[House Report 106-344]
[From the U.S. Government Publishing Office]



106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    106-344

======================================================================



 
                    EXTENSION OF EXPIRING PROVISIONS

                                _______
                                

 September 28, 1999.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

    Mr. Archer, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 2923]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 2923) to amend the Internal Revenue Code of 1986 to 
extend expiring provisions, to fully allow the nonrefundable 
personal credits against regular tax liability, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
  I. Summary and Background...........................................6
          A. Purpose and Summary.................................     6
          B. Background and Need for Legislation.................     7
          C. Legislative History.................................     8
 II. Explanation of the Bill..........................................8
     Title I: Extension of Expiring Provisions........................8
          A. Extend Minimum Tax Relief for Individuals...........     8
          B. Extension of Research Tax Credit....................     9
          C. Extend Exceptions under Subpart F for Active 
              Financing Income...................................    13
          D. Extend Suspension of Net Income Limitation on 
              Percentage Depletion from Marginal Oil and Gas 
              Wells..............................................    15
          E. Extend the Work Opportunity Tax Credit..............    16
          F. Extend the Welfare-to-Work Tax Credit...............    17
     Title II: Other Time-Sensitive Provisions.......................18
          A. Prohibit Disclosure of APAs and APA Background Files    18
          B. Add Certain Vaccines Against Streptococcus 
              Pneumoniae to the List of Taxable Vaccines.........    23
          C. Authority to Postpone Certain Tax-Related Deadlines 
              by Reason of Year 2000 Failures....................    25
     Title III: Revenue Offset for Fiscal Year 2000..................27
          A. Modification of Individual Estimated Tax Safe Harbor    27
III. Votes of the Committee..........................................27
 IV. Budget Effects..................................................29
  V. Other Matters...................................................35
 VI. Changes in Existing Law.........................................37
VII. Dissenting Views................................................46

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

               TITLE I--EXTENSION OF EXPIRING PROVISIONS

SEC. 101. NONREFUNDABLE PERSONAL CREDITS FULLY ALLOWED AGAINST REGULAR 
                    TAX LIABILITY.

  (a) In General.--Subsection (a) of section 26 of the Internal Revenue 
Code of 1986 (relating to limitation based on amount of tax) is amended 
to read as follows:
  ``(a) Limitation Based on Amount of Tax.--The aggregate amount of 
credits allowed by this subpart for the taxable year shall not exceed 
the taxpayer's regular tax liability for the taxable year.''.
  (b) Child Credit.--Subsection (d) of section 24 of such Code is 
amended by striking paragraph (2) and by redesignating paragraph (3) as 
paragraph (2).
  (c) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1998.

SEC. 102. RESEARCH CREDIT.

  (a) Extension.--
          (1) In general.--Paragraph (1) of section 41(h) of the 
        Internal Revenue Code of 1986 (relating to termination) is 
        amended--
                  (A) by striking ``June 30, 1999'' and inserting 
                ``June 30, 2004'', and
                  (B) by striking the material following subparagraph 
                (B).
          (2) Technical amendment.--Subparagraph (D) of section 
        45C(b)(1) of such Code is amended by striking ``June 30, 1999'' 
        and inserting ``June 30, 2004''.
          (3) Effective date.--The amendments made by this subsection 
        shall apply to amounts paid or incurred after June 30, 1999.
  (b) Increase in Percentages Under Alternative Incremental Credit.--
          (1) In general.--Subparagraph (A) of section 41(c)(4) of such 
        Code is amended--
                  (A) by striking ``1.65 percent'' and inserting ``2.65 
                percent'',
                  (B) by striking ``2.2 percent'' and inserting ``3.2 
                percent'', and
                  (C) by striking ``2.75 percent'' and inserting ``3.75 
                percent''.
          (2) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after June 30, 1999.
  (c) Special Rule.--
          (1) In general.--For purposes of the Internal Revenue Code of 
        1986, the credit determined under section 41 of such Code which 
        is otherwise allowable under such Code and which is 
        attributable to the suspension period shall not be taken into 
        account prior to October 1, 2000. On or after such date, such 
        credit may be taken into account through the filing of an 
        amended return, an application for expedited refund, an 
        adjustment of estimated taxes, or other means allowed by such 
        Code.
          (2) Suspension period.--For purposes of this subsection, the 
        suspension period is the period beginning on July 1, 1999, and 
        ending on September 30, 2000.
          (3) Expedited refunds.--
                  (A) In general.--If there is an overpayment of tax 
                with respect to a taxable year by reason of paragraph 
                (1), the taxpayer may file an application for a 
                tentative refund of such overpayment. Such application 
                shall be in such manner and form, and contain such 
                information, as the Secretary may prescribe.
                  (B) Deadline for applications.--Subparagraph (A) 
                shall apply only to applications filed before October 
                1, 2001.
                  (C) Allowance of adjustments.--Not later than 90 days 
                after the date on which an application is filed under 
                this paragraph, the Secretary shall--
                          (i) review the application,
                          (ii) determine the amount of the overpayment, 
                        and
                          (iii) apply, credit, or refund such 
                        overpayment,
                in a manner similar to the manner provided in section 
                6411(b) of such Code.
                  (D) Consolidated returns.--The provisions of section 
                6411(c) of such Code shall apply to an adjustment under 
                this paragraph in such manner as the Secretary may 
                provide.
          (4) Credit attributable to suspension period.--
                  (A) In general.--For purposes of this subsection, in 
                the case of a taxable year which includes a portion of 
                the suspension period, the amount of credit determined 
                under section 41 of such Code for such taxable year 
                which is attributable to such period is the amount 
                which bears the same ratio to the amount of credit 
                determined under such section 41 for such taxable year 
                as the number of months in the suspension period which 
                are during such taxable year bears to the number of 
                months in such taxable year.
                  (B) Waiver of estimated tax penalties.--No addition 
                to tax shall be made under section 6654 or 6655 of such 
                Code for any period before July 1, 1999, with respect 
                to any underpayment of tax imposed by such Code to the 
                extent such underpayment was created or increased by 
                reason of subparagraph (A).
          (5) Secretary.--For purposes of this subsection, the term 
        ``Secretary'' means the Secretary of the Treasury (or such 
        Secretary's delegate).

SEC. 103. SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME.

  (a) In General.--Sections 953(e)(10) and 954(h)(9) of the Internal 
Revenue Code of 1986 (relating to application) are each amended--
          (1) by striking ``the first taxable year'' and inserting 
        ``taxable years'',
          (2) by striking ``January 1, 2000'' and inserting ``January 
        1, 2005'', and
          (3) by striking ``within which such'' and inserting ``within 
        which any such''.
  (b) Effective Date.--The amendments made by this section shall apply 
to taxable years beginning after December 31, 1999.

SEC. 104. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR MARGINAL 
                    PRODUCTION.

  (a) In General.--Subparagraph (H) of section 613A(c)(6) of the 
Internal Revenue Code of 1986 (relating to temporary suspension of 
taxable limit with respect to marginal production) is amended by 
striking ``January 1, 2000'' and inserting ``January 1, 2005''.
  (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1999.

SEC. 105. WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK CREDIT.

  (a) Temporary Extension.--Sections 51(c)(4)(B) and 51A(f ) of the 
Internal Revenue Code of 1986 (relating to termination) are each 
amended by striking ``June 30, 1999'' and inserting ``December 31, 
2001''.
  (b) Clarification of First Year of Employment.--Paragraph (2) of 
section 51(i) of such Code is amended by striking ``during which he was 
not a member of a targeted group''.
  (c) Effective Date.--The amendments made by this section shall apply 
to individuals who begin work for the employer after June 30, 1999.

               TITLE II--OTHER TIME-SENSITIVE PROVISIONS

SEC. 201. ADVANCE PRICING AGREEMENTS TREATED AS CONFIDENTIAL TAXPAYER 
                    INFORMATION.

  (a) In General.--
          (1) Treatment as return information.--Paragraph (2) of 
        section 6103(b) of the Internal Revenue Code of 1986 (defining 
        return information) is amended by striking ``and'' at the end 
        of subparagraph (A), by inserting ``and'' at the end of 
        subparagraph (B), and by inserting after subparagraph (B) the 
        following new subparagraph:
                  ``(C) any advance pricing agreement entered into by a 
                taxpayer and the Secretary and any background 
                information related to such agreement or any 
                application for an advance pricing agreement,''.
          (2) Exception from public inspection as written 
        determination.--Paragraph (1) of section 6110(b) of such Code 
        (defining written determination) is amended by adding at the 
        end the following new sentence: ``Such term shall not include 
        any advance pricing agreement entered into by a taxpayer and 
        the Secretary and any background information related to such 
        agreement or any application for an advance pricing 
        agreement.''.
          (3) Effective date.--The amendments made by this subsection 
        shall take effect on the date of the enactment of this Act.
  (b) Annual Report Regarding Advance Pricing Agreements.--
          (1) In general.--Not later than 90 days after the end of each 
        calendar year, the Secretary of the Treasury shall prepare and 
        publish a report regarding advance pricing agreements.
          (2) Contents of report.--The report shall include the 
        following for the calendar year to which such report relates:
                  (A) Information about the structure, composition, and 
                operation of the advance pricing agreement program 
                office.
                  (B) A copy of each model advance pricing agreement.
                  (C) The number of--
                          (i) applications filed during such calendar 
                        year for advanced pricing agreements;
                          (ii) advance pricing agreements executed 
                        cumulatively to date and during such calendar 
                        year;
                          (iii) renewals of advanced pricing agreements 
                        issued;
                          (iv) pending requests for advance pricing 
                        agreements;
                          (v) pending renewals of advance pricing 
                        agreements;
                          (vi) for each of the items in clauses (ii) 
                        through (v), the number that are unilateral, 
                        bilateral, and multilateral, respectively;
                          (vii) advance pricing agreements revoked or 
                        canceled, and the number of withdrawals from 
                        the advance pricing agreement program; and
                          (viii) advanced pricing agreements finalized 
                        or renewed by industry.
                  (D) General descriptions of--
                          (i) the nature of the relationships between 
                        the related organizations, trades, or 
                        businesses covered by advance pricing 
                        agreements;
                          (ii) the covered transactions and the 
                        business functions performed and risks assumed 
                        by such organizations, trades, or businesses;
                          (iii) the related organizations, trades, or 
                        businesses whose prices or results are tested 
                        to determine compliance with transfer pricing 
                        methodologies prescribed in advanced pricing 
                        agreements;
                          (iv) methodologies used to evaluate tested 
                        parties and transactions and the circumstances 
                        leading to the use of those methodologies;
                          (v) critical assumptions made and sources of 
                        comparables used;
                          (vi) comparable selection criteria and the 
                        rationale used in determining such criteria;
                          (vii) the nature of adjustments to 
                        comparables or tested parties;
                          (viii) the nature of any ranges agreed to, 
                        including information regarding when no range 
                        was used and why, when interquartile ranges 
                        were used, and when there was a statistical 
                        narrowing of the comparables;
                          (ix) adjustment mechanisms provided to 
                        rectify results that fall outside of the agreed 
                        upon advance pricing agreement range;
                          (x) the various term lengths for advance 
                        pricing agreements, including rollback years, 
                        and the number of advance pricing agreements 
                        with each such term length;
                          (xi) the nature of documentation required; 
                        and
                          (xii) approaches for sharing of currency or 
                        other risks.
                  (E) Statistics regarding the amount of time taken to 
                complete new and renewal advance pricing agreements.
                  (F) A detailed description of the Secretary of the 
                Treasury's efforts to ensure compliance with existing 
                advance pricing agreements.
          (3) Confidentiality.--The reports required by this subsection 
        shall be treated as authorized by the Internal Revenue Code of 
        1986 for purposes of section 6103 of such Code, but the reports 
        shall not include information--
                  (A) which would not be permitted to be disclosed 
                under section 6110(c) of such Code if such report were 
                a written determination as defined in section 6110 of 
                such Code, or
                  (B) which can be associated with, or otherwise 
                identify, directly or indirectly, a particular 
                taxpayer.
          (4) First report.--The report for calendar year 1999 shall 
        include prior calendar years after 1990.
  (c) Regulations.--The Secretary of the Treasury or the Secretary's 
delegate shall prescribe such regulations as may be necessary or 
appropriate to carry out the purposes of section 6103(b)(2)(C), and the 
last sentence of section 6110(b)(1), of the Internal Revenue Code of 
1986, as added by this section.

SEC. 202. INCLUSION OF CERTAIN VACCINES AGAINST STREPTOCOCCUS 
                    PNEUMONIAE TO LIST OF TAXABLE VACCINES.

  (a) Inclusion of Vaccines.--
          (1) In general.--Section 4132(a)(1) of the Internal Revenue 
        Code of 1986 (defining taxable vaccine) is amended by adding at 
        the end the following new subparagraph:
                  ``(L) Any conjugate vaccine against streptococcus 
                pneumoniae.''.
          (2) Effective date.--
                  (A) Sales.--The amendment made by this subsection 
                shall apply to vaccine sales beginning on the day after 
                the date on which the Centers for Disease Control makes 
                a final recommendation for routine administration to 
                children of any conjugate vaccine against streptococcus 
                pneumoniae, but shall not take effect if subsection (b) 
                does not take effect.
                  (B) Deliveries.--For purposes of subparagraph (A), in 
                the case of sales on or before the date described in 
                such subparagraph for which delivery is made after such 
                date, the delivery date shall be considered the sale 
                date.
  (b) Vaccine Tax and Trust Fund Amendments.--
          (1) Sections 1503 and 1504 of the Vaccine Injury Compensation 
        Program Modification Act (and the amendments made by such 
        sections) are hereby repealed.
          (2) Subparagraph (A) of section 9510(c)(1) is amended by 
        striking ``August 5, 1997'' and inserting ``October 21, 1998''.
          (3) The amendments made by this subsection shall take effect 
        as if included in the provisions of the Tax and Trade Relief 
        Extension Act of 1998 to which they relate.
  (c) Report.--Not later than December 31, 1999, the Comptroller 
General of the United States shall prepare and submit a report to the 
Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate on the operation of the Vaccine 
Injury Compensation Trust Fund and on the adequacy of such Fund to meet 
future claims made under the Vaccine Injury Compensation Program.

SEC. 203. AUTHORITY TO POSTPONE CERTAIN TAX-RELATED DEADLINES BY REASON 
                    OF Y2K FAILURES.

  (a) In General.--In the case of a taxpayer determined by the 
Secretary of the Treasury (or the Secretary's delegate) to be affected 
by a Y2K failure, the Secretary may disregard a period of up to 90 days 
in determining, under the internal revenue laws, in respect of any tax 
liability (including any interest, penalty, additional amount, or 
addition to the tax) of such taxpayer--
          (1) whether any of the acts described in paragraph (1) of 
        section 7508(a) of the Internal Revenue Code of 1986 (without 
        regard to the exceptions in parentheses in subparagraphs (A) 
        and (B)) were performed within the time prescribed therefor, 
        and
          (2) the amount of any credit or refund.
  (b) Applicability of Certain Rules.--For purposes of this section, 
rules similar to the rules of subsections (b) and (e) of section 7508 
of the Internal Revenue Code of 1986 shall apply.

                       TITLE III--REVENUE OFFSET

SEC. 301. MODIFICATION OF ESTIMATED TAX SAFE HARBOR.

    (a) In General.--The table contained in clause (i) of section 
6654(d)(1)(C) of the Internal Revenue Code of 1986 (relating to 
limitation on use of preceding year's tax) is amended by striking the 
item relating to 1999 or 2000 and inserting the following new items:

    ``1999........................................               108.5 
    2000..........................................               106''.

    (b) Effective Date.--The amendment made by this section shall apply 
with respect to any installment payment for taxable years beginning 
after December 31, 1999.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary


                                purpose

    The bill, H.R. 2923, provides needed relief to individuals 
by allowing nonrefundable personal credits, including the child 
credit, to offset fully regular tax liability, extends other 
expiring provisions, and addresses other time-sensitive issues 
relating to disclosure of advance pricing agreements 
(``APAs''), inclusion of vaccines against streptococcus in the 
list of taxable vaccines, and failures to meet certain tax 
deadlines by reason of Year 2000 failures.

                                summary

Extension of expiring provisions

    Extension of minimum tax relief for individuals.--Effective 
for taxable years beginning after December 31, 1998, the 
provision allows an individual taxpayer to offset the entire 
regular tax liability (without regard to the minimum tax) by 
the personal nonrefundable credits and repeals the present-law 
reduction of the refundable child credit by the amount of an 
individual's minimum tax.
    Extension of research tax credit.--The provision extends 
the research tax credit generally through June 30, 2004, 
increases the credit rate under the alternative incremental 
credit by one percentage point for each step, and provides that 
research credits attributable to periods after June 30, 1999, 
and before October 1, 2000, shall not be taken into account in 
determining any amount required to be paid for any purpose 
under the Internal Revenue Code before October 1, 2000.
    Extend exceptions under Subpart F for active financing 
income.--The provision extends for five years the present-law 
temporary exceptions from Subpart F foreign personal holding 
company income, foreign base company services income, and 
insurance income for certain income that is derived in the 
active conduct of a banking, financing, or similar business, or 
in the conduct of an insurance business. The provision is 
effective for taxable years of a foreign corporation beginning 
after December 31, 1999, and before January 1, 2005, and for 
taxable years of U.S. shareholders with or within which such 
taxable years of such foreign corporation end.
    Extend suspension of net income limitation on percentage 
depletion from marginal oil and gas wells.--The provision 
extends through December 31, 2004, the present-law suspension 
of a rule limiting percentage depletion deductions of oil and 
gas independent producers to 100 percent of the net income from 
the mineral property.
    Extend the Work Opportunity Tax Credit.--The provision 
extends the Work Opportunity Tax Credit for 30 months 
(``WOTC'') (through December 31, 2001) and directs the 
Secretary of the Treasury to expedite procedures to allow 
taxpayers to satisfy their WOTC filing requirements by 
electronic means. Generally, the provision is effective for 
wages paid to, or incurred with respect to, qualified 
individuals who begin work for the employer on or after July 1, 
1999, and before January 1, 2002.
    Extend the Welfare-to-Work Tax Credit.--The provision 
extends the welfare-to-work credit for 30 months (through 
December 31, 2001). The provision is effective for wages paid 
or incurred to a qualified individual who begins work for an 
employer on or after July 1, 1999, and before January 1, 2002.

Other time-sensitive provisions

    Prohibit disclosure of APAs and APA background files.--The 
provision confirms that advance pricing agreements (``APAs'') 
and related background information are confidential return 
information and are not ``written determinations'' for purposes 
of the public inspection requirements of section 6110 and 
requires the Department of Treasury to prepare annually a 
detailed report regarding APAs and the APA program. The 
provision is effective upon enactment, such that neither APAs, 
regardless of when executed, nor their related background 
files, can be released to the public.
    Add certain vaccines against streptococcus pneumoniae to 
the list of taxable vaccines.--The provision adds conjugate 
streptococcus pneumoniae vaccines to the list of taxable 
vaccines, effective for vaccine purchases beginning on the day 
after the date on which the Centers for Disease Control makes 
final recommendation for routine administration of the 
vaccines, and directs the General Accounting Office to report 
on the Vaccine Injury Compensation Trust Fund not later than 
December 31, 1999.
    Authority to postpone certain tax-related deadlines by 
reason of Year 2000 failures.--The provision permits the 
Secretary of the Treasury to postpone certain tax-related 
deadlines for a period of up to 90 days in the case of a 
taxpayer determined to be affected by an actual Year 2000 
failure.

Revenue offset for fiscal year 2000

    Modification of individual estimated tax safe harbor.--For 
taxable years beginning in 2000, the estimated tax safe harbor 
for an individual with an AGI of more than $150,000 as shown on 
the return for the preceding taxable year would be increased to 
108.5 percent of the preceding year's liability.

                 B. Background and Need for Legislation

    Certain tax provisions have expired or will expire in 1999. 
The Committee believes that these provisions should be extended 
in order for taxpayers to have certainty in applying the 
provisions and for the Congress to have additional time to 
review and evaluate the provisions. The proposal will provide 
tax relief to individual taxpayers by making permanent the 
provision allowing an individual to offset the entire regular 
tax liability by the personal nonrefundable credits.
    Certain time-sensitive matters also need to be addressed. 
The bill generally prohibits disclosure of advanced pricing 
agreements (``APAs''), gives the Secretary of the Treasury 
authority to provide relief from certain tax deadlines due to 
Year 2000 failures, and adds certain vaccines against 
streptococcus pneumoniae to the list of taxable vaccines.
    The bill includes a revenue offset for Fiscal Year 2000.

                         C. Legislative History

    The bill, H.R. 2923, was introduced by Chairman Archer on 
September 23, 1999. The Committee marked up the bill on 
September 24, 1999, and approved the bill with the Chairman's 
amendment in the nature of a substitute by a roll call vote of 
23 yeas to 14 nays (with a quorum present). The provisions 
extending expiring tax provisions, the provision relating to 
streptococcus pneumoniae, and the provision relating to 
advanced pricing agreements generally were also included in the 
conference agreement for H.R. 2488, the ``Taxpayer Refund and 
Relief Act of 1999.'' 1
---------------------------------------------------------------------------
    \1\ H.R. 2488 was vetoed by President Clinton on September 23, 
1999.
---------------------------------------------------------------------------

                      II. EXPLANATION OF THE BILL


               TITLE I: EXTENSION OF EXPIRING PROVISIONS


A. Extend Minimum Tax Relief for Individuals (Sec. 101 of the Bill and 
                      Secs. 24 and 26 of the Code)


                              Present Law

    Present law provides for certain nonrefundable personal tax 
credits (i.e., the dependent care credit, the credit for the 
elderly and disabled, the adoption credit, the child tax 
credit, the credit for interest on certain home mortgages, the 
HOPE Scholarship and Lifetime Learning credits, and the D.C. 
homebuyer's credit). Except for taxable years beginning during 
1998, these credits are allowed only to the extent that the 
individual's regular income tax liability exceeds the 
individual's tentative minimum tax, determined without regard 
to the minimum tax foreign tax credit. For taxable years 
beginning during 1998, these credits are allowed to the extent 
of the full amount of the individual's regular tax (without 
regard to the tentative minimum tax).
    An individual's tentative minimum tax is an amount equal to 
(1) 26 percent of the first $175,000 ($87,500 in the case of a 
married individual filing a separate return) of alternative 
minimum taxable income (``AMTI'') in excess of a phased-out 
exemption amount and (2) 28 percent of the remaining AMTI. The 
maximum tax rates on net capital gain used in computing the 
tentative minimum tax are the same as under the regular tax. 
AMTI is the individual's taxable income adjusted to take 
account of specified preferences and adjustments. The exemption 
amounts are: (1) $45,000 in the case of married individuals 
filing a joint return and surviving spouses; (2) $33,750 in the 
case of other unmarried individuals; and (3) $22,500 in the 
case of married individuals filing a separate return, estates 
and trusts. The exemption amounts are phased out by an amount 
equal to 25 percent of the amount by which the individual's 
AMTI exceeds (1) $150,000 in the case of married individuals 
filing a joint return and surviving spouses, (2) $112,500 in 
the case of other unmarried individuals, and (3) $75,000 in the 
case of married individuals filing separate returns or an 
estate or a trust. These amounts are not indexed for inflation.
    For families with three or more qualifying children, a 
refundable child credit is provided, up to the amount by which 
the liability for social security taxes exceeds the amount of 
the earned income credit (sec. 24(d)). For taxable years 
beginning after 1998, the refundable child credit is reduced by 
the amount of the individual's minimum tax liability (i.e., the 
amount by which the tentative minimum tax exceeds the regular 
tax liability).

                           Reasons for Change

    The Committee believes that middle-income families should 
be able to use the nonrefundable credits without limitation by 
reason of the minimum tax. This provision will also result in 
significant simplification.

                        Explanation of Provision

    The provision allows an individual to offset the entire 
regular tax liability (without regard to the minimum tax) by 
the personal nonrefundable credits.
    The present-law provision that reduces the refundable child 
credit by the amount of an individual's minimum tax is 
repealed.

                             Effective Date

    The provisions are effective for taxable years beginning 
after December 31, 1998.

 B. Extension of Research Tax Credit (Sec. 102 of the Bill and Sec. 41 
                              of the Code)


                              Present Law

General rule

    Section 41 provides for a research tax credit equal to 20 
percent of the amount by which a taxpayer's qualified research 
expenditures for a taxable year exceeded its base amount for 
that year. The research tax credit expired and generally does 
not apply to amounts paid or incurred after June 30, 1999.
    A 20-percent research tax credit also applied to the excess 
of (1) 100 percent of corporate cash expenditures (including 
grants or contributions) paid for basic research conducted by 
universities (and certain nonprofit scientific research 
organizations) over (2) the sum of (a) the greater of two 
minimum basic research floors plus (b) an amount reflecting any 
decrease in nonresearch giving to universities by the 
corporation as compared to such giving during a fixed-base 
period, as adjusted for inflation. This separate credit 
computation is commonly referred to as the ``university basic 
research credit'' (see sec. 41(e)).

Computation of allowable credit

    Except for certain university basic research payments made 
by corporations, the research tax credit applies only to the 
extent that the taxpayer's qualified research expenditures for 
the current taxable year exceed its base amount. The base 
amount for the current year generally is computed by 
multiplying the taxpayer's ``fixed-base percentage'' by the 
average amount of the taxpayer's gross receipts for the four 
preceding years. If a taxpayer both incurred qualified research 
expenditures and had gross receipts during each of at least 
three years from 1984 through 1988, then its ``fixed-base 
percentage'' is the ratio that its total qualified research 
expenditures for the 1984-1988 period bears to its total gross 
receipts for that period (subject to a maximum ratio of .16). 
All other taxpayers (so-called ``start-up firms'') are assigned 
a fixed-base percentage of 3 percent.2
---------------------------------------------------------------------------
    \2\ A special rule is designed to gradually recompute a start-up 
firm's fixed-base percentage based on its actual research experience. 
Under this special rule, a start-up firm will be assigned a fixed-base 
percentage of 3 percent for each of its first five taxable years after 
1993 in which it incurs qualified research expenditures. In the event 
that the research credit is extended beyond the scheduled expiration 
date, a start-up firm's fixed-based percentage for its sixth through 
tenth taxable years after 1993 in which it incurs qualified research 
expenditures will be a phased-in ratio based on its actual research 
experience. For all subsequent taxable years, the taxpayer's fixed-
based percentage will be its actual ratio of qualified research 
expenditures to gross receipts for any five years selected by the 
taxpayer from its fifth through tenth taxable years after 1993 (sec. 
41(c)(3)(B)).
---------------------------------------------------------------------------
    In computing the credit, a taxpayer's base amount may not 
be less than 50 percent of its current-year qualified research 
expenditures.

Alternative incremental research credit regime

    Taxpayers are allowed to elect an alternative incremental 
research credit regime. If a taxpayer elects to be subject to 
this alternative regime, the taxpayer is assigned a three-
tiered fixed-base percentage (that is lower than the fixed-base 
percentage otherwise applicable under present law) and the 
credit rate likewise is reduced. Under the alternative credit 
regime, a credit rate of 1.65 percent applies to the extent 
that a taxpayer's current-year research expenses exceed a base 
amount computed by using a fixed-base percentage of 1 percent 
(i.e., the base amount equals 1 percent of the taxpayer's 
average gross receipts for the four preceding years) but do not 
exceed a base amount computed by using a fixed-base percentage 
of 1.5 percent. A credit rate of 2.2 percent applies to the 
extent that a taxpayer's current-year research expenses exceed 
a base amount computed by using a fixed-base percentage of 1.5 
percent but do not exceed a base amount computed by using a 
fixed-base percentage of 2 percent. A credit rate of 2.75 
percent applies to the extent that a taxpayer's current-year 
research expenses exceed a base amount computed by using a 
fixed-base percentage of 2 percent. An election to be subject 
to this alternative incremental credit regime applies to the 
taxable year in which the election is made and all subsequent 
years (in the event that the credit subsequently is extended by 
Congress) unless revoked with the consent of the Secretary of 
the Treasury.

Eligible expenditures

    Qualified research expenditures eligible for the research 
tax credit consist of: (1) ``in-house'' expenses of the 
taxpayer for wages and supplies attributable to qualified 
research; (2) certain time-sharing costs for computer use in 
qualified research; and (3) 65 percent of amounts paid by the 
taxpayer for qualified research conducted on the taxpayer's 
behalf (so-called ``contract research expenses'').3
---------------------------------------------------------------------------
    \3\ Under a special rule, 75 percent of amounts paid to a research 
consortium for qualified research is treated as qualified research 
expenses eligible for the research credit (rather than 65 percent under 
the general rule under sec. 41(b)(3) governing contract research 
expenses) if (1) such research consortium is a tax-exempt organization 
that is described in section 501(c)(3) (other than a private 
foundation) or section 501(c)(6) and is organized and operated 
primarily to conduct scientific research, and (2) such qualified 
research is conducted by the consortium on behalf of the taxpayer and 
one or more persons not related to the taxpayer.
---------------------------------------------------------------------------
    To be eligible for the credit, the research must not only 
satisfy the requirements of present-law section 174 but must be 
undertaken for the purpose of discovering information that is 
technological in nature, the application of which is intended 
to be useful in the development of a new or improved business 
component of the taxpayer, and must involve a process of 
experimentation related to functional aspects, performance, 
reliability, or quality of a business component.
    Expenditures attributable to research that is conducted 
outside the United States do not enter into the credit 
computation. In addition, the credit is not available for 
research in the social sciences, arts, or humanities, nor is it 
available for research to the extent funded by any grant, 
contract, or otherwise by another person (or governmental 
entity).

Relation to deduction

    Deductions allowed to a taxpayer under section 174 (or any 
other section) are reduced by an amount equal to 100 percent of 
the taxpayer's research tax credit determined for the taxable 
year. Taxpayers may alternatively elect to claim a reduced 
research tax credit amount under section 41 in lieu of reducing 
deductions otherwise allowed (sec. 280C(c)(3)).

                           Reasons for Change

    The Committee believes that increasing technological 
knowledge ultimately will lead to new and better products 
produced at lower costs. New and better products and lower 
production costs are the genesis of economic growth. For this 
reason, the Committee believes it is important to extend the 
research and experimentation tax credit.
    In addition, the Committee believes the alternative 
incremental credit enacted in 1996 should be strengthened. The 
alternative incremental research credit was enacted to respond 
to the changing economic circumstances of many taxpayers which 
invest heavily in research. However, the Committee believes 
that, under current law, the alternative incremental research 
credit provides less of a research incentive than does the 
regular research and experimentation tax credit. Therefore, the 
Committee believes it is appropriate to increase the rate of 
the alternative incremental research credit.

                        Explanation of Provision

    The bill extends the research tax credit for five years, 
i.e., generally, for the period July 1, 1999, through June 30, 
2004.
    In addition, the bill increases the credit rate applicable 
under the alternative incremental research credit one 
percentage point per step, in the following manner: (1) from 
1.65 percent to 2.65 percent when a taxpayer's current-year 
research expenses exceed a base amount of 1 percent but do not 
exceed a base amount of 1.5 percent; (2) from 2.2 percent to 
3.2 percent when a taxpayer's current-year research expenses 
exceed a base amount of 1.5 percent but do not exceed a base 
amount of 2 percent; and (3) from 2.75 percent to 3.75 percent 
when a taxpayer's current-year research expenses exceed a base 
amount of 2 percent.
    Research tax credits that are attributable to the period 
beginning on July 1, 1999, and ending on September 30, 2000, 
may not be taken into account in determining any amount 
required to be paid for any purpose under the Internal Revenue 
Code prior to October 1, 2000. On or after October 1, 2000, 
such credits may be taken into account through the filing of an 
amended return, an application for expedited refund, an 
adjustment of estimated taxes, or other means that are allowed 
by the Code.
    The amount of research credits that are attributable to any 
period between July 1, 1999, and September 30, 2000, is 
determined by multiplying the total research credit for any 
year that includes a portion of such period, by the ratio of 
months in such period to the months in the taxable year. For 
example, assume a calendar year corporation has $800 of credits 
for both 1999 and 2000. The amount of credits attributable to 
the period July 1 through December 31, 1999, would be 
$400,4 and the amount of credits attributable to the 
period January 1 through September 30, 2000 would be 
$600.5
---------------------------------------------------------------------------
    \4\ 6/12 X $800.
    \5\ 9/12 X $800.
---------------------------------------------------------------------------
    In this example, because the taxpayer has research tax 
credits of $400 attributable to the period July 1, 1999, 
through December 31, 1999, the taxpayer may not reduce its 1999 
liability by that $400. On or after October 1, 2000, the 
taxpayer may file an amended return to claim the benefit of 
that $400. Normal rules will apply to such an amended return. 
The IRS must refund the $400 within 45 days of the date the 
amended return is filed, or overpayment interest will accrue to 
the taxpayer from March 15, 2000, the original due date of the 
1999 return.
    In lieu of filing an amended return, the taxpayer may file 
an application for a tentative refund of the $400 overpayment 
under a special expedited refund proceeding similar to that 
available for the accelerated refund of net operating loss 
carrybacks. The Secretary is required to process this refund 
claim within 90 days. Applications to use the special expedited 
refund proceeding must be filed before October 1, 2001.
    Research tax credits that are attributable to the period 
beginning on July 1, 1999, and ending on September 30, 2000, 
may not be used to reduce estimated tax payments during this 
period. For example, assume that the calendar year taxpayer 
discussed above also has research tax credits equal to $600 for 
the period January 1, 2000, through September 30, 2000. These 
credits, along with the $400 of research credits for the period 
July 1, 1999, through December 31, 1999, may not be taken into 
account in determining any of the estimated tax payments that 
are due prior to October 1, 2000. If the taxpayer makes an 
estimated payment for its 200 taxes based on its prior year tax 
liability, that liability must be determined without regard to 
the $400 of research credits attributable to the July 1 through 
December 31, 1999, period. If the taxpayer bases such an 
estimated payment on the current year's liability, whether or 
not such liability is annualized, the $600 of research credits 
attributable to the January 1 through September 30, 2000, 
period may not be considered in determining current year 
liability.
    In this example, the calendar year taxpayer's first 
estimated tax payment due on or after October 1, 2000, will be 
the payment due on December 15, 2000. At that time, the 
research credits that previously could not be considered may be 
taken into account. Due to the cumulative nature of the 
estimated tax system, this may reduce the amount otherwise 
required to be paid on December 15, 2000. However, the 
sufficiency of estimated payments due prior to October 1, 2000, 
must still be determined without regard to the research credits 
attributable to the period beginning on July 1, 1999, and 
ending on September 30, 2000, even if that determination occurs 
on or after October 1, 2000.

                             Effective Date

    The extension of the research credit is effective for 
qualified research expenditures paid or incurred during the 
period July 1, 1999, through June 30, 2004. The increase in the 
credit rate under the alternative incremental research credit 
is effective for taxable years beginning after June 30, 1999. 
Estimated tax penalties will be waived for the period before 
July 1, 1999, with respect to any underpayment that is created 
by reason of the rule allocating research credits to a period 
based on the ratio of months in such period to the months in 
the taxable year.

C. Extend Exceptions Under Subpart F for Active Financing Income (Sec. 
           103 of the Bill and Secs. 953 and 954 of the Code)


                              Present Law

    Under the subpart F rules, 10-percent U.S. shareholders of 
a controlled foreign corporation (``CFC'') are subject to U.S. 
tax currently on certain income earned by the CFC, whether or 
not such income is distributed to the shareholders. The income 
subject to current inclusion under the subpart F rules 
includes, among other things, foreign personal holding company 
income and insurance income. In addition, 10-percent U.S. 
shareholders of a CFC are subject to current inclusion with 
respect to their shares of the CFC's foreign base company 
services income (i.e., income derived from services performed 
for a related person outside the country in which the CFC is 
organized).
    Foreign personal holding company income generally consists 
of the following: (1) dividends, interest, royalties, rents, 
and annuities; (2) net gains from the sale or exchange of (a) 
property that gives rise to the preceding types of income, (b) 
property that does not give rise to income, and (c) interests 
in trusts, partnerships, and REMICs; (3) net gains from 
commodities transactions; (4) net gains from foreign currency 
transactions; (5) income that is equivalent to interest; (6) 
income from notional principal contracts; and (7) payments in 
lieu of dividends.
    Insurance income subject to current inclusion under the 
subpart F rules includes any income of a CFC attributable to 
the issuing or reinsuring of any insurance or annuity contract 
in connection with risks located in a country other than the 
CFC's country of organization. Subpart F insurance income also 
includes income attributable to an insurance contract in 
connection with risks located within the CFC's country of 
organization, as the result of an arrangement under which 
another corporation receives a substantially equal amount of 
consideration for insurance of other-country risks. Investment 
income of a CFC that is allocable to any insurance or annuity 
contract related to risks located outside the CFC's country of 
organization is taxable as subpart F insurance income (Prop. 
Treas. Reg. sec. 1.953-1(a)).
    Temporary exceptions from foreign personal holding company 
income, foreign base company services income, and insurance 
income apply for subpart F purposes for certain income that is 
derived in the active conduct of a banking, financing, or 
similar business, or in the conduct of an insurance business 
(so-called ``active financing income''). These exceptions are 
applicable only for taxable years beginning in 
1999.6
---------------------------------------------------------------------------
    \6\ Temporary exceptions from the subpart F provisions for certain 
active financing income applied only for taxable years beginning in 
1998. Those exceptions were extended and modified as part of the 
present-law provision.
---------------------------------------------------------------------------
    With respect to income derived in the active conduct of a 
banking, financing, or similar business, a CFC is required to 
be predominantly engaged in such business and to conduct 
substantial activity with respect to such business in order to 
qualify for the exceptions. In addition, certain nexus 
requirements apply, which provide that income derived by a CFC 
or a qualified business unit (``QBU'') of a CFC from 
transactions with customers is eligible for the exceptions if, 
among other things, substantially all of the activities in 
connection with such transactions are conducted directly by the 
CFC or QBU in its home country, and such income is treated as 
earned by the CFC or QBU in its home country for purposes of 
such country's tax laws. Moreover, the exceptions apply to 
income derived from certain cross border transactions, provided 
that certain requirements are met. Additional exceptions from 
foreign personal holding company income apply for certain 
income derived by a securities dealer within the meaning of 
section 475 and for gain from the sale of active financing 
assets.
    In the case of insurance, in addition to a temporary 
exception from foreign personal holding company income for 
certain income of a qualifying insurance company with respect 
to risks located within the CFC's country of creation or 
organization, certain temporary exceptions from insurance 
income and from foreign personal holding company income apply 
for certain income of a qualifying branch of a qualifying 
insurance company with respect to risks located within the home 
country of the branch, provided certain requirements are met 
under each of the exceptions. Further, additional temporary 
exceptions from insurance income and from foreign personal 
holding company income apply for certain income of certain CFCs 
or branches with respect to risks located in a country other 
than the United States, provided that the requirements for 
these exceptions are met.

                           Reasons for Change

    In the Taxpayer Relief Act of 1997, one-year temporary 
exceptions from foreign personal holding company income were 
enacted 7 for income from the active conduct of an 
insurance, banking, financing, or similar business. In the Tax 
and Trade Relief Extension Act of 1998 (the ``1998 
Act''),8 the Congress extended the temporary 
exceptions for an additional year, with certain modifications 
designed to treat various types of businesses with active 
financing income more similarly to each other than did the 1997 
provision. The Committee believes that it is appropriate to 
extend the temporary exceptions, as modified in the 1998 Act, 
for another five years.
---------------------------------------------------------------------------
    \7\ The President canceled this provision in 1997 pursuant to the 
Line Item Veto Act. On June 25, 1998, the U.S. Supreme Court held that 
the cancellation procedures set forth in the Line Item Veto Act are 
unconstitutional. Clinton v. City of New York, 118 S. Ct. 2091 (June 
25, 1998).
    \8\ Division J of H.R. 4328, the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act, 1999.
---------------------------------------------------------------------------

                        Explanation of Provision

    The bill extends for five years the present-law temporary 
exceptions from subpart F foreign personal holding company 
income, foreign base company services income, and insurance 
income for certain income that is derived in the active conduct 
of a banking, financing, or similar business, or in the conduct 
of an insurance business.

                             Effective Date

    The provision is effective for taxable years of a foreign 
corporation beginning after December 31, 1999, and before 
January 1, 2005, and for taxable years of U.S. shareholders 
with or within which such taxable years of such foreign 
corporation end.

 D. Extend Suspension of Net Income Limitation on Percentage Depletion 
From Marginal Oil and Gas Wells (Sec. 104 of the Bill and Sec. 613A of 
                               the Code)


                              Present Law

    The Code permits taxpayers to recover their investments in 
oil and gas wells through depletion deductions. In the case of 
certain properties, the deductions may be determined using the 
percentage depletion method. Among the limitations that apply 
in calculating percentage depletion deductions is a restriction 
that, for oil and gas properties, the amount deducted may not 
exceed 100 percent of the net income from that property in any 
year (sec. 613(a)).
    Special percentage depletion rules apply to oil and gas 
production from ``marginal'' properties (sec. 613A(c)(6)). 
Marginal production is defined as domestic crude oil and 
natural gas production from stripper well property or from 
property substantially all of the production from which during 
the calendar year is heavy oil. Stripper well property is 
property from which the average daily production is 15 barrel 
equivalents or less, determined by dividing the average daily 
production of domestic crude oil and domestic natural gas from 
producing wells on the property for the calendar year by the 
number of wells. Heavy oil is domestic crude oil with a 
weighted average gravity of 20 degrees API or less (corrected 
to 60 degrees Farenheit). Under one such special rule, the 100-
percent-of-net-income limitation does not apply to domestic oil 
and gas production from marginal properties during taxable 
years beginning after December 31, 1997, and before January 1, 
2000.

                           Reasons for Change

    The Committee notes that oil is, and will continue to be, 
vital to the American economy. The Committee observes that low 
oil prices have created substantial economic hardship in the 
oil industry and particularly in those communities where the 
majority of jobs are related to providing this vital commodity 
to the nation. Skilled workers and industry know-how will be 
critical to the exploration for and production of oil and gas 
in the future. The Committee,therefore, is concerned that the 
current economic hardship in the industry could lead to business 
failures and job losses. The Committee understands that many of these 
businesses are cash starved. The Committee finds it appropriate to 
extend the present-law rule suspending the 100-percent-of-net-income 
limitation with respect to oil and gas production from marginal wells. 
The Committee believes that by reducing current taxable income, less 
cash will have to be devoted to income tax payments and the current 
cash position of many such businesses will improve, helping them 
weather this current economic storm.

                        Explanation of Provision

    The bill extends the present-law rule suspending the 100-
percent-of-net-income limitation with respect to oil and gas 
production from marginal wells to include taxable years 
beginning after December 31, 1999, and before January 1, 2005.

                             Effective Date

    The provision is effective for taxable years beginning 
after December 31, 1999.

  E. Extend the Work Opportunity Tax Credit (Sec. 105 of the Bill and 
                          Sec. 51 of the Code)


                              Present Law

    The work opportunity tax credit (``WOTC'') is available on 
an elective basis for employers hiring individuals from one or 
more of eight targeted groups. The credit generally is equal to 
a percentage of qualified wages. The credit percentage is 25 
percent for employment of at least 120 hours but less than 400 
hours and 40 percent for employment of 400 hours or more. 
Qualified wages consist of wages attributable to service 
rendered by a member of a targeted group during the one-year 
period beginning with the day the individual begins work for 
the employer.
    Generally, no more than $6,000 of wages during the first 
year of employment is permitted to be taken into account with 
respect to any individual. Thus, the maximum credit per 
individual is $2,400. With respect to qualified summer youth 
employees, the maximum credit is 40 percent of up to $3,000 of 
qualified first-year wages, for a maximum credit of $1,200. The 
credit is only effective for wages paid to, or incurred with 
respect to, qualified individuals who began work for the 
employer before July 1, 1999.
    The employer's deduction for wages is reduced by the amount 
of the credit.

                           Reasons for Change

    The Committee believes the preliminary experience of the 
WOTC is promising as an incentive for employers to hire 
individuals who are under-skilled, undereducated, or who 
generally may be less desirable (e.g., lacking in work 
experience) to employers. A temporary extension of this credit 
will allow the Congress and the Treasury and Labor Departments 
to continue to monitor the effectiveness of the credit. The 
Committee also believes that the electronic filing of the 
request for certification (the ``Form 8850'') will reduce the 
administrative burden involved in claiming the credit and 
encourage more employers to participate in the program.

                        Explanation of Provision

    The bill extends the WOTC for 30 months (through December 
31, 2001).
    The bill also directs to the Secretary of the Treasury to 
expedite procedures to allow taxpayers to satisfy their WOTC 
filing requirements (e.g., Form 8850) by electronic means.

                             Effective Date

    The provision is effective for wages paid to, or incurred 
with respect to, qualified individuals who begin work for the 
employer on or after July 1, 1999, and before January 1, 2002.

F. Extend the Welfare-To-Work Tax Credit (Sec. 105 of the Bill and Sec. 
                            51A of the Code)


                              Present Law

    The Code provides a tax credit to employers on the first 
$20,000 of eligible wages paid to qualified long-term family 
assistance (``TANF'') recipients during the first two years of 
employment. The credit is 35 percent of the first $10,000 of 
eligible wages in the first year of employment and 50 percent 
of the first $10,000 of eligible wages in the second year of 
employment. The maximum credit is $8,500 per qualified 
employee.
    Qualified long-term family assistance recipients are: (1) 
members of a family that has received family assistance for at 
least 18 consecutive months ending on the hiring date; (2) 
members of a family that has received family assistance for a 
total of at least 18 months (whether or not consecutive) after 
August 5, 1997 (the date of enactment of this credit) if they 
are hired within 2 years after the date that the 18-month total 
is reached; and (3) members of a family who are no longer 
eligible for family assistance because of either Federal or 
State time limits, if they are hired within 2 years after the 
Federal or State time limits made the family ineligible for 
family assistance.
    Eligible wages include cash wages paid to an employee plus 
amounts paid by the employer for the following: (1) educational 
assistance excludable under a section 127 program (or that 
would be excludable but for the expiration of sec. 127); (2) 
health plan coverage for the employee, but not more than the 
applicable premium defined under section 4980B(f)(4); and (3) 
dependent care assistance excludable under section 129.
    The welfare to work credit is effective for wages paid or 
incurred to a qualified individual who begins work for an 
employer on or after January 1, 1998, and before June 30, 1999.

                           Reasons for Change

    The Committee believes that the credit should be 
temporarily extended to provide the Congress and the Treasury 
and Labor Departments a better opportunity to assess the 
operation and effectiveness of the credit in meeting its goals. 
When enacted in the Taxpayer Relief Act of 1997, the goals of 
the welfare-to-work credit were: (1) to provide an incentive to 
hire long-term welfare recipients; (2) to promote the 
transition from welfare to work by increasing access to 
employment; and (3) to encourage employers to provide these 
individuals with training, health coverage, dependent care and 
ultimately better job attachment.

                        Explanation of Provision

    The bill extends the welfare-to-work credit for 30 months, 
so that the credit is available for eligible individuals who 
begin work for an employer before January 1, 2002.

                             Effective Date

    The provision is effective for wages paid or incurred to a 
qualified individual who begins work for an employer on or 
after July 1, 1999, and before January 1, 2002.

                       II. TIME-SENSITIVE ISSUES


 A. Prohibit Disclosure of APAs and APA Background Files (Sec. 201 of 
             the Bill and Secs. 6103 and 6110 of the Code)


                              Present Law

Section 6103

    Under section 6103, returns and return information are 
confidential and cannot be disclosed unless authorized by the 
Internal Revenue Code.
    The Code defines return information broadly. Return 
information includes:
           A taxpayer's identity, the nature, source or 
        amount of income, payments, receipts, deductions, 
        exemptions, credits, assets, liabilities, net worth, 
        tax liability, tax withheld, deficiencies, 
        overassessments, or tax payments;
           Whether the taxpayer's return was, is being, 
        or will be examined or subject to other investigation 
        or processing; or
           Any other data, received by, recorded by, 
        prepared by, furnished to, or collected by the 
        Secretary with respect to a return or with respect to 
        the determination of the existence, or possible 
        existence, of liability (or the amount thereof) of any 
        person under this title for any tax, penalty, interest, 
        fine, forfeiture, or other imposition, or 
        offense.9
---------------------------------------------------------------------------
    \9\ Sec. 6103(b)(2)(A).
---------------------------------------------------------------------------

Section 6110 and the Freedom of Information Act

    With certain exceptions, section 6110 makes the text of any 
written determination the IRS issues available for public 
inspection. A written determination is any ruling, 
determination letter, technical advice memorandum, or Chief 
Counsel advice. Once the IRS makes the written determination 
publicly available, the background file documents associated 
with such written determination are available for public 
inspection upon written request. The Code defines ``background 
file documents'' as any written material submitted in support 
of the request. Background file documents also include any 
communications between the IRS and persons outside the IRS 
concerning such written determination that occur before the IRS 
issues the determination.
    Before making them available for public inspection, section 
6110 requires the IRS to delete specific categories of 
sensitive information from the written determination and 
background file documents.10 It also provides 
judicial and administrative procedures to resolve disputes over 
the scope of the information the IRS will disclose. In 
addition, Congress has also wholly exempted certain matters 
from section 6110's public disclosure 
requirements.11 Any part of a written determination 
or background file that is not disclosed under section 6110 
constitutes ``return information.'' 12
---------------------------------------------------------------------------
    \10\ Sec. 6110(c) provides for the deletion of identifying 
information, trade secrets, confidential commercial and financial 
information and other material.
    \11\ Sec. 6110(l).
    \12\ Sec. 6103(b)(2)(B) (``The term ``return information'' means * 
* * any part of any written determination or any background file 
document relating to such written determination (as such terms are 
defined in section 6110(b)) which is not open to public inspection 
under section 6110'').
---------------------------------------------------------------------------
    The Freedom of Information Act (``FOIA'') lists categories 
of information that a federal agency must make available for 
public inspection.13 It establishes a presumption 
that agency records are accessible to the public. The FOIA, 
however, also provides nine exemptions from public disclosure. 
One of those exemptions is for matters specifically exempted 
from disclosure by a statute other than the FOIA if the 
exempting statute meets certain requirements.14 
Section 6103 qualifies as an exempting statute under this FOIA 
provision. Thus, returns and return information that section 
6103 deems confidential are exempt from disclosure under the 
FOIA.
---------------------------------------------------------------------------
    \13\ Unless published promptly and offered for sale, an agency must 
provide for public inspection and copying: (1) final opinions as well 
as orders made in the adjudication of cases; (2) statements of policy 
and interpretations not published in the Federal Register; (3) 
administrative staff manuals and instructions to staff that affect a 
member of the public; and (4) agency records which have been or the 
agency expects to be, the subject of repetitive FOIA requests. 5 U.S.C. 
sec. 552(a)(2). An agency must also publish in the Federal Register: 
the organizational structure of the agency and procedures for obtaining 
information under the FOIA; statements describing the functions of the 
agency and all formal and informal procedures; rules of procedure, 
descriptions of forms and statements describing all papers, reports and 
examinations; rules of general applicability and statements of general 
policy; and amendments, revisions and repeals of the foregoing. 5 
U.S.C. sec. 552(a)(1). All other agency records can be sought by FOIA 
request; however, some records may be exempt from disclosure.
    \14\ Exemption 3 of the FOIA provides that an agency is not 
required to disclose matters that are:

      (3) specifically exempted from disclosure by statute (other 
      than section 552b of this title) provided that such statute 
      (A) requires that the matters be withheld from the public 
      in such a manner as to leave no discretion on the issue, or 
      (B) establishes particular criteria for withholding or 
---------------------------------------------------------------------------
      refers to particular types of matters to be withheld; * * *

5 U.S.C. Sec. 552(b)(3).
    Section 6110 is the exclusive means for the public to view 
IRS written determinations.15 If section 6110 covers 
the written determination, then the public cannot use the FOIA 
to obtain that determination.
---------------------------------------------------------------------------
    \15\ Sec. 6110(m).
---------------------------------------------------------------------------

Advance Pricing Agreements

    The Advance Pricing Agreement (``APA'') program is an 
alternative dispute resolution program conducted by the IRS, 
which resolves international transfer pricing issues prior to 
the filing of the corporate tax return. Specifically, an APA is 
an advance agreement establishing an approved transfer pricing 
methodology entered into among the taxpayer, the IRS, and a 
foreign tax authority. The IRS and the foreign tax authority 
generally agree to accept the results of such approved 
methodology. Alternatively, an APA also may be negotiated 
between just the taxpayer and the IRS; such an APA establishes 
an approved transfer pricing methodology for U.S. tax purposes. 
The APA program focuses on identifying the appropriate transfer 
pricing methodology; it does not determine a taxpayer's tax 
liability. Taxpayers voluntarily participate in the program.
    To resolve the transfer pricing issues, the taxpayer 
submits detailed and confidential financial information, 
business plans and projections to the IRS for consideration. 
Resolution involves an extensive analysis of the taxpayer's 
functions and risks. Since its inception in 1991, the APA 
program has resolved more than 180 APAs, and approximately 195 
APA requests are pending.
    Currently pending in the U.S. District Court for the 
District of Columbia are three consolidated lawsuits asserting 
that APAs are subject to public disclosure under either section 
6110 or the FOIA.16 Prior to this litigation and 
since the inception of the APA program, the IRS held the 
position that APAs were confidential return information 
protected from disclosure by section 6103.17 On 
January 11, 1999, the IRS conceded that APAs are ``rulings'' 
and therefore are ``written determinations'' for purposes of 
section 6110.18 Although the court has not yet 
issued a ruling in the case, the IRS announced its plan to 
publicly release both existing and future APAs. The IRS then 
transmitted existing APAs to the respective taxpayers with 
proposed deletions. It has received comments from some of the 
affected taxpayers. Where appropriate, foreign tax authorities 
have also received copies of the relevant APAs for comment on 
the proposed deletions. No APAs have yet been released to the 
public.
---------------------------------------------------------------------------
    \16\ BNA v. IRS, Nos. 96-376, 96-2820, and 96-1473 (D.D.C.). The 
Bureau of National Affairs, Inc. (BNA) publishes matters of interest 
for use by its subscribers. BNA contends that APAs are not return 
information as they are prospective in application. Thus at the time 
they are entered into they do not relate to ``the determination of the 
existence, or possible existence, of liability or amount thereof * * 
*.''
    \17\ The IRS contended that information received or generated as 
part of the APA process pertains to a taxpayer's liability and 
therefore was return information as defined in sec. 6103(b)(2)(A). 
Thus, the information was subject to section 6103's restrictions on the 
dissemination of returns and return information. Rev. Proc. 91-22, sec. 
11, 1991-1 C.B. 526, 534 and Rev. Proc. 96-53, sec. 12, 1996-2 C.B. 
375, 386.
    \18\ IR 1999-05.
---------------------------------------------------------------------------
    Some taxpayers assert that the IRS erred in adopting the 
position that APAs are subject to section 6110 public 
disclosure. Several have sought to participate as amici in the 
lawsuit to block the release of APAs. They are concerned that 
release under section 6110 could expose them to expensive 
litigation to defend the deletion of the confidential 
information from their APAs. They are also concerned that the 
section 6110 procedures are insufficient to protect the 
confidentiality of their trade secrets and other financial and 
commercial information.

                           Reasons for Change

    The APA program has been a successful mechanism for 
resolving transfer pricing issues, not only for future years, 
but, in some instances, for prior open years as well 
(rollbacks). It reduces protracted disputes and costly 
litigation between taxpayers and the government. The program 
involves not only taxpayers and the IRS, but also foreign 
taxing authorities.
    As part of the program, the taxpayer voluntarily provides 
substantial, sensitive information to the IRS. The proprietary 
information necessary to support a claim of comparability may 
be among a company's most closely guarded trade secrets. 
Similarly, information regarding production costs and customer 
pricing may also be extremely sensitive information.
    From the program's inception, the IRS has assured taxpayers 
and foreign governments that the information received or 
generated in the APA process would be protected as confidential 
return information. Such assurances were based on published IRS 
materials.
    The APA process is based on taxpayers' cooperation and 
voluntary disclosure to the IRS of sensitive information. The 
continued confidentiality of this information is vital to the 
APA program. Otherwise, the Committee believes that some 
taxpayers may refuse to participate in this successful program, 
causing a decline in its usefulness.
    Congress must balance the need for confidentiality with the 
general public's need for practical tax guidance. Some members 
of the public have expressed concern that the APA program has 
led to the development of a body of ``secret law,'' known only 
to a few members of the tax profession. In addition, some 
members of the public contend that taxpayers have received APAs 
permitting the use of transfer pricing methodologies not 
contemplated in the section 482 regulations. They also contend 
that APAs have provided interpretations of law not available to 
taxpayers that do not participate in the APA process. Such 
concerns could undermine the public's confidence in the IRS's 
ability to fairly enforce the transfer pricing rules. Thus, the 
provision requires the Department of the Treasury to prepare 
and publish an annual report regarding APAs, which will provide 
extensive information regarding the program, while clarifying 
that existing and future APAs and related background 
information continue to be confidential return information.

                        Explanation of Provision

    The bill amends section 6103 to state that APAs and related 
background information are confidential return information 
under section 6103. Related background information is meant to 
include: the request for an APA, any material submitted in 
support of the request, and any communication (written or 
otherwise) prepared or received by the Secretary in connection 
with an APA, regardless of when such communication is prepared 
or received. Protection is not limited to agreements actually 
executed; it would include material received and generated in 
the APA process that does not result in an executed agreement.
    Further, the bill provides that APAs and related background 
information are not ``written determinations'' as that term is 
defined in section 6110. Therefore, the public inspection 
requirements of section 6110 do not apply to APAs and related 
background information. A document's incorporation in a 
background file, however, would not be grounds for not 
disclosing an otherwise disclosable document from a source 
other than a background file.
    The bill statutorily requires that the Treasury Department 
prepare and publish an annual report on the status of APAs. The 
annual report is to contain the following information:
           Information about the structure, 
        composition, and operation of the APA program office;
           A copy of each current model APA;
           Statistics regarding the amount of time to 
        complete new and renewal APAs;
           The number of APA applications filed during 
        such year;
           The number of APAs executed to date and for 
        the year;
           The number of APA renewals issued to date 
        and for the year;
           The number of pending APA requests;
           The number of pending APA renewals;
           The number of APAs executed and pending 
        (including renewals and renewal requests) that are 
        unilateral, bilateral and multilateral, respectively;
           The number of APAs revoked or canceled, and 
        the number of withdrawals from the APA program, to date 
        and for the year;
           The number of finalized new APAs and 
        renewals by industry; 19 and General 
        descriptions of:
---------------------------------------------------------------------------
    \19\ This information was previously released in IRS Publication 
3218, ``IRS Report on Application and Administration of I.R.C. Section 
482.''
---------------------------------------------------------------------------
           The nature of the relationships between the 
        related organizations, trades, or businesses covered by 
        APAs;
           The related organizations, trades, or 
        businesses whose prices or results are tested to 
        determine compliance with the transfer pricing 
        methodology prescribed in the APA;
           The covered transactions and the functions 
        performed and risks assumed by the related 
        organizations, trades or businesses involved;
           Methodologies used to evaluate tested 
        parties and transactions and the circumstances leading 
        to the use of those methodologies;
           Critical assumptions;
           Sources of comparables;
           Comparable selection criteria and the 
        rationale used in determining such criteria;
           The nature of adjustments to comparables 
        and/or tested parties;
           The nature of any range agreed to, including 
        information such as whether no range was used and why, 
        whether an inter-quartile range was used, or whether 
        there was a statistical narrowing of the comparables;
           Adjustment mechanisms provided to rectify 
        results that fall outside of the agreed upon APA range;
           The various term lengths for APAs, including 
        rollback years, and the number of APAs with each such 
        term length;
           The nature of documentation required; and
           Approaches for sharing of currency or other 
        risks.
    In addition, the bill requires the IRS to describe, in each 
annual report, its efforts to ensure compliance with existing 
APA agreements. The first report would cover the period January 
1, 1991, through the calendar year including the date of 
enactment. The Treasury Department cannot include any 
information in the report which would have been deleted under 
section 6110(c) if the report were a written determination as 
defined in section 6110. Additionally, the report cannot 
include any information which could be associated with 
orotherwise identify, directly or indirectly, a particular taxpayer. 
The Secretary is expected to obtain input from taxpayers to ensure 
proper protection of taxpayer information and, if necessary, utilize 
its regulatory authority to implement appropriate processes for 
obtaining this input. For purposes of section 6103, the report 
requirement is treated as part of Title 26.
    While the bill requires an annual report, it is not 
intended to discourage the Treasury Department from issuing 
other forms of guidance, such as regulations or revenue 
rulings, consistent with the confidentiality provisions of the 
Code.

                             Effective Date

    The bill is effective on the date of enactment; 
accordingly, no APAs, regardless of whether executed before or 
after enactment, or related background file documents could be 
released to the public after the date of enactment. The bill 
requires the Treasury Department to publish the first annual 
report no later than March 30, 2000.

B. Add Certain Vaccines Against Streptococcus Pneumoniae to the List of 
   Taxable Vaccines (Sec. 202 of the Bill and Sec. 4132 of the Code)


                              Present Law

    A manufacturer's excise tax is imposed at the rate of 75 
cents per dose (sec. 4131) on the following vaccines 
recommended for routine administration to children: diphtheria, 
pertussis, tetanus, measles, mumps, rubella, polio, HIB 
(haemophilus influenza type B), hepatitis B, varicella (chicken 
pox), and rotavirus gastroenteritis. The tax applied to any 
vaccine that is a combination of vaccine components equals 75 
cents times the number of components in the combined vaccine.
    Amounts equal to net revenues from this excise tax are 
deposited in the Vaccine Injury Compensation Trust Fund 
(``Vaccine Trust Fund'') to finance compensation awards under 
the Federal Vaccine Injury Compensation Program for individuals 
who suffer certain injuries following administration of the 
taxable vaccines. This program provides a substitute Federal, 
``no fault'' insurance system for the State-law tort and 
private liability insurance systems otherwise applicable to 
vaccine manufacturers and physicians. All persons immunized 
after September 30, 1988, with covered vaccines must pursue 
compensation under this Federal program before bringing civil 
tort actions under State law.

                           Reasons for Change

    Streptococcus pneumoniae (often referred to as 
pneumococcus) is a bacterium that can cause bacterial 
meningitis, a brain or spinal cord infection, bacteremia, a 
bloodstream infection, and otitis media (ear infection). The 
Committee understands that each year in the United States, 
pneumococcal disease accounts for an estimated 3,000 cases of 
bacterial meningitis, 50,000 cases of bacteremia, 500,000 cases 
of pneumonia, and 7 million cases of otitis media among all age 
groups. The Committee understands that, while there currently 
is a vaccine effective in preventing pneumococcal diseases in 
adults, that vaccine, a polysaccaride vaccine, does not induce 
an adequate immune response in young children and therefore 
does not protect children against these diseases. The Committee 
further understands that the Food and Drug Administration's 
(the ``FDA'') is expected to approve a new, sugar protein 
conjugate vaccine against the disease and the Centers for 
Disease Control is expected to recommend this conjugate vaccine 
for routine inoculation of children. The Committee believes 
American children will benefit from wide use of this new 
vaccine. The Committee believes that, by including the new 
vaccine with those presently covered by the Vaccine Trust Fund, 
greater application of the vaccine will be promoted. The 
Committee, therefore, believes it is appropriate to add the 
conjugate vaccine against streptococcus pneumoniae to the list 
of taxable vaccines.
    The Committee is aware that the Vaccine Trust Fund has a 
current cash-flow surplus in excess of $1.3 
billion.20 However, without more detailed 
information on the operation of the Vaccine Injury Compensation 
Program and likely future claims it is not possible to assess 
whether this current surplus is a prudent use of taxpayers' 
dollars. Therefore, the Committee finds it appropriate to 
direct the Comptroller General of the United States to report 
on the operation and management of expenditures from the 
Vaccine Trust Fund and to advise the Committee on the adequacy 
of the Vaccine Trust Fund to meet future claims under the 
Federal Vaccine Injury Compensation Program.
---------------------------------------------------------------------------
    \20\ Joint Committee on Taxation, Schedule of Present Federal 
Excise Taxes (as of January 1, 1999) (JCS-2-99), March 29, 1999, p. 48.
---------------------------------------------------------------------------

                        Explanation of Provision

    The bill adds any conjugate vaccine against streptococcus 
pneumoniae to the list of taxable vaccines. The bill also 
changes an incorrect effective date enacted in Public Law 105-
277 and makes certain other conforming amendments to 
expenditure purposes to enable certain payments to be made from 
the Trust Fund.
    In addition, the bill directs the General Accounting Office 
(``GAO'') to report to the House Committee on Ways and Means 
and the Senate Committee on Finance on the operation and 
management of expenditures from the Vaccine Trust Fund and to 
advise the Committees on the adequacy of the Vaccine Trust Fund 
to meet future claims under the Federal Vaccine Injury 
Compensation Program.
    Within its report, to the greatest extent possible, the 
Committee would like to see a thorough statistical report of 
the number of claims submitted annually, the number of claims 
settled annually, and the value of settlements. The Committee 
would like to learn about thestatistical distribution of 
settlements, including the mean and median values of settlements, and 
the extent to which the value of settlements varies with an injury 
attributed to an identifiable vaccine. The Committee also would like to 
learn about the settlement process, including a statistical 
distribution of the amount of time required from the initial filing of 
a claim to a final resolution.
    The Code provides that certain administrative expenses may 
be charged to the Vaccine Trust Fund. The Committee intends 
that the GAO report include an analysis of the overhead and 
administrative expenses charged to the Vaccine Trust Fund.
    The GAO is directed to report its findings to the House 
Committee on Ways and Means and the Senate Committee on Finance 
not later than December 31, 1999.

                             Effective Date

    The provision is effective for vaccine purchases beginning 
on the day after the date on which the Centers for Disease 
Control make final recommendation for routine administration of 
conjugate streptococcus pneumonia vaccines to children. No 
floor stocks tax is to be collected for amounts held for sale 
on that date. For sales on or before the date on which the 
Centers for Disease Control make final recommendation for 
routine administration of conjugate streptococcus pneumonia 
vaccines to children for which delivery is made after such 
date, the delivery date is deemed to be the sale date.

  C. Authority To Postpone Certain Tax-Related Deadlines by Reason of 
               Year 2000 Failures (Sec. 203 of the Bill)


                              Present Law

    There are no specific provisions in present law that would 
permit the Secretary of the Treasury to postpone tax-related 
deadlines by reason of Year 2000 (also known as ``Y2K'') 
failures. The Secretary is, however, permitted to postpone tax-
related deadlines for other reasons. For example, the Secretary 
may specify that certain deadlines are postponed for a period 
of up to 90 days in the case of a taxpayer determined to be 
affected by a Presidentially declared disaster. The deadlines 
that may be postponed are the same as are postponed by reason 
of service in a combat zone. The provision does not apply for 
purposes of determining interest on any overpayment or 
underpayment.
    The suspension of time applies to the following acts: (1) 
filing any return of income, estate, or gift tax (except 
employment and withholding taxes); (2) payment of any income, 
estate, or gift tax (except employment and withholding taxes); 
(3) filing a petition with the Tax Court for a redetermination 
of deficiency, or for review of a decision rendered by the Tax 
Court; (4) allowance of a credit or refund of any tax; (5) 
filing a claim for credit or refund of any tax; (6) bringing 
suit upon any such claim for credit or refund; (7) assessment 
of any tax; (8) giving or making any notice or demand for 
payment of any tax, or with respect to any liability to the 
United States in respect of any tax; (9) collection of the 
amount of any liability in respect of any tax; (10) bringing 
suit by the United States in respect of any liability in 
respect of any tax; and (11) any other act required or 
permitted under the internal revenue laws specified in 
regulations prescribed under section 7508 by the Secretary.

                           Reasons for Change

    Although it is anticipated that Y2K compliance is high and 
widespread failures are unlikely, the Committee believes it is 
appropriate to provide the Secretary with discretion to provide 
relief to affected taxpayers. The Committee believes that 
delegating this responsibility to the Secretary is appropriate, 
because any such Y2K failures likely will occur while Congress 
is not in session. Therefore, the Committee believes it is 
appropriate to give the Secretary the authority to provide 
relief by postponing tax-related deadlines for those taxpayers 
who, despite having made good faith and reasonable efforts to 
avoid any such failures, are affected by an actual Y2K related 
failure.

                        Explanation of Provision

    Under the bill, the Secretary is permitted to postpone, on 
a taxpayer-by-taxpayer basis, certain tax-related deadlines for 
a period of up to 90 days in the case of a taxpayer that the 
Secretary determines to have been affected by an actual Y2K 
related failure. In order to be eligible for relief, taxpayers 
must have made good faith, reasonable efforts to avoid any Y2K 
related failures. The relief will be similar to that granted 
under the Presidentially declared disaster and combat zone 
provisions, except that employment and withholding taxes also 
are eligible for relief under the bill. The relief will permit 
the abatement of both penalties and interest.
    The relief may apply to the following acts: (1) filing of 
any return of income, estate, or gift tax, including employment 
and withholding taxes; (2) payment of any income, estate, or 
gift tax, including employment and withholding taxes; (3) 
filing a petition with the Tax Court; (4) allowance of a credit 
or refund of any tax; (5) filing a claim for credit or refund 
of any tax; (6) bringing suit upon any such claim for credit or 
refund; (7) assessment of any tax; (8) giving or making any 
notice or demand for payment of any tax, or with respect to any 
liability to the United States in respect of any tax; (9) 
collection of the amount of any liability in respect of any 
tax; (10) bringing suit by the United States in respect of any 
liability in respect of any tax; and (11) any other act 
required or permitted under the internal revenue laws specified 
or prescribed by the Secretary.

                             Effective Date

    The provision is effective on the date of enactment.

             TITLE III--REVENUE OFFSET FOR FISCAL YEAR 2000


 A. Modification of Individual Estimated Tax Safe Harbor (Sec. 301 of 
                  the Bill and Sec. 6654 of the Code)


                              Present Law

    Under present law, an individual taxpayer generally is 
subject to an addition to tax for any underpayment of estimated 
tax. An individual generally does not have an underpayment of 
estimated tax if he or she makes timely estimated tax payments 
at least equal to: (1) 100 percent of the tax shown on the 
return of the individual for the preceding year (the ``100 
percent of last year's liability safe harbor'') or (2) 90 
percent of the tax shown on the return for the current year. 
The 100 percent of last year's liability safe harbor generally 
is modified to be a 110 percent of last year's liability safe 
harbor for any individual with an AGI of more than $150,000 as 
shown on the return for the preceding taxable year, except that 
it is 105 percent of last year's liability for taxable years 
beginning in 1999, 106 percent of last year's safe harbor for 
taxable years beginning in 2000 and 2001, and 112 percent of 
last year's liability for taxable years beginning in 2002. If a 
married individual files a separate return for the year for 
which an estimated tax installment payment was due, the 
$150,000 amount becomes $75,000.

                           Reasons for Change

    The Committee believes that it is appropriate to modify the 
applicability of the estimated tax safe harbor.

                        Explanation of Provision

    For taxable years beginning in 2000, the safe harbor for an 
individual with an AGI of more than $150,000 as shown on the 
return for the preceding taxable year is modified to be a 108.5 
(instead of 106) percent of last year's liability safe harbor.

                             Effective Date

    The provision is effective for estimated tax payments made 
with respect to taxable years beginning in 2000.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the votes of the Committee on Ways and Means in its 
consideration of the bill, H.R. 2923.

                       MOTION TO REPORT THE BILL

    The bill, H.R. 2923, as amended, was ordered favorably 
reported by a rollcall vote of 23 yeas to 14 nays (with a 
quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Archer......................        X   ........  ........  Mr. Rangel........  ........        X   ........
Mr. Crane.......................        X   ........  ........  Mr. Stark.........  ........        X   ........
Mr. Thomas......................        X   ........  ........  Mr. Matsui........  ........        X   ........
Mr. Shaw........................        X   ........  ........  Mr. Coyne.........  ........        X   ........
Mrs. Johnson....................        X   ........  ........  Mr. Levin.........  ........        X   ........
Mr. Houghton....................        X   ........  ........  Mr. Cardin........  ........        X   ........
Mr. Herger......................        X   ........  ........  Mr. McDermott.....  ........        X   ........
Mr. McCrery.....................        X   ........  ........  Mr. Kleczka.......  ........        X   ........
Mr. Camp........................        X   ........  ........  Mr. Lewis (GA)....  ........        X   ........
Mr. Ramstad.....................        X   ........  ........  Mr. Neal..........  ........        X   ........
Mr. Nussle......................        X   ........  ........  Mr. McNulty.......  ........        X   ........
Mr. Johnson.....................        X   ........  ........  Mr. Jefferson.....  ........  ........  ........
Ms. Dunn........................        X   ........  ........  Mr. Tanner........  ........  ........  ........
Mr. Collins.....................        X   ........  ........  Mr. Becerra.......  ........        X   ........
Mr. Portman.....................        X   ........  ........  Mrs. Thurman......  ........        X   ........
Mr. English.....................        X   ........  ........  Mr. Doggett.......  ........        X   ........
Mr. Watkins.....................        X   ........  ........
Mr. Hayworth....................        X   ........  ........
Mr. Weller......................        X   ........  ........
Mr. Hulshof.....................        X   ........  ........
Mr. McInnis.....................        X   ........  ........
Mr. Lewis (KY)..................        X   ........  ........
Mr. Foley.......................        X   ........  ........
----------------------------------------------------------------------------------------------------------------

                          VOTES ON AMENDMENTS

    A rollcall vote was conducted on the following amendment to 
the Chairman's amendment in the nature of a substitute.
    A substitute amendment by Mr. Rangel, was defeated by a 
rollcall vote of 14 yeas to 22 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representatives             Yea       Nay     Present    Representatives      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Archer......................  ........        X   ........  Mr. Rangel........        X   ........  ........
Mr. Crane.......................  ........        X   ........  Mr. Stark.........        X   ........  ........
Mr. Thomas......................  ........        X   ........  Mr. Matsui........        X   ........  ........
Mr. Shaw........................  ........        X   ........  Mr. Coyne.........        X   ........  ........
Mrs. Johnson....................  ........        X   ........  Mr. Levin.........        X   ........  ........
Mr. Houghton....................  ........        X   ........  Mr. Cardin........        X   ........  ........
Mr. Herger......................  ........        X   ........  Mr. McDermott.....        X   ........  ........
Mr. McCrery.....................  ........        X   ........  Mr. Kleczka.......        X   ........  ........
Mr. Camp........................  ........        X   ........  Mr. Lewis (GA)....        X   ........  ........
Mr. Ramstad.....................  ........        X   ........  Mr. Neal..........        X   ........  ........
Mr. Nussle......................  ........  ........  ........  Mr. McNulty.......        X   ........  ........
Mr. Johnson.....................  ........        X   ........  Mr. Jefferson.....  ........  ........  ........
Ms. Dunn........................  ........        X   ........  Mr. Tanner........  ........  ........  ........
Mr. Collins.....................  ........        X   ........  Mr. Becerra.......        X   ........  ........
Mr. Portman.....................  ........        X   ........  Mrs. Thurman......        X   ........  ........
Mr. English.....................  ........        X   ........  Mr. Doggett.......        X   ........  ........
Mr. Watkins.....................  ........        X   ........
Mr. Hayworth....................  ........        X   ........
Mr. Weller......................  ........        X   ........
Mr. Hulshof.....................  ........        X   ........
Mr. McInnis.....................  ........        X   ........
Mr. Lewis (KY)..................  ........        X   ........
Mr. Foley.......................  ........        X   ........
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of Rule XIII of the Rules 
of the House of Representatives, the following statement is 
made concerning the effects on the budget of the bill, H.R. 
2488, as reported.
    The bill is estimated to have the following effects on 
budget receipts for fiscal years 1999-2009:

                                  ESTIMATED BUDGET EFFECTS OF H.R. 2923 AS REPORTED BY THE COMMITTEE ON WAYS AND MEANS
                                                    [Fiscal years 2000-2004, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                Provision                             Effective                 2000         2001         2002         2003         2004      2000-2004
--------------------------------------------------------------------------------------------------------------------------------------------------------
Extension of Expiring Provisions:
    1. Extend permanently the treatment   tybi 1999.......................         -972         -977       -1,235       -1,555       -2,071       -6,810
     of nonrefundable personal credit
     under the alternative individual
     minimum tax.
    2. Research tax credit, and increase  (\1\)...........................  ...........       -3,341       -2,264       -2,573       -2,294      -10,471
     AIC rates by 1 percentage point;
     credit cannot be claimed until
     after 9/30/00 (through 6/30/04).
    3. Exemption from Subpart F for       tyba 1999.......................         -187         -827         -992       -1,190       -1,369       -4,565
     active financing income (through 12/
     31/04).
    4. Suspension of 100% net income      tyba 12/31/99...................          -23          -35          -36          -36          -37         -167
     limitation for marginal properties
     (through 12/31/04).
    5. Work opportunity tax credit        wpoifibwa 6/20/99...............         -229         -321         -293         -151          -58       -1,051
     (through 12/31/01).
    6. Welfare-to-work tax credit         wpoifibwa 6/30/99...............          -49          -77          -79          -47          -19         -272
     (through 12/31/01).
                                         ---------------------------------------------------------------------------------------------------------------
      Total of Extension of Expiring      ................................       -1,460       -5,578       -4,899       -5,552       -5,848      -23,336
       Provisions.
                                         ===============================================================================================================
Time-Sensitive Provisions:
    1. Prohibit disclosure of advance     DOE.............................                                No Revenue Effect
     pricing agreements (APAs) and
     related information; require the
     IRS to submit to Congress an annual
     report of such agreements.
    2. Add the Streptococcus Pneumoniae   (\2\)...........................            4            7            9           10           10           39
     vaccine to the list of taxable
     vaccines in the Federal vaccine
     insurance program; study of program.
    3. Authority to postpone certain tax- 1/1/00..........................                            Negligible Revenue Effect
     related deadlines by reason of year
     2000 failures.
                                         ---------------------------------------------------------------------------------------------------------------
      Total of Time-Sensitive Provisions  ................................            4            7            9           10           10           39
                                         ===============================================================================================================
Revenue Offset Provision--Increase        tyea 12/31/99...................        1,500       -1,500  ...........  ...........  ...........  ...........
 Individual Estimated Tax Safe Harbor to
 108.5% in 2000 Only; Present-Law
 Thereafter.
                                         ---------------------------------------------------------------------------------------------------------------
      Net total.........................  ................................           44       -7,071       -4,890       -5,542       -5,838      -23,297
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Details may not add to totals due to rounding.

\1\ Extension of credit effective for expenses incurred after 6/30/99; increase in AIC rates effective for taxable years beginning after 6/30/99.
\2\ Effective for vaccine sales the date after the date on which the Centers for Disease Control make final recommendation for routine administration of
  conjugate Streptococcus Pneumoniae vaccines to children.

Legend for ``Effective'' column: DOE=date of enactment; tyba=taxable years beginning after; tyea=taxable years ending after; tybi=taxable years
  beginning in; wpoifibwa=wages paid or incurred for individuals beginning work after.
Source: Joint Committee on Taxation.

    B. Statement Regarding New Budget Authority and Tax Expenditures


Budget authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority.

Tax expenditures

    In compliance with clause 2(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
extensions of expiring provisions involve increased tax 
expenditures. (See amounts in table in Part IV.A., above.)

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of Rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the Congressional Budget Office (``CBO''), the 
following statement by CBO is provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 28, 1999.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2923, a bill to 
amend the Internal Revenue Code of 1986 to extend expiring 
provisions, to fully allow the nonrefundable personal credits 
against regular tax liability, and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Hester 
Grippando (for revenues), and Jeanne De Sa (for federal 
spending).
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 2933--A bill to amend the Internal Revenue Code of 1986 to extend 
        expiring provisions, to fully allow the nonrefundable personal 
        credits against regular tax liability, and for other purposes

    Summary: H.R. 2923 would amend existing laws and extend 
numerous tax provisions that have expired recently or are about 
to expire. The Congressional Budget Office (CBO) and the Joint 
Committee on Taxation (JCT) estimate that H.R. 2923 would 
decrease governmental receipts by $23 billion over the 2000-
2004 period. CBO estimates that the bill would also increase 
direct spending by $25 million over same period.
    H.R. 2923 contains one new intergovernmental mandate, the 
cost of which would not exceed the threshold for 
intergovernmental mandates ($50 million in fiscal year 1996, 
adjusted annually for inflation) established in the Unfunded 
Mandates Reform Act (UMRA). The bill also contains one new 
private-sector mandate. The costs of this mandate would not 
exceed the threshold established by UMRA for private-sector 
mandates ($100 million in fiscal year 1996, adjusted annually 
for inflation) in fiscal years 2000 through 2004.
    Decription of major provisions: H.R. 2923 would amend the 
Internal Revenue Code in order to:
           Extend a provision in effect from 1998 that 
        allows individuals to use nonrefundable personal tax 
        credits without regard to the alternative minimum tax 
        and repeal the provision that reduces the refundable 
        child tax credit by the amount of an individual's 
        alternative minimum tax;
           Extend the research and experimentation tax 
        credit through June 30, 2004;
           Extend the exemption from Subpart F for 
        active financing income through December 31, 2004;
           Extend the suspension of income limitation 
        on percentage depletion from marginal oil and gas wells 
        through December 31, 2004;
           Extend the work opportunity and welfare-to-
        work tax credits through December 31, 2001;
           Add the Streptococcus Pneumoniae vaccine to 
        the list of taxable vaccines; and
           Increase Individual Estimated Tax Safe 
        Harbor to 108.5 percent in 2000 only.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2923 is shown in the following table.

----------------------------------------------------------------------------------------------------------------
                                                            By fiscal years, in millions of dollars--
                                               -----------------------------------------------------------------
                                                   1999       2000       2001       2002       2003       2004
----------------------------------------------------------------------------------------------------------------
                                               CHANGES IN REVENUES

Estimated Revenues............................          0         44     -7,071     -4,890     -5,542     -5,838

                                           CHANGES IN DIRECT SPENDING

Estimated Budget Authority....................          0          2          4          6          6          7
Estimated Outlays.............................          0          2          4          6          6          7
----------------------------------------------------------------------------------------------------------------
Note.--Implementing the bill would also increase spending subject to appropriation, but CBO estimates that such
  costs would not be significant.

Sources: Congressional Budget Office and Joint Committee on Taxation.

Basis of estimate

            Revenues
    All revenue estimates were provided by JCT.
            Direct spending
    H.R. 2923 would add conjugate vaccines against 
streptococcus pneumoniae to the list of taxable vaccines and 
thus would allow for compensation for injuries related to those 
vaccines from the National Vaccine Injury Compensation Trust 
Fund. CBO estimates that this provision would increase outlays 
by $4 million over the 2000-2004 period. This provision would 
also increase federal Medicaid outlays by $21 million over the 
2000-2004 period because Medicaid would be required to pay the 
excise tax on purchases of vaccines against streptococcus 
pneumoniae. The federal government purchases about one-half of 
all vaccines through its Vaccines for Children program.
    Also, by adding conjugate vaccines against streptococcus 
pneumoniae to the list of taxable vaccines, the bill would 
increase the cost of vaccines purchased under section 317 of 
the Public Health Service Act. Section 317 authorizes grants to 
states for the purchase of vaccines under federal contracts 
with vaccine manufacturers. Any increase in spending under this 
section would be subject to the annual appropriation process; 
CBO estimates that the additional costs would not be 
significant.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays and governmental receipts that are subject 
to pay-as-you-go procedures are shown in the following table. 
For the purposes of enforcing pay-as-you-go procedures, only 
the effects in the current year, the budget year, and the 
succeeding four years are counted.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               By fiscal years, in millions of dollars--
                                              ----------------------------------------------------------------------------------------------------------
                                                1999    2000      2001      2002      2003      2004      2005      2006      2007      2008      2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts..........................      0        44    -7,071    -4,890    -5,542    -5,838    -5,292    -4,251    -4,918    -5,799    -7,066
Changes in outlays...........................      0         2         4         6         6         7         7         7         7         7         7
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimated impact on State, local, and tribal governments: 
JCT has determined that the provision that would add 
streptococcus pneumoniae to the list of taxable vaccines is an 
intergovernmental mandate. JCT estimates that the cost of this 
mandate would not exceed the threshold specified in UMRA ($50 
million in fiscal year 1996, adjusted for inflation).
    Estimated impact on the private sector: JCT has determined 
that the provision that would add streptococcus pneumoniae to 
the list of taxable vaccines is a private-sector mandate. JCT 
estimates that the cost of the private-sector mandate would not 
exceed the threshold established in UMRA ($100 million in 
fiscal year 1996, adjusted annually for inflation) in each 
fiscal year of the 2000-2004 period.
    Estimate prepared by: Revenues: Hester Grippando. Federal 
Spending: Jeanne De Sa.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
director for Budget Analysis. G. Thomas Woodward, Assistant 
Director for Tax Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was a result of the Committee's 
oversight review concerning the extension of certain expired 
and expiring tax provisions, prohibiting disclosure of APAs and 
APA background files, adding certain vaccines against 
streptococcus pneumoniae to the list of taxable vaccines, 
authority to postpone certain tax-related deadlines by reason 
of year 2000 failures, and modification of the individual 
estimated tax safe harbor, that the Committee concluded that it 
is appropriate and timely to enact the provisions included in 
the bill as reported.

    B. Summary of Findings and Recommendations of the Committee on 
                           Government Reform

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that no 
oversight findings or recommendations have been submitted to 
this Committee by the Committee on Government Reform with 
respect to the provisions contained in the bill.

                 C. Constitutional Authority Statement

    With respect to clause 3(d)(1) of rule XIII of the Rules of 
the House of Representatives (relating to Constitutional 
Authority), the Committee states that the Committee's action in 
reporting this bill is derived from Article I of the 
Constitution, Section 8 (``The Congress shall have Power To lay 
and collect Taxes, Duties, Imposts and Excises * * *''), and 
from the 16th Amendment to the Constitution.

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
    The Committee has determined that the following provision 
of the bill contains Federal mandates on the private sector 
(for the amount, see table in Part IV.A., above): add certain 
vaccines against streptococcus pneumoniae to the list of 
taxable vaccines.
    The costs required to comply with the Federal private 
sector mandate generally are no greater than the estimated 
budget effects of the provision. Benefits from the provision 
include improved administration of the Federal tax laws.
    The provision that adds streptococcus pneumoniae vaccine to 
the list of taxable vaccines for purposes of the vaccine excise 
tax imposes Federal intergovernmental mandates on State, local, 
and tribal governments. The staff of the Joint Committee on 
Taxation estimates that the direct costs of complying with this 
Federal intergovernmental mandate will not exceed $50,000,000 
in either the first fiscal year or in any of the 4 fiscal years 
following the first fiscal year. The Committee intends that 
this Federal intergovernmental mandate be unfunded because the 
net revenues from the Federal vaccine excise tax are used to 
finance the Federal Vaccine Injury Compensation Trust Fund. 
Since the Federal excise tax is imposed on the private sector 
and on State, local, and tribal governments, it does not affect 
the competitive balance between such governments and the 
private sector.

                E. Applicability of House Rules XXI5(b)

    Rule XXI5(b) of the Rules of the House of Representatives 
provides, in part, that ``No bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase shall be considered as passed or agreed to unless 
determined by a vote of not less than three-fifths of the 
Members.'' The Committee has carefully reviewed the provisions 
of the bill, and states that the provisions of the bill do not 
involve any Federal income tax rate increase within the meaning 
of the rule.

                       F. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service Reform and 
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the 
Joint Committee on Taxation (in consultation with the Internal 
Revenue Service and the Department of the Treasury) to provide 
a tax complexity analysis. The complexity analysis is required 
for all legislation reported by the House Committee on Ways and 
Means, the Senate Committee on Finance, or any committee of 
conference if the legislation includes a provision that 
directly or indirectly amends the Internal Revenue Code and has 
widespread applicability to individuals or small businesses.
    The staff of the Joint Committee on Taxation has determined 
that a complexity analysis is not required under section 
4022(b) of the IRS Reform Act because the bill contains no 
provisions that amend the Internal Revenue Code and that have 
``widespread applicability'' to individuals or small 
businesses.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *



Subtitle A--Income Taxes

           *       *       *       *       *       *       *


CHAPTER 1--NORMAL TAXES AND SURTAXES

           *       *       *       *       *       *       *


Subchapter A--Determination of tax liability

           *       *       *       *       *       *       *


PART IV--CREDITS AGAINST TAX

           *       *       *       *       *       *       *


Subpart A--Nonrefundable personal credits

           *       *       *       *       *       *       *


SEC. 24. CHILD TAX CREDIT.

  (a)  * * *

           *       *       *       *       *       *       *

  (d) Additional Credit for Families With 3 or More Children.--
          (1)  * * *

           *       *       *       *       *       *       *

          [(2) Reduction of credit to taxpayer subject to 
        alternative minimum tax.--For taxable years beginning 
        after December 31, 1998, the credit determined under 
        this subsection for the taxable year shall be reduced 
        by the excess (if any) of--
                  [(A) the amount of tax imposed by section 55 
                (relating to alternative minimum tax) with 
                respect to such taxpayer for such taxable year, 
                over
                  [(B) the amount of the reduction under 
                section 32(h) with respect to such taxpayer for 
                such taxable year.]
          [(3)] (2) Social security taxes.--For purposes of 
        paragraph (1)--
                  (A)  * * *

           *       *       *       *       *       *       *


SEC. 26. LIMITATION BASED ON TAX LIABILITY; DEFINITION OF TAX 
                    LIABILITY.

  [(a) Limitation Based on Amount of Tax.--The aggregate amount 
of credits allowed by this subpart for the taxable year shall 
not exceed the excess (if any) of--
          [(1) the taxpayer's regular tax liability for the 
        taxable year, over
          [(2) the tentative minimum tax for the taxable year 
        (determined without regard to the alternative minimum 
        tax foreign tax credit).
For purposes of paragraph (2), the taxpayer's tentative minimum 
tax for any taxable year beginning during 1998 shall be treated 
as being zero.]
  (a) Limitation Based on Amount of Tax.--The aggregate amount 
of credits allowed by this subpart for the taxable year shall 
not exceed the taxpayer's regular tax liability for the taxable 
year.

           *       *       *       *       *       *       *


SEC. 41. CREDIT FOR INCREASING RESEARCH ACTIVITIES.

  (a)  * * *

           *       *       *       *       *       *       *

  (c) Base Amount.--
          (1)  * * *

           *       *       *       *       *       *       *

          (4) Election of alternative incremental credit.--
                  (A) In general.--At the election of the 
                taxpayer, the credit determined under 
                subsection (a)(1) shall be equal to the sum 
                of--
                          (i) [1.65 percent] 2.65 percent of so 
                        much of the qualified research expenses 
                        for the taxable year as exceeds 1 
                        percent of the average described in 
                        subsection (c)(1)(B) but does not 
                        exceed 1.5 percent of such average,
                          (ii) [2.2 percent] 3.2 percent of so 
                        much of such expenses as exceeds 1.5 
                        percent of such average but does not 
                        exceed 2 percent of such average, and
                          (iii) [2.75 percent] 3.75 percent of 
                        so much of such expenses as exceeds 2 
                        percent of such average.

           *       *       *       *       *       *       *

  (h) Termination.--
          (1) In general.--This section shall not apply to any 
        amount paid or incurred--
                  (A) after June 30, 1995, and before July 1, 
                1996, or
                  (B) after June 30, [1999] 2004.
[Notwithstanding the preceding sentence, in the case of a 
taxpayer making an election under subsection (c)(4) for its 
first taxable year beginning after June 30, 1996, and before 
July 1, 1997, this section shall apply to amounts paid or 
incurred during the 36-month period beginning with the first 
month of such year. The 36 months referred to in the preceding 
sentence shall be reduced by the number of full months after 
June 1996 (and before the first month of such first taxable 
year) during which the taxpayer paid or incurred any amount 
which is taken into account in determining the credit under 
this section.]

           *       *       *       *       *       *       *


SEC. 45C. CLINICAL TESTING EXPENSES FOR CERTAIN DRUGS FOR RARE DISEASES 
                    OR CONDITIONS.

  (a)  * * *
  (b) Qualified Clinical Testing Expenses.--For purposes of 
this section--
          (1) Qualified clinical testing expenses.--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (D) Special rule.--For purposes of this 
                paragraph, section 41 shall be deemed to remain 
                in effect for periods after June 30, 1995, and 
                before July 1, 1996, and periods after June 30, 
                [1999] 2004.

           *       *       *       *       *       *       *


SEC. 51. AMOUNT OF CREDIT.

  (a)  * * *

           *       *       *       *       *       *       *

  (c) Wages Defined.--For purposes of this subpart--
          (1)  * * *

           *       *       *       *       *       *       *

          (4) Termination.--The term ``wages'' shall not 
        include any amount paid or incurred to an individual 
        who begins work for the employer--
                  (A) after December 31, 1994, and before 
                October 1, 1996, or
                  (B) after [June 30, 1999] December 31, 2001.

           *       *       *       *       *       *       *

  (i) Certain Individuals Ineligible.--
          (1)  * * *

           *       *       *       *       *       *       *

          (2) Nonqualifying rehires.--No wages shall be taken 
        into account under subsection (a) with respect to any 
        individual if, prior to the hiring date of such 
        individual, such individual had been employed by the 
        employer at any time [during which he was not a member 
        of a targeted group].

           *       *       *       *       *       *       *


SEC. 51A. TEMPORARY INCENTIVES FOR EMPLOYING LONG-TERM FAMILY 
                    ASSISTANCE RECIPIENTS.

  (a)  * * *

           *       *       *       *       *       *       *

  (f) Termination.--This section shall not apply to individuals 
who begin work for the employer after [June 30, 1999] December 
31, 2001.

           *       *       *       *       *       *       *


Subchapter I--Natural Resources

           *       *       *       *       *       *       *


PART I--DEDUCTIONS

           *       *       *       *       *       *       *



SEC. 613A. LIMITATIONS ON PERCENTAGE IN CASE OF OIL AND GAS WELLS.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Exemption for Independent Producers and Royalty Owners.--
          (1) * * *

           *       *       *       *       *       *       *

          (6) Oil and natural gas produced from marginal 
        properties.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (H) Temporary suspension of taxable income 
                limit with respect to marginal production.--The 
                second sentence of subsection (a) of section 
                613 shall not apply to so much of the allowance 
                for depletion as is determined under 
                subparagraph (A) for any taxable year beginning 
                after December 31, 1997, and before January 1, 
                [2000] 2005.

           *       *       *       *       *       *       *


Subpart F--Controlled foreign corporations

           *       *       *       *       *       *       *



SEC. 953. INSURANCE INCOME.

  (a)  * * *

           *       *       *       *       *       *       *

  (e) Exempt Insurance Income.--
  For purposes of this section--
          (1) * * *

           *       *       *       *       *       *       *

          (10) Application.--This subsection and section 954(i) 
        shall apply only to [the first taxable year] taxable 
        years of a foreign corporation beginning after December 
        31, 1998, and before January 1, [2000] 2005, and to 
        taxable years of United States shareholders with or 
        [within which such] within which any such taxable year 
        of such foreign corporation ends.

           *       *       *       *       *       *       *


SEC. 954. FOREIGN BASE COMPANY INCOME.

  (a) * * *

           *       *       *       *       *       *       *

  (h) Special Rule for Income Derived in the Active Conduct of 
Banking, Financing, or Similar Businesses.--
          (1) * * *

           *       *       *       *       *       *       *

          (9) Application.--This subsection, subsection 
        (c)(2)(C)(ii), and the last sentence of subsection 
        (e)(2) shall apply only to [the first taxable year] 
        taxable years of a foreign corporation beginning after 
        December 31, 1998, and before January 1, [2000] 2005, 
        and to taxable years of United States shareholders with 
        or [within which such] within which any such taxable 
        year of such foreign corporation ends.

           *       *       *       *       *       *       *


Subtitle D--Miscellaneous Excise Taxes

           *       *       *       *       *       *       *


CHAPTER 31--RETAIL EXCISE TAXES

           *       *       *       *       *       *       *


Subchapter C--Certain Vaccines

           *       *       *       *       *       *       *


SEC. 4132. DEFINITIONS AND SPECIAL RULES.

  (a) Definitions Relating to Taxable Vaccines.--For purposes 
of this subchapter--
          (1) Taxable vaccine.--The term ``taxable vaccine'' 
        means any of the following vaccines which are 
        manufactured or produced in the United States or 
        entered into the United States for consumption, use, or 
        warehousing:
                  (A) * * *

           *       *       *       *       *       *       *

                  (L) Any conjugate vaccine against 
                streptococcus pneumoniae.

           *       *       *       *       *       *       *


Subtitle F--Procedure and Administration

           *       *       *       *       *       *       *


CHAPTER 61--INFORMATION AND RETURNS

           *       *       *       *       *       *       *


Subchapter B--Miscellaneous Provisions

           *       *       *       *       *       *       *


SEC. 6103. CONFIDENTIALITY AND DISCLOSURE OF RETURNS AND RETURN 
                    INFORMATION.

  (a) * * *
  (b) Definitions.--For purposes of this section--
          (1) * * *
          (2) Return information.--The term ``return 
        information'' means--
                  (A) a taxpayer's identity, the nature, 
                source, or amount of his income, payments, 
                receipts, deductions, exemptions, credits, 
                assets, liabilities, net worth, tax liability, 
                tax withheld, deficiencies, over-assessments, 
                or tax payments, whether the taxpayer's return 
                was, is being, or will be examined or subject 
                to other investigation or processing, or any 
                other data, received by, recorded by, prepared 
                by, furnished to, or collected by the Secretary 
                with respect to a return or with respect to the 
                determination of the existence, or possible 
                existence, of liability (or the amount thereof) 
                of any person under this title for any tax, 
                penalty, interest, fine, forfeiture, or other 
                imposition, or offense, [and]
                  (B) any part of any written determination or 
                any background file document relating to such 
                written determination (as such terms are 
                defined in section 6110(b)) which is not open 
                to public inspection under section 6110, and
                  (C) any advance pricing agreement entered 
                into by a taxpayer and the Secretary and any 
                background information related to such 
                agreement or any application for an advance 
                pricing agreement,
        but such term does not include data in a form which 
        cannot be associated with, or otherwise identify, 
        directly or indirectly, a particular taxpayer. Nothing 
        in the preceding sentence, or in any other provision of 
        law, shall be construed to require the disclosure of 
        standards used or to be used for the selection of 
        returns for examination, or data used or to be used for 
        determining such standards, if the Secretary determines 
        that such disclosure will seriously impair assessment, 
        collection, or enforcement under the internal revenue 
        laws.

           *       *       *       *       *       *       *


SEC. 6110. PUBLIC INSPECTION OF WRITTEN DETERMINATIONS.

  (a) * * *
  (b) Definitions.--For purposes of this section--
          (1) Written determination.--The term ``written 
        determination'' means a ruling, determination letter, 
        technical advice memorandum, or Chief Counsel advice. 
        Such term shall not include any advance pricing 
        agreement entered into by a taxpayer and the Secretary 
        and any background information related to such 
        agreement or any application for an advance pricing 
        agreement.

           *       *       *       *       *       *       *


 CHAPTER 68--ADDITIONS TO THE TAX, ADDITIONAL AMOUNTS, AND ASSESSABLE 
PENALTIES

           *       *       *       *       *       *       *


Subchapter A--Additions to the Tax, Additional Amounts

           *       *       *       *       *       *       *


PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *



SEC. 6654. FAILURE BY INDIVIDUAL TO PAY ESTIMATED INCOME TAX.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Amount of Required Installments.--For purposes of this 
section--
          (1) Amount.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) Limitation on use of preceding year's 
                tax.--
                          (i) In general.--If the adjusted 
                        gross income shown on the return of the 
                        individual for the preceding taxable 
                        year beginning in any calendar year 
                        exceeds $150,000, clause (ii) of 
                        subparagraph (B) shall be applied by 
                        substituting the applicable percentage 
                        for ``100 percent''. For purposes of 
                        the preceding sentence, the applicable 
                        percentage shall be determined in 
                        accordance with the following table:

        If the preceding taxable                          The applicable
          year begins in:                                 percentage is:
            1998..............................................      105 
            [1999 or 2000.....................................     106] 
            1999..............................................    108.5 
            2000..............................................      106 
            2001..............................................      112 
            2002 or thereafter................................      110.

                This clause shall not apply in the case of a 
                preceding taxable year beginning in calendar 
                year 1997.

           *       *       *       *       *       *       *


Subtitle I--Trust Fund Code

           *       *       *       *       *       *       *


CHAPTER 98--TRUST FUND CODE

           *       *       *       *       *       *       *


Subchapter A--Establishment of Trust Funds

           *       *       *       *       *       *       *


SEC. 9510. VACCINE INJURY COMPENSATION TRUST FUND.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Expenditures From Trust Fund.--
          (1) In general.--Amounts in the Vaccine Injury 
        Compensation Trust Fund shall be available, as provided 
        in appropriation Acts, only for--
                  (A) the payment of compensation under 
                subtitle 2 of title XXI of the Public Health 
                Service Act (as in effect on [August 5, 1997] 
                October 21, 1998) for vaccine-related injury or 
                death with respect to any vaccine--
                          (i) * * *

           *       *       *       *       *       *       *

                              ----------                              


VACCINE INJURY COMPENSATION MODIFICATION ACT

           *       *       *       *       *       *       *


[SEC. 1503. INCLUSION OF ROTAVIRUS GASTROENTERITIS AS A TAXABLE 
                    VACCINE.

  [(a) In General.--Section 4132(1) of the Internal Revenue 
Code of 1986 (defining taxable vaccine) is amended by adding at 
the end the following new subparagraph:
                  [``(K) Any vaccine against rotavirus 
                gastroenteritis.''.
  [(b) Effective Date.--
          [(1) Sales.--The amendment made by this section shall 
        apply to sales after the date of the enactment of this 
        Act.
          [(2) Deliveries.--For purposes of paragraph (1), in 
        the case of sales on or before the date of the 
        enactment of this Act for which delivery is made after 
        such date, the delivery date shall be considered the 
        sale date.

[SEC. 1504. VACCINE INJURY COMPENSATION TRUST FUND.

  [(a) Amendments Related to Section 904 of 1997 Act.--
          [(1) Paragraph (1) of section 9510(c) of the 1986 
        Code is amended to read as follows:
          [``(1) In general.--Amounts in the Vaccine Injury 
        Compensation Trust Fund shall be available, as provided 
        in appropriation Acts, only for--
                  [``(A) the payment of compensation under 
                subtitle 2 of title XXI of the Public Health 
                Service Act (as in effect on August 6, 1997) 
                for vaccine-related injury or death with 
                respect to any vaccine--
                          [``(i) which is administered after 
                        September 30, 1988, and
                          [``(ii) which is a taxable vaccine 
                        (as defined in section 4132(a)(1)) at 
                        the time the vaccine was administered, 
                        or
                  [``(B) the payment of all expenses of 
                administration incurred by the Federal 
                Government in administering such subtitle.''.
          [(2) Section 9510(b) of the 1986 Code is amended by 
        adding at the end the following new paragraph:
          [``(3) Limitation on transfers to vaccine injury 
        compensation trust fund.--No amount may be appropriated 
        to the Vaccine Injury Compensation Trust Fund on and 
        after the date of any expenditure from the Trust Fund 
        which is not permitted by this section. The 
        determination of whether an expenditure is so permitted 
        shall be made without regard to--
                  [``(A) any provision of law which is not 
                contained or referenced in this title or in a 
                revenue Act, and
                  [``(B) whether such provision of law is a 
                subsequently enacted provision or directly or 
                indirectly seeks to waive the application of 
                this paragraph.''.
  [(b) Effective Date.--The amendments made by this section 
shall take effect as if included in the provisions of the 
Taxpayer Relief Act of 1997 to which they relate.]

                         VII. DISSENTING VIEWS

    We are united in our support for extension of the expiring 
tax incentives covered by this bill and others omitted by the 
legislation. We also support the other time-sensitive, 
noncontroversial provisions contained in the Committee bill. 
However, we are puzzled by the strategy of the Majority Members 
of this Committee that threatens the enactment of provisions 
that are both time-sensitive and broadly supported on a 
bipartisan basis.
    In our view, the Republican Leadership pursued a veto 
strategy for their bloated tax bill earlier this year. Their 
$792 billion tax bill was fiscally irresponsible and it was 
unfair. Those segments of our society which have been richly 
rewarded in the recent economic expansion would have been 
showered with additional tax benefits under that bill. The bill 
contained many corporate special interest provisions. The less 
fortunate segments of our society would have received little or 
no benefit. The American people saw it for what it was, a bill 
designed merely to attract a veto, not an effort at real 
legislation.
    After that failed political ploy, it is now time for the 
Republican leadership to act like legislators and actually 
enact legislation. Enactment of a bill under our form of 
government requires a Presidential signature. Extension of the 
expiring provisions is necessary. The Republican leadership 
should consult with the Democratic Members of Congress and with 
the President to find a way to accomplishment that goal.
    The President has made his position very clear. He will not 
entertain tax legislation funded out of either the Social 
Security or non-Social Security surplus until legislation has 
been enacted to extend the solvency of the Social Security 
system, protect the Medicare system and provide a Medicare 
prescription drug benefit. That position is supported by the 
Democratic Members of Congress and by the public at large. As a 
result, it is time for the Congress to pass expeditiously 
revenue-neutral legislation to extend the expiring provisions.
    In addition, the Committee bill makes it clear that the 
Republican leadership does not believe that education of our 
children should be a priority. The Committee bill omits the 
exclusion of employer-provided educational assistance that was 
included in the Republican conference report. The Committee 
bill refuses to extend and expand the existing bond program for 
school improvements. As a result, it provides no assistance to 
public schools in financing the approximately $200 billion that 
will be needed to modernize and construct public school because 
of the baby boom echo effect. The Committee bill ignores the 
fact that over 200 Members of the House of Representatives have 
cosponsored legislation that would extend and expand the 
existing program that provides interest-free funds for public 
school renovation and modernization.
    The Democrats in the Committee offered a substitute to the 
Committee bill. That substitute differs in one major respect 
from the Committee bill--if passed by the Congress, it would 
receive a Presidential signature. Supporters of the research 
credit and other expiring provisions should not be fooled by 
the Committee bill. It, like the vetoed $792 billion tax bill, 
promises a 5-year extension of the research credit, and it, 
just like the $792 billion tax bill, will be vetoed.
    We intended to seek an opportunity to offer a substitute on 
the Floor. Members who want to enact legislation and not engage 
in further partisan political stunts should support our 
efforts.

                                   C.B. Rangel.
                                   Robert T. Matsui.
                                   John Lewis.
                                   Lloyd Doggett.
                                   Xavier Becerra.
                                   Sander Levin.
                                   Wm. J. Jefferson.
                                   William J. Coyne.
                                   Jim McDermott.
                                   Richard E. Neal.
                                   Karen L. Thurman.
                                   Pete Stark.
                                   Michael R. McNulty.
                                   John Tanner.
                                   Jerry Kleczka.
                                   Ben Cardin.

                                
