[House Report 104-100]
[From the U.S. Government Publishing Office]
104th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 104-100
_______________________________________________________________________
PROVIDING FOR THE CONSIDERATION OF H.R. 1215, THE CONTRACT WITH AMERICA
TAX RELIEF ACT OF 1995
_______
April 4, 1995.--Referred to the House Calendar and ordered to be
printed
_______________________________________________________________________
Mr. Solomon, from the Committee on Rules, submitted the following
R E P O R T
[To accompany H. Res. 128]
The Committee on Rules, having had under consideration
House Resolution 128, by a record vote of 9 to 4, report the
same to the House with the recommendation that the resolution
be adopted.
Brief Summary and Explanation of Provisions of Resolution
The resolution provides for the consideration of H.R. 1215,
the ``Contract With America Tax Relief Act of 1995'' under a
modified closed rule.
The rule waives all points of order against the bill (see
next paragraph for an explanation of known waivers needed). The
rule provides four hours of general debate, with two-hours
allocated to the Ways and Means Committee, and one-hour each to
the Budget and Commerce committees. The rule makes in order the
text of H.R. 1327, as modified by the amendment printed in the
Committee report, as the base bill for amendment purposes. All
points of order against the amendment are waived. The rule
makes in order one amendment in the nature of a substitute by
Representative Gephardt of Missouri which is non-amendable but
subject to one hour of debate. All points of order are waived
against the Gephardt amendment. Finally, the rule provides one
motion to recommit, with or without instructions.
Two Budget Act points of order lie against the bill:
section 303(a) for revenue changes preempting the coming budget
resolution for fiscal year 1996; and section 311(a) for
breaching the five-year revenue floor. Those points of order
would also lie against the amendment in the nature of a
substitute made in order as base text as well as the Gephardt
substitute. In addition, both substitutes require a waiver of
clause 7 of rule XVI, germaneness, since they contain matters
from unrelated bills to offset the revenue losses; and the base
text and Gephardt substitutes require a waiver of clause 5(a)
of rule XXI, prohibiting appropriations in a legislative bill,
because of its disposition of the U.S. Uranium Enrichment
Corporation appropriations. Because all three vehicles may have
other vulnerabilities, the Committee waived all points of order
out of caution.
Explanation of Modification to H.R. 1327
The modification to H.R. 1327 (which is made base text for
amendment purposes by the rule) does two things:
First, it takes out a tax provision contained in the
Commerce Committee's title III relating to the Privatization of
the Uranium Enrichment Corporation. This is being done at the
request of Chairman Archer of the Ways and Means Committee,
with the agreement of the Commerce Committee. The tax provision
in question was not referred to or reported by his committee.
Second, the modification contains a revised version of the
Upton-Castle-Martini amendment tying the tax provisions to
deficit reduction and a balanced budget. The revised amendment
makes the effectiveness of the tax provisions contingent upon
the adoption of a fiscal 1996 budget resolution that will
project a balanced budget by the year 2002; and on a
confirmation in the reconciliation conference report that it
meets the required deficit reduction targets. Thereafter, the
amendment calls for annual monitoring of the deficit reduction
targets and congressional action if necessary to bring the
deficit back within the projected levels to achieve a balanced
budget by 2002.
Note.--No explanation or summary of the Gephardt amendment
in the nature of a substitute was provided at the time the
revised version was filed with the Committee at noon on
Tuesday, April 4th.
Committee Votes
Pursuant to clause 2(l)(B) of House rule XI the results of
each rollcall vote on an amendment or motion to report,
together with the names of those voting for and against, are
printed below. The amendment numbers by the names of Members
are the numbers assigned to amendments in the order they were
filed with the Rules Committee. A summary of each amendment
filed is included following the rollcall votes for reference
purposes:
rules committee rollcall no. 121
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Ms. Pryce.
Summary of Motion: Make in order amendment No. 24 by Rep.
Ganske.
Results: Rejected, 6 to 7.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Yea; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Yea; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
rules committee rollcall no. 122
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Moakley.
Summary of Motion: Allow a division of the question and a
separate vote on titles II and V (H.R. 1215), the senior
citizen equity provisions.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Yea; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
rules committee rollcall No. 123
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Frost.
Summary of Motion: Make in order amendment No. 1 by Rep.
Frost.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
rules committee rollcall No. 124
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Frost.
Summary of Motion: Make in order amendment No. 19 by Rep.
Browder.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
rules committee rollcall No. 125
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Frost.
Summary of Motion: Make in order amendment No. 36 by Rep.
Harman.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
Rules Committee Rollcall No. 126
Date: April 4, 1995.
Measure: Rule for consideration of H.R. 1215, Contract With
America Tax Relief Act.
Motion By: Mr. Moakley.
Summary of Motion: Make in order amendment No. 23 by Reps.
Kennedy and Burton.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
Rules Committee Rollcall No. 127
Date: April 4, 1995.
Measure: Rule for consideration of H.R. 1215, Contract With
America Tax Relief Act.
Motion By: Mr. Hall.
Summary of Motion: Make in order amendment No. 34 by Rep.
Wolf.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
Rules Committee Rollcall No. 128
Date: April 4, 1995.
Measure: Rule for consideration of H.R. 1215, Contract With
America Tax Relief Act.
Motion By: Mr. Hall.
Summary of Motion: Make in order amendment No. 22 by Rep.
Pryce.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
Rules Committee Rollcall No. 129
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Moakley.
Summary of Motion: Make in order amendment No. 25 by Rep.
Kleczka.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
Rules Committee Rollcall No. 130
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Hall.
Summary of Motion: Make in order amendment No. 8 by Rep.
Bunning.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
Rules Committee Rollcall No. 131
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Frost.
Summary of Motion: Make in order amendment No. 3 by Rep.
Kennelly.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
rules committee rollcall no. 132
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Frost.
Summary of Motion: Make in order amendment No. 30 by Rep.
Pomeroy.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
rules committee rollcall no. 133
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Beilenson.
Summary of Motion: Make in order amendment No. 21 by Rep.
Wyden.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
rules committee rollcall no. 134
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Beilenson.
Summary of Motion: Make in order amendment No. 41 by Rep.
Kleczka.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
rules committee rollcall no. 135
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Frost.
Summary of Motion: Make in order amendment No. 33 by Rep.
Evans.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
rules committee rollcall no. 136
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Beilenson.
Summary of Motion: Make in order amendments: No. 35 by Rep.
Stupak, No. 18 by Rep. Schiff, and No. 9 by Reps. Nadler and
Lowey.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
rules committee rollcall no. 137
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Beilenson.
Summary of Motion: Make in order amendments: No. 6 by Rep.
Traficant, No. 7 by Rep. Meehan, No. 16 and No. 17 by Rep.
Schiff, and No. 32 by Rep. Abercrombie.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
Rules Committee Rollcall No. 138
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Hall.
Summary of Motion: Make in order amendments: No. 4 by Rep.
Sanders, and No. 39 by Rep. Orton.
Results: Rejected, 4 to 9.
Vote by Member: Quillen--Nay; Dreier--Nay; Goss--Nay;
Linder--Nay; Pryce--Nay; Diaz-Balart--Nay; McInnis--Nay;
Waldholtz--Nay; Moakley--Yea; Beilenson--Yea; Frost--Yea;
Hall--Yea; Solomon--Nay.
Rules Committee Rollcall No. 139
Date: April 4, 1995.
Measure: Rule for the consideration of H.R. 1215, Contract
With America Tax Relief Act.
Motion By: Mr. Quillen.
Summary of Motion: Report rule favorably to the House.
Results: Adopted, 9 to 4.
Vote by Member: Quillen--Yea; Dreier--Yea; Goss--Yea;
Linder--Yea; Pryce--Yea; Diaz-Balart--Yea; McInnis--Yea;
Waldholtz--Yea; Moakley--Nay; Beilenson--Nay; Frost--Nay;
Hall--Nay; Solomon--Yea.
Amendments Submitted to the Rules Committee on H.R. 1215
April 3 (3:00 P.M.)
1. Frost (TX)--Prohibit the enactment of the tax provisions
until the OMB Director certifies that the federal budget has
been balanced for one fiscal year.
2. Bass (NH)--Delays effective date of H.R. 1215 until
which time Congress adopts a budget resolution which projects a
balanced federal budget by fiscal year 2002.
3. Kennelly--Increase the Social Security retirement test
for the blind from the current law $11,280 annually by $2,000 a
year through 1999 when it would be $19,280 and then all the way
to $30,000 in 2000.
4. Sanders--Amends IRA provisions of H.R. 1215: increases
levels of tax deductible IRA contributions, increases the
income thresholds that set eligibility for deductibility of IRA
contributions, authorizes additional IRA contributions for
nonworking spouses, allows penalty-free withdrawals for middle-
class taxpayers. Finances tax changes by establishment of a
minimum tax on the income of foreign-owned companies.
5. Traficant--Establishes a 10% domestic investment tax
credit for purchased goods comprised of parts and services of
which more than 50% are American-made.
6. Traficant--Reduces the capital gains tax to 10% with the
proceeds used to purchase public debt obligations. Proceeds of
the sale must be invested in government securities.
7. Meehan--Reduces the capital gains tax rate to 23.5
percent for productive assets held for 3 years or longer; to 19
percent for assets held 6 years or longer; indexes rates for
inflation.
8. Bunning--Amends the adoption tax credit to allow an
individual to carry forward the balance of the available $5,000
in tax credit and claim it against their tax liability in any
future taxable year.
9. Nadler/Lowey--Allows for the immediate repeal of the tax
on Social Security; pays for this by striking the provisions
eliminating the corporate minimum tax.
10. Nadler--Require that tax liability be indexed to
compensate for regional differences in the cost of living.
11. Porter--Delays implementation of the tax cuts until the
budget is in balance and the tax cut would not result in a
budget deficit.
12. Kolbe/Knollenberg--Creates a non-refundable 100% tax
credit for up to $100 per wage earner/per year for donations to
charities engaged in helping low-income Americans. Funds
resulting in loss in revenue by repealing the EITC expansion
enacted in OBRA '93.
13. Zeliff/Istook--Ties the implementation of tax cuts to
the ability of Congress to reach established spending cut
targets (which establish a glide path to a balanced budget by
2002). Tax cuts would remain in effect so long as Congress met
the established spending target each year.
14. Engel--Allows individuals to withdraw funding from an
American Dream Savings account to be used to start-up or expand
a business. Includes a limit on this withdrawal of $50,000.
15. Allard--Repeals section 1257 of the tax code which
requires the ordinary treatment of gain on the sale of
converted wetlands (land converted to farming) and highly
erodible cropland. Revenue loss offset by additional reductions
in the discretionary caps from 1996-2000.
16. Schiff--Eliminate the indexing for inflation, except
for capital gains.
17. Schiff--Places a maximum 6 month holding requirement
for all capital gains recognition.
18. Schiff--Scales back the elimination of the Alternative
Minimum Tax by proposing a reduction to 18% from its current
rate of 20%.
19. Browder--Establishes annual deficit targets. Tax cuts
would only be in effect for years where Congress met the
established annual deficit targets.
20. Kim--Establishes a clear, objective test under which an
individual can qualify for independent contractor status;
requires independent contractors to list 1099 income on their
tax returns; increases penalty on businesses for not issuing
1099's from $50 to $75 per offense and from $100 to $125 for
doing so intentionally.
21. Wyden/Morella/Regula/Kennedy (MA)--Attaches long term
care insurance standards to the tax incentives.
22. Pryce--Provides a tax credit equal to 50% of the
expense incurred by an employer to provide licensed, on-site or
site-adjacent dependent child care.
23. Kennedy (MA)/Burton--Enhances the adoption incentives
in H.R. 1215.
24. Ganske--Lowers the child tax credit ``cap'' from
$200,000 to $95,000 and shortens the phase out from $50,000 to
$25,000.
25. Kleczka--Requires that the use of federal offices for
regular lodging purposes by Members of Congress be treated as a
taxable employer benefit as in the private sector.
26. Doolittle--Eliminates the $200,000 income eligibility
ceiling on the child tax credit.
27. MacIntosh--Second degree amendment to any amendment
lowering the income limit for the $500 per-child tax credit.
Directs the savings from such an amendment to increase the
value of the marriage penalty tax credit from $145 to $310.
28. Salmon/Tate/Burr--Gives taxpayers the choice of taking
the $500 family tax credit, or having it reduce the public
debt.
29. Goodling--Lowers child tax credit limit from $200,000
to $95,000 (phasing out at $120,000).
30. Pomeroy--Amendment to raise the deduction of health
insurance premiums for self-employed individuals from 25- to
80-percent and allow employees who are ineligible to
participate in employer-subsidized health plans to deduct 80
percent of their health insurance premiums. This would be paid
for by lowering the income eligibility for the $500 child tax
credit from $200,000 to $55,000.
31. Foglietta--Establishes an independent commission,
similar to the Base Closure Commission, to develop
recommendations for reducing corporate and farm subsidies for
the purposes of deficit reduction.
32. Abercrombie--Modifies the one-time capital gains
exclusion for homeowners over 55 years of age by increasing the
excluded amount, increasing the minimum ownership period, and
increasing the minimum principal residence period.
33. Evans--Amendment to reduce corporate tax loopholes and
apply savings to deficit reduction.
34. Wolf--Strikes the sections that change the employee
contributions to the Civil Service Retirement System and
Federal Employee Retirement System.
35. Stupak--Strikes subtitle C which calls for a phaseout
of the alternative minimum tax for corporations.
36. Harman--Provides that savings cut from discretionary
spending be put in a ``lockbox'' for deficit reduction.
37. Gephardt--Democrat amendment in the nature of a
substitute entitled ``The School Act.'' It includes provisions
to: (a) let middle-income families deduct up to $10,000 in
educational expenses every year, (b) let students deduct
interest payments on their student loans, and (c) add Browder
amendment stating that no tax cut can become law unless there
is a plan to balance the budget and pay for the tax cuts. Cost
would be offset by lowering discretionary caps to a freeze at
1995 levels. Additional cuts may be necessary to fully offset
costs of proposal.
38. Hilliard--Amendment to declare the exclusion from gross
income interest on certain waterway facility bonds issued
before July 1, 1989 by the Marengo County Port Authority.
39. Orton--Expands the current IRA statute to allow
individuals to borrow or lend (to their children) money for a
first time home purchase of a primary residence.
40. Obey--Grants the President the authority to
unilaterally reduce the lowest income tax rate during a period
of low economic growth. Allows the President to regain the lost
revenue when the economy is growing again by placing a surtax
on higher income tax brackets.
41. Kleczka--Requires that in order to qualify as a long
term insurance contract, the contract must meet the relevant
standards established in the National Association of Insurance
Commissioners' Long Term Care Model Act and Regulations.
42. Hansen--Amends the provisions relating to federal
employees by making them only applicable to new employees
starting employment after December 31, 1995.
PART 1
The amendment in the nature of a substitute to be
considered as an original text pursuant to the rule consists of
the text of H.R. 1327 modified by the following amendment:
Page 25, strike lines 11 through 24; and
At the end of title VI of the bill insert the following new
subtitle:
Subtitle G--Tax Reduction Contingent on Deficit Reduction
SEC. 6701. TAX REDUCTION CONTINGENT ON DEFICIT REDUCTION.
Notwithstanding any other provision of this title and any
amendment made by this title, no provision of this title shall
take effect unless--
(1) the concurrent resolution on the budget for
fiscal year 1996, as agreed to, provides that the
budget of the United States will be in balance by
fiscal year 2002, and
(2) the conference report, as agreed to, on the
reconciliation bill for that resolution--
(A) achieves the aggregate amount of deficit
reduction to effectuate the reconciliation
instructions required for the years covered by
that resolution necessary to so balance the
budget, and
(B) contains a statement, based on estimates
made by the Director of the Congressional
Budget Office, that such conference report does
so comply.
SEC. 6702. MONITORING.
The Committees on the Budget of the House of
Representatives and the Senate shall each monitor progress on
achieving a balanced budget consistent with the most recently
agreed to concurrent resolution on the budget for fiscal year
1996 or any subsequent fiscal year (and the reconciliation Act
for that resolution) or the most recently agreed to concurrent
resolution on the budget that would achieve a balanced budget
by fiscal year 2002 (and the reconciliation Act for that
resolution). After consultation with the Director of the
Congressional Budget Office, each such committee shall submit a
report of its findings to its House and the President on or
before December 15, 1995, and annually thereafter. Each such
report shall contain the following:
(1) Estimates of the deficit levels (based on
legislation enacted through the date of the report) for
each fiscal year through fiscal year 2002.
(2) An analysis of the variance (if any) between
those estimated deficit levels and the levels set forth
in the concurrent resolution on the budget for fiscal
year 1996 or the most recently agreed to concurrent
resolution on the budget that would achieve a balanced
budget by fiscal year 2002.
(3) Policy options to achieve the additional levels
of deficit reduction necessary to balance the budget of
the United States by fiscal year 2002.
SEC. 6703. CONGRESSIONAL ACTION.
Each House of Congress shall incorporate the policy options
included in the report of its Committee on the Budget under
section 6702(a)(3) (or other policy options) in developing a
concurrent resolution on the budget for any fiscal year that
achieves the additional levels of deficit reduction necessary
to balance the budget of the United States by fiscal year 2002.
SEC. 6704. PRESIDENTIAL ACTION.
If the President submits a budget under section 1105(a) of
title 31, United States Code, that does not provide for a
balanced budget for the United States by fiscal year 2002, then
the President shall include with that submission a complete
budget that balances the budget by that fiscal year.
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PART 2
The amendment in the nature of a substitute to be offered
by Representative Gephardt of Missouri or his designee is as
follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE CONTENTS.
(a) Short Title.--This Act may be cited as the ``School Act of
1995''.
(b) Table of Contents.--
Sec. 1. Short title; table of contents.
TITLE I--INCENTIVES FOR INVESTMENT IN HIGHER EDUCATION
Sec. 101. Deduction for higher education expenses.
Sec. 102. Deduction for interest on loans for higher education.
Sec. 103. Expansion of education saving bond program.
Sec. 104. Deduction for IRA contributions available to all middle-
income taxpayers.
Sec. 105. Distributions from individual retirement plans may be used
without penalty to pay higher education expenses.
Sec. 106. Spousal IRA computed on basis of compensation of both
spouses.
TITLE II--NONDEDUCTIBLE TAX-FREE INDIVIDUAL RETIREMENT ACCOUNTS
Sec. 201. Establishment of nondeductible tax-free individual retirement
accounts.
TITLE III--TAX BENEFITS CONTINGENT ON FEDERAL BUDGET
Sec. 301. Effective dates of tax benefits delayed until Federal budget
projected to be in balance.
Sec. 302. Termination of tax benefits if Federal budget deficit
reduction targets are not met.
TITLE IV--REVISIONS TO DISCRETIONARY SPENDING LIMITS AND BUDGET PROCESS
Sec. 401. Short title.
Sec. 402. Discretionary spending limits.
Sec. 403. General statement and definitions.
Sec. 404. Enforcing discretionary spending limits.
Sec. 405. Enforcing pay-as-you-go.
Sec. 406. Reports and orders.
Sec. 407. Technical correction.
Sec. 408. Effective date.
Sec. 409. Savings from provisions of this title reducing discretionary
spending to be added to pay-as-you-go scorecard.
Sec. 410. Clarification of order in which adjustments to discretionary
spending limits are to be made.
TITLE V--PROVISIONS RELATING TO INTERNATIONAL TAXATION
Sec. 501. Revision of tax rules on expatriation.
Sec. 502. Improved information reporting on foreign trusts.
Sec. 503. Modification of rules relating to foreign trusts having one
or more United States beneficiaries.
Sec. 504. Foreign persons not to be treated as owners under grantor
trust rules.
Sec. 505. Gratuitous transfers by partnerships and foreign
corporations.
Sec. 506. Information reporting regarding large foreign gifts.
Sec. 507. Modification of rules relating to foreign trusts which are
not grantor trusts.
Sec. 508. Residence of estates and trusts.
TITLE VI--EXTENSION OF AUTHORITY OF FEDERAL COMMUNICATIONS COMMISSION
TO USE COMPETITIVE BIDDING
Sec. 601. Extension of authority.
TITLE VII--PRIVATIZATION OF THE UNITED STATES ENRICHMENT CORPORATION
Sec. 701. Short title and reference.
Sec. 702. Production facility.
Sec. 703. Definitions.
Sec. 704. Employees of the corporation.
Sec. 705. Marketing and contracting authority.
Sec. 706. Privatization of the corporation.
Sec. 707. Periodic certification of compliance.
Sec. 708. Licensing of other technologies.
Sec. 709. Conforming amendments.
TITLE I--INCENTIVES FOR INVESTMENT IN HIGHER EDUCATION
SEC. 101. DEDUCTION FOR HIGHER EDUCATION EXPENSES.
(a) Deduction Allowed.-- Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to additional itemized
deductions for individuals) is amended by redesignating section 220 as
section 221 and by inserting after section 219 the following new
section:
``SEC. 220. HIGHER EDUCATION TUITION AND FEES.
``(a) Allowance of Deduction.--In the case of an individual, there
shall be allowed as a deduction the amount of qualified higher
education expenses paid by the taxpayer during the taxable year.
``(b) Limitations.--
``(1) Dollar limitation.--
``(A) In general.--The amount allowed as a deduction
under subsection (a) for any taxable year shall not
exceed $10,000.
``(B) Phase-in.--In the case of taxable years
beginning in 1996, 1997, or 1998, `$5,000' shall be
substituted for `$10,000' in subparagraph (A).
``(2) Limitation based on modified adjusted gross income.--
``(A) In general.--The amount which would (but for
this paragraph) be taken into account under paragraph
(1) shall be reduced (but not below zero) by the amount
determined under subparagraph (B).
``(B) Amount of reduction.--The amount determined
under this subparagraph equals the amount which bears
the same ratio to the amount which would be so taken
into account as--
``(i) the excess of--
``(I) the taxpayer's modified
adjusted gross income for such taxable
year, over
``(II) $50,000 ($75,000 in the case
of a joint return), bears to
``(ii) $10,000.
``(C) Modified adjusted gross income.--The term
`modified adjusted gross income' means the adjusted
gross income of the taxpayer for the taxable year
determined--
``(i) without regard to this section and
sections 911, 931, and 933, and
``(ii) after the application of sections 86,
135, 219 and 469.
For purposes of sections 86, 135, 219, and 469,
adjusted gross income shall be determined without
regard to the deduction allowed under this section.
``(c) Qualified Higher Education Expenses.--For purposes of this
section--
``(1) Qualified higher education expenses.--
``(A) In general.--The term `qualified higher
education expenses' means tuition and fees charged by
an educational institution and required for the
enrollment or attendance of--
``(i) the taxpayer,
``(ii) the taxpayer's spouse, or
``(iii) any dependent of the taxpayer with
respect to whom the taxpayer is allowed a
deduction under section 151,
as an eligible student at an institution of higher
education.
``(B) Exception for education involving sports,
etc.--Such term does not include expenses with respect
to any course or other education involving sports,
games, or hobbies, unless such expenses--
``(i) are part of a degree program, or
``(ii) are deductible under this chapter
without regard to this section.
``(C) Exception for nonacademic fees.--Such term does
not include any student activity fees, athletic fees,
insurance expenses, or other expenses unrelated to a
student's academic course of instruction.
``(D) Eligible student.--For purposes of subparagraph
(A), the term `eligible student' means a student who--
``(i) meets the requirements of section
484(a)(1) of the Higher Education Act of 1965
(20 U.S.C. 1091(a)(1)), as in effect on the
date of the enactment of this section, and
``(ii)(I) is carrying at least one-half the
normal full-time work load for the course of
study the student is pursuing, as determined by
the institution of higher education, or
``(II) is enrolled in a course which enables
the student to improve the student's job skills
or to acquire new job skills.
``(E) Identification requirement.--No deduction shall
be allowed under subsection (a) to a taxpayer with
respect to an eligible student unless the taxpayer
includes the name, age, and taxpayer identification
number of such eligible student on the return of tax
for the taxable year.
``(2) Institution of higher education.--The term `institution
of higher education' means an institution which--
``(A) is described in section 481 of the Higher
Education Act of 1965 (20 U.S.C. 1088), as in effect on
the date of the enactment of this section, and
``(B) is eligible to participate in programs under
title IV of such Act.
``(d) Special Rules.--
``(1) No double benefit.--
``(A) In general.--No deduction shall be allowed
under subsection (a) for qualified higher education
expenses with respect to which a deduction is allowable
to the taxpayer under any other provision of this
chapter unless the taxpayer irrevocably waives his
right to the deduction of such expenses under such
other provision.
``(B) Dependents.--No deduction shall be allowed
under subsection (a) to any individual with respect to
whom a deduction under section 151 is allowable to
another taxpayer for a taxable year beginning in the
calendar year in which such individual's taxable year
begins.
``(C) Savings bond exclusion.--A deduction shall be
allowed under subsection (a) for qualified higher
education expenses only to the extent the amount of
such expenses exceeds the amount excludable under
section 135 for the taxable year.
``(2) Limitation on taxable year of deduction.--
``(A) In general.--A deduction shall be allowed under
subsection (a) for any taxable year only to the extent
the qualified higher education expenses are in
connection with enrollment at an institution of higher
education during the taxable year.
``(B) Certain prepayments allowed.--Subparagraph (A)
shall not apply to qualified higher education expenses
paid during a taxable year if such expenses are in
connection with an academic term beginning during such
taxable year or during the 1st 3 months of the next
taxable year.
``(3) Adjustment for certain scholarships and veterans
benefits.--The amount of qualified higher education expenses
otherwise taken into account under subsection (a) with respect
to the education of an individual shall be reduced (before the
application of subsection (b)) by the sum of the amounts
received with respect to such individual for the taxable year
as--
``(A) a qualified scholarship which under section 117
is not includable in gross income,
``(B) an educational assistance allowance under
chapter 30, 31, 32, 34, or 35 of title 38, United
States Code, or
``(C) a payment (other than a gift, bequest, devise,
or inheritance within the meaning of section 102(a))
for educational expenses, or attributable to enrollment
at an eligible educational institution, which is exempt
from income taxation by any law of the United States.
``(4) No deduction for married individuals filing separate
returns.--If the taxpayer is a married individual (within the
meaning of section 7703), this section shall apply only if the
taxpayer and the taxpayer's spouse file a joint return for the
taxable year. The preceeding sentence shall not apply if the
taxpayer lives apart from his spouse at all times during the
taxable year.
``(5) Nonresident aliens.--If the taxpayer is a nonresident
alien individual for any portion of the taxable year, this
section shall apply only if such individual is treated as a
resident alien of the United States for purposes of this
chapter by reason of an election under subsection (g) or (h) of
section 6013.
``(6) Regulations.--The Secretary may prescribe such
regulations as may be necessary or appropriate to carry out
this section, including regulations requiring recordkeeping and
information reporting.''
(b) Deduction Allowed in Computing Adjusted Gross Income.--Section
62(a) of such Code is amended by inserting after paragraph (15) the
following new paragraph:
``(16) Higher education tuition and fees.--The deduction
allowed by section 220.''
(c) Conforming Amendment.--The table of sections for part VII of
subchapter B of chapter 1 of such Code is amended by striking the item
relating to section 220 and inserting:
``Sec. 220. Higher education tuition and
fees.
``Sec. 221. Cross reference.''
(d) Effective Date.--The amendments made by this section shall apply
to payments made after December 31, 1995.
SEC. 102. DEDUCTION FOR INTEREST ON LOANS FOR HIGHER EDUCATION.
(a) In General.--Paragraph (2) of section 163(h) of the Internal
Revenue Code of 1986 (defining personal interest) is amended by
striking ``and'' at the end of subparagraph (D), by redesignating
subparagraph (E) as subparagraph (F), and by inserting after
subparagraph (D) the following new subparagraph:
``(E) any interest on a qualified higher education
loan, and''.
(b) Qualified Higher Education Loan Defined.--Paragraph (5) of
section 163(h) of such Code (relating to phase-in of limitations) is
amended to read as follows:
``(5) Qualified higher education loan.--For purposes of this
subsection--
``(A) In general.--The term `qualified higher
education loan' means any loan incurred by the taxpayer
under a State or Federal student loan program to pay
qualified higher education expenses (as defined in
section 220(c))--
``(i) which are paid or incurred within a
reasonable period of time before or after the
indebtedness is incurred, and
``(ii) which are attributable to education
furnished during a period during which the
recipient was an eligible student (as defined
in such section).
Such term includes indebtedness used to refinance
indebtedness which qualifies as a qualified higher
education loan.
``(B) Reduction of benefit for higher income
taxpayers.--
``(i) In general.--The amount of interest
which would (but for this subparagraph) be
taken into account under paragraph (2)(E) for
the taxable year shall be reduced (but not
below zero) by the amount which bears the same
ratio to the amount of such interest as--
``(I) the excess of the taxpayer's
modified adjusted gross income for such
taxable year over $50,000 ($75,000 in
the case of a joint return), bears to
``(II) $10,000.
``(ii) Modified adjusted gross income.--For
purposes of clause (i), the term `modified
adjusted gross income' means the adjusted gross
income of the taxpayer for the taxable year
determined--
``(I) without regard to paragraph
(2)(E) and sections 911, 931, and 933,
and
``(II) after the application of
sections 86, 135, 219, 220, and 469.
For purposes of sections 86, 135, 219, 220, and
469, adjusted gross income shall be determined
without regard to the deduction allowed by
reason of paragraph (2)(E).
``(C) Coordination with limitation on home equity
indebtedness.--Any qualified higher education loan
shall not be taken into account for purposes of
applying the limitation of paragraph (3)(C)(ii).
``(D) Coordination with savings bond exclusion.--The
amount of qualified higher education expenses for any
taxable year otherwise taken into account under
subparagraph (A) shall be reduced by any amount
excludable from gross income under section 135 for such
taxable year.
``(E) Other rules to apply.--Rules similar to the
rules of subparagraphs (B) and (C) of paragraph (1),
and paragraphs (3), (4), and (5), of section 220(d),
shall apply for purposes of this section.''
(c) Deduction Allowed in Computing Adjusted Gross Income.--Section
62(a) of such Code is amended by inserting after paragraph (16) the
following new paragraph:
``(17) Interest on loans for higher education.--The deduction
allowed by section 163 to the extent attributable to any
qualified higher education loan (as defined in section
163(h)(5)).''
(d) Effective Date.--The amendments made by this section shall apply
to amounts paid or accrued after December 31, 1995.
SEC. 103. EXPANSION OF EDUCATION SAVING BOND PROGRAM.
(a) Higher Yield on Guaranteed Education Plan Bonds.--Subsection (b)
of section 3101 of title 31, United States Code, is amended by adding
at the end the following new paragraph:
``(3)(A) The Secretary shall issue savings bonds which are
designated as Guaranteed Education Plan Bonds.
``(B)(i) Except as provided in clause (ii) or by the
Secretary, Guaranteed Education Plan Bonds shall have the same
terms and conditions as other savings bonds.
``(ii) Guaranteed Education Plan Bonds, if redeemed under
circumstances such that the Secretary is reasonably certain
that the redemption proceeds will be used to pay the qualified
higher education expenses (as defined in section 135 of the
Internal Revenue Code of 1986) of the individual holding the
bond, shall have an investment yield which is materially
greater than the investment yield when not so used.''
(b) Reduction of Age Limit on Individual To Whom Bond Issued.--
Subparagraph (B) of section 135(b)(1) is amended by striking ``age 24''
and inserting ``age 21''.
(c) Taxpayer Need Not Be Purchaser of Bond.--Nothing in section 135
of the Internal Revenue Code of 1986 shall be construed to require
that, in order for a savings bond to be a qualified United States
savings bond under such section, the purchaser of the bond must be the
individual to whom the bond is issued.
(d) Limitation on Inflation Adjustment.--Subparagraph (B) of section
135(b)(2) is amended by adding at the end the following new flush
sentence:
``In no event shall be adjustment under this
subparagraph increase the $40,000 amount to more than
$50,000 or the $60,000 amount to more than $70,000.''
(e) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to bonds issued
after the date of the enactment of this Act.
(2) Subsection (d).--The amendment made by subsection (d)
shall apply to taxable years beginning after December 31, 1995.
(e) Authorization of Appropriations.--There are authorized to be
appropriated for the administrative expenses of the Department of the
Treasury to carry out the amendment made by subsection (a)--
(1) $650,000 for the fiscal year beginning after the date of
the enactment of this Act, and
(2) $11,900,000 for each following fiscal year.
SEC. 104. DEDUCTION FOR IRA CONTRIBUTIONS AVAILABLE TO ALL MIDDLE-
INCOME TAXPAYERS.
(a) In General.--Subparagraph (B) of section 219(g)(3) of the
Internal Revenue Code of 1986 is amended--
(1) by striking ``$40,000'' in clause (i) and inserting
``$75,000'', and
(2) by striking ``$25,000'' in clause (ii) and inserting
``$50,000''.
(b) Effective Date.--The amendment made by subsection (a) shall apply
to contributions for taxable years beginning after December 31, 1995.
SEC. 105. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT PLANS MAY BE USED
WITHOUT PENALTY TO PAY HIGHER EDUCATION EXPENSES.
(a) In General.--Paragraph (2) of section 72(t) of the Internal
Revenue Code of 1986 (relating to exceptions to 10-percent additional
tax on early distributions from qualified retirement plans) is amended
by adding at the end thereof the following new subparagraph:
``(D) Distributions from individual retirement plans
for higher educational expenses.--Distributions to an
individual from an individual retirement plan to the
extent such distributions during the taxable year do
not exceed the amount allowed as a deduction under
section 220 to the taxpayer for such taxable year.''
(b) Effective Date.--The amendment made by subsection (a) shall apply
to distributions after December 31, 1995.
SEC. 106. SPOUSAL IRA COMPUTED ON BASIS OF COMPENSATION OF BOTH
SPOUSES.
(a) In General.--Subsection (c) of section 219 of the Internal
Revenue Code of 1986 (relating to special rules for certain married
individuals) is amended to read as follows:
``(c) Special Rules for Certain Married Individuals.--
``(1) In general.--In the case of an individual to whom this
paragraph applies for the taxable year, the limitation of
subsection (b)(1) shall be equal to the lesser of--
``(A) $2,000, or
``(B) the sum of--
``(i) the compensation includible in such
individual's gross income for the taxable year,
plus
``(ii) the compensation includible in the
gross income of such individual's spouse for
the taxable year reduced by the amount
allowable as a deduction under subsection (a)
to such spouse for such taxable year.
``(2) Individuals to whom paragraph (1) applies.--Paragraph
(1) shall apply to any individual if--
``(A) such individual files a joint return for the
taxable year, and
``(B) the amount of compensation (if any) includible
in such individual's gross income for the taxable year
is less than the compensation includible in the gross
income of such individual's spouse for the taxable
year.
``(3) Phasein of benefit.--The amount determined under
paragraph (1)(B)(ii) for any taxable year beginning in a
calendar year shall not exceed the sum of--
``(A) $250, plus
``(B) the product of $250 and the number of calendar
years which such calendar year is after 1996.''
(b) Technical Amendment.--Paragraph (2) of section 219(f) of such
Code (relating to other definitions and special rules) is amended by
striking ``subsections (b) and (c)'' and inserting ``subsection (b)''.
(c) Effective Date.--The amendments made by this section shall apply
to contributions for taxable years beginning after December 31, 1995.
TITLE II--NONDEDUCTIBLE TAX-FREE INDIVIDUAL RETIREMENT ACCOUNTS
SEC. 201. ESTABLISHMENT OF NONDEDUCTIBLE TAX-FREE INDIVIDUAL RETIREMENT
ACCOUNTS.
(a) In General.--Subpart A of part I of subchapter D of chapter 1 of
the Internal Revenue Code of 1986 (relating to pension, profit-sharing,
stock bonus plans, etc.) is amended by inserting after section 408 the
following new section:
``SEC. 408A. SPECIAL INDIVIDUAL RETIREMENT ACCOUNTS.
``(a) General Rule.--Except as provided in this chapter, a special
individual retirement account shall be treated for purposes of this
title in the same manner as an individual retirement plan.
``(b) Special Individual Retirement Account.--For purposes of this
title, the term `special individual retirement account' means an
individual retirement plan which is designated at the time of
establishment of the plan as a special individual retirement account.
``(c) Treatment of Contributions.--
``(1) No deduction allowed.--No deduction shall be allowed
under section 219 for a contribution to a special individual
retirement account.
``(2) Contribution limit.--The aggregate amount of
contributions for any taxable year to all special individual
retirement accounts maintained for the benefit of an individual
shall not exceed the excess (if any) of--
``(A) the maximum amount allowable as a deduction
under section 219 with respect to such individual for
such taxable year, over
``(B) the amount so allowed.
``(3) Special rules for qualified transfers.--
``(A) In general.--No rollover contribution may be
made to a special individual retirement account unless
it is a qualified transfer.
``(B) Limit not to apply.--The limitation under
paragraph (2) shall not apply to a qualified transfer
to a special individual retirement account.
``(d) Tax Treatment of Distributions.--
``(1) In general.--Except as provided in this subsection, any
amount paid or distributed out of a special individual
retirement account shall not be included in the gross income of
the distributee.
``(2) Exception for earnings on contributions held less than
5 years.--
``(A) In general.--Any amount distributed out of a
special individual retirement account which consists of
earnings allocable to contributions made to the account
during the 5-year period ending on the day before such
distribution shall be included in the gross income of
the distributee for the taxable year in which the
distribution occurs.
``(B) Ordering rule.--
``(i) First-in, first-out rule.--
Distributions from a special individual
retirement account shall be treated as having
been made--
``(I) first from the earliest
contribution (and earnings allocable
thereto) remaining in the account at
the time of the distribution, and
``(II) then from other contributions
(and earnings allocable thereto) in the
order in which made.
``(ii) Allocations between contributions and
earnings.--Any portion of a distribution
allocated to a contribution (and earnings
allocable thereto) shall be treated as
allocated first to the earnings and then to the
contribution.
``(iii) Allocation of earnings.--Earnings
shall be allocated to a contribution in such
manner as the Secretary may by regulations
prescribe.
``(iv) Contributions in same year.--Except as
provided in regulations, all contributions made
during the same taxable year may be treated as
1 contribution for purposes of this
subparagraph.
``(C) Cross reference.--
``For additional tax for early withdrawal, see
section 72(t).
``(3) Qualified transfer.--
``(A) In general.--Paragraph (2) shall not apply to
any distribution which is transferred in a qualified
transfer to another special individual retirement
account.
``(B) Contribution period.--For purposes of paragraph
(2), the special individual retirement account to which
any contributions are transferred shall be treated as
having held such contributions during any period such
contributions were held (or are treated as held under
this subparagraph) by the special individual retirement
account from which transferred.
``(4) Special rules relating to certain transfers.--
``(A) In general.--Notwithstanding any other
provision of law, in the case of a qualified transfer
to a special individual retirement account from an
individual retirement plan which is not a special
individual retirement account--
``(i) there shall be included in gross income
any amount which, but for the qualified
transfer, would be includible in gross income,
but
``(ii) section 72(t) shall not apply to such
amount.
``(B) Time for inclusion.--In the case of any
qualified transfer which occurs before January 1, 1997,
any amount includible in gross income under
subparagraph (A) with respect to such contribution
shall be includible ratably over the 4-taxable year
period beginning in the taxable year in which the
amount was paid or distributed out of the individual
retirement plan.
``(e) Qualified Transfer.--For purposes of this section--
``(1) In general.--The term `qualified transfer' means a
transfer to a special individual retirement account from
another such account or from an individual retirement plan but
only if such transfer meets the requirements of section
408(d)(3).
``(2) Limitation.--A transfer otherwise described in
paragraph (1) shall not be treated as a qualified transfer if
the taxpayer's adjusted gross income for the taxable year of
the transfer exceeds the sum of--
``(A) the applicable dollar amount, plus
``(B) the dollar amount applicable for the taxable
year under section 219(g)(2)(A)(ii).
This paragraph shall not apply to a transfer from a special
individual retirement account to another special individual
retirement account.
``(3) Definitions.--For purposes of this subsection, the
terms `adjusted gross income' and `applicable dollar amount'
have the meanings given such terms by section 219(g)(3), except
subparagraph (A)(ii) thereof shall be applied without regard to
the phrase `or the deduction allowable under this section'.''
(b) Early Withdrawal Penalty.--Section 72(t) of such Code is amended
by adding at the end the following new paragraph:
``(6) Rules relating to special individual retirement
accounts.--In the case of a special individual retirement
account under section 408A--
``(A) this subsection shall only apply to
distributions out of such account which consist of
earnings allocable to contributions made to the account
during the 5-year period ending on the day before such
distribution, and
``(B) paragraph (2)(A)(i) shall not apply to any
distribution described in subparagraph (A).''
(c) Excess Contributions.--Section 4973(b) of such Code is amended by
adding at the end the following new sentence: ``For purposes of
paragraphs (1)(B) and (2)(C), the amount allowable as a deduction under
section 219 shall be computed without regard to section 408A.''
(d) Conforming Amendment.--The table of sections for subpart A of
part I of subchapter D of chapter 1 of such Code is amended by
inserting after the item relating to section 408 the following new
item:
``Sec. 408A. Special individual
retirement accounts.''
(e) Effective Date.--The amendments made by this section shall apply
to taxable years beginning after December 31, 1995.
TITLE III--TAX BENEFITS CONTINGENT ON FEDERAL BUDGET
SEC. 301. EFFECTIVE DATES OF TAX BENEFITS DELAYED UNTIL FEDERAL BUDGET
PROJECTED TO BE IN BALANCE.
(a) In General.--Notwithstanding any provision of title I or II of
this Act and any amendment made by such titles, except as otherwise
provided in this section--
(1) any reference in this such titles (or in any amendment
made by such titles) to 1995 shall be treated as a reference to
the calendar year ending in the first successful deficit
reduction year, and
(2) any reference in such titles (or in any amendment made by
such titles) to any later calendar year shall be treated as a
reference to the calendar year which is the same number of
years after such first calendar year as such later year is
after 1995.
(b) First Successful Deficit Reduction Year.--For purposes of this
section and section 302--
(1) In general.--The term ``first successful deficit
reduction year'' means the first fiscal year beginning after
the date of the enactment of this Act with respect to which
there is an OMB certification before the beginning of such
fiscal year that the budget of the United States will be in
balance by fiscal year 2002 based upon estimates of enacted
legislation, including the amendments made by this Act.
(2) OMB certification.--The term ``OMB certification'' means
a written certification by the Director of the Office of
Management and Budget to the President and the Congress.
(c) Certification During 1995.--Subsection (a) shall not apply if
there is an OMB certification made during 1995 that the budget of the
United States will be in balance by fiscal year 2002 based upon
estimates of enacted legislation, including the amendments made by this
Act.
SEC. 302. TERMINATION OF TAX BENEFITS IF FEDERAL BUDGET DEFICIT
REDUCTION TARGETS ARE NOT MET.
(a) No Credits, Deductions, Exclusions, Preferential Rate of Tax,
Etc.--No tax benefit provided by any provision of the Internal Revenue
Code of 1986 added by title I or II of this Act shall apply to any
taxable year beginning after the calendar year in which the first
failed deficit reduction year ends.
(b) First Failed Deficit Reduction Year.--For purposes of this
section, the term ``first failed deficit reduction year'' means the
first fiscal year (beginning after the earliest date on which any
amendment made by title I or II takes effect) with respect to which
there is an OMB certification during the 3-month period after the close
of such fiscal year that the actual deficit in the budget of the United
States for such fiscal year was greater than the deficit target for
such fiscal year specified in the following table:
The deficit target
``In the case of fiscal year: (in billions) is:
1996......................................................... $150
1997......................................................... 125
1998......................................................... 100
1999......................................................... 75
2000......................................................... 50
2001......................................................... 25
2002 or thereafter........................................... 0.
TITLE IV--REVISIONS TO DISCRETIONARY SPENDING LIMITS AND BUDGET PROCESS
SEC. 401. SHORT TITLE.
This title may be cited as the ``Discretionary Spending Reduction and
Control Act of 1995''.
SEC. 402. DISCRETIONARY SPENDING LIMITS.
(a) Limits.--Section 601(a)(2) of the Congressional Budget Act of
1974 is amended by striking subparagraphs (A), (B), (C), (D), and (F),
by redesignating subparagraph (E) as subparagraph (A) and by striking
``and'' at the end of that subparagraph, and by inserting after
subparagraph (A) the following new subparagraphs:
``(B) with respect to fiscal year 1996, for the
discretionary category: $516,478,000,000 in new budget
authority and $549,054,000,000 in outlays;
``(C) with respect to fiscal year 1997, for the
discretionary category: $522,894,000,000 in new budget
authority and $544,051,000,000 in outlays;
``(D) with respect to fiscal year 1998, for the
discretionary category: $528,810,000,000 in new budget
authority and $545,548,000,000 in outlays;
``(E) with respect to fiscal year 1999, for the
discretionary category: $527,753,000,000 in new budget
authority and $544,402,000,000 in outlays; and
``(F) with respect to fiscal year 2000, for the
discretionary category: $527,040,000,000 in new budget
authority and $543,357,000,000 in outlays;''.
(b) Committee Allocations and Enforcement.--Section 602 of the
Congressional Budget Act of 1974 is amended--
(1) in subsection (c), by striking ``1995'' and inserting
``2000'' and by striking its last sentence; and
(2) in subsection (d), by striking ``1992 to 1995'' in the
side heading and inserting ``1995 to 2000'' and by striking
``1992 through 1995'' and inserting ``1995 through 2000''.
(c) Five-Year Budget Resolutions.--Section 606 of the Congressional
Budget Act of 1974 is amended--
(1) in subsection (a), by striking ``1992, 1993, 1994, or
1995'' and inserting ``1995, 1996, 1997, 1998, 1999, or 2000'';
and
(2) in subsection (d)(1), by striking ``1992, 1993, 1994, and
1995'' and inserting ``1995, 1996, 1997, 1998, 1999, and
2000'', and by striking ``(i) and (ii)''.
(d) Effective Date.--Section 607 of the Congressional Budget Act of
1974 is amended by striking ``1991 to 1998'' and inserting ``1995 to
2000''.
(e) Sequestration Regarding Crime Trust Fund.--Section 251A(b)(1) of
the Balanced Budget and Emergency Deficit Control Act of 1985 is
amended by striking its last sentence and inserting the following:
``(E) For fiscal year 1999, $5,639,000,000.
``(F) For fiscal year 2000, $6,225,000,000.
SEC. 403. GENERAL STATEMENT AND DEFINITIONS.
(a) General Statement.--Section 250(b) of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended by striking the first
sentence and inserting the following: ``This part provides for the
enforcement of deficit reduction through discretionary spending limits
and pay-as-you-go requirements for fiscal years 1995 through 2000.''.
(b) Definitions.--Section 250(c) of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended--
(1) by striking paragraph (4) and inserting the following:
``(4) The term `category' means all discretionary
appropriations.'';
(2) by striking paragraph (6) and inserting the following:
``(6) The term `budgetary resources' means new budget
authority, unobligated balances, direct spending authority, and
obligation limitations.'';
(3) in paragraph (9), by striking ``1992'' and inserting
``1995'';
(4) in paragraph (14), by striking ``1995'' and inserting
``2000''; and
(5) by striking paragraph (17) and by redesignating
paragraphs (18) through (21) as paragraphs (17) through (20),
respectively.
SEC. 404. ENFORCING DISCRETIONARY SPENDING LIMITS.
Section 251 of the Balanced Budget and Emergency Deficit Control Act
of 1985 is amended--
(1) in the side heading of subsection (a), by striking
``1991-1998'' and inserting ``1995-2000'';
(2) in the first sentence of subsection (b)(1), by striking
``1992, 1993, 1994, 1995, 1996, 1997 or 1998'' and inserting
``1995, 1996, 1997, 1998, 1999, or 2000'' and by striking
``through 1998'' and inserting ``through 2000'';
(3) in subsection (b)(1), by striking subparagraphs (B) and
(C) and by striking ``the following:'' and all that follows
through ``The adjustments'' and inserting ``the following: the
adjustments'';
(4) in subsection (b)(2), by striking ``1991, 1992, 1993,
1994, 1995, 1996, 1997, or 1998'' and inserting ``1995, 1996,
1997, 1998, 1999, or 2000'' and by striking ``through 1998''
and inserting ``through 2000'';
(5) by striking subparagraphs (A), (B), and (C) of subsection
(b)(2);
(6) in subsection (b)(2)(E), by striking clauses (i), (ii),
and (iii) and by striking ``(iv) if, for fiscal years 1994,
1995, 1996, 1997, and 1998'' and inserting ``If, for fiscal
years 1995, 1996, 1997, 1998, 1999, and 2000''; and
(7) in subsection (b)(2)(F), strike everything after ``the
adjustment in outlays'' and insert ``for a category for a
fiscal year shall not exceed 0.5 percent of the adjusted
discretionary spending limit on outlays for that fiscal year in
fiscal year 1996, 1997, 1998, 1999, or 2000.''.
SEC. 405. ENFORCING PAY-AS-YOU-GO.
Section 252 of the Balanced Budget and Emergency Deficit Control Act
of 1985 is amended--
(1) in the side heading of subsection (a), by striking
``1992-1998'' and inserting ``1995-2000'';
(2) in subsection (d), by striking ``1998'' each place it
appears and inserting ``2000''; and
(3) in subsection (e), by striking ``1991 through 1998'' and
inserting ``1995 through 2000'' and by striking ``through
1995'' and inserting ``through 2000''.
SEC. 406. REPORTS AND ORDERS.
Section 254 of the Balanced Budget and Emergency Deficit Control Act
of 1985 is amended--
(1) in subsection (d)(2), by striking ``1998'' and inserting
``2000''; and
(2) in subsection (g), by striking ``1998'' each place it
appears and inserting ``2000''.
SEC. 407. TECHNICAL CORRECTION.
Section 258 of the Balanced Budget and Emergency Deficit Control Act
of 1985, entitled ``Modification of Presidential Order'', is repealed.
SEC. 408. EFFECTIVE DATE.
(a) Expiration.--Section 275(b) of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended by striking ``1995'' and
inserting ``2000''.
(b) Expiration.--Section 14002(c)(3) of the Omnibus Budget
Reconciliation Act of 1993 (2 U.S.C. 900 note; 2 U.S.C. 665 note) is
repealed.
SEC. 409. SAVINGS FROM PROVISIONS OF THIS TITLE REDUCING DISCRETIONARY
SPENDING TO BE ADDED TO PAY-AS-YOU-GO SCORECARD.
(a)(1) The net change in outlays for any fiscal year through fiscal
year 2000 estimated to result from provisions of this title revising or
extending limits on discretionary spending and spending from the
Violent Crime Reduction Trust Fund shall be considered a change in
direct spending for purposes of section 252 of the Balanced Budget and
Emergency Deficit Control Act of 1985.
(2) In applying paragraph (1), the change in outlays resulting from
provisions of this title revising and extending the limits on
discretionary spending set forth in section 601(a)(2) of the
Congressional Budget Act of 1974 shall be computed as follows:
(A) For fiscal years 1996 through 1998, by comparing the
outlay limit resulting from this title for each year with the
outlay limit for that year in effect immediately prior to
enactment of this Act.
(B) For fiscal years 1999 and 2000, by comparing the outlay
limit resulting from this title for each year with the limit
for fiscal year 1998 in effect immediately prior to enactment
of this Act.
(3) In applying paragraph (1), the change in outlays resulting from
provisions of this title extending the limits on spending from the
Violent Crime Reduction Trust Fund set forth in section 251A(b)(1) of
the Balanced Budget and Emergency Deficit Control Act of 1985 shall be
computed by comparing the outlay limit resulting from this title for
each year with the level of outlays for that year referred to in the
last 2 sentences of section 251A(b)(1) of such Act as in effect
immediately before the enactment of this Act.
(b) Except as provided in subsection (a), no statutory reduction in
the discretionary spending limits shall be counted in estimates under
section 252(d) of the Balanced Budget and Emergency Deficit Control Act
of 1985.
SEC. 410. CLARIFICATION OF ORDER IN WHICH ADJUSTMENTS TO DISCRETIONARY
SPENDING LIMITS ARE TO BE MADE.
In the OMB final sequestration report for fiscal year 1996--
(1) all adjustments required by section 251(b)(2) made after
the preview report for fiscal year 1996 shall be made to the
discretionary spending limits set forth in 601(a)(2) of the
Congressional Budget Act of 1974 as amended by section 402; and
(2) all statutory changes in the discretionary spending
limits made by the Personal Responsibility Act of 1995 or by
the Act entitled ``An Act making emergency supplemental
appropriations for additional disaster assistance and making
rescissions for the fiscal year ending September 30, 1995, and
for other purposes'' shall be made to those limits.
TITLE V--PROVISIONS RELATING TO INTERNATIONAL TAXATION
SEC. 501. REVISION OF TAX RULES ON EXPATRIATION.
(a) In General.--Subpart A of part II of subchapter N of chapter 1 of
the Internal Revenue Code of 1986 is amended by inserting after section
877 the following new section:
``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.
``(a) General Rules.--For purposes of this subtitle--
``(1) Citizens.--If any United States citizen relinquishes
his citizenship during a taxable year, all property held by
such citizen at the time immediately before such relinquishment
shall be treated as sold at such time for its fair market value
and any gain or loss shall be taken into account for such
taxable year.
``(2) Certain residents.--If any long-term resident of the
United States ceases to be subject to tax as a resident of the
United States for any portion of any taxable year, all property
held by such resident at the time of such cessation shall be
treated as sold at such time for its fair market value and any
gain or loss shall be taken into account for the taxable year
which includes the date of such cessation.
``(b) Exclusion for Certain Gain.--The amount which would (but for
this subsection) be includible in the gross income of any taxpayer by
reason of subsection (a) shall be reduced (but not below zero) by
$600,000.
``(c) Property Treated as Held.--For purposes of this section, except
as otherwise provided by the Secretary, an individual shall be treated
as holding--
``(1) all property which would be includible in his gross
estate under chapter 11 were such individual to die at the time
the property is treated as sold,
``(2) any other interest in a trust which the individual is
treated as holding under the rules of section 679(e)
(determined by treating such section as applying to foreign and
domestic trusts), and
``(3) any other interest in property specified by the
Secretary as necessary or appropriate to carry out the purposes
of this section.
``(d) Exceptions.--The following property shall not be treated as
sold for purposes of this section:
``(1) United states real property interests.--Any United
States real property interest (as defined in section
897(c)(1)), other than stock of a United States real property
holding corporation which does not, on the date the individual
relinquishes his citizenship or ceases to be subject to tax as
a resident, meet the requirements of section 897(c)(2).
``(2) Interest in certain retirement plans.--
``(A) In general.--Any interest in a qualified
retirement plan (as defined in section 4974(d)), other
than any interest attributable to contributions which
are in excess of any limitation or which violate any
condition for tax-favored treatment.
``(B) Foreign pension plans.--
``(i) In general.--Under regulations
prescribed by the Secretary, interests in
foreign pension plans or similar retirement
arrangements or programs.
``(ii) Limitation.--The value of property
which is treated as not sold by reason of this
subparagraph shall not exceed $500,000.
``(e) Definitions.--For purposes of this section--
``(1) Relinquishment of citizenship.--A citizen shall be
treated as relinquishing his United States citizenship on the
date the United States Department of State issues to the
individual a certificate of loss of nationality or on the date
a court of the United States cancels a naturalized citizen's
certificate of naturalization.
``(2) Long-term resident.--
``(A) In general.--The term `long-term resident'
means any individual (other than a citizen of the
United States) who is a lawful permanent resident of
the United States and, as a result of such status, has
been subject to tax as a resident in at least 10
taxable years during the period of 15 taxable years
ending with the taxable year during which the sale
under subsection (a) is treated as occurring.
``(B) Special rule.--For purposes of subparagraph
(A), there shall not be taken into account--
``(i) any taxable year during which any prior
sale is treated under subsection (a) as
occurring, or
``(ii) any taxable year prior to the taxable
year referred to in clause (i).
``(f) Termination of Deferrals, Etc.--On the date any property held
by an individual is treated as sold under subsection (a)--
``(1) any period deferring recognition of income or gain
shall terminate, and
``(2) any extension of time for payment of tax shall cease to
apply and the unpaid portion of such tax shall be due and
payable.
``(g) Election by Expatriating Residents.--Solely for purposes of
determining gain under subsection (a)--
``(1) In general.--At the election of a resident not a
citizen of the United States, property--
``(A) which was held by such resident on the date the
individual first became a resident of the United States
during the period of long-term residency to which the
treatment under subsection (a) relates, and
``(B) which is treated as sold under subsection (a),
shall be treated as having a basis on such date of not less
than the fair market value of such property on such date.
``(2) Election.--Such an election shall apply to all property
described in paragraph (1), and, once made, shall be
irrevocable.
``(h) Deferral of Tax on Closely Held Business Interests.--The
District Director may enter into an agreement with any individual which
permits such individual to defer payment for not more than 5 years of
any tax imposed by subsection (a) by reason of holding any interest in
a closely held business (as defined in section 6166(b)) other than a
United States real property interest described in subsection (d)(1).
``(i) Regulations.--The Secretary shall prescribe such regulations as
may be necessary or appropriate to carry out the purposes of this
section.
``(j) Cross Reference.--
``For termination of United States citizenship for
tax purposes, see section 7701(a)(47).''
(b) Definition of Termination of United States Citizenship.--Section
7701(a) of such Code is amended by adding at the end the following new
paragraph:
``(47) Termination of united states citizenship.--An
individual shall not cease to be treated as a United States
citizen before the date on which the individual's citizenship
is treated as relinquished under section 877A(e)(1).''
(c) Conforming Amendments.--
(1) Section 877 of such Code is amended by adding at the end
the following new subsection:
``(f) Termination.--This section shall not apply to any individual
who is subject to the provisions of section 877A.''
(2) Paragraph (10) of section 7701(b) of such Code is amended
by adding at the end the following new sentence: ``This
paragraph shall not apply to any individual who is subject to
the provisions of section 877A.''
(d) Clerical Amendment.--The table of sections for subpart A of part
II of subchapter N of chapter 1 of such Code is amended by inserting
after the item relating to section 877 the following new item:
``Sec. 877A. Tax responsibilities of
expatriation.''
(e) Effective Date.--The amendments made by this section shall apply
to--
(1) United States citizens who relinquish (within the meaning
of section 877A(e)(1) of the Internal Revenue Code of 1986, as
added by this section) United States citizenship on or after
February 6, 1995, and
(2) long-term residents (as defined in such section) who
cease to be subject to tax as residents of the United States on
or after such date.
SEC. 502. IMPROVED INFORMATION REPORTING ON FOREIGN TRUSTS.
(a) In General.--Section 6048 of the Internal Revenue Code of 1986
(relating to returns as to certain foreign trusts) is amended to read
as follows:
``SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN FOREIGN TRUSTS.
``(a) Notice of Certain Events.--
``(1) General rule.--On or before the 90th day (or such later
day as the Secretary may prescribe) after any reportable event,
the responsible party shall--
``(A) notify each trustee of the trust of the
requirements of subsection (b), and
``(B) provide written notice of such event to the
Secretary in accordance with paragraph (2).
``(2) Contents of notice.--The notice required by paragraph
(1)(B) shall contain such information as the Secretary may
prescribe, including--
``(A) the amount of money or other property (if any)
transferred to the trust in connection with the
reportable event,
``(B) the identity of the trust and of each trustee
and beneficiary (or class of beneficiaries) of the
trust, and
``(C) a statement that each trustee of the trust has
been informed of the requirements of subsection (b).
``(3) Reportable event.--For purposes of this subsection, the
term `reportable event' means--
``(A) the creation of any foreign trust by a United
States person,
``(B) the transfer of any money or property to a
foreign trust by a United States person, including a
transfer by reason of death,
``(C) a domestic trust becoming a foreign trust,
``(D) the death of a citizen or resident of the
United States who is a grantor of a foreign trust, and
``(E) the residency starting date (within the meaning
of section 7701(b)(2)(A)) of a grantor of a foreign
trust subject to tax under section 679(a)(3).
Subparagraphs (A) and (B) shall not apply with respect to a
trust described in section 404(a)(4) or 404A.
``(4) Responsible party.--For purposes of this subsection,
the term `responsible party' means--
``(A) the grantor in the case of a reportable event
described in subparagraph (A) or (E) of paragraph (3),
``(B) the transferor in the case of a reportable
event described in paragraph (3)(B) other than a
transfer by reason of death,
``(C) the trustee of the domestic trust in the case
of a reportable event described in paragraph (3)(C),
and
``(D) the executor of the decedent's estate in the
case of a transfer by reason of death.
``(b) Trust Reporting Requirements.--If a foreign trust, at any time
during a taxable year of such trust--
``(1) has a grantor who is a United States person and--
``(A) such grantor is treated as the owner of any
portion of such trust under the rules of subpart E of
part I of subchapter J of chapter 1, or
``(B) any portion of such trust would be included in
the gross estate of such grantor if the grantor were to
die at such time, or
``(2) directly or indirectly distributes, credits, or
allocates money or property to any United States person
(whether or not the trust has a grantor described in paragraph
(1)),
then such trust shall meet the requirements of subsection (c) (relating
to trust information and agent) and subsection (d) (relating to annual
return).
``(c) Contents of Section 6048 Statement.--
``(1) In general.--The requirements of this subsection are
met if the trust files with the Secretary a statement which
contains such information as the Secretary may prescribe and
which--
``(A) identifies a United States person who is the
trust's limited agent to provide the Secretary with
such information that reasonably should be available to
the trust for purposes of applying sections 7602, 7603,
and 7604 with respect to any request by the Secretary
to examine trust records or produce testimony related
to any transaction by the trust or with respect to any
summons by the Secretary for such records or testimony,
and
``(B) contains an agreement to comply with the
requirements of subsection (d).
``(2) Special rule.--A foreign trust which appoints an agent
described in paragraph (1)(A) shall not be considered to have
an office or a permanent establishment in the United States
solely because of the activities of such agent pursuant to this
section. For purposes of this section, the appearance of
persons or production of records by reason of the creation of
the agency shall not subject such persons or records to legal
process for any purpose other than determining the correct
treatment under this title of the activities and operations of
the trust.
``(d) Annual Returns and Statements.--The requirements of this
subsection are met if--
``(1) the trust makes a return for the taxable year which
sets forth a full and complete accounting of all trust
activities and operations for the taxable year, and contains
such other information as the Secretary may prescribe; and
``(2) the trust furnishes such information as the Secretary
may prescribe to each United States person--
``(A) who is treated as the owner of any portion of
such trust under the rules of subpart E of part I of
subchapter J of chapter 1,
``(B) to whom any item with respect to the taxable
year is credited or allocated, or
``(C) who receives a distribution from such trust
with respect to the taxable year.
``(e) Time and Manner of Filing Information.--Any notice, statement,
or return required under this section shall be made at such time and in
such manner as the Secretary shall prescribe.
``(f) Modification of Return Requirements.--The Secretary is
authorized to suspend or modify any requirement of this section if the
Secretary determines that the United States has no significant tax
interest in obtaining the required information.''
(b) Penalties.--Section 6677 of such Code (relating to failure to
file information returns with respect to certain foreign trusts) is
amended to read as follows:
``SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT TO CERTAIN
FOREIGN TRUSTS.
``(a) Failure To Report Certain Events.--
``(1) In general.--In the case of a reportable event
described in any subparagraph of section 6048(a)(3) for which a
responsible party does not file a written notice meeting the
requirements of section 6048(a)(2) within the time specified in
section 6048(a)(1), the responsible party shall pay a penalty
of $10,000. If any failure described in the preceding sentence
continues for more than 90 days after the day on which the
Secretary mails notice of such failure to the responsible
party, such party shall pay a penalty (in addition to the
$10,000 amount) of $10,000 for each 30-day period (or fraction
thereof) during which such failure continues after the
expiration of such 90-day period.
``(2) 35-percent penalty.--In the case of a reportable event
described in subparagraph (A), (B), or (C) of section
6048(a)(3) (other than a transfer by reason of death), the
aggregate amount of the penalties under paragraph (1) shall not
be less than an amount equal to 35 percent of the gross value
of the property involved in such event (determined as of the
date of the event).
``(3) Responsible party.--For purposes of this subsection,
the term `responsible party' has the meaning given to such term
by section 6048(a)(4).
``(b) Failure To Make Certain Statements and Returns.--
``(1) In general.--In the case of any failure to meet the
requirements of section 6048(b), the appropriate tax treatment
of any trust transactions or operations shall be determined by
the Secretary in the Secretary's sole discretion from the
Secretary's own knowledge or from such information as the
Secretary may obtain through testimony or otherwise.
``(2) Monetary penalty.--In the case of any failure to meet
the requirements of section 6048(b) with respect to a trust
described in such section by reason of paragraph (1) thereof,
the grantor described in such paragraph (1) shall pay a penalty
of $10,000 for each taxable year with respect to which the
foreign trust fails to meet such requirements. If any failure
described in the preceding sentence continues for more than 90
days after the day on which the Secretary mails notice of such
failure to such grantor, such grantor shall pay a penalty (in
addition to any other penalty) of $10,000 for each 30-day
period (or fraction thereof) during which such failure
continues after the expiration of such 90-day period.
``(c) 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 requested documentation is not
reasonable cause.
``(d) Deficiency Procedures Not To Apply.--Subchapter B of chapter 63
(relating to deficiency procedures for income, estate, gift, and
certain excise taxes) shall not apply in respect of the assessment or
collection of any penalty imposed by this section.''
(c) Clerical Amendments.--
(1) The table of sections for subpart B of part III of
subchapter A of chapter 61 of such Code is amended by striking
the item relating to section 6048 and inserting the following
new item:
``Sec. 6048. Information with respect to
certain foreign trusts.''
(2) The table of sections for part I of subchapter B of
chapter 68 of such Code is amended by striking the item
relating to section 6677 and inserting the following new item:
``Sec. 6677. Failure to file information
with respect to certain foreign
trusts.''
(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply--
(A) to reportable events occurring on or after
February 6, 1995, and
(B) to the extent such amendments require reporting
for any taxable year under section 6048(b) of the
Internal Revenue Code of 1986 (as added by this
section), to taxable years beginning after the date of
the enactment of this Act.
(2) Notices.--For purposes of section 6048(a) of such Code,
the 90th day referred to therein shall in no event be treated
as being earlier than the 90th day after the date of the
enactment of this Act.
SEC. 503. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS HAVING ONE
OR MORE UNITED STATES BENEFICIARIES.
(a) In General.--Section 679 of the Internal Revenue Code of 1986
(relating to foreign trusts having one or more United States
beneficiaries) is amended to read as follows:
``SEC. 679. FOREIGN TRUSTS HAVING ONE OR MORE UNITED STATES
BENEFICIARIES.
``(a) Transferor Treated as Owner.--
``(1) In general.--A United States person who directly or
indirectly transfers property to a foreign trust (other than a
trust described in section 404(a)(4) or section 404A) shall be
treated as the owner for his taxable year of the portion of
such trust attributable to such property if for such year there
is a United States beneficiary of such trust.
``(2) Exception.--
``(A) In general.--Paragraph (1) shall not apply to
any sale or exchange of property to a trust if--
``(i) the trust pays fair market value for
such property, and
``(ii) all of the gain to the transferor is
recognized at the time of transfer.
``(B) Certain obligations not taken into account.--
For purposes of subparagraph (A), in determining
whether the transferor received fair market value,
there shall not be taken into account--
``(i) any obligation of--
``(I) the trust,
``(II) any grantor or beneficiary of
the trust, or
``(III) any person who is related
(within the meaning of section
643(i)(3)) to any grantor or
beneficiary of the trust, and
``(ii) except as provided in regulations, any
obligation which is guaranteed by a person
described in clause (i).
``(C) Treatment of deemed sale election under section
1057.--For purposes of subparagraph (A), a transfer
with respect to which an election under section 1057 is
made shall not be treated as a sale or exchange.
``(3) Special rules applicable to foreign grantor who later
becomes a united states person.--A nonresident alien individual
who becomes a United States resident within 5 years after
directly or indirectly transferring property to a foreign trust
shall be treated for purposes of this section and section 6048
as having transferred such property, and any undistributed
income (including all realized and unrealized gains)
attributable thereto, to the foreign trust immediately after
becoming a United States resident. For this purpose, a
nonresident alien shall be treated as becoming a resident of
the United States on the residency starting date (within the
meaning of section 7701(b)(2)(A)).
``(b) Beneficiaries Treated as Transferors in Certain Cases.--For
purposes of this section and section 6048, if--
``(1) a citizen or resident of the United States who is
treated as the owner of any portion of a trust under subsection
(a) dies,
``(2) property is transferred to a foreign trust by reason of
the death of a citizen or resident of the United States, or
``(3) a domestic trust to which any United States person made
a transfer becomes a foreign trust,
then, except as otherwise provided in regulations, the trust
beneficiaries shall be treated as having transferred to such trust (as
of the date of the applicable event under paragraph (1), (2), or (3))
their respective interests (as determined under subsection (e)) in the
property involved.
``(c) Trusts Acquiring United States Beneficiaries.--If--
``(1) subsection (a) applies to a trust for the transferor's
taxable year, and
``(2) subsection (a) would have applied to the trust for the
transferor's immediately preceding taxable year but for the
fact that for such preceding taxable year there was no United
States beneficiary for any portion of the trust,
then, for purposes of this subtitle, the transferor shall be treated as
having received as an accumulation distribution taxable under subpart D
an amount equal to the undistributed net income (as determined under
section 665(a) as of the close of such immediately preceding taxable
year) attributable to the portion of the trust referred to in
subsection (a).
``(d) Trusts Treated as Having a United States Beneficiary.--
``(1) In general.--For purposes of this section, a trust
shall be treated as having a United States beneficiary for the
taxable year unless--
``(A) under the terms of the trust, no part of the
income or corpus of the trust may be paid or
accumulated during the taxable year to or for the
benefit of a United States person, and
``(B) if the trust were terminated at any time during
the taxable year, no part of the income or corpus of
such trust could be paid to or for the benefit of a
United States person.
To the extent provided by the Secretary, for purposes of this
subsection, the term `United States person' includes any person
who was a United States person at any time during the existence
of the trust.
``(2) Attribution of ownership.--For purposes of paragraph
(1), an amount shall be treated as paid or accumulated to or
for the benefit of a United States person if such amount is
paid to or accumulated for a foreign corporation, foreign
partnership, or foreign trust or estate, and--
``(A) in the case of a foreign corporation, more than
50 percent of the total combined voting power of all
classes of stock of such corporation entitled to vote
is owned (within the meaning of section 958(a)) or is
considered to be owned (within the meaning of section
958(b)) by United States shareholders (as defined in
section 951(b)),
``(B) in the case of a foreign partnership, a United
States person is a partner of such partnership, or
``(C) in the case of a foreign trust or estate, such
trust or estate has a United States beneficiary (within
the meaning of paragraph (1)).
``(e) Determination of Beneficiaries' Interests in Trust.--
``(1) General rule.--For purposes of this section, a
beneficiary's interest in a foreign trust shall be based upon
all relevant facts and circumstances, including the terms of
the trust instrument and any letter of wishes or similar
document, historical patterns of trust distributions, and the
existence of and functions performed by a trust protector or
any similar advisor.
``(2) Special rule.--In the case of beneficiaries whose
interests in a trust cannot be determined under paragraph (1)--
``(A) the beneficiary having the closest degree of
kinship to the grantor shall be treated as holding the
remaining interests in the trust not determined under
paragraph (1) to be held by any other beneficiary, and
``(B) if 2 or more beneficiaries have the same degree
of kinship to the grantor, such remaining interests
shall be treated as held equally by such beneficiaries.
``(3) Constructive ownership.--If a beneficiary of a foreign
trust is a corporation, partnership, trust, or estate, the
shareholders, partners, or beneficiaries shall be deemed to be
the trust beneficiaries for purposes of this section.
``(4) Taxpayer return position.--A taxpayer shall clearly
indicate on its income tax return--
``(A) the methodology used to determine that
taxpayer's trust interest under this section, and
``(B) if the taxpayer knows (or has reason to know)
that any other beneficiary of such trust is using a
different methodology to determine such beneficiary's
trust interest under this section.
``(f) Regulations.--The Secretary shall prescribe such regulations as
may be necessary or appropriate to carry out the purposes of this
section.''
(b) Effective Date.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by
this section shall apply to taxable years ending on or after
February 6, 1995.
(2) Section 679(a).--Paragraphs (2) and (3) of section 679(a)
of the Internal Revenue Code of 1986 (as added by this section)
shall apply to--
(A) any trust created on or after February 6, 1995,
and
(B) the portion of any trust created before such date
which is attributable to actual transfers of property
to the trust on or after such date.
(3) Section 679(b).--
(A) In general.--Paragraphs (1) and (2) of section
679(b) of such Code (as so added) shall apply to--
(i) any trust created on or after the date of
the enactment of this Act, and
(ii) the portion of any trust created before
such date which is attributable to actual
transfers of property to the trust on or after
such date.
(B) Section 679(b)(3).--Section 679(b)(3) of such
Code (as so added) shall take effect on February 6,
1995, without regard to when the property was
transferred to the trust.
SEC. 504. FOREIGN PERSONS NOT TO BE TREATED AS OWNERS UNDER GRANTOR
TRUST RULES.
(a) In General.--So much of section 672(f) of the Internal Revenue
Code of 1986 (relating to special rule where grantor is foreign person)
as precedes paragraph (2) is amended to read as follows:
``(f) Subpart Not To Result in Foreign Ownership.--
``(1) In general.--Notwithstanding any other provision of
this subpart, this subpart shall apply only to the extent such
application results in an amount being included (directly or
through 1 or more entities) in the gross income of a citizen or
resident of the United States or a domestic corporation. The
preceding sentence shall not apply to any portion of an
investment trust if such trust is treated as a trust for
purposes of this title and the grantor of such portion is the
sole beneficiary of such portion.''
(b) Credit for Certain Taxes.--Paragraph (2) of section 665(d) of
such Code is amended by adding at the end the following new sentence:
``Under rules or regulations prescribed by the Secretary, in the case
of any foreign trust of which the settlor or another person would be
treated as owner of any portion of the trust under subpart E but for
section 672(f), the term `taxes imposed on the trust' includes the
allocable amount of any income, war profits, and excess profits taxes
imposed by any foreign country or possession of the United States on
the settlor or such other person in respect of trust income.''
(c) Distributions by Certain Foreign Trusts Through Nominees.--
(1) Section 643 of such Code is amended by adding at the end
the following new subsection:
``(h) Distributions by Certain Foreign Trusts Through Nominees.--For
purposes of this part, any amount paid to a United States person which
is derived directly or indirectly from a foreign trust of which the
payor is not the grantor shall be deemed in the year of payment to have
been directly paid by the foreign trust to such United States person.''
(2) Section 665 of such Code is amended by striking
subsection (c).
(d) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
(e) Transitional Rule.--If--
(1) by reason of the amendments made by this section, any
person other than a United States person ceases to be treated
as the owner of a portion of a domestic trust, and
(2) before January 1, 1996, such trust becomes a foreign
trust, or the assets of such trust are transferred to a foreign
trust,
no tax shall be imposed by section 1491 of the Internal Revenue Code of
1986 by reason of such trust becoming a foreign trust or the assets of
such trust being transferred to a foreign trust.
SEC. 505. GRATUITOUS TRANSFERS BY PARTNERSHIPS AND FOREIGN
CORPORATIONS.
(a) In General.--Subchapter C of chapter 80 of the Internal Revenue
Code of 1986 (relating to provisions affecting more than one subtitle)
is amended by adding at the end the following new section:
``SEC. 7874. PURPORTED GIFTS BY PARTNERSHIPS AND FOREIGN CORPORATIONS.
``(a) In General.--Any property (including money) that is purportedly
a direct or indirect gift by a partnership or a foreign corporation to
a person who is not a partner of the partnership or a shareholder of
the corporation, respectively, may be recharacterized by the Secretary
to prevent the avoidance of tax. The Secretary may not recharacterize
gifts made for bona fide business or charitable purposes.
``(b) Statements on Recipient's Return.--A taxpayer who receives a
purported gift subject to subsection (a) shall attach a statement to
his income tax return for the year of receipt that identifies the
property received and describes fully the circumstances surrounding the
purported gift.
``(c) Exemption.--Subsection (a) shall not apply to purported gifts
received by any person during any taxable year if the amount thereof is
less than $2,500.
``(d) Regulations.--The Secretary may prescribe such rules as may be
necessary or appropriate to carry out the purposes of this section.''
(b) Clerical Amendment.--The table of sections for such subchapter C
is amended by adding at the end the following new item:
``Sec. 7874. Purported gifts by
partnerships and foreign
corporations.''
(c) Effective Date.--The amendments made by this section shall apply
to amounts received after the date of the enactment of this Act.
SEC. 506. INFORMATION REPORTING REGARDING LARGE FOREIGN GIFTS.
(a) In General.--Subpart A of part III of subchapter A of chapter 61
of the Internal Revenue Code of 1986 is amended by inserting after
section 6039E the following new section:
``SEC. 6039F. NOTICE OF LARGE GIFTS RECEIVED FROM FOREIGN PERSONS.
``(a) In General.--If the value of the aggregate foreign gifts
received by a United States person (other than an organization
described in section 501(c) and exempt from tax under section 501(a))
during any taxable year exceeds $100,000, such United States person
shall furnish (at such time and in such manner as the Secretary shall
prescribe) such information as the Secretary may prescribe regarding
each foreign gift received during such year.
``(b) Foreign Gift.--For purposes of this section, the term `foreign
gift' means any amount received from a person other than a United
States person which the recipient treats as a gift or bequest. Such
term shall not include any qualified transfer (within the meaning of
section 2503(e)(2)).
``(c) Penalty for Failure To File Information.--
``(1) In general.--If a United States person fails to furnish
the information required by subsection (a) with respect to any
foreign gift within the time prescribed therefor (including
extensions)--
``(A) the tax consequences of the receipt of such
gift shall be determined by the Secretary in the
Secretary's sole discretion from the Secretary's own
knowledge or from such information as the Secretary may
obtain through testimony or otherwise, and
``(B) such United States person shall pay (upon
notice and demand by the Secretary and in the same
manner as tax) an amount equal to 5 percent of the
amount of such foreign gift for each month for which
the failure continues (not to exceed 25 percent of such
amount in the aggregate).
``(2) Reasonable cause exception.-- Paragraph (1) shall not
apply to any failure to report a foreign gift if the United
States person shows that the failure is due to reasonable cause
and not due to willful neglect.
``(d) Regulations.--The Secretary shall prescribe such regulations as
may be necessary to carry out the purposes of this section.''.
(b) Clerical Amendment.--The table of sections for such subpart is
amended by inserting after the item relating to section 6039E the
following new item:
``Sec. 6039F. Notice of large gifts
received from foreign
persons.''
(c) Effective Date.--The amendments made by this section shall apply
to amounts received after the date of the enactment of this Act in
taxable years ending after such date.
SEC. 507. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS WHICH ARE
NOT GRANTOR TRUSTS.
(a) Modification of Interest Charge on Accumulation Distributions.--
Subsection (a) of section 668 of the Internal Revenue Code of 1986
(relating to interest charge on accumulation distributions from foreign
trusts) is amended to read as follows:
``(a) General Rule.--For purposes of the tax determined under section
667(a)--
``(1) Sum of interest charges for each throwback year.--The
interest charge (determined under paragraph (2)) with respect
to any distribution is the sum of the interest charges for each
of the throwback years to which such distribution is allocated
under section 666(a).
``(2) Interest charge for year.--Except as provided in
paragraph (6), the interest charge for any throwback year on
such year's allocable share of the partial tax computed under
section 667(b) with respect to any distribution shall be
determined for the period--
``(A) beginning on the due date for the throwback
year, and
``(B) ending on the due date for the taxable year of
the distribution,
by using the rates and method applicable under section 6621 for
underpayments of tax for such period. For purposes of the
preceding sentence, the term `due date' means the date
prescribed by law (determined without regard to extensions) for
filing the return of the tax imposed by this chapter for the
taxable year.
``(3) Allocable partial tax.--For purposes of paragraph (2),
a throwback year's allocable share of the partial tax is an
amount equal to such partial tax multiplied by the fraction--
``(A) the numerator of which is the amount deemed by
section 666(a) to be distributed on the last day of
such throwback year, and
``(B) the denominator of which is the accumulation
distribution taken into account under section 666(a).
``(4) Throwback year.--For purposes of this subsection, the
term `throwback year' means any taxable year to which a
distribution is allocated under section 666(a).
``(5) Periods of nonresidence.--The period under paragraph
(2) shall not include any portion thereof during which the
beneficiary was not a citizen or resident of the United States.
``(6) Throwback years before 1996.--In the case of any
throwback year beginning before 1996--
``(A) interest for the portion of the period
described in paragraph (2) which occurs before the
first taxable year beginning after 1995 shall be
determined by using an interest rate of 6 percent and
no compounding, and
``(B) interest for the remaining portion of such
period shall be determined as if the partial tax
computed under section 667(b) for the throwback year
were increased (as of the beginning of such first
taxable year) by the amount of the interest determined
under subparagraph (A).''
(b) Rule When Information Not Available.--Subsection (d) of section
666 of such Code is amended by adding at the end the following: ``In
the case of a distribution from a foreign trust to which section
6048(b) applies, adequate records shall not be considered to be
available for purposes of the preceding sentence unless such trust
meets the requirements referred to in such section. If a taxpayer is
not able to demonstrate when a trust was created, the Secretary may use
any reasonable approximation based on available evidence.''
(c) Abusive Transactions.--Section 643(a) of such Code is amended by
inserting after paragraph (6) the following new paragraph:
``(7) Abusive transactions.--The Secretary shall prescribe
such regulations as may be necessary or appropriate to carry
out the purposes of this part, including regulations to prevent
avoidance of such purposes.''
(d) Treatment of Use of Trust Property.--Section 643 of such Code
(relating to definitions applicable to subparts A, B, C, and D) is
amended by adding at the end the following new subsection:
``(i) Use of Foreign Trust Property.--
``(1) General rule.--For purposes of subparts B, C, and D,
if, during a taxable year of a foreign trust a trust
participant of such trust directly or indirectly uses any of
the trust's property, the use value for such taxable year shall
be treated as an amount paid to such participant (other than
from income for the taxable year) within the meaning of
sections 661(a)(2) and section 662(a)(2).
``(2) Exemption.--Paragraph (1) shall not apply to any trust
participant as to whom the aggregate use value during the
taxable year does not exceed $2,500.
``(3) Definitions and special rules.--For purposes of this
subsection--
``(A) Use value.--Except as provided in subparagraph
(B), the term `use value' means the fair market value
of the use of property reduced by any amount paid for
such use by the trust participant or by any person who
is related to such participant.
``(B) Special rule for cash and cash equivalent.--A
direct or indirect loan of cash, or cash equivalent, by
a foreign trust shall be treated as a use of trust
property by the borrower and the full amount of the
loan principal shall be the use value.
``(C) Use by related party.--
``(i) Use by a person who is related to a
trust participant shall be treated as use by
the participant.
``(ii) If property is used by any person who
is a related person with respect to more than
one trust participant, then the property shall
be treated as used by the trust participant
most closely related, by blood or otherwise, to
such person.
``(D) Property includes cash and cash equivalents.--
The term `property' includes cash and cash equivalents.
``(E) Trust participant.--The term `trust
participant' means each grantor and beneficiary of the
trust.
``(F) Related person.--A person is related to a trust
participant if the relationship between such persons
would result in a disallowance of losses under section
267(b) or 707(b). In applying section 267 for purposes
of the preceding sentence--
``(i) section 267(e) shall be applied as if
such person or the trust participant were a
pass-thru entity,
``(ii) section 267(b) shall be applied by
substituting `at least 10 percent' for `more
than 50 percent' each place it appears, and
``(iii) in determining the family of an
individual under section 267(c)(4), such
section shall be treated as including the
spouse (and former spouse) of such individual
and of each other person who is treated under
such section as being a member of the family of
such individual or spouse.
``(G) Subsequent transactions regarding loan
principal.--If any loan described in subparagraph (B)
is taken into account under paragraph (1), any
subsequent transaction between the trust and the
original borrower regarding the principal of the loan
(by way of complete or partial repayment, satisfaction,
cancellation, discharge, or otherwise) shall be
disregarded for purposes of this title.''
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after the date of the enactment of this Act.
(2) Interest charge.--The amendment made by subsection (a)
shall apply to interest for throwback years beginning before,
on, or after the date of the enactment of this Act.
SEC. 508. RESIDENCE OF ESTATES AND TRUSTS.
(a) Treatment as United States Person.--Paragraph (30) of section
7701(a) of the Internal Revenue Code of 1986 is amended by striking
subparagraph (D) and by inserting after subparagraph (C) the following:
``(D) any estate or trust if--
``(i) a court within the United States is
able to exercise primary supervision over the
administration of the estate or trust, and
``(ii) in the case of a trust, one or more
United States fiduciaries have the authority to
control all substantial decisions of the
trust.''
(b) Conforming Amendment.--Paragraph (31) of section 7701(a) of such
Code is amended to read as follows:
``(31) Foreign estate or trust.--The term `foreign estate' or
`foreign trust' means any estate or trust other than an estate
or trust described in section 7701(a)(30)(D).''
(c) Effective Date.--The amendments made by this section shall
apply--
(1) to taxable years beginning after December 31, 1996, and
(2) at the election of the trustee of a trust, to taxable
years beginning after the date of the enactment of this Act and
on or before December 31, 1996.
Such an election, once made, shall be irrevocable.
TITLE VI--EXTENSION OF AUTHORITY OF FEDERAL COMMUNICATIONS COMMISSION
TO USE COMPETITIVE BIDDING
SEC. 601. EXTENSION OF AUTHORITY.
Section 309(j)(11) of the Communications Act of 1934 (47 U.S.C.
309(j)(11)) is amended by striking ``September 30, 1998'' and inserting
``September 30, 2000''.
TITLE VII--PRIVATIZATION OF THE UNITED STATES ENRICHMENT CORPORATION
SEC. 701. SHORT TITLE AND REFERENCE.
(a) Short Title.--This title may be cited as the ``USEC Privatization
Act''.
(b) Reference.--Except as otherwise expressly provided, whenever in
this title an amendment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference shall be
considered to be made to a section or other provision of the Atomic
Energy Act of 1954 (42 U.S.C. 2011 et seq.).
SEC. 702. PRODUCTION FACILITY.
Paragraph v. of section 11 (42 U.S.C. 2014 v.) is amended by striking
``or the construction and operation of a uranium enrichment production
facility using Atomic Vapor Laser Isotope Separation technology''.
SEC. 703. DEFINITIONS.
Section 1201 (42 U.S.C. 2297) is amended--
(1) in paragraph (4), by inserting before the period the
following: ``and any successor corporation established through
privatization of the Corporation'';
(2) by redesignating paragraphs (10) through (13) as
paragraphs (14) through (17), respectively, and by inserting
after paragraph (9) the following new paragraphs:
``(10) The term `low-level radioactive waste' has the meaning
given such term in section 102(9) of the Low-Level Radioactive
Waste Policy Amendments Act of 1985 (42 U.S.C. 2021b(9)).
``(11) The term `mixed waste' has the meaning given such term
in section 1004(41) of the Solid Waste Disposal Act (42 U.S.C.
6903(41)).
``(12) The term `privatization' means the transfer of
ownership of the Corporation to private investors pursuant to
chapter 25.
``(13) The term `privatization date' means the date on which
100 percent of ownership of the Corporation has been
transferred to private investors.'';
(3) by inserting after paragraph (17) (as redesignated) the
following new paragraph:
``(18) The term `transition date' means July 1, 1993.''; and
(4) by redesignating the unredesignated paragraph (14) as
paragraph (19).
SEC. 704. EMPLOYEES OF THE CORPORATION.
(a) Paragraph (2).--Paragraphs (1) and (2) of section 1305(e) (42
U.S.C. 2297b-4(e)(1)(2)) are amended to read as follows:
``(1) In general.--It is the purpose of this subsection to
ensure that the privatization of the Corporation shall not
result in any adverse effects on the pension benefits of
employees at facilities that are operated, directly or under
contract, in the performance of the functions vested in the
Corporation.
``(2) Applicability of existing collective bargaining
agreement.--The Corporation shall abide by the terms of the
collective bargaining agreement in effect on the privatization
date at each individual facility.''.
(b) Paragraph (4).--Paragraph (4) of section 1305(e) (42 U.S.C.
2297b-4(e)(4)) is amended--
(1) by striking ``and detailees'' in the heading;
(2) by striking the first sentence;
(3) in the second sentence, by inserting ``from other Federal
employment'' after ``transfer to the Corporation''; and
(4) by striking the last sentence.
SEC. 705. MARKETING AND CONTRACTING AUTHORITY.
(a) Marketing Authority.--Section 1401(a) (42 U.S.C. 2297c(a)) is
amended effective on the privatization date (as defined in section
1201(13) of the Atomic Energy Act of 1954)--
(1) by amending the subsection heading to read ``Marketing
Authority.--''; and
(2) by striking the first sentence.
(b) Transfer of Contracts.--Section 1401(b) (42 U.S.C. 2297c(b)) is
amended--
(1) in paragraph (2)(B), by adding at the end the following:
``The privatization of the Corporation shall not affect the
terms of, or the rights or obligations of the parties to, any
such power purchase contract.''; and
(2) by adding at the end the following:
``(3) Effect of transfer.--
``(A) As a result of the transfer pursuant to
paragraph (1), all rights, privileges, and benefits
under such contracts, agreements, and leases, including
the right to amend, modify, extend, revise, or
terminate any of such contracts, agreements, or leases
were irrevocably assigned to the Corporation for its
exclusive benefit.
``(B) Notwithstanding the transfer pursuant to
paragraph (1), the United States shall remain obligated
to the parties to the contracts, agreements, and leases
transferred pursuant to paragraph (1) for the
performance of the obligations of the United States
thereunder during the term thereof. The Corporation
shall reimburse the United States for any amount paid
by the United States in respect of such obligations
arising after the privatization date to the extent such
amount is a legal and valid obligation of the
Corporation then due.
``(C) After the privatization date, upon any material
amendment, modification, extension, revision,
replacement, or termination of any contract, agreement,
or lease transferred under paragraph (1), the United
States shall be released from further obligation under
such contract, agreement, or lease, except that such
action shall not release the United States from
obligations arising under such contract, agreement, or
lease prior to such time.''.
(c) Pricing.--Section 1402 (42 U.S.C. 2297c-1) is amended to read as
follows:
``SEC. 1402. PRICING.
``The Corporation shall establish prices for its products, materials,
and services provided to customers on a basis that will allow it to
attain the normal business objectives of a profitmaking corporation.''.
(d) Leasing of Gaseous Diffusion Facilities of Department.--Effective
on the privatization date (as defined in section 1201(13) of the Atomic
Energy Act of 1954), section 1403 (42 U.S.C. 2297c-2) is amended by
adding at the end the following:
``(h) Low-Level Radioactive Waste and Mixed Waste.--
``(1) Responsibility of the department; costs.--
``(A) With respect to low-level radioactive waste and
mixed waste generated by the Corporation as a result of
the operation of the facilities and related property
leased by the Corporation pursuant to subsection (a) or
as a result of treatment of such wastes at a location
other than the facilities and related property leased
by the Corporation pursuant to subsection (a) the
Department, at the request of the Corporation, shall--
``(i) accept for treatment or disposal of all
such wastes for which treatment or disposal
technologies and capacities exist, whether
within the Department or elsewhere; and
``(ii) accept for storage (or ultimately
treatment or disposal) all such wastes for
which treatment and disposal technologies or
capacities do not exist, pending development of
such technologies or availability of such
capacities for such wastes.
``(B) All low-level wastes and mixed wastes that the
Department accepts for treatment, storage, or disposal
pursuant to subparagraph (A) shall, for the purpose of
any permits, licenses, authorizations, agreements, or
orders involving the Department and other Federal
agencies or State or local governments, be deemed to be
generated by the Department and the Department shall
handle such wastes in accordance with any such permits,
licenses, authorizations, agreements, or orders. The
Department shall obtain any additional permits,
licenses, or authorizations necessary to handle such
wastes, shall amend any such agreements or orders as
necessary to handle such wastes, and shall handle such
wastes in accordance therewith.
``(C) The Corporation shall reimburse the Department
for the treatment, storage, or disposal of low-level
radioactive waste or mixed waste pursuant to
subparagraph (A) in an amount equal to the Department's
costs but in no event greater than an amount equal to
that which would be charged by commercial, State,
regional, or interstate compact entities for treatment,
storage, or disposal of such waste.
``(2) Agreements with other persons.--The Corporation may
also enter into agreements for the treatment, storage, or
disposal of low-level radioactive waste and mixed waste
generated by the Corporation as a result of the operation of
the facilities and related property leased by the Corporation
pursuant to subsection (a) with any person other than the
Department that is authorized by applicable laws and
regulations to treat, store, or dispose of such wastes.''.
(e) Liabilities.--
(1) Subsection (a) of section 1406 (42 U.S.C. 2297c-5(a)) is
amended--
(A) by inserting ``and Privatization'' after
``Transition'' in the heading; and
(B) by adding at the end the following: ``As of the
privatization date, all liabilities attributable to the
operation of the Corporation from the transition date
to the privatization date shall be direct liabilities
of the United States.''.
(2) Subsection (b) of section 1406 (42 U.S.C. 2297c-5(b)) is
amended--
(A) by inserting ``and Privatization'' after
``Transition'' in the heading; and
(B) by adding at the end the following: ``As of the
privatization date, any judgment entered against the
Corporation imposing liability arising out of the
operation of the Corporation from the transition date
to the privatization date shall be considered a
judgment against the United States.''.
(3) Subsection (d) of section 1406 (42 U.S.C. 2297c-5(d)) is
amended--
(A) by inserting ``and Privatization'' after
``Transition'' in the heading; and
(B) by striking ``the transition date'' and inserting
``the privatization date (or, in the event the
privatization date does not occur, the transition
date)''.
(f) Transfer of Uranium.--Title II (42 U.S.C. 2297 et seq.) is
amended by redesignating section 1408 as section 1409 and by inserting
after section 1407 the following:
``SEC. 1408. TRANSFER OF URANIUM.
``The Secretary may, before the privatization date, transfer to the
Corporation without charge raw uranium, low-enriched uranium, and
highly enriched uranium.''.
SEC. 706. PRIVATIZATION OF THE CORPORATION.
(a) Establishment of Private Corporation.--Chapter 25 (42 U.S.C.
2297d et seq.) is amended by adding at the end the following new
section:
``SEC. 1503. ESTABLISHMENT OF PRIVATE CORPORATION.
``(a) Establishment.--
``(1) In general.--In order to facilitate privatization, the
Corporation may provide for the establishment of a private
corporation organized under the laws of any of the several
States. Such corporation shall have among its purposes the
following:
``(A) To help maintain a reliable and economical
domestic source of uranium enrichment services.
``(B) To undertake any and all activities as provided
in its corporate charter.
``(2) Authorities.--The corporation established pursuant to
paragraph (1) shall be authorized to--
``(A) enrich uranium, provide for uranium to be
enriched by others, or acquire enriched uranium
(including low-enriched uranium derived from highly
enriched uranium);
``(B) conduct, or provide for conducting, those
research and development activities related to uranium
enrichment and related processes and activities the
corporation considers necessary or advisable to
maintain itself as a commercial enterprise operating on
a profitable and efficient basis;
``(C) enter into transactions regarding uranium,
enriched uranium, or depleted uranium with--
``(i) persons licensed under section 53, 63,
103, or 104 in accordance with the licenses
held by those persons;
``(ii) persons in accordance with, and within
the period of, an agreement for cooperation
arranged under section 123; or
``(iii) persons otherwise authorized by law
to enter into such transactions;
``(D) enter into contracts with persons licensed
under section 53, 63, 103, or 104, for as long as the
corporation considers necessary or desirable, to
provide uranium or uranium enrichment and related
services;
``(E) enter into contracts to provide uranium or
uranium enrichment and related services in accordance
with, and within the period of, an agreement for
cooperation arranged under section 123 or as otherwise
authorized by law; and
``(F) take any and all such other actions as are
permitted by the law of the jurisdiction of
incorporation of the corporation.
``(3) Transfer of assets.--For purposes of implementing the
privatization, the Corporation may transfer some or all of its
assets and obligations to the corporation established pursuant
to this section, including--
``(A) all of the Corporation's assets, including all
contracts, agreements, and leases, including all
uranium enrichment contracts and power purchase
contracts;
``(B) all funds in accounts of the Corporation held
by the Treasury or on deposit with any bank or other
financial institution;
``(C) all of the Corporation's rights, duties, and
obligations, accruing subsequent to the privatization
date, under the power purchase contracts covered by
section 1401(b)(2)(B); and
``(D) all of the Corporation's rights, duties, and
obligations, accruing subsequent to the privatization
date, under the lease agreement between the Department
and the Corporation executed by the Department and the
Corporation pursuant to section 1403.
``(4) Merger or consolidation.--For purposes of implementing
the privatization, the Corporation may merge or consolidate
with the corporation established pursuant to subsection (a)(1)
if such action is contemplated by the plan for privatization
approved by the President under section 1502(b). The Board
shall have exclusive authority to approve such merger or
consolidation and to take all further actions necessary to
consummate such merger or consolidation, and no action by or in
respect of shareholders shall be required. The merger or
consolidation shall be effected in accordance with, and have
the effects of a merger or consolidation under, the laws of the
jurisdiction of incorporation of the surviving corporation, and
all rights and benefits provided under this title to the
Corporation shall apply to the surviving corporation as if it
were the Corporation.
``(5) Tax treatment of privatization.--
``(A) Transfer of assets or merger.--No income, gain,
or loss shall be recognized by any person by reason of
the transfer of the Corporation's assets to, or the
Corporation's merger with, the corporation established
pursuant to subsection (a)(1) in connection with the
privatization.
``(B) Cancellation of debt and common stock.--No
income, gain, or loss shall be recognized by any person
by reason of any cancellation of any obligation or
common stock of the Corporation in connection with the
privatization.
``(b) OSHA Requirements.--For purposes of the regulation of
radiological and nonradiological hazards under the Occupational Safety
and Health Act of 1970, the corporation established pursuant to
subsection (a)(1) shall be treated in the same manner as other
employers licensed by the Nuclear Regulatory Commission. Any
interagency agreement entered into between the Nuclear Regulatory
Commission and the Occupational Safety and Health Administration
governing the scope of their respective regulatory authorities shall
apply to the corporation as if the corporation were a Nuclear
Regulatory Commission licensee.
``(c) Legal Status of Private Corporation.--
``(1) Not federal agency.--The corporation established
pursuant to subsection (a)(1) shall not be an agency,
instrumentality, or establishment of the United States
Government and shall not be a Government corporation or
Government-controlled corporation.
``(2) No recourse against united states.--Obligations of the
corporation established pursuant to subsection (a)(1) shall not
be obligations of, or guaranteed as to principal or interest
by, the Corporation or the United States, and the obligations
shall so plainly state.
``(3) No claims court jurisdiction.--No action under section
1491 of title 28, United States Code, shall be allowable
against the United States based on the actions of the
corporation established pursuant to subsection (a)(1).
``(d) Board of Director's Election After Public Offering.--In the
event that the privatization is implemented by means of a public
offering, an election of the members of the board of directors of the
Corporation by the shareholders shall be conducted before the end of
the 1-year period beginning the date shares are first offered to the
public pursuant to such public offering.
``(e) Adequate Proceeds.--The Secretary of Energy shall not allow the
privatization of the Corporation unless before the sale date the
Secretary determines that the estimated sum of the gross proceeds from
the sale of the Corporation will be an adequate amount.''.
(b) Ownership Limitations.--Chapter 25 (as amended by subsection (a))
is amended by adding at the end the following new section:
``SEC. 1504. OWNERSHIP LIMITATIONS.
``(a) Securities Limitation.--In the event that the privatization is
implemented by means of a public offering, during a period of 3 years
beginning on the privatization date, no person, directly or indirectly,
may acquire or hold securities representing more than 10 percent of the
total votes of all outstanding voting securities of the Corporation.
``(b) Application.--Subsection (a) shall not apply--
``(1) to any employee stock ownership plan of the
Corporation,
``(2) to underwriting syndicates holding shares for resale,
or
``(3) in the case of shares beneficially held for others, to
commercial banks, broker-dealers, clearing corporations, or
other nominees.
``(c) No director, officer, or employee of the Corporation may
acquire any securities, or any right to acquire securities, of the
Corporation--
``(1) in the public offering of securities of the Corporation
in the implementation of the privatization,
``(2) pursuant to any agreement, arrangement, or
understanding entered into before the privatization date, or
``(3) before the election of directors of the Corporation
under section 1503(d) on any terms more favorable than those
offered to the general public.''.
(c) Exemption From Liability.--Chapter 25 (as amended by subsection
(b)) is amended by adding at the end the following new section:
``SEC. 1505. EXEMPTION FROM LIABILITY.
``(a) In General.--No director, officer, employee, or agent of the
Corporation shall be liable, for money damages or otherwise, to any
party if, with respect to the subject matter of the action, suit, or
proceeding, such person was fulfilling a duty, in connection with any
action taken in connection with the privatization, which such person in
good faith reasonably believed to be required by law or vested in such
person.
``(b) Exception.--The privatization shall be subject to the
Securities Act of 1933 and the Securities Exchange Act of 1934. The
exemption set forth in subsection (a) shall not apply to claims arising
under such Acts or under the Constitution or laws of any State,
territory, or possession of the United States relating to transactions
in securities, which claims are in connection with a public offering
implementing the privatization.''.
(d) Resolution of Certain Issues.--Chapter 25 (as amended by
subsection (c)) is amended by adding at the end the following new
section:
``SEC. 1506. RESOLUTION OF CERTAIN ISSUES.
``(a) Corporation Actions.--Notwithstanding any provision of any
agreement to which the Corporation is a party, the Corporation shall
not be considered to be in breach, default, or violation of any such
agreement because of any provision of this chapter or any action the
Corporation is required to take under this chapter.
``(b) Right To Sue Withdrawn.--The United States hereby withdraws any
stated or implied consent for the United States, or any agent or
officer of the United States, to be sued by any person for any legal,
equitable, or other relief with respect to any claim arising out of, or
resulting from, acts or omissions under this chapter.''.
(e) Application of Privatization Proceeds.--Chapter 25 (as amended by
subsection (d)) is amended by adding at the end the following new
section:
``SEC. 1507. APPLICATION OF PRIVATIZATION PROCEEDS.
``The proceeds from the privatization shall be included in the budget
baseline required by the Balanced Budget and Emergency Deficit Control
Act of 1985 and shall be counted as an offset to direct spending for
purposes of section 252 of such Act, notwithstanding section 257(e) of
such Act.''.
(f) Conforming Amendment.--The table of contents for chapter 25 is
amended by inserting after the item for section 1502 the following:
``Sec. 1503. Establishment of Private Corporation.
``Sec. 1504. Ownership Limitations.
``Sec. 1505. Exemption from Liability.
``Sec. 1506. Resolution of Certain Issues.
``Sec. 1507. Application of Privatization Proceeds.''.
(g) Section 193 (42 U.S.C. 2243) is amended by adding at the end the
following:
``(f) Limitation.--If the privatization of the United States
Enrichment Corporation results in the Corporation being--
``(1) owned, controlled, or dominated by a foreign
corporation or a foreign government, or
``(2) otherwise inimical to the common defense or security of
the United States,
any license held by the Corporation under sections 53 and 63 shall be
terminated.''.
(h) Period for Congressional Review.--Section 1502(d) (42 U.S.C.
2297d-1(d)) is amended by striking ``less than 60 days after
notification of the Congress'' and inserting ``less than 60 days after
the date of the report to Congress by the Comptroller General under
subsection (c)''.
SEC. 707. PERIODIC CERTIFICATION OF COMPLIANCE.
Section 1701(c)(2) (42 U.S.C. 2297f(c)(2)) is amended by striking
``Annual application for certificate of compliance.--The Corporation
shall apply at least annually to the Nuclear Regulatory Commission for
a certificate of compliance under paragraph (1).'' and inserting
``Periodic application for certificate of compliance.--The Corporation
shall apply to the Nuclear Regulatory Commission for a certificate of
compliance under paragraph (1) periodically, as determined by the
Nuclear Regulatory Commission, but not less than every 5 years.''.
SEC. 708. LICENSING OF OTHER TECHNOLOGIES.
Subsection (a) of section 1702 (42 U.S.C. 2297f-1(a)) is amended by
striking ``other than'' and inserting ``including''.
SEC. 709. CONFORMING AMENDMENTS.
(a) Repeals in Atomic Energy Act of 1954 as of the Privatization
Date.--
(1) Repeals.--As of the privatization date (as defined in
section 1201(13) of the Atomic Energy Act of 1954), the
following sections (as in effect on such privatization date) of
the Atomic Energy Act of 1954 are repealed:
(A) Section 1202.
(B) Sections 1301 through 1304.
(C) Sections 1306 through 1316.
(D) Sections 1404 and 1405.
(E) Section 1601.
(F) Sections 1603 through 1607.
(2) Conforming amendment.--The table of contents of such Act
is amended by repealing the items referring to sections
repealed by paragraph (1).
(b) Statutory Modifications.--As of such privatization date, the
following shall take effect:
(1) For purposes of title I of the Atomic Energy Act of 1954,
all references in such Act to the ``United States Enrichment
Corporation'' shall be deemed to be references to the
corporation established pursuant to section 1503 of the Atomic
Energy Act of 1954 (as added by section 6(a)).
(2) Section 1018(1) of the Energy Policy Act of 1992 (42
U.S.C. 2296b-7(1)) is amended by striking ``the United States''
and all that follows through the period and inserting ``the
corporation referred to in section 1201(4) of the Atomic Energy
Act of 1954.''.
(3) Section 9101(3) of title 31, United States Code, is
amended by striking subparagraph (N), as added by section
902(b) of Public Law 102-486.
(c) Revision of Section 1305.--As of such privatization date, section
1305 of the Atomic Energy Act of 1954 (42 U.S.C 2297b-4) is amended--
(1) by repealing subsections (a), (b), (c), and (d), and
(2) in subsection (e)--
(A) by striking the subsection designation and
heading,
(B) by redesignating paragraphs (1) and (2) (as added
by section 4(a)) as subsections (a) and (b) and by
moving the margins 2-ems to the left,
(C) by striking paragraph (3), and
(D) by redesignating paragraph (4) (as amended by
section 4(b)) as subsection (c), and by moving the
margins 2-ems to the left.