complicate 
     tax administration for the Internal Revenue Service.
       (4) To facilitate a better understanding of tax 
     expenditures in the future, it is constructive for 
     legislation extending these provisions to include a study of 
     such provisions.     

     SEC. 622. STUDY OF EXTENDED TAX EXPENDITURES.

       (a) In General.--Not later than November 30, 2010, the 
     Chief of Staff of the Joint Committee on Taxation, in 
     consultation with the Comptroller General of the United 
     States, shall submit to the Committee on Ways and Means of 
     the House of Representatives and the Committee on Finance of 
     the Senate a report on each tax expenditure (as defined in 
     section 3(3) of the Congressional Budget Impoundment Control 
     Act of 1974 (2 U.S.C. 622(3)) extended by this Act.
       (b) Rolling Submission of Reports.--The Chief of Staff of 
     the Joint Committee on Taxation shall initially submit the 
     reports for each such tax expenditure enacted in subtitle B 
     of title I (relating to business tax relief) and title IV 
     (relating to energy provisions) in order of the tax 
     expenditure incurring the least aggregate cost to the 
     greatest aggregate cost (determined by reference to the cost 
     estimate of this Act by the Joint Committee on Taxation). 
     Thereafter, such reports may be submitted in such order as 
     the Chief of Staff determines appropriate.
       (c) Contents of Report.--Such reports shall contain the 
     following:
       (1) An explanation of the tax expenditure and any relevant 
     economic, social, or other context under which it was first 
     enacted.
       (2) A description of the intended purpose of the tax 
     expenditure.
       (3) An analysis of the overall success of the tax 
     expenditure in achieving such purpose, and evidence 
     supporting such analysis.
       (4) An analysis of the extent to which further extending 
     the tax expenditure, or making it permanent, would contribute 
     to achieving such purpose.
       (5) A description of the direct and indirect beneficiaries 
     of the tax expenditure, including identifying any unintended 
     beneficiaries.
       (6) An analysis of whether the tax expenditure is the most 
     cost-effective method for achieving the purpose for which it 
     was intended, and a description of any more cost-effective 
     methods through which such purpose could be accomplished.
       (7) A description of any unintended effects of the tax 
     expenditure that are useful in understanding the tax 
     expenditure's overall value.
       (8) An analysis of how the tax expenditure could be 
     modified to better achieve its original purpose.
       (9) A brief description of any interactions (actual or 
     potential) with other tax expenditures or direct spending 
     programs in the same or related budget function worthy of 
     further study.
       (10) A description of any unavailable information the staff 
     of the Joint Committee on Taxation may need to complete a 
     more thorough examination and analysis of the tax 
     expenditure, and what must be done to make such information 
     available.
       (d) Minimum Analysis by Deadline.--In the event the Chief 
     of Staff of the Joint Committee on Taxation concludes it will 
     not be feasible to complete all reports by the date specified 
     in subsection (a), at a minimum, the reports for each tax 
     expenditure enacted in subtitle B of title I (relating to 
     business tax relief) and title IV (relating to energy 
     provisions) shall be completed by such date.

  The SPEAKER pro tempore. The gentleman from New York (Mr. Rangel) and 
the gentleman from Michigan (Mr. Camp) each will control 30 minutes.
  The Chair recognizes the gentleman from New York.


                             General Leave

  Mr. RANGEL. Mr. Speaker, I ask that all Members have 5 legislative 
days to revise and extend their remarks and insert extraneous material 
in the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from New York?
  There was no objection.
  Mr. RANGEL. Mr. Speaker, this package of extensions of legislation 
that are about to expire represents the real need for tax reform in 
this country. I have talked with the Ways and Means Committee ranking 
member to see whether or not our leadership can agree that the taxpayer 
really deserves better than this and should be able to depend on some 
continuity in the law.
  To that extent, we will be sending to the nonpartisan Joint Committee 
on Taxation all of these extenders that we hope will be supported 
overwhelmingly today to better advise us how we can get on with the tax 
reform to make certain that certain things like research and 
development and other great things that we have in this package would 
be made permanent, so that the taxpayers, corporate and private, would 
know what they can depend on, instead of just relying on the constant 
extensions which have passed this body before.
  So along with Ways and Means Committee Ranking Member Camp, we ask 
that this committee take this up. And also we want to make it clear 
that the contents of this bill and the understandings of legislative 
intent is available on the Joint Committee's Web site, www.jct.gov. And 
it's listed under the document number JCX-60-09.
  This list of bills, as I said, concerns very important legislation, 
and our committee has worked very hard on this legislation.
  Mr. Speaker, I would like permission for the balance of my time to be 
turned over to Richard Neal, who heads up a special subcommittee on our 
Ways and Means Committee, who spent a great deal of time evaluating 
what we should do, along with Congressman Levin and other members of 
the Ways and Means Committee, and with your permission and the 
permission of the House, I'd like to yield the balance of the time that 
I have to Congressman Neal.
  The SPEAKER pro tempore. Without objection, the gentleman from 
Massachusetts will control the balance of the time.
  There was no objection.
  Mr. YOUNG of Alaska. Will the gentleman yield?
  Mr. RANGEL. Yes, I will.
  Mr. YOUNG of Alaska. Mr. Chairman, may I indulge in a colloquy with 
you?
  Mr. RANGEL. Yes, I yield to the gentleman.
  Mr. YOUNG of Alaska. I would like to engage in a brief colloquy with 
you regarding a provision of great importance to the Alaska Native 
community. As you and I have previously discussed on numerous 
occasions, section 646 of the Internal Revenue Code allows Alaska 
Native Settlement Trusts to provide health, education, and welfare 
benefits to Alaska Natives, who are generally recognized as among the 
most economically disadvantaged populations in the United States.
  It is my understanding that this provision was not included in the 
bill before us today because the bill only extends tax benefits that 
terminate in

[[Page 30805]]

2009, and this benefit does not terminate until December 31, 2010. Its 
omission is not a reflection of your views on the merits of the 
provision.
  Mr. RANGEL. The gentleman from Alaska is correct. I look forward to 
working with him on this important legislation for the Alaska Native 
community; and when the committee considered this and other provisions 
that have a later termination, all the other provisions we plan to take 
up with priority. And I thank you for bringing this to my attention.
  Mr. YOUNG of Alaska. Thank you, Mr. Chairman. I'd like to thank you 
for your commitment to work on this provision and for your support of 
the Alaska Native people.
  Mr. CAMP. Mr. Speaker, I yield myself such time as I may consume.
  It is the tradition of this House to annually extend certain tax 
relief items, everything from a research and development tax credit to 
incentives for the manufacture, purchase and use of alternative fuels, 
to credits that help offset out-of-pocket expenses for teachers that 
they incur buying materials for their classrooms.
  I helped write many of these provisions, and if the bill before us 
were truly a tax extenders bill, I'd be voting for it, as I have in 
previous years. However, the Democrats seemingly have never met a tax 
cut they liked; and, thus, the Democrats have turned tax extenders into 
tax extenders and tax raisers.
  I want each of my colleagues to think about that for a minute. The 
bill before us proposes permanent tax increases and just 1 year of tax 
relief. Unemployment is at 10 percent. Nearly 3 million Americans have 
lost their jobs since the start of the year. The economy is continuing 
to hemorrhage thousands of jobs every month. Small businesses continue 
to struggle as credit markets remain tight. And this proposes to raise 
taxes on economic investment.
  Just yesterday the President called for a Stimulus II package to help 
small businesses and to help start job creation. Part of that was to 
cut capital gains taxes on investments in small businesses, showing he 
understands the importance of capital to growing business and creating 
jobs.
  By contrast, this bill changes how carried interest has been treated 
for decades, and it is nothing short of a new tax on the very 
investments needed to start a new business and create economic growth 
in this country.
  So while Democrats claim they want to stimulate growth, they are 
actually increasing taxes in a way that will discourage job creation. 
And they left more than two dozen expiring tax relief provisions out of 
the bill, including the biggest of them all, the AMT patch.
  So in addition to the tax increases within this bill, there are, by 
omission, close to 30 tax increases that Americans will face next year 
because of the bill's shortcomings, including higher taxes for small 
businesses and approximately $2,600 in higher taxes for millions of 
middle class families.
  While some of those admissions might be justified, I'm disappointed 
that, once again, the Ways and Means Committee held neither a hearing 
nor a mark-up to consider legislation within our jurisdiction. Given 
the disconnect between House Democrats' rhetoric on jobs and their 
votes for tax increases, it is no wonder employers are confused. New 
investments aren't being made, and unemployment remains high. I support 
tax extenders, and that's what we should pass today, not this tax-
increasing, job-killing bill before us.
  I reserve the balance of my time.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I 
might consume.
  Mr. Speaker, I guess Mr. Camp, who is my friend, wasn't referring to 
me when he talked about the Democrats who didn't like tax relief. They 
forgot about the idea that I was the lead sponsor on the net operating 
loss bill, and have supported accelerated depreciation allowance, and 
believe that there are some tax cuts, in fact, that are better than 
others. And, at the same time, I think we could all find unity in the 
suggestion today that one thing we've discovered is that tax cuts 
really don't pay for themselves.
  But I rise in support of this extenders legislation that we're 
considering today, and certainly Mr. Rangel should be acknowledged for 
the hard work that he has offered on this legislation. There ought to 
be an opportunity here for us, Mr. Speaker, to find some common ground. 
There are many, many, many good parts of this legislation that I know 
our friends on the other side support.
  There are provisions here in the bottom of the ninth inning, with two 
out, that are expiring; and we need to give some predictability to 
decisions that will be made by businesses and individuals over the 
course of the next year. And this is going to be the last chance that 
we're going to have to do it this year.
  This bill contains extensions of many popular incentives. For my home 
State of Massachusetts, this bill means that 94,000 teachers will get a 
deduction for their out-of-pocket expenses for classroom supplies, no 
small matter.

                              {time}  1345

  It means that more than 1,000 businesses in Massachusetts will get 
some credits for the millions they spend on research here in the United 
States. A reminder, the research and development tax credit is in this 
bill, and it is critical to retaining American jobs. Without this bill, 
125,000 families in Massachusetts cannot take the deduction for college 
tuition expenses. This legislation provides significant tax relief to 
millions of families nationwide both in red States, purple States, and 
blue States.
  There are 12 million families nationwide who live in States with no 
income tax; however, this bill does provide a State sales tax 
deduction.
  This bill also includes a number of popular tax incentives for 
alternative fuels. There are also packages of tax benefits to assist 
distressed communities and those hit by natural disasters. There are 
many well-crafted provisions in this bill. There's not really enough 
time to address all of them.
  This bill does no harm to the Federal budget. The cost of these cuts 
is completely offset by two revenue raisers, one of which I have 
offered and authored, and I know there is broad support across America 
for that issue. This is the Foreign Bank Account Reporting bill, which 
will shut down abuses by wealthy taxpayers hiding money in overseas 
banks.
  And for the life of me, I can't understand why everybody in this 
institution is not supportive of this measure. Transparency is 
important. 160,000 soldiers in Iraq, about to be 160,000 soldiers in 
Afghanistan, and we have taken our sweet time by not cracking down on 
these tax evaders who don't want to pay their fair share at the same 
time that we had these extensive commitments around the world. I'd like 
to poll that question in any congressional district in America. We have 
taken the comments of those who are impacted and we have made this 
reporting regime a workable enforcement tool in this legislation. 
Again, you should not be hiding money in foreign bank accounts for the 
sole purpose of avoiding American taxes.
  The second offset is a carry interest proposal which seeks to ensure 
investment managers pay taxes on their earnings as income tax rates 
rather than capital gains.
  Let me also suggest that Mr. Rangel has crafted a balanced bill. 
Again, I will repeat, it does no harm to the Federal Treasury. He has 
included a directive to the nonpartisan and, I think, highly effective 
and professional Joint Committee on Taxation to review the 
effectiveness of all of these extenders so that we could begin in 
earnest our effort to reform the Tax Code.
  I certainly am supportive of this measure. I hope it will find broad 
support across this institution.
  With that, I reserve the balance of my time.
  Mr. CAMP. At this time, I yield 2 minutes to the distinguished member 
of the Ways and Means Committee, the gentleman from California (Mr. 
Herger).
  Mr. HERGER. I thank my good friend from Michigan.
  Mr. Speaker, there is a long tradition of bipartisan support for 
extending

[[Page 30806]]

these expiring tax relief provisions. I have personally been a strong 
supporter of the research and development tax credit, the 5-year 
depreciation schedule for farm equipment, and tax-free charitable 
contributions from individual retirement accounts. That is why I'm very 
disappointed that the majority party has chosen to bypass the Ways and 
Means Committee and bring a partisan extenders bill to the floor.
  The bill before us raises taxes by nearly $25 billion at a time of 10 
percent unemployment. As our economy is struggling to recover, this tax 
increase directly targets hard-hit sectors like real estate. It simply 
does not make sense that at the same time we are talking about the need 
to create jobs, this House is voting for the second time in as many 
weeks to raise taxes for next year.
  H.R. 4213 also fails to extend the renewable energy credit for open-
loop biomass plants. That's very important to my northern California 
district. But the President and the Speaker heading overseas to talk 
about how we need more renewable energy, I can't imagine why we would 
pull the plug on successful biomass producers. Mr. Speaker, if we had 
moved this bill through the committee process, we could have fixed this 
oversight, and I hope we can address it in conference.
  Mr. NEAL of Massachusetts. Just before I recognize my friend from 
Michigan, I want to remind my friend from California there are 320,000 
teachers in his home State who will not get a tax benefit if this 
legislation does not pass, 571,000 families will not be able to deduct 
higher education costs, 1.2 million families will not be able to deduct 
home State sales taxes that they currently pay, and 4,000 businesses in 
a State that is so dependent upon high technology in California will 
not be able to get the credit for their crucial research and 
development costs.
  With that, I yield to my friend from Michigan (Mr. Levin) for 3 
minutes.
  Mr. LEVIN. Let's be clear what's involved in the pay-fors: tax-haven 
legislation, also the issue of fairness.
  Those who invest their own money will continue to receive capital 
gains tax treatment, period. Those who manage other people's money will 
have to pay ordinary income tax like everybody else who performs 
services. There is widespread support for this.
  Gregory Mankiw, who was on President Bush's Council of Economic 
Advisors, said this: ``Deferred compensation, even risky compensation, 
is still compensation, and it should be taxed as such . . . When I 
wrote my book, that was sweat equity . . . I oppose different levels of 
taxation on different types of compensation.''
  This from a former member of President Reagan's Council of Economic 
Advisors, William Niskanen: ``The share of investment profits are 
basically fees for managing other people's money.''
  Also, another person who was deputy undersecretary under George H.W. 
Bush, Professor Michael Graetz: ``I think it's odd that people making 
that much money off of essentially labor income should be paying lower 
rates than, than the average . . . than their secretaries are, to put 
it baldly.''
  And then from the New York Times: ``They're actively managing assets, 
and should be taxed accordingly as managers earning compensation . . . 
Congress will achieve a significant victory, for fairness and for 
fiscal responsibility, if it ends the breaks that are skewing the Tax 
Code in favor of the most advantaged Americans.''
  And likewise, the Washington Post: ``But these fund managers, for the 
most part, are not risking their own money.'' And I insert to the 
extent they are, they get capital gains treatment. ``Besides, plenty of 
risky industries don't enjoy comparable tax benefits. Income earned 
from managing an investment partnership fund should be treated just 
like the income earned for providing any other service.''
  And I could quote this from William Stanfill, who's a manager of 
venture capital. He says, ``Many Americans invest sweat equity in their 
jobs and their businesses, take risks, contribute to the economy, and 
may have to wait a long time before their hard work pays off. But they 
still pay ordinary income tax rates on their compensation. To the 
extent we take risk, we take it with other people's money.''
  And that's why the statement of administration policy is very clear 
from the President. ``The legislation would fulfill the 
administration's commitment to crack down on overseas tax havens and 
put a stop to billions of dollars' worth of tax abuse and would end the 
special preferential treatment for carried interest income.''
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. NEAL of Massachusetts. I yield the gentleman an additional 30 
seconds.
  Mr. LEVIN. In terms of sparking economic growth, we need to have 
measures that target investment, not give a special break for those who 
perform services. For example, I have introduced a bill to eliminate 
capital gains on investments in certain small business stock for 2010. 
On investments. That's the issue here, that nobody blur it. Those who 
work with other people's money will pay ordinary income tax; those who 
invest their own money will continue to receive capital gains tax 
treatment.
  Mr. CAMP. At this time, Mr. Speaker, I yield 2 minutes to the 
distinguished member of the Ways and Means Committee, the gentleman 
from Texas (Mr. Brady), who has been a leader in the effort to restore 
the local sales tax deduction.
  Mr. BRADY of Texas. Mr. Speaker, I rise and strongly oppose this 
bill.
  Encouraging research jobs on the one hand while killing local real 
estate and construction jobs on the other makes no economic sense. In 
making one of our most vulnerable sectors, commercial real estate, 
which faces the next real crisis in America, making that situation 
worse is going to kill jobs in this country. That type of thing is the 
reason that this new Congress and this White House has failed to get 
the American economy going.
  Let me explain. There are parts of this bill that all of us support, 
including cracking down on tax evaders but encouraging companies to 
keep research and development jobs; letting States, local taxpayers, 
write off the State and local sales taxes. And our State, I'm proud to 
say, we fought to restore this. It saves our taxpayers $1.2 billion a 
year, creates 22,000 jobs. That's fairness. In helping teachers write 
off, for example, their supplies they pay out of their pocket to help 
educate their students, we all agree on that. That's not the question.
  But what they do in this bill as well, they target some of our most 
basic companies at home. They say they're going after those Wall Street 
managers of your money, the ones who have their feet up on the desk who 
just shuffle money back and forth and make billions of dollars. That's 
what they say they're aiming at. What they're hitting is Main Street, 
our real estate partnerships. These are our local companies that build 
our office buildings, apartments, shopping centers, movie theaters, our 
industrial parks. There are no abuses in this. These are the people who 
create jobs at home.
  This bill increases their tax, almost triples their taxes, and these 
are people who put in sweat equity for 15 years, 20 years. Only if they 
get it right do they make a dollar back on all of their hard work. This 
is who they nearly triple the taxes on.
  These are the people, 1.2 million, traditional real estate 
partnerships, who will pay the price if this bill passes, because this 
makes no economic sense and damages jobs. That's why this bill is dead 
on arrival in the Senate, deader than a doornail, because with this 
economy, we ought to be creating jobs and not killing jobs.
  Mr. NEAL of Massachusetts. Mr. Speaker, a reminder that there are 
303,000 people in the State of Texas who will not be able to deduct 
their higher education tuition costs. That is for the State of Texas a 
$690 million benefit.
  With that, I would yield 30 seconds to the gentleman from Vermont 
(Mr. Welch).
  Mr. WELCH. Mr. Speaker, we spend more on tax expenditures authorized 
by Congress and the Committee on Ways and Means than we do on the 
entire appropriations budget. It really

[[Page 30807]]

matters. This is the third year I've served in Congress, the third year 
we've had tax extenders. And the question for many of us is the one 
that was raised by Chairman Rangel: Is it time to take a look at this, 
kick the tires of each one of these to see not just how it affects the 
particular beneficiary--they always are in favor--but how it affects 
the overall economy for creating wealth in jobs and how it affects the 
burden of fairness that is our responsibility? So I applaud the 
chairman in his effort to do that.
  Mr. CAMP. At this time, I yield 2 minutes to the distinguished 
gentleman from the Ways and Means Committee, the gentleman from 
Illinois (Mr. Roskam).
  Mr. ROSKAM. I thank the gentleman for yielding.
  I think it's a sad argument, ironically, that the majority is using, 
and that is to kind of procedurally hold hostage, a group of teachers 
who are counting on predictability and clarity and forthrightness and 
transparency from this Congress, and now it is 21 days before a tax 
provision upon which they are going to rely is now dangling before 
them.
  And what this House is being told by the majority is either you vote 
for these teachers or you push them off, and these are your choices. Is 
that really as good as it gets? Is that really as robust a tax 
provision and a tax policy that we can come up with, to dangle a group 
of teachers out and sort of manipulate them on the House floor in terms 
of an argument and say, ``You're either for teachers or you're not''?

                              {time}  1400

  Well, I think the American public sees through that argument, Mr. 
Speaker. I think that the American public has a hope and an expectation 
that we are not going to get to this false trade; that is, that we are 
going to permanently increase taxes on job creators while offering 
temporary tax relief. That's a bad deal. That's a real bad deal all the 
way around.
  And it gets particularly difficult if you think about the extension 
of that logic: Are we going to have this same debate in the 2010 cycle 
when we're going to be dealing with tax rates, we're going to be 
talking about dividend rates, and we're going to be talking about 
individual rates? Are we going to be having this same permanent tax 
increase in exchange for temporary tax relief?
  Mr. Speaker, that's a bad deal. We ought to walk away from this. We 
ought to vote ``no'' and send this back to the committee where it 
belongs.
  Mr. NEAL of Massachusetts. Mr. Speaker, since the gentleman was 
concerned that I was picking on teachers, let me raise this point. 
There are 2,274 businesses in his home State of Illinois that will not 
be able to get a credit for their crucial research and development 
costs, a $23 million benefit.
  And with that, I yield 2 minutes to the gentleman from North Carolina 
(Mr. Etheridge).
  Mr. ETHERIDGE. I thank the gentleman for yielding, and I thank Mr. 
Rangel for his hard work on this legislation. I support the bill. The 
Tax Extenders Act of 2009 reduces taxes by more than $30 billion for 
individuals and businesses to support small businesses and fuel job 
growth.
  To help create high-tech jobs and support American competitiveness, 
H.R. 4213 extends the R&D tax credit. North Carolina's growth has been 
supported by technology and the health and energy industries. The R&D 
tax credit is vital to this sector of the economy, a sector that spurs 
innovation and creates new jobs all across America.
  H.R. 4213 extends the accelerated cost recovery credit for restaurant 
and retail improvements, and incentivizes more businesses to grow, 
retool, modernize, and expand their facilities. To help struggling 
communities, the bill extends incentives like the new markets tax 
credits and tax incentives for businesses in designated Empowerment 
Zones. These provisions are more important than ever. As we help 
businesses grow, we help grow our workforce and strengthen our economy.
  Education is the key to the future for both our young people and 
those who are retraining for new jobs. The bill protects tuition 
deductions to help make more students afford school. For individuals, 
it also extends the deductions for State and local taxes, and property 
taxes, while also preserving $7 billion in deductions that encourage 
charitable giving.
  I also am pleased to know that this bill extends tax credits for 
teachers. Even though they are often underpaid, many teachers use their 
own money. I happen to know. I was a State superintendent of schools in 
North Carolina for 8 years and worked with this tax credit. I thank the 
committee for putting it in and keeping it in. It's unfair to ask them 
to continue year after year to pay. I thank you for doing it. This is a 
tax credit that helps them contribute to the success of future 
generations.
  I support this legislation and encourage its passage.
  Mr. CAMP. I yield myself such time as I may consume, and I think the 
point that we're trying to make on the floor here is that this is a 
false choice: Either you're for teachers or you're for the research and 
development tax credit, or you're against it. And the false choice is: 
Do we really have to raise taxes on job creators in order to get the 
extension of the research and development tax credit temporarily? Do we 
have to have this permanent tax increase that, frankly, will make us 
one of the highest-taxed countries in the world on this sort of 
investment tax? And I think that's a false choice being presented 
today.
  And with that, I yield to the gentleman from Illinois (Mr. Roskam).
  Mr. ROSKAM. I thank the gentleman. I want to thank the gentleman from 
Massachusetts for highlighting the research and development elements of 
my home State. And I guess my reply is that simply casting a wider net 
and grabbing more procedural hostages, I don't find it persuasive, 
because I think the false premise that is the basis of this bill is the 
permanence versus temporary argument; in other words, that the tax 
hikes that are being articulated are going to be permanent tax hikes. 
The tax relief that is being used, Mr. Speaker, to really sell the bill 
are going to be temporary tax relief.
  I find it ironic that here we have had a jobs summit at the White 
House with the congressional leadership and obviously the President, 
and so much consternation that we all share about what? About the 
unpredictability of our economy.
  This is an opportunity, I think, for us to come together on the 
research and development tax credit, for example, and cast a larger 
vision, and to say for R&D to make great strides in this country, there 
has to be a sense of predictability to it. We can't keep it on a short 
leash of 12 months. That's too short of a cycle. The accountants in 
these firms are going to be saying, Look, you can't rely on the 
Congress necessarily to come through.
  So I think that is ultimately the argument that I'm making. I think 
we have a false choice, as Mr. Camp said. I think we can do better, and 
I would hope that we did. But I appreciate the gentleman from 
Massachusetts highlighting the State of Illinois.
  Mr. NEAL of Massachusetts. Just reminding him of those numbers. I 
yield myself as much time as I might consume.
  In response to my friend's, Mr. Roskam's, argument here about these 
tax proposals being made permanent, I don't understand how the other 
side could have been witness to borrowing billions and billions of 
dollars for Iraq and not having had the courage to speak to the issue 
of transparency and allowing the American people to see what Iraq was 
going to cost.
  In addition, remember, they talk about fiscal responsibility? They 
cut taxes six times while committing 160,000 soldiers to Iraq. On 
January 19 of 2001, they inherited an almost perfect economic picture: 
unparalleled economic growth, the deficits had been paid off, the debt 
was coming down. And do you know what? To show you my bipartisan 
position here, let's give Bush I some credit for that, having had the 
courage to do it, and Clinton twice.

[[Page 30808]]

It was the recklessness that the other side embraced that now we have 
to pay for.
  And this bill today, as unpalatable as some of them might argue that 
it is, it's paid for. We square this issue with the American people. 
This legislation is paid for.
  I reserve the balance of my time.
  Mr. CAMP. At this time, I yield 2 minutes to the gentleman from Texas 
(Mr. Brady).
  Mr. BRADY of Texas. I would point out, Mr. Speaker, that when 
Republicans lost control of Congress, the deficit was $160 billion, too 
high. Today, just 2\1/2\ years later, it is nearly nine times that 
high. It is greater than all the deficits in 1 year and all the 
deficits under President Bush. We are on an unsustainable path where 
our children and grandchildren will never be able to afford what is 
being spent today.
  And I will remind, too, my friend from Massachusetts that when 
Democrats took that gavel, Speaker Pelosi pledged she would pay every 
dime of our wars in Iraq and Afghanistan. Nearly 3 years later, they 
haven't paid for a dime of those wars.
  Let me make a point here. The reason I think Congress' approval 
ratings are lower than Bernie Madoff's is that we keep pitting 
Americans against other Americans. In this case, we keep pitting 
teachers and research workers and local taxpayers, you hear the 
numbers, against our local real estate workers and our local 
construction workers. This bill will seriously damage our ability to 
create jobs and raise property values at the local level. Our real 
estate partners, the real target of this bill, the real losers in this 
bill, these are average people who build our local facilities, who 
create construction jobs, who are the backbone of our economy. And in 
this case, they will have their taxes nearly tripled. It will result in 
lower property values and fewer jobs at home.
  What it really does is it punishes people who put in sweat equity and 
work for decades to bring it about. And it forces them to go to the 
bank and take debt, to seek capital at a time when there is no bank and 
no lending available. So we have taken one of the toughest parts of our 
economy, commercial real estate, and punished them. It is a false 
choice, as the gentleman from Michigan has said. It's the wrong choice. 
This is a bad deal.
  Mr. CAMP. Will the gentleman yield?
  Mr. BRADY of Texas. I yield to the gentleman from Michigan.
  Mr. CAMP. I just want to comment, too, on this perfect economic 
picture you said occurred in 2001. As we all know, the bubble burst in 
2000. So that history is not quite accurate. I just want to correct 
that for the record.
  Mr. NEAL of Massachusetts. Let me yield 2 minutes to the very 
important member of the Ways and Means Committee, the gentlewoman from 
Nevada (Ms. Berkley).
  Ms. BERKLEY. Mr. Speaker, I thank the gentleman, who is doing a 
remarkably good job, in spite of all the misinformation on the other 
side, of moving this bill along.
  I rise in support of this legislation to extend expiring tax 
provisions. It is very important that Congress pass this bill this 
year.
  Allowing these provisions to expire would amount to a tax increase at 
a most challenging economic time for our Nation's businesses and 
families. Waiting to enact an extension retroactively would add to the 
already uncertain business climate and make tax planning all the more 
difficult for companies and individuals that depend on these tax 
credits.
  The bill extends necessary tax relief to parents and teachers, 
college students, homeowners, small businesses, and millions of other 
middle-income families. This legislation is needed in my State for so 
many critical things. It ensures that Nevada residents who do not pay a 
State income tax can continue to deduct their sales and State tax from 
their Federal income tax. For Nevada college students, most of whom 
come from middle-income families, deduction of their tuition makes the 
difference between going to college and not going to college.
  The bill extends a few alternative and renewable energy tax credits, 
so critical at this particular time, such as the tax incentive for 
natural gas and propane used as a fuel in transportation vehicles. 
These important provisions will help increase clean energy production 
and consumption.
  When it comes to the State of Nevada, and all politics is local, I 
would like to tell the other side how important this is to the people I 
represent. This is not a joke, and this is not using these people. This 
is providing tax relief for millions and millions of people across the 
country and hundreds of thousands of Nevadans.
  Over 23,000 teachers in my home State will not get a tax benefit for 
purchasing school supplies out-of-pocket if we don't pass this.
  The SPEAKER pro tempore. The time of the gentlewoman has expired.
  Mr. NEAL of Massachusetts. I yield the gentlewoman 30 additional 
seconds.
  Ms. BERKLEY. Over 32,000 families in my State will not be able to 
deduct their higher education tuition costs, and 346,000 Nevada 
families in my State will not be able to deduct the State sales tax 
that they pay. This would be a loss of a $574 million benefit for the 
State of Nevada. And 141 businesses in my State will not be able to get 
a credit for their crucial research and development costs.
  I submit to you, Mr. Speaker, this is an important piece of 
legislation. It is timely. We need to pass it now.
  Mr. CAMP. I yield myself such time as I may consume.
  What we're being offered here is temporary tax relief for 1 year paid 
for with permanent tax increases. And I would just say that while the 
majority disingenuously portrays this provision as targeting only rich 
Wall Street financiers, it actually goes well beyond that, affecting 
investments and transactions along Main Street as well. This extremely 
broad provision applies not only to private equity firms and hedge 
funds, but also to real estate partnerships that invest in every 
congressional district and venture capital funds that help finance 
start-up, high-tech and biotechnology investments all across America.
  This provision would have far-reaching consequences on the returns of 
the pension funds, university endowments, and philanthropic foundations 
that invest in these partnerships that are targeted by the majority.
  Let me just, for the record, say that in CQ there is a quote from 
Chairman Baucus on the Senate side that said the House on Wednesday 
will take up a roughly $31 billion bill extending dozens of provisions 
expiring December 31. The major offset for the package, raising $24.6 
billion through taxing investment on partners income for managerial 
services as regular income rather than capital gains, is unlikely to 
survive in the Senate.

                              {time}  1415

  Again, we are moving forward on a funding mechanism that is permanent 
for 1 year of tax relief, and it is something that the Senate will not 
take up. To go on further, he says the provision passed the House twice 
in the 110th Congress but went nowhere in the Senate where Democratic 
leaders deemed it too contentious. Earlier this year, Baucus said he 
did not want to spook shaky financial markets by using the measure as 
an offset.
  I reserve the balance of my time.
  Mr. NEAL of Massachusetts. Mr. Speaker, might I inquire as to how 
much time remains on both sides.
  The SPEAKER pro tempore. The majority has 12\3/4\ minutes and the 
minority has 16\1/2\ minutes.
  Mr. NEAL of Massachusetts. Just before I recognize the gentleman from 
Illinois (Mr. Davis), I hope that my friend Mr. Camp will have a 
chance--he spoke to one provision of the pay-for. Maybe he will speak 
to the issue of tax evasion as to whether or not he supports the $8 
billion that's being raised in this legislation to pay for this bill.
  With that, I would like to recognize the gentleman from Illinois, my 
friend, Mr. Davis, for 2 minutes.
  Mr. DAVIS of Illinois. Let me first of all thank the gentleman from 
Massachusetts for yielding.
  I rise in strong support of H.R. 4213, the Tax Extenders Act of 2009. 
There

[[Page 30809]]

are multiple provisions within this bill that are needed by 
individuals, businesses as well as State and local governments. This 
bill is good for Chicago, it's good for the State of Illinois and, 
indeed, it is good for the Nation.
  This bill helps individuals with the cost of education, both for 
teachers who pay out of pocket for supplies and for students who pay 
for tuition and books. It helps families cover the cost of property 
taxes and sales taxes. It helps business invest in research and 
development, equipment, maintenance and certain capital improvements.
  It promotes charitable giving of food, equipment and inventory. This 
bill also supports critical community assistance programs. It 
encourages empowerment zones and renewal communities in economically 
depressed areas. It supports areas that experienced natural disasters, 
such as the gulf coast and the Midwest.
  The Chicago Reporter, a newspaper that does an outstanding job, found 
that the west and south sides of Chicago have unemployment rates of 
over 20 percent. It is obvious to me that the city of Chicago, the 
State of Illinois, and, indeed, the Nation, need this bill. I am proud 
to support it.
  Mr. CAMP. At this time I am prepared to close if the gentleman has no 
further speakers.
  I reserve the balance of my time.
  Mr. NEAL of Massachusetts. Mr. Speaker, we are trying to just assess 
how much time is here, if you will give me a second.
  Mr. Speaker, I would like to recognize the gentleman from Michigan 
(Mr. Levin) for 3 minutes.
  Mr. LEVIN. I think it's important that we look at the facts here. The 
gentleman from Texas and others have raised issues regarding real 
estate. These are the figures that have been compiled by our staff 
based on IRS data. That less than 10 percent of all of the income 
earned in real estate construction and development is earned by 
partnerships that might be involved here, that less than 5 percent of 
all wages earned by employees in real estate construction and real 
estate development are earned by employees of partnerships.
  Ninety percent of the income earned in real estate construction and 
real estate development is earned by C corporations or S corporations. 
Let me just say, in terms of corporations that are involved in real 
estate, when they give stock options, when those are exercised, and 
these are the vast majority of cases, the people who exercised the 
stock option pay ordinary income tax.
  Essentially, you have here an argument undercutting the basic 
proposition. That is that those who invest their own money get capital 
gains treatment and those who provide services, in whatever 
circumstances, they pay ordinary income tax.
  Also let me just mention that the President has suggested some 
specific provisions that will encourage investment. There is a basic 
structure in question here, a basic structure. When people invest their 
own money, they should pay capital gains tax on the profits. When they 
perform services managing other people's money, like everybody else who 
performs services, should they not pay ordinary income tax as does the 
waitress, no money except a small amount of minimum wage, and not even 
that, perhaps, if there are no tips; and the author, if the books 
aren't sold, then they don't get anything.
  What is being proposed here, as I said earlier, is what has been 
suggested by economists, whether they are conservative, moderate, 
liberal, whatever you want to call them, and by various other sources. 
That there is a basic issue here. This legislation is an effort to 
address that basic issue and to pay for the tax extenders. In previous 
years, in so many cases, you have passed legislation without paying for 
it and the debt goes up and up.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. NEAL of Massachusetts. I yield the gentleman an additional 15 
seconds.
  Mr. LEVIN. What we are suggesting here is fiscal responsibility. 
Don't dig the hole deeper and deeper. Step up and pay for it, and pay 
for it by making the Tax Code equitable for all of the citizens of the 
United States of America.
  Mr. NEAL of Massachusetts. I would like to yield to the gentlewoman 
from the Virgin Islands (Mrs. Christensen) for the purpose of a 
unanimous consent request.
  Mrs. CHRISTENSEN. I thank the gentleman for yielding.
  Mr. Speaker, I rise in support of HR 4213, the Tax Extenders of 2009 
Act which contains the crucial extension of the rum cover-over program 
to the American Caribbean territories. The annual extension, which 
raises at least $20 million for the Virgin Islands for infrastructure 
development, is a vital component of our economic development 
strategies for continued growth and self sufficiency. In 1954, Congress 
extended the equalization cover-over provision to the Virgin Islands to 
foster greater fiscal autonomy and in 1983 and 2000, it enacted laws 
which vested the Legislature of the Virgin Islands with sole authority 
to determine how rum cover-over revenues should be utilized.
  Recently, that authority has been challenged by legislation that 
would tie the hands of our local territorial governments in regards to 
determining how best to utilize those funds. The government and people 
of the Virgin Islands commend the early foresight of the Congress and 
reserve the right to determine what is in the best interest of our 
community.
  Mr. Speaker, Congress designed the rum cover-over program to create 
economic stability for its territories in the Caribbean, to include the 
U.S. Virgin Islands and Puerto Rico. Over the years, each has benefited 
from this program and hopes to continue to do so in the future. If one 
territory believes that they no longer need or require this benefit, I 
am here today to tell you, that the people of the Virgin Islands are 
grateful for the continued opportunity to have this funding and to 
determine how best it can be utilized for their ultimate benefit.
  In the present global economic development environment, the U.S. 
Virgin Islands has moved to stabilize this industry on its shore, 
guaranteeing revenue and jobs for Americans, securing our retirement 
system and repairing schools while at the same time working to clean up 
environmental issues associated with the rum industry.
  The Congress support of today's rum revenue extenders and indeed the 
entire rum cover program is crucial to the economic future of the 
territories and today, I, along with the people of the U.S. Virgin 
Islands thank Chairman Rangel, the leadership of the House and my 
colleagues on both sides of the aisle for your continued support.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself 2 minutes.
  There is an opportunity here today to begin the discussion of 
fundamental tax reform. If we could move past the ideology that is so 
rigid, where we can only discuss cuts and never revenue or, on the 
other side, only revenue and never cuts, then we could move this debate 
and discussion forward.
  Now, the other side today, they are suggesting to the American 
people, we like the R&D tax credit. We like teachers. We like tuition 
assistance, and what we are saying on this side is we like all of those 
institutions as well, but we think they should be paid for. Sometimes 
you have to eat the broccoli before you have your dessert.
  Tax reform is an opportunity. I hope that the strategy that got us 
into this difficulty--remember the old argument here that tax cuts pay 
for themselves? You couldn't even get our friend who ran for President 
on the Republican ticket last year to have his top economic adviser say 
that was true. That's part of the problem here, being married to rigid 
ideology as opposed to common solutions that might make this work for 
the American people.
  I reserve the balance of my time.
  Mr. CAMP. At this time I yield 2 minutes to the distinguished member 
of the Ways and Means Committee, the gentleman from Texas (Mr. Brady).
  Mr. BRADY of Texas. Mr. Speaker, well, there is no question we all 
support extending the Republican State and local sales tax deduction 
put in place, restored by a Republican Congress.
  I am pleased to extend the teachers' classroom supply deduction, 
again, something created and fostered under a Republican Congress, the 
same with the renewable energy credits, much of which expanded under a 
Republican Congress. But make no mistake, this isn't about paying for 
these issues.

[[Page 30810]]

  This Congress, this White House is paying for nothing these days; 
$700 billion, $800 billion stimulus bill, not a dime paid for. All the 
new spending, TARP II, second part of the bailout, not a dime paid for.
  Two weeks ago they pass out this bill, a quarter of a trillion 
dollars out of this House, to help doctors with their Medicare 
reimbursements. Guess how much is paid for? Not a dime, zero. This new 
fiscal responsibility, while we appreciate it, you shouldn't achieve it 
by raising taxes and punishing our local real estate and construction 
people.
  I do take exception. We were told today, well, don't worry about it. 
It's only 10 percent of our local real estate and construction jobs, 
only 10 percent. Well, that's $4.5 trillion of local and real estate 
investment along Main Street America.
  Here, I guess they think we can just sacrifice one out of every 10 
local construction jobs. We will just sacrifice one out of every 10 
local real estate jobs. That's just collateral damage up here.
  It's real damage back home. Picking winners and losers, rewarding 
those, our teachers, our research workers, those who are sending their 
kids to college, and taking away jobs from Main Street America in real 
estate, construction from those who build our communities is a false 
choice.
  The gentleman from Michigan is correct: this is a false choice that 
damages our economy, that's dead on arrival in the Senate, as it should 
be. We ought to be working together finding a way to help people, not 
picking winners and damaging jobs in America today. No wonder we face 
10 percent unemployment.
  Mr. NEAL of Massachusetts. My friend from Texas conveniently left out 
TARP I, which was a Bush initiative; conveniently left out the cost of 
the Iraq war, which was borrowed money; and conveniently left out the 
Bush tax cuts, which cost $2.3 trillion that only went to people at the 
very top of the economic strata of America.
  I reserve the balance of my time.
  Mr. CAMP. To close, Mr. Speaker, the American people don't need to be 
reminded of the dire economic situation we face today. The American 
people know unemployment at 10 percent remains far too high. They know 
it's tough to make ends meet without having to pay higher taxes. They 
know higher taxes on investment, on business investment, won't create 
jobs. In fact, it will hurt job creation.
  The American people need not be reminded of those things, but 
apparently the majority does. Nearly 3 million Americans have lost 
their jobs since the Democrats enacted their so-called stimulus bill. 
Unemployment is 25 percent higher than the administration promised, and 
yet the bill before us proposes to add a new $24.6 billion tax on 
business investment.
  Now, frankly, I wish we could end this year-end process we go 
through, and I know the chairman of the Ways and Means Committee gave 
an interview yesterday where he suggested a way out of this year-end 
extenders process we find ourselves in. I look forward to working with 
the chairman to try to find a solution to this problem.
  The bottom line is the decision we are faced with today means we 
should be encouraging business investment, not discouraging it through 
higher taxes. I would just say to my friend that our motion to recommit 
would not repeal the international banking disclosure provisions.
  In fact, Republicans share the majority's concern about the illegal 
use of offshore accounts to evade U.S. taxes. Tax evasion is a Federal 
crime and individuals who break the law by illegally hiding their 
income in offshore accounts and any financial institutions that 
facilitate that tax evasion should be aggressively pursued and punished 
to the fullest extent of the law.
  If loopholes exist in law that allow tax cheats to illegally hide 
assets offshore, obviously Republicans stand ready to help close those 
loopholes in an appropriate way. As I said, our motion to recommit 
would retain the language in the majority's bill on that provision.
  Again, these extensions of tax relief, which in many cases are 
policies Republicans passed and voted for when we were in the majority, 
they are helpful, and they are important to do, but they are temporary. 
They last 1 year. In order to get that done, the majority would 
increase taxes on economic investment.
  Let's just be clear about this. It changes how business income has 
been taxed for decades, making it so that income that is currently 
taxed at a rate of 15 percent would be taxed at 35 percent, more than 
doubling that tax in an economic recession. It places one of the 
highest taxes on investment found anywhere in the world, and its reach 
and scope will increase taxes on everyone from the largest investors to 
the local real estate partnerships, again, permanent tax increases for 
1 year of tax relief. With that, I would urge my colleagues to oppose 
this legislation.
  I yield back the balance of my time.
  Mr. NEAL of Massachusetts. Mr. Speaker, at this time I would like to 
yield the balance of my time to the chairman of the Ways and Means 
Committee, my friend, the gentleman from New York (Mr. Rangel).

                              {time}  1430

  Mr. RANGEL. Mr. Speaker, I thank Chairman Neal for the fantastic job 
he has done, along with my good friend Mr. Levin, for presenting the 
position of the Ways and Means Committee, which, Republican or 
Democrat, we are so proud to be a part of.
  We have produced for this Congress $30 billion of benefits to the 
American people. Some may be critical because it's only for 1 year, but 
I think we have made it abundantly clear that because we are on the 
brink of reform of the entire system, as Mr. Levin said, we've got to 
study this to evaluate how we can better serve our teachers, our State 
and local governments in order to make certain that the things that 
everybody here is in support of can be made permanent so that they can 
plan and understand exactly where this Congress is coming from for the 
people of the United States.
  It's interesting to note that the opposition to this bill, nobody has 
criticized any of the benefits that are in this extender bill. Let me 
say this again. This is a very, very unique thing that would happen in 
the Halls of Congress. The bill that we are presenting and asking for 
an affirmative vote, H.R. 4213, there is no criticism of any provisions 
of the benefits that are in this legislation. I'm going to rest for a 
moment and let that sink in.
  The opposition to this bill, it appears to me from listening to the 
responses from my Republican friends, is that their problem is that we 
don't want to increase the deficit. Their problem is they just don't 
like the way we are indeed closing the loopholes. When we say, We're 
closing loopholes, they say, You are raising taxes. You bet your life 
we are. We are getting the resources that America deserves by fairness 
and equities in the tax system. There's no way to clean up the tax 
system without making those who should be paying taxes to pay it.
  So if indeed you have some criticism of the loopholes that we're 
closing, let's take a look at the loopholes. That sounds fair, because 
my friends have not been talking about the benefits in these bills. My 
friends on the other side are talking about taxes. If you want to make 
this a case of forgetting all of these good people that deserve and 
relied on the extension and make this a tax reform argument--which I 
really think should be at another time and another place. I really 
think that tax reform really deserves the study, the research, and the 
debate so at the end of the day we don't have a Democratic tax bill. 
This country deserves a bipartisan tax bill, because there's going to 
be pain in it; because every time we try to bring equity into it, if 
the other side is to say I don't have any tax reform, but you're 
raising taxes by cutting away a lot of benefits that we say people 
don't deserve, and you say that we're increasing taxes.
  Well, let's talk about it. A part of this good bill is being funded 
so that we don't have a deficit by making certain that, during this 
time of war, American taxpayers don't avoid their

[[Page 30811]]

fair share of taxes and they get together in an unpatriotic way and 
pick foreign countries to determine how they can avoid American taxes 
and pick foreign countries to invest in and put foreign countries that 
really are not concerned with our need for jobs and equity but they're 
concerned with greed for their stockholders and corporations. Did one 
Republican get up and say this is a good thing? And I would yield to 
anyone on the other side who wants to say it is not a good thing to go 
after these people who are taking advantage of our law.
  So we can't reform it all at one time, but we can knock out these 
things where people are taking unfair advantage of our Tax Code.
  The other issue, which made me think in listening to the response to 
this extender bill where hardly anyone talked about the benefits, 
seemed to be centered around some tax provision that is commonly 
referred to as carried interest. It seems as though the minority is 
saying that there's a certain group of people that do work and they're 
entitled to get compensation for their work.
  For those who think this is a complicated issue, it is not. It means 
that we really think as a body that those people who take outstanding 
risk, who are not employees but are adventurous, creative people, that 
they be given 15 percent, a lower tax rate than 35 percent. And we're 
saying that those people who put capital in, who work in order to 
develop jobs in whatever they want to develop, if their money is in, 
they should get a 15 percent tax cut because they took risks. Anybody 
who doesn't put money in here that becomes a partnership and acts like 
they're taking risk should not be able to enjoy this benefit.
  So I do hope that you consider the weight of the debate and then vote 
accordingly.
  Mr. HIMES. Mr. Speaker, I rise to express my serious concern 
regarding the revenue provisions of H.R. 4213, The Tax Extenders Act of 
2009, specifically the provision affecting the treatment of ``carried 
interest'' in our tax code. I believe this provision, as currently 
worded, does not represent an optimal solution to the underlying 
challenge of fairly and appropriately taxing investment management 
professionals.
  My concerns are tempered by my enthusiastic support for many of the 
provisions in the bill as a whole, which would provide individuals and 
businesses with approximately $31 billion in tax relief in 2009. As 
families and businesses in my district struggle to make ends meet, 
these provisions will provide swift and cost-effective support to 
research and development, to alternative fuels, and to the ability of 
U.S. companies to serve customers in foreign markets.
  My concerns with the legislation rest with the changes it would make 
to the tax treatment of ``carried interest'' on investment managers.
  Current law treats carried interest the same as all other profits 
derived from a partnership and thus characterizes carried interest as 
being derived from an interest in the partnership's capital. In a 
broad-brush fashion, the legislation would transform these capital 
gains into ordinary income for tax purposes, a change that would 
increase taxes on carried interest income from the current 15 percent 
capital gains rate to as much as 35 percent beginning next year. It 
should be noted that this date is a good deal more aggressive than a 
similar provision in President Obama's budget, which in the interest of 
economic recovery would start taxing carried interest as regular income 
only in 2011.
  While I respect the view that in some cases carried interest 
represents a form of compensation for services provided by the general 
partner, this distinction is far from clear in every case. 
Professionals in this industry should be taxed fairly and 
appropriately, but I disagree that the only way to achieve this goal is 
to apply one of two pre-existing categories to their services.
  Industry analysts generally base their characterization of carried 
interest upon the degree to which a general partner's own assets are at 
risk and differences in the profit interest of the general and limited 
partners. Many observers, such as Professor Victor Fleischer of the 
University of Colorado School of Law, argue with sound legal 
justification that these professionals should be taxed somewhere 
between that of pure capital and pure ordinary income.
  Given the widespread reliance of partnerships on these rules, I 
believe we in Congress must be more cautious in enacting such a 
significant change in the rules at this juncture. Such a reformulation 
at the least deserves a greater hearing of views in a full and 
deliberate committee process.
  Our venture capitalists risk significant quantities of time, money, 
and effort to assist the most compelling business models to improve the 
way that Americans live and work. Before we enact changes to our tax 
system which could threaten existing incentives to innovation and 
investment, I believe such changes deserve the fullest possible 
consideration to arrive at the most practical and fair solution.
  I am hopeful that the underlying legislation will undergo revisions 
to its revenue-raising provisions which enable me to support it. Given 
the concerns voiced above, however, I regret that I am unable to cast 
my vote in support of the bill as it stands.
  Mr. GENE GREEN of Texas. Mr. Speaker, I rise today to show my support 
for H.R. 4213, the Tax Extenders Package that includes several critical 
extensions important to Texas.
  The package will extend through 2010 the $1 per gallon credit for 
producing biodiesel and the $1 per gallon credit for producing diesel 
from biomass, which is especially important to my district as it is 
home to the struggling biodiesel industry.
  Texas is the leading producer of biodiesel in the nation. The 
industry supported up to 8,600 jobs in the State and over 50,000 jobs 
in the U.S. in the past year. It is both fiscally and environmentally 
responsible to extend these tax credits and to promote the development 
of biodiesel here at home.
  The biodiesel excise tax credit enables biodiesel to remain price 
competitive with conventional diesel. Without the prompt extension of 
the tax credits before they expire on December 31, 2009, we risk 
reducing the domestic production of low carbon, renewable energy 
sources that help our nation to significantly reduce carbon emissions, 
as well as our dependence on foreign oil.
  The biodiesel industry has already been forced to close several 
plants and is operating at about 20 percent capacity due in large part 
to the weak economy. A retroactive extension of the credit after 
December 31, 2009 could further exacerbate the industry's job losses, 
and place this important industry in a precarious position.
  I appreciate the bipartisan support of the following Texas members 
who recently joined me in sending a letter to House Leadership 
supporting the biodiesel tax extension: Al Green, Chet Edwards, 
Silvestre Reyes, Solomon Ortiz, Ruben Hinojosa, Henry Cuellar, Ciro 
Rodriguez, Charlie Gonzalez, and Joe Barton. This support exemplifies 
the importance of protecting the biodiesel industry for the nation and 
for Texans.
  It is imperative that we move forward expeditiously to extend the 
biodiesel and renewable diesel excise tax credits to protect American 
jobs and to help our nation move towards a clean energy future.
  Mr. SKELTON. Mr. Speaker, today the House of Representatives is 
considering H.R. 4213, the Tax Extenders Act of 2009. I wish to express 
my support for this legislation, which would continue a number of 
expiring provisions of the U.S. tax code that are important to the 
people and businesses I am privileged to represent in rural Missouri. 
Without Congressional action, these tax cuts will expire on December 
31st.
  For Missouri families, H.R. 4213 would provide important tax relief. 
The measure would extend deductions for state and local sales and 
property taxes and for college tuition. It would extend a special 
deduction for teachers and other school professionals who use personal 
funds to buy school supplies for their classrooms. And, the legislation 
would take steps to ensure activated military reservists do not suffer 
a pay reduction by providing a tax credit for small businesses that 
continue to pay National Guard and Reserve employees when they are 
called to active duty.
  For Missouri farmers, H.R. 4213 would extend the five-year 
depreciation for farming machinery and equipment, would extend the 
charitable tax deduction for donated food, and would extend the tax 
deduction for donating conservation easements. H.R. 4213 would also 
extend critical tax incentives for biodiesel and renewable diesel fuel. 
The biodiesel tax credit is very important to the development and 
sustainability of America's renewable fuel industry and is particularly 
beneficial to biodiesel facilities, like Prairie Pride, located in 
Missouri's Fourth Congressional District.
  For Missouri businesses, H.R. 4213 would extend the research and 
development (R&D) tax credit that encourages financial investment and 
job creation in America's high tech sector. The legislation would also 
strengthen the ability of American companies to serve customers 
overseas, would extend benefits for investments in economically 
distressed areas of our

[[Page 30812]]

country, and would extend the 15-year cost recovery for qualified 
improvements to restaurants and retail space. H.R. 4213 would also 
extend a low-income housing tax credit exchange program that has 
invested more than $3.7 billion in the construction of over 49,000 low-
income housing units.
  H.R. 4213 would extend other valuable provisions of the U.S. tax 
code, including deductions for charitable contributions by individuals 
and businesses. And, to ensure the legislation does not add to the 
deficit, the $31 billion cost of this legislation is offset by cracking 
down on tax evaders who hide their assets in offshore tax havens and 
ending special tax treatment for hedge fund and investment bank 
managers.
  I urge my colleagues to support H.R. 4213 so that we can provide tax 
relief and economic certainty to families and businesses in 2010.
  Mr. VAN HOLLEN. Mr. Speaker, I rise in strong support of the Tax 
Extenders Act of 2009. This legislation will provide businesses and 
individuals with $31 billion in tax relief over the next year to 
continue creating jobs and strengthening our economy. It is on time, 
fully paid for and deserves this chamber's support.
  The R&D Tax Credit extension in this bill will enhance the 
competitiveness of nearly 11,000 corporations driving innovation in the 
global marketplace. The above-the-line deductions for school supplies 
and qualified tuition expenses will continue to support our teachers 
and students' education. The IRA Charitable Rollover and Conservation 
Easement provisions maintain important incentives for critical work in 
our non-profit sector. And the clean energy credits move us towards the 
energy independence, reliability and efficiency we know we must embrace 
in the 21st century.
  This is an important bill, strongly supported by the Obama 
Administration. For that reason, I urge our colleagues in the Senate to 
act expeditiously on H.R. 4213 so that the President can sign extenders 
legislation into law this year. I yield back the balance of my time.
  Mr. KIND. Mr. Speaker, I rise today in strong support of H.R. 4213, 
the Tax Extenders Act of 2009. This bill extends several badly needed 
tax provisions that will continue to provide economic benefits to 
struggling families and businesses. While these temporary, last-minute 
patches are not the preferred means of action for anyone, this action 
is better than none, and I urge my colleagues to support it.
  Passage of this bill will ensure that individuals already facing the 
worst economic situation in decades will retain the ability to deduct 
state and local taxes, preventing a $3.3 billion tax increase. It also 
extends the deduction that students receive for tuition payments and 
the credit teachers receive for stocking their classrooms out of their 
own pocket. both are essential for making a quality education 
accessible to all.
  For businesses, this bill will extend the invaluable R&D tax credit 
so they can continue to invest in the innovation that will keep America 
competitive in the industries of today and tomorrow. I have long 
advocated making this credit permanent so companies can make it a 
permanent part of their business plans. I hope we will do that as part 
of overall tax reform starting next year.
  Other provisions important to my district in Western Wisconsin 
include the Conservation Easement Credit, which gives individuals an 
incentive to protect environmentally important land in perpetuity, and 
the extension of a 5-year depreciation period for farm and agricultural 
equipment. This extended period has been highly successful in spurring 
capital improvements on the farm and improving farm output and 
efficiency.
  Finally, I am particularly pleased that this bill extends a provision 
I authored last year that provides tax relief to families and 
businesses who are impacted by natural disasters. Following devastating 
floods in my district in 2007 and 2008, it became clear to me that more 
tools were needed to assist individuals and businesses to recover. The 
tax relief provided here offers a more systematic and fair method than 
the previous system of ad hoc assistance on a case-by-case basis. I 
thank Chairman Rangel and the rest of the committee for including it in 
the extenders package today.
  Mr. Speaker, I would like to note that all of these benefits are 
completely paid for, meaning this bill will not add one dime to the 
deficit. In fact, one of the ways we pay for this bill is by cracking 
down on foreign bank accounts, where millionaires have been hiding 
their fortunes from the IRS for years. This type of enforcement has 
been sorely lacking. It is unfortunate, however, that the bulk of 
revenue for this bill will come from higher taxation of venture capital 
funds that have been leaders in spurring job growth and innovation. I 
sincerely wish we had been able to find an alternative revenue source 
that would not raise taxes on these entrepreneurs at the exact time 
when we need them the most. Twice before the Senate has rejected this 
pay-for, and I hope they will do so again.
  On balance, Mr. Speaker, this is a critically important piece of 
legislation before us that will prevent disastrous consequences in this 
fragile economic environment. I ask my colleagues to join me in 
supporting its passage today.
  Mr. LANGEVIN. Mr. Speaker, I rise in support of H.R. 4213, the Tax 
Extenders Act of 2009. This bill provides $31 billion in tax relief to 
individuals, families, businesses and charitable organizations by 
extending over forty tax provisions that are set to expire at the end 
of 2009. These tax breaks are an important component to rebuilding the 
financial and economic strength of Rhode Islanders struggling in the 
wake of the worst recession in decades.
  H.R. 4213 contains more than $5 billion in individual tax relief and 
more than $17 billion in tax cuts for American businesses. To 
strengthen pocketbooks of families and inject demand into the economy, 
this measure extends property tax relief for up to 30 million 
homeowners. It helps 4.5 million families better afford college with 
tuition deductions and saves 3.4 million teachers money with a 
deduction for classroom expenses. This measure further extends the 
research and development tax credit for thousands of American 
corporations, encouraging businesses to increase investments in 
technology and create more high-tech jobs for the twenty-first century.
  Also included in this package is more than $7 billion in tax 
provisions that encourage charitable contributions, provide community 
development incentives, and support alternative energy investments.
  In tough economic times, it is important to enact tax policies that 
spur job creation and foster economic growth, innovation and 
opportunity. The annual extension of these tax cuts is an important 
step toward achieving that goal, and I look forward to working with my 
colleagues on more permanent solutions to simplify the Internal Revenue 
Code and ease the tax burden on millions of Americans.
  Mr. LARSON of Connecticut. Mr. Speaker, I rise in support of H.R. 
4213, the Tax Extenders Act of 2009, and applaud the leadership of 
Chairman Rangel and the Ways and Means Committee in crafting this bill. 
I commend the Chairman for the inclusion of the alternative fuel tax 
credit, which incentivizes individuals and businesses to purchase 
energy for vehicles that run on clean energy sources. This continues 
Congress' commitment to reduce our dependence on foreign oil. As long 
as we are exporting our dollars overseas in exchange for oil, our 
economic and national security are at risk.
  Natural gas is an abundant transition energy that is twice as clean 
as coal. While 69% of the oil consumed in America is for transportation 
(two-thirds of which we import from foreign nations), 98% of the 
natural gas we consume is produced in North America.
  The more than 100 years of natural gas reserves in the U.S. will 
provide thousands of domestic jobs that cannot be outsourced and will 
help keep taxpayer dollars in the U.S. Approximately 1.3 million 
Americans are directly employed by natural gas companies, and the 
entire U.S. natural gas industry supports nearly three million U.S. 
jobs, with the potential to add many more.
  Natural gas will play an increasing role in reducing U.S. carbon 
emissions, creating jobs, and enhancing U.S. security. I thank Chairman 
Rangel for extending the alternative fuel tax credit and for 
recognizing the importance of natural gas.
  Mr. HOLT. Mr. Speaker, I rise today in support of legislation that 
will extend tax relief to millions of Americans, the Tax Extenders Act 
of 2009. This bill will extend 40 tax cuts which are due to expire at 
the end of this year, many of which are important to businesses and 
families in Central New Jersey.
  New Jersey has the highest property taxes in the country. While 
property taxes are assessed on a local basis to fund local services and 
schools, I have attempted at the federal level to provide some relief 
to homeowners. Earlier this year, I reintroduced the Universal 
Homeowner Tax Relief Act (H.R. 2725) which would extend the property 
tax deduction for American homeowners who don't itemize on their 
federal returns. I helped write this initiative to create an additional 
standard deduction of $500 for single filers and $1,000 for joint 
filers for local real property taxes paid. I am pleased that the bill 
before us today extends this deduction for the 2010 tax year and 
provides needed relief to the 30 million homeowners nationwide and an 
estimated 600,000 New Jerseyans who are due to lose this benefit this 
year.
  H.R. 4213 also includes $17 billion in tax cuts that would help 
American businesses create and preserve jobs during these difficult

[[Page 30813]]

economic times. It would extend the low-income housing tax credit 
exchange program which has invested more than $3.7 billion in the 
construction of more than 49,000 low-income housing units nationwide. 
It will also invest $3 billion to encourage economic development in 
economically distressed communities.
  I especially support that H.R. 4213 would extend the research and 
development tax credit for an additional year. This tax credit is 
crucial in spurring private research and driving technological 
innovation and will support R&D at 11,000 American companies this year. 
This credit stimulates American made innovation and preserves and 
creates new high paying jobs in research and development. As important 
as the R&D tax credit has been, it has never been a permanent part of 
the tax code and has been allowed to expire several times, most notably 
in 2007. Congress should work to make this tax credit permanent in 
order strengthen the incentive for businesses to invest in long-term 
research by giving corporate leaders certainty that their research 
investments will be rewarded year after year.
  The Tax Extenders Act of 2009 also would extend the above-the-line 
deduction for qualified tuition and related expenses. This tax cut of 
up to $4,000 helps parents offset the rising cost of higher education 
and keeps a college degree within reach of many middle class families. 
H.R. 4213 also would extend the teacher tax credit that allows teachers 
to deduct up to $250 for purchasing classroom supplies for their 
students. More than 3.4 million teachers benefited from this tax credit 
this year.
  The Tax Extenders Act ensures that these tax cuts do not increase the 
deficit by providing the U.S. Treasury Department with significant new 
tools to find and prosecute U.S. individuals that hide assets overseas 
from the Internal Revenue Service.
  I am always looking to extend tax relief to New Jersey families. This 
bill does that in a fiscally responsible way.
  The SPEAKER pro tempore. All time for debate has expired.
  Pursuant to House Resolution 955, the previous question is ordered on 
the bill.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


                           Motion to Recommit

  Mr. CAMP. Mr. Speaker, I have a motion to recommit at the desk.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. CAMP. I am, in its present form.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:
       Mr. Camp moves to recommit the bill H.R. 4213 to the 
     Committee on Ways and Means with instructions to report the 
     same back to the House forthwith with the following 
     amendments:
       In subtitle A of title I, add at the end the following:

     SEC. 105. ALTERNATIVE MINIMUM TAX RELIEF.

       (a) Increased Exemption Amount.--Paragraph (1) of section 
     55(d) is amended--
       (1) by striking ``($70,950 in the case of taxable years 
     beginning in 2009)'' in subparagraph (A) and inserting 
     ``($72,650 in the case of taxable years beginning in 2010)'', 
     and
       (2) by striking ``($46,700 in the case of taxable years 
     beginning in 2009)'' in subparagraph (B) and inserting 
     ``($47,550 in the case of taxable years beginning in 2010)''.
       (b) Allowance of Nonrefundable Personal Credits Against 
     Alternative Minimum Tax.--Paragraph (2) of section 26(a) is 
     amended--
       (1) by striking ``or 2009'' and inserting ``2009, or 
     2010'', and
       (2) by striking ``2009'' in the heading thereof and 
     inserting ``2010''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.
       In subtitle B of title I, add at the end the following:

     SEC. 127. INCREASED LIMITATIONS ON EXPENSING OF CERTAIN 
                   DEPRECIABLE BUSINESS ASSETS.

       (a) In General.--Paragraph (7) of section 179(b) is 
     amended--
       (1) by striking ``or 2009'' in the text thereof and 
     inserting ``2009, or 2010'', and
       (2) by striking ``and 2009'' in the heading thereof and 
     inserting ``2009, and 2010''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.
       In title VI, strike subtitles A and B.

  Mr. CAMP (during the reading). Mr. Speaker, I ask unanimous consent 
to dispense with the reading.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Michigan?
  There was no objection.


                             Point of Order

  Mr. NEAL of Massachusetts. Mr. Speaker, I make a point of order that 
the motion before us is in violation of clause 10 of rule XXI of the 
rules of the House.
  The SPEAKER pro tempore. Does any Member wish to be heard on the 
point of order?
  Mr. CAMP. Mr. Speaker, I ask to be heard on the point of order.
  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
Michigan.
  Mr. CAMP. Mr. Speaker, this point of order illustrates the dangers 
raised by the majority's PAYGO rule and its decision at the start of 
this Congress to prohibit us from offering motions to recommit that are 
not PAYGO compliant, something that all minorities, Republican and 
Democrat, over the last many years have been permitted to do in prior 
sessions, including as recently as last year.
  The majority has asserted the motion to recommit violates clause 10 
of rule XXI, known as the PAYGO rule, which requires amendments, 
including those contained in a motion to recommit, to be budget 
neutral.
  I submit, Mr. Speaker, that his point of order should be overturned 
because it precludes the House from considering the merits of a 
different approach to the underlying bill, one that would let the 
American people keep more of their hard-earned income.
  By contrast, granting the PAYGO point of order would prevent the 
House from considering whether to extend this tax relief, as it has 
done many times before, without offsets. We should be encouraging 
business investment, not discouraging it through higher taxes.
  Let's be clear. This carried interest tax of over $25 billion changes 
how business income has been taxed for decades, making income currently 
taxed at 15 percent up to 30 percent, more than doubling it.
  Mr. Speaker, granting this point of order would foreclose the House 
from even considering whether it might want to pass this bill with 
fewer offsets or further tax relief.
  Accordingly, I ask that you overrule the point of order and allow the 
House to debate and vote on our alternative, which would provide 
additional tax relief for families and small businesses without some of 
the most objectionable offsets found in the underlying bill.
  The SPEAKER pro tempore. The gentleman from Massachusetts makes a 
point of order that the amendment proposed in the instructions included 
in the motion to recommit offered by the gentleman from Michigan 
violates clause 10 of rule XXI by proposing a change in revenues that 
would increase the deficit.
  Pursuant to clause 10 of rule XXI, the Chair is authoritatively 
guided by estimates from the Committee on the Budget that the net 
effect of the provisions in the amendment affecting revenues would 
increase the deficit for a relevant period.
  Accordingly, the point of order is sustained and the motion is not in 
order.
  Mr. CAMP. Mr. Speaker, I appeal the ruling of the Chair.
  The SPEAKER pro tempore. The question is, Shall the decision of the 
Chair stand as the judgment of the House?


                            Motion to Table

  Mr. NEAL of Massachusetts. Mr. Speaker, I move to table the motion to 
appeal the ruling of the Chair.
  The SPEAKER pro tempore. The question is on the motion to table.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. CAMP. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 and clause 9 of rule 
XX, this 15-minute vote on the motion to table will be followed by 5-
minute votes on passage of the bill, if arising without further 
proceedings in recommittal, and suspending the rules with regard to 
H.R. 3603.
  The vote was taken by electronic device, and there were--yeas 251, 
nays 172, not voting 11, as follows:

[[Page 30814]]



                             [Roll No. 942]

                               YEAS--251

     Abercrombie
     Ackerman
     Adler (NJ)
     Altmire
     Andrews
     Arcuri
     Baca
     Baird
     Barrow
     Bean
     Becerra
     Berkley
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boccieri
     Boren
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Braley (IA)
     Bright
     Brown, Corrine
     Butterfield
     Cao
     Capps
     Capuano
     Cardoza
     Carnahan
     Carney
     Carson (IN)
     Castor (FL)
     Chandler
     Childers
     Chu
     Clarke
     Clay
     Cleaver
     Clyburn
     Cohen
     Connolly (VA)
     Conyers
     Cooper
     Costa
     Costello
     Courtney
     Crowley
     Cuellar
     Cummings
     Dahlkemper
     Davis (AL)
     Davis (CA)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Dingell
     Doggett
     Donnelly (IN)
     Doyle
     Driehaus
     Edwards (MD)
     Edwards (TX)
     Ellison
     Ellsworth
     Engel
     Eshoo
     Etheridge
     Farr
     Fattah
     Filner
     Foster
     Frank (MA)
     Garamendi
     Giffords
     Gonzalez
     Gordon (TN)
     Grayson
     Green, Al
     Green, Gene
     Griffith
     Grijalva
     Gutierrez
     Hall (NY)
     Halvorson
     Hare
     Harman
     Hastings (FL)
     Heinrich
     Herseth Sandlin
     Higgins
     Hill
     Himes
     Hinchey
     Hinojosa
     Hirono
     Hodes
     Holden
     Holt
     Honda
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Johnson (GA)
     Johnson, E. B.
     Kagen
     Kanjorski
     Kaptur
     Kennedy
     Kildee
     Kilpatrick (MI)
     Kilroy
     Kind
     Kirkpatrick (AZ)
     Kissell
     Klein (FL)
     Kosmas
     Kratovil
     Kucinich
     Langevin
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Levin
     Lipinski
     Loebsack
     Lofgren, Zoe
     Lowey
     Lujan
     Lynch
     Maffei
     Maloney
     Markey (CO)
     Markey (MA)
     Marshall
     Massa
     Matheson
     Matsui
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McMahon
     McNerney
     Meek (FL)
     Meeks (NY)
     Melancon
     Michaud
     Miller (NC)
     Miller, George
     Minnick
     Mitchell
     Mollohan
     Moore (KS)
     Moore (WI)
     Murphy (CT)
     Murphy (NY)
     Murphy, Patrick
     Nadler (NY)
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor (AZ)
     Payne
     Perlmutter
     Perriello
     Peters
     Peterson
     Pingree (ME)
     Polis (CO)
     Pomeroy
     Price (NC)
     Quigley
     Rahall
     Rangel
     Reyes
     Richardson
     Rodriguez
     Ross
     Rothman (NJ)
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Salazar
     Sanchez, Linda T.
     Sarbanes
     Schakowsky
     Schauer
     Schiff
     Schrader
     Schwartz
     Scott (GA)
     Scott (VA)
     Serrano
     Sestak
     Shea-Porter
     Sherman
     Shuler
     Sires
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Space
     Speier
     Spratt
     Stark
     Stupak
     Sutton
     Tanner
     Taylor
     Teague
     Thompson (CA)
     Thompson (MS)
     Tierney
     Titus
     Tonko
     Towns
     Tsongas
     Van Hollen
     Velazquez
     Visclosky
     Walz
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Welch
     Wexler
     Wilson (OH)
     Woolsey
     Wu
     Yarmuth

                               NAYS--172

     Aderholt
     Akin
     Alexander
     Austria
     Bachmann
     Bachus
     Bartlett
     Barton (TX)
     Biggert
     Bilbray
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehner
     Bonner
     Bono Mack
     Boozman
     Boustany
     Brady (TX)
     Broun (GA)
     Brown (SC)
     Brown-Waite, Ginny
     Buchanan
     Burgess
     Burton (IN)
     Buyer
     Calvert
     Camp
     Campbell
     Cantor
     Capito
     Cassidy
     Castle
     Chaffetz
     Coble
     Coffman (CO)
     Cole
     Conaway
     Crenshaw
     Culberson
     Davis (KY)
     Deal (GA)
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Dreier
     Duncan
     Ehlers
     Emerson
     Fallin
     Flake
     Fleming
     Forbes
     Fortenberry
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gingrey (GA)
     Gohmert
     Goodlatte
     Graves
     Guthrie
     Hall (TX)
     Harper
     Hastings (WA)
     Heller
     Hensarling
     Herger
     Hoekstra
     Hunter
     Inglis
     Issa
     Jenkins
     Johnson (IL)
     Johnson, Sam
     Jones
     Jordan (OH)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline (MN)
     Lamborn
     Lance
     Latham
     Latta
     Lee (NY)
     Lewis (CA)
     Linder
     LoBiondo
     Lucas
     Luetkemeyer
     Lummis
     Lungren, Daniel E.
     Mack
     Manzullo
     Marchant
     McCarthy (CA)
     McCaul
     McClintock
     McCotter
     McHenry
     McKeon
     McMorris Rodgers
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moran (KS)
     Murphy, Tim
     Myrick
     Neugebauer
     Nunes
     Nye
     Olson
     Paul
     Paulsen
     Pence
     Petri
     Pitts
     Platts
     Poe (TX)
     Posey
     Price (GA)
     Putnam
     Rehberg
     Reichert
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Rooney
     Ros-Lehtinen
     Roskam
     Royce
     Ryan (WI)
     Scalise
     Schmidt
     Schock
     Sensenbrenner
     Sessions
     Shadegg
     Shimkus
     Shuster
     Simpson
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Souder
     Stearns
     Sullivan
     Terry
     Thompson (PA)
     Thornberry
     Tiahrt
     Tiberi
     Turner
     Upton
     Walden
     Wamp
     Westmoreland
     Whitfield
     Wilson (SC)
     Wittman
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--11

     Baldwin
     Barrett (SC)
     Carter
     Fudge
     Granger
     LaTourette
     Lewis (GA)
     Moran (VA)
     Murtha
     Radanovich
     Sanchez, Loretta

                              {time}  1508

  Messrs. DUNCAN, ROONEY and Mrs. MYRICK changed their vote from 
``yea'' to ``nay.''
  Messrs. GORDON of Tennessee and FILNER changed their vote from 
``nay'' to ``yea.''
  So the motion to table was agreed to.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. RANGEL. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 241, 
noes 181, not voting 12, as follows:

                             [Roll No. 943]

                               AYES--241

     Abercrombie
     Ackerman
     Adler (NJ)
     Altmire
     Andrews
     Arcuri
     Baca
     Baird
     Barrow
     Becerra
     Berkley
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boccieri
     Boren
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Braley (IA)
     Bright
     Brown, Corrine
     Butterfield
     Cao
     Capps
     Capuano
     Cardoza
     Carnahan
     Carney
     Carson (IN)
     Castor (FL)
     Chandler
     Childers
     Chu
     Clarke
     Clay
     Cleaver
     Clyburn
     Cohen
     Connolly (VA)
     Conyers
     Cooper
     Costa
     Costello
     Courtney
     Crowley
     Cuellar
     Cummings
     Dahlkemper
     Davis (AL)
     Davis (CA)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Dingell
     Doggett
     Donnelly (IN)
     Doyle
     Driehaus
     Edwards (MD)
     Edwards (TX)
     Ellison
     Ellsworth
     Engel
     Eshoo
     Etheridge
     Farr
     Fattah
     Filner
     Foster
     Frank (MA)
     Garamendi
     Giffords
     Gonzalez
     Gordon (TN)
     Grayson
     Green, Al
     Green, Gene
     Griffith
     Grijalva
     Gutierrez
     Hall (NY)
     Halvorson
     Hare
     Harman
     Hastings (FL)
     Heinrich
     Herseth Sandlin
     Higgins
     Hill
     Hinojosa
     Hirono
     Hodes
     Holden
     Holt
     Honda
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Johnson (GA)
     Johnson, E. B.
     Jones
     Kagen
     Kanjorski
     Kennedy
     Kildee
     Kilpatrick (MI)
     Kilroy
     Kind
     Kirkpatrick (AZ)
     Kissell
     Kosmas
     Kratovil
     Kucinich
     Langevin
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Levin
     Lipinski
     Loebsack
     Lofgren, Zoe
     Lowey
     Lujan
     Lynch
     Maloney
     Markey (CO)
     Markey (MA)
     Marshall
     Massa
     Matheson
     Matsui
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McMahon
     McNerney
     Meek (FL)
     Meeks (NY)
     Melancon
     Michaud
     Miller (NC)
     Miller, George
     Minnick
     Mollohan
     Moore (KS)
     Moore (WI)
     Murphy (CT)
     Murphy (NY)
     Murphy, Patrick
     Nadler (NY)
     Napolitano
     Neal (MA)
     Nye
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor (AZ)
     Payne
     Perlmutter
     Perriello
     Peters
     Peterson
     Pingree (ME)
     Pomeroy
     Price (NC)
     Quigley
     Rahall
     Rangel
     Reyes
     Richardson
     Rodriguez
     Ross
     Rothman (NJ)
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Salazar
     Sanchez, Linda T.
     Sarbanes
     Schakowsky
     Schauer
     Schiff
     Schwartz
     Scott (GA)
     Scott (VA)
     Serrano
     Sestak
     Shea-Porter
     Sherman
     Shuler
     Sires
     Skelton
     Slaughter
     Snyder
     Space
     Speier
     Spratt
     Stark
     Stupak
     Sutton
     Tanner
     Teague
     Thompson (CA)
     Thompson (MS)
     Tierney
     Titus
     Tonko
     Towns
     Tsongas
     Van Hollen
     Velazquez
     Visclosky
     Walz
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Welch
     Wilson (OH)
     Woolsey
     Wu
     Yarmuth

                               NOES--181

     Aderholt
     Akin
     Alexander
     Austria
     Bachmann
     Bachus
     Bartlett
     Barton (TX)
     Bean
     Biggert
     Bilbray
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehner
     Bonner
     Bono Mack
     Boozman
     Boustany
     Brady (TX)
     Broun (GA)
     Brown (SC)

[[Page 30815]]


     Brown-Waite, Ginny
     Buchanan
     Burgess
     Burton (IN)
     Buyer
     Calvert
     Camp
     Campbell
     Cantor
     Capito
     Cassidy
     Castle
     Chaffetz
     Coble
     Coffman (CO)
     Cole
     Conaway
     Crenshaw
     Culberson
     Davis (KY)
     Deal (GA)
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Dreier
     Duncan
     Ehlers
     Emerson
     Fallin
     Flake
     Fleming
     Forbes
     Fortenberry
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gingrey (GA)
     Gohmert
     Goodlatte
     Graves
     Guthrie
     Hall (TX)
     Harper
     Hastings (WA)
     Heller
     Hensarling
     Herger
     Himes
     Hoekstra
     Hunter
     Inglis
     Issa
     Jenkins
     Johnson (IL)
     Johnson, Sam
     Jordan (OH)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Klein (FL)
     Kline (MN)
     Lamborn
     Lance
     Latham
     LaTourette
     Latta
     Lee (NY)
     Lewis (CA)
     Linder
     LoBiondo
     Lucas
     Luetkemeyer
     Lummis
     Lungren, Daniel E.
     Mack
     Maffei
     Manzullo
     Marchant
     McCarthy (CA)
     McCaul
     McClintock
     McCotter
     McHenry
     McKeon
     McMorris Rodgers
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Mitchell
     Moran (KS)
     Murphy, Tim
     Myrick
     Neugebauer
     Nunes
     Olson
     Paul
     Paulsen
     Pence
     Petri
     Pitts
     Platts
     Poe (TX)
     Polis (CO)
     Posey
     Price (GA)
     Putnam
     Rehberg
     Reichert
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Rooney
     Ros-Lehtinen
     Roskam
     Royce
     Ryan (WI)
     Scalise
     Schmidt
     Schock
     Schrader
     Sensenbrenner
     Sessions
     Shadegg
     Shimkus
     Shuster
     Simpson
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Souder
     Stearns
     Sullivan
     Taylor
     Terry
     Thompson (PA)
     Thornberry
     Tiahrt
     Tiberi
     Turner
     Upton
     Walden
     Wamp
     Westmoreland
     Wexler
     Whitfield
     Wilson (SC)
     Wittman
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--12

     Baldwin
     Barrett (SC)
     Carter
     Fudge
     Granger
     Hinchey
     Kaptur
     Lewis (GA)
     Moran (VA)
     Murtha
     Radanovich
     Sanchez, Loretta


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (during the vote). There are 2 minutes 
remaining in this vote.

                              {time}  1517

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________