[House Report 107-367]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 107-367
======================================================================
PROVIDING FOR CONSIDERATION OF THE SENATE AMENDMENT TO THE BILL H.R.
3090, ECONOMIC SECURITY AND RECOVERY ACT OF 2001
_______
March 6, 2002.--Referred to the House Calendar and ordered to be
printed
_______
Ms. Pryce of Ohio, from the Committee on Rules, submitted the following
R E P O R T
[To accompany H. Res. 360]
The Committee on Rules, having had under consideration
House Resolution 360, by a nonrecord vote, report the same to
the House with the recommendation that the resolution be
adopted.
summary of provisions of the resolution
The resolution provides for a motion offered by the
chairman of the Committee on Ways and Means or his designee to
take from the Speaker's table the bill H.R. 3090, to provide
tax incentives for economic recovery, with the Senate amendment
thereto, and concur in the Senate amendment with the amendment
printed in this report. The rule waives all points of order
against the motion. The rule provides that the Senate amendment
and the motion shall be considered as read. The rule provides
one hour of debate in the House equally divided and controlled
by the chairman and ranking minority member of the Committee on
Ways and Means. Finally, the rule provides that the previous
question shall be considered as ordered on the motion to final
adoption without intervening motion.
The waiver of all points of order applies to the motion and
therefore applies to the amendment printed in this report as
part of the motion.
The waiver of all points of order includes a waiver of
section 302 (prohibiting consideration of legislation providing
new budget authority in excess of a committee's allocation of
such authority), section 306 (prohibiting consideration of
legislation within the Budget Committee's jurisdiction, unless
reported by the Budget Committee), and section 401 (prohibiting
consideration of legislation providing new entitlement
authority which becomes effective during the current fiscal
year) of the Congressional Budget Act of 1974.
committee votes
Pursuant to clause 3(b) of House rule XIII the results of
each record vote on an amendment or motion to report, together
with the names of those voting for and against, are printed
below:
Rules Committee Record Vote No. 63
Date: March 6, 2002.
Measure: H.R. 3090.
Motion by: Mr. Frost.
Summary of motion: To make in order the amendment by
Representative Gekas to amend the Internal Revenue Code of 1986
to exclude unemployment compensation from gross income. Applies
to taxable years beginning after December 31, 2000.
Results: Defeated 4 to 8.
Vote by Members: Linder--Nay; Pryce--Nay; Diaz-Balart--Nay;
Hastings (WA)--Nay; Myrick--Nay; Sessions--Nay; Reynolds--Nay;
Frost--Yea; Hall--Yea; Slaughter--Yea; Hastings (FL)--Yea;
Dreier--Nay.
summary of amendment included in the motion
Job creation business provisions
Special depreciation allowance for certain property--30%
expensing of the value of capital assets with (1) MACRS lives
of 20 years or less, (2) leasehold improvements, and (3)
purchased software with one-year placed in service extension
for certain property subject to a long production period. It
will conform AMT depreciation for property eligible for the
special depreciation allowance (sunset after 36 months).
The amendment would provide a 5-year carryback of net
operating losses and would waive the AMT 90% limitation on the
allowance of losses (including losses carried forward into tax
years ending in 2001 and 2002) (sunset after 24 months).
Unemployment assistance provisions
The amendment would provide an additional 13 weeks of
temporary extended unemployment benefits for those who
exhausted their regular benefits in any State with an insured
unemployment rate of at least 4%. Provides for $8 billion in
Special Reed Act transfers.
Tax benefits for reconstruction of New York City
The Work Opportunity Tax Credit would be expanded and
targeted to include certain employees in New York City--for
employers with 200 or fewer employees and individuals working
in or relocated from the Liberty Zone as a targeted group
eligible for a modified WOTC. (40% on first 6,000; allow
against AMT) (sunset 12/31/03)
The amendment also provides 30% bonus depreciation for
property placed in service in the Liberty Zone, $8 billion in
tax exempt private activity bonds for rebuilding the portion of
the City damaged in the 9/11/01 terrorist attack, allows a
total of $9 billion in advance refunding of tax exempt bonds,
increases Section 179 expensing to $35,000, allows
involuntarily converted properties to be replaced over 5 years,
and provides 5-year life for leasehold improvements in the
Liberty Zone.
Miscellaneous and technical provisions
--The amendment would allow form 1099 to provided
electronically.
--Would reverse the Supreme Court's decision in Gitilitz v.
Commissioner (relating to subchapter S corporations).
--Limit use of non-accrual experience method of accounting
to amount to be received for the performance of qualified
professional services.
--Exclusion for foster care payments to apply to payments
by qualified placement agencies.
--Temporary increase in the highest specified percentage
applied to the interest rate used in determining additional
required contributions to defined benefit pension plans and
PBGC variable rate premiums.
--Above-the-line deduction for teacher classroom expenses
capped at $250 annually for 2002 and 2003.
Extends the following expiring provisions
--Treatment of nonrefundable personal credits under the
individual alternative minimum tax.
--Tax credit for electric vehicles.
--Tax credit for electricity production from alternative
energy sources.
--Work opportunity tax credit.
--Welfare-to-work tax credit.
--Deductions for qualified clean-fuel vehicle property and
qualified clean-fuel refueling property.
--Suspension of 100 percent-of-net-income limitation on
percentage depletion for oil and gas from marginal wells.
--Authority to issue qualified zone academy bonds.
--Temporary increase in limit on cover of run excise tax
revenues to Puerto Rico and the Virgin Islands.
--Tax on failure to comply with mental health parity
requirements applicable to group health plans.
--Suspension of section 809 related to the reduction in
policyholder dividends for mutual life insurance companies.
--Archer medical savings account.
--Accelerated depreciation and employment tax credit for
incentives on tribal lands.
--Temporary Assistance for Needy Families (TANF)
supplemental grants and contingency fund.
text of amendment included in the motion
In the amendment of the Senate, strike the matter proposed to
be inserted by the Senate and insert the following:
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Job Creation
and Worker Assistance Act of 2002''.
(b) References to Internal Revenue Code of 1986.--Except as
otherwise expressly provided, whenever in this Act an amendment
or repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be
considered to be made to a section or other provision of the
Internal Revenue Code of 1986.
(c) Table of Contents.--
Sec. 1. Short title; etc.
TITLE I--BUSINESS PROVISIONS
Sec. 101. Special depreciation allowance for certain property acquired
after September 10, 2001, and before September 11, 2004.
Sec. 102. Carryback of certain net operating losses allowed for 5 years;
temporary suspension of 90 percent AMT limit.
TITLE II--UNEMPLOYMENT ASSISTANCE
Sec. 201. Short title.
Sec. 202. Federal-State agreements.
Sec. 203. Temporary extended unemployment compensation account.
Sec. 204. Payments to States having agreements for the payment of
temporary extended unemployment compensation.
Sec. 205. Financing provisions.
Sec. 206. Fraud and overpayments.
Sec. 207. Definitions.
Sec. 208. Applicability.
Sec. 209. Special Reed Act transfer in fiscal year 2002.
TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS
Sec. 301. Tax benefits for area of New York City damaged in terrorist
attacks on September 11, 2001.
TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS
Subtitle A--General Miscellaneous Provisions
Sec. 401. Allowance of electronic 1099's.
Sec. 402. Excluded cancellation of indebtedness income of S corporation
not to result in adjustment to basis of stock of shareholders.
Sec. 403. Limitation on use of nonaccrual experience method of
accounting.
Sec. 404. Exclusion for foster care payments to apply to payments by
qualified placement agencies.
Sec. 405. Interest rate range for additional funding requirements.
Sec. 406. Adjusted gross income determined by taking into account
certain expenses of elementary and secondary school teachers.
Subtitle B--Technical Corrections
Sec. 411. Amendments related to Economic Growth and Tax Relief
Reconciliation Act of 2001.
Sec. 412. Amendments related to Community Renewal Tax Relief Act of
2000.
Sec. 413. Amendments related to the Tax Relief Extension Act of 1999.
Sec. 414. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 415. Amendment related to the Balanced Budget Act of 1997.
Sec. 416. Other technical corrections.
Sec. 417. Clerical amendments.
Sec. 418. Additional corrections.
TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT
Sec. 501. No impact on social security trust funds.
Sec. 502. Emergency designation.
TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS
Sec. 601. Allowance of nonrefundable personal credits against regular
and minimum tax liability.
Sec. 602. Credit for qualified electric vehicles.
Sec. 603. Credit for electricity produced from certain renewable
resources.
Sec. 604. Work opportunity credit.
Sec. 605. Welfare-to-work credit.
Sec. 606. Deduction for clean-fuel vehicles and certain refueling
property.
Sec. 607. Taxable income limit on percentage depletion for oil and
natural gas produced from marginal properties.
Sec. 608. Qualified zone academy bonds.
Sec. 609. Cover over of tax on distilled spirits.
Sec. 610. Parity in the application of certain limits to mental health
benefits.
Sec. 611. Temporary special rules for taxation of life insurance
companies.
Sec. 612. Availability of medical savings accounts.
Sec. 613. Incentives for Indian employment and property on Indian
reservations.
Sec. 614. Subpart F exemption for active financing.
Sec. 615. Repeal of requirement for approved diesel or kerosene
terminals.
Sec. 616. Reauthorization of TANF supplemental grants for population
increases for fiscal year 2002.
Sec. 617. 1-year extension of contingency fund under the TANF program.
TITLE I--BUSINESS PROVISIONS
SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED
AFTER SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11,
2004.
(a) In General.--Section 168 (relating to accelerated cost
recovery system) is amended by adding at the end the following
new subsection:
``(k) Special Allowance for Certain Property Acquired After
September 10, 2001, and Before September 11, 2004.--
``(1) Additional allowance.--In the case of any
qualified property--
``(A) the depreciation deduction provided by
section 167(a) for the taxable year in which
such property is placed in service shall
include an allowance equal to 30 percent of the
adjusted basis of the qualified property, and
``(B) the adjusted basis of the qualified
property shall be reduced by the amount of such
deduction before computing the amount otherwise
allowable as a depreciation deduction under
this chapter for such taxable year and any
subsequent taxable year.
``(2) Qualified property.--For purposes of this
subsection--
``(A) In general.--The term `qualified
property' means property--
``(i)(I) to which this section
applies which has a recovery period of
20 years or less,
``(II) which is computer software (as
defined in section 167(f)(1)(B)) for
which a deduction is allowable under
section 167(a) without regard to this
subsection,
``(III) which is water utility
property, or
``(IV) which is qualified leasehold
improvement property,
``(ii) the original use of which
commences with the taxpayer after
September 10, 2001,
``(iii) which is--
``(I) acquired by the
taxpayer after September 10,
2001, and before September 11,
2004, but only if no written
binding contract for the
acquisition was in effect
before September 11, 2001, or
``(II) acquired by the
taxpayer pursuant to a written
binding contract which was
entered into after September
10, 2001, and before September
11, 2004, and
``(iv) which is placed in service by
the taxpayer before January 1, 2005,
or, in the case of property described
in subparagraph (B), before January 1,
2006.
``(B) Certain property having longer
production periods treated as qualified
property.--
``(i) In general.--The term
`qualified property' includes
property--
``(I) which meets the
requirements of clauses (i),
(ii), and (iii) of subparagraph
(A),
``(II) which has a recovery
period of at least 10 years or
is transportation property, and
``(III) which is subject to
section 263A by reason of
clause (ii) or (iii) of
subsection (f)(1)(B) thereof.
``(ii) Only pre-september 11, 2004,
basis eligible for additional
allowance.--In the case of property
which is qualified property solely by
reason of clause (i), paragraph (1)
shall apply only to the extent of the
adjusted basis thereof attributable to
manufacture, construction, or
production before September 11, 2004.
``(iii) Transportation property.--For
purposes of this subparagraph, the term
`transportation property' means
tangible personal property used in the
trade or business of transporting
persons or property.
``(C) Exceptions.--
``(i) Alternative depreciation
property.--The term `qualified
property' shall not include any
property to which the alternative
depreciation system under subsection
(g) applies, determined--
``(I) without regard to
paragraph (7) of subsection (g)
(relating to election to have
system apply), and
``(II) after application of
section 280F(b) (relating to
listed property with limited
business use).
``(ii) Qualified new york liberty
zone leasehold improvement property.--
The term `qualified property' shall not
include any qualified New York Liberty
Zone leasehold improvement property (as
defined in section 1400L(c)(2)).
``(iii) Election out.--If a taxpayer
makes an election under this clause
with respect to any class of property
for any taxable year, this subsection
shall not apply to all property in such
class placed in service during such
taxable year.
``(D) Special rules.--
``(i) Self-constructed property.--In
the case of a taxpayer manufacturing,
constructing, or producing property for
the taxpayer's own use, the
requirements of clause (iii) of
subparagraph (A) shall be treated as
met if the taxpayer begins
manufacturing, constructing, or
producing the property after September
10, 2001, and before September 11,
2004.
``(ii) Sale-leasebacks.--For purposes
of subparagraph (A)(ii), if property--
``(I) is originally placed in
service after September 10,
2001, by a person, and
``(II) sold and leased back
by such person within 3 months
after the date such property
was originally placed in
service,
such property shall be treated as
originally placed in service not
earlier than the date on which such
property is used under the leaseback
referred to in subclause (II).
``(E) Coordination with section 280f.--For
purposes of section 280F--
``(i) Automobiles.--In the case of a
passenger automobile (as defined in
section 280F(d)(5)) which is qualified
property, the Secretary shall increase
the limitation under section
280F(a)(1)(A)(i) by $4,600.
``(ii) Listed property.--The
deduction allowable under paragraph (1)
shall be taken into account in
computing any recapture amount under
section 280F(b)(2).
``(F) Deduction allowed in computing minimum
tax.--For purposes of determining alternative
minimum taxable income under section 55, the
deduction under subsection (a) for qualified
property shall be determined under this section
without regard to any adjustment under section
56.
``(3) Qualified leasehold improvement property.--For
purposes of this subsection--
``(A) In general.--The term `qualified
leasehold improvement property' means any
improvement to an interior portion of a
building which is nonresidential real property
if--
``(i) such improvement is made under
or pursuant to a lease (as defined in
subsection (h)(7))--
``(I) by the lessee (or any
sublessee) of such portion, or
``(II) by the lessor of such
portion,
``(ii) such portion is to be occupied
exclusively by the lessee (or any
sublessee) of such portion, and
``(iii) such improvement is placed in
service more than 3 years after the
date the building was first placed in
service.
``(B) Certain improvements not included.--
Such term shall not include any improvement for
which the expenditure is attributable to--
``(i) the enlargement of the
building,
``(ii) any elevator or escalator,
``(iii) any structural component
benefiting a common area, and
``(iv) the internal structural
framework of the building.
``(C) Definitions and special rules.--For
purposes of this paragraph--
``(i) Commitment to lease treated as
lease.--A commitment to enter into a
lease shall be treated as a lease, and
the parties to such commitment shall be
treated as lessor and lessee,
respectively.
``(ii) Related persons.--A lease
between related persons shall not be
considered a lease. For purposes of the
preceding sentence, the term `related
persons' means--
``(I) members of an
affiliated group (as defined in
section 1504), and
``(II) persons having a
relationship described in
subsection (b) of section 267;
except that, for purposes of
this clause, the phrase `80
percent or more' shall be
substituted for the phrase
`more than 50 percent' each
place it appears in such
subsection.''
(b) Effective Date.--The amendments made by this section
shall apply to property placed in service after September 10,
2001, in taxable years ending after such date.
SEC. 102. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED FOR 5
YEARS; TEMPORARY SUSPENSION OF 90 PERCENT AMT
LIMIT.
(a) In General.--Paragraph (1) of section 172(b) (relating to
years to which loss may be carried) is amended by adding at the
end the following new subparagraph:
``(H) In the case of a taxpayer which has a
net operating loss for any taxable year ending
during 2001 or 2002, subparagraph (A)(i) shall
be applied by substituting `5' for `2' and
subparagraph (F) shall not apply.''.
(b) Election To Disregard 5-Year Carryback.--Section 172
(relating to net operating loss deduction) is amended by
redesignating subsection (j) as subsection (k) and by inserting
after subsection (i) the following new subsection:
``(j) Election To Disregard 5-Year Carryback for Certain Net
Operating Losses.--Any taxpayer entitled to a 5-year carryback
under subsection (b)(1)(H) from any loss year may elect to have
the carryback period with respect to such loss year determined
without regard to subsection (b)(1)(H). Such election shall be
made in such manner as may be prescribed by the Secretary and
shall be made by the due date (including extensions of time)
for filing the taxpayer's return for the taxable year of the
net operating loss. Such election, once made for any taxable
year, shall be irrevocable for such taxable year.''.
(c) Temporary Suspension of 90 Percent Limit on Certain NOL
Carryovers.--
(1) In general.--Subparagraph (A) of section 56(d)(1)
(relating to general rule defining alternative tax net
operating loss deduction) is amended to read as
follows:
``(A) the amount of such deduction shall not
exceed the sum of--
``(i) the lesser of--
``(I) the amount of such
deduction attributable to net
operating losses (other than
the deduction attributable to
carryovers described in clause
(ii)(I)), or
``(II) 90 percent of
alternative minimum taxable
income determined without
regard to such deduction, plus
``(ii) the lesser of--
``(I) the amount of such
deduction attributable to the
sum of carrybacks of net
operating losses for taxable
years ending during 2001 or
2002 and carryforwards of net
operating losses to taxable
years ending during 2001 and
2002, or
``(II) alternative minimum
taxable income determined
without regard to such
deduction reduced by the amount
determined under clause (i),
and''.
(2) Effective date.--The amendment made by this
subsection shall apply to taxable years ending before
January 1, 2003.
(d) Effective Date.--Except as provided in subsection (c),
the amendments made by this section shall apply to net
operating losses for taxable years ending after December 31,
2000.
TITLE II--UNEMPLOYMENT ASSISTANCE
SEC. 201. SHORT TITLE.
This title may be cited as the ``Temporary Extended
Unemployment Compensation Act of 2002''.
SEC. 202. FEDERAL-STATE AGREEMENTS.
(a) In General.--Any State which desires to do so may enter
into and participate in an agreement under this title with the
Secretary of Labor (in this title referred to as the
``Secretary''). Any State which is a party to an agreement
under this title may, upon providing 30 days' written notice to
the Secretary, terminate such agreement.
(b) Provisions of Agreement.--Any agreement under subsection
(a) shall provide that the State agency of the State will make
payments of temporary extended unemployment compensation to
individuals who--
(1) have exhausted all rights to regular compensation
under the State law or under Federal law with respect
to a benefit year (excluding any benefit year that
ended before March 15, 2001);
(2) have no rights to regular compensation or
extended compensation with respect to a week under such
law or any other State unemployment compensation law or
to compensation under any other Federal law;
(3) are not receiving compensation with respect to
such week under the unemployment compensation law of
Canada; and
(4) filed an initial claim for regular compensation
on or after March 15, 2001.
(c) Exhaustion of Benefits.--For purposes of subsection
(b)(1), an individual shall be deemed to have exhausted such
individual's rights to regular compensation under a State law
when--
(1) no payments of regular compensation can be made
under such law because such individual has received all
regular compensation available to such individual based
on employment or wages during such individual's base
period; or
(2) such individual's rights to such compensation
have been terminated by reason of the expiration of the
benefit year with respect to which such rights existed.
(d) Weekly Benefit Amount, Etc.--For purposes of any
agreement under this title--
(1) the amount of temporary extended unemployment
compensation which shall be payable to any individual
for any week of total unemployment shall be equal to
the amount of the regular compensation (including
dependents' allowances) payable to such individual
during such individual's benefit year under the State
law for a week of total unemployment;
(2) the terms and conditions of the State law which
apply to claims for regular compensation and to the
payment thereof shall apply to claims for temporary
extended unemployment compensation and the payment
thereof, except--
(A) that an individual shall not be eligible
for temporary extended unemployment
compensation under this title unless, in the
base period with respect to which the
individual exhausted all rights to regular
compensation under the State law, the
individual had 20 weeks of full-time insured
employment or the equivalent in insured wages,
as determined under the provisions of the State
law implementing section 202(a)(5) of the
Federal-State Extended Unemployment
Compensation Act of 1970 (26 U.S.C. 3304 note);
and
(B) where otherwise inconsistent with the
provisions of this title or with the
regulations or operating instructions of the
Secretary promulgated to carry out this title;
and
(3) the maximum amount of temporary extended
unemployment compensation payable to any individual for
whom a temporary extended unemployment compensation
account is established under section 203 shall not
exceed the amount established in such account for such
individual.
(e) Election by States.--Notwithstanding any other provision
of Federal law (and if State law permits), the Governor of a
State that is in an extended benefit period may provide for the
payment of temporary extended unemployment compensation in lieu
of extended compensation to individuals who otherwise meet the
requirements of this section. Such an election shall not
require a State to trigger off an extended benefit period.
SEC. 203. TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION ACCOUNT.
(a) In General.--Any agreement under this title shall provide
that the State will establish, for each eligible individual who
files an application for temporary extended unemployment
compensation, a temporary extended unemployment compensation
account with respect to such individual's benefit year.
(b) Amount in Account.--
(1) In general.--The amount established in an account
under subsection (a) shall be equal to the lesser of--
(A) 50 percent of the total amount of regular
compensation (including dependents' allowances)
payable to the individual during the
individual's benefit year under such law, or
(B) 13 times the individual's average weekly
benefit amount for the benefit year.
(2) Weekly benefit amount.--For purposes of this
subsection, an individual's weekly benefit amount for
any week is the amount of regular compensation
(including dependents' allowances) under the State law
payable to such individual for such week for total
unemployment.
(c) Special Rule.--
(1) In general.--Notwithstanding any other provision
of this section, if, at the time that the individual's
account is exhausted, such individual's State is in an
extended benefit period (as determined under paragraph
(2)), then, such account shall be augmented by an
amount equal to the amount originally established in
such account (as determined under subsection (b)(1)).
(2) Extended benefit period.--For purposes of
paragraph (1), a State shall be considered to be in an
extended benefit period if, at the time of exhaustion
(as described in paragraph (1))--
(A) such a period is then in effect for such
State under the Federal-State Extended
Unemployment Compensation Act of 1970; or
(B) such a period would then be in effect for
such State under such Act if section 203(d) of
such Act were applied as if it had been amended
by striking ``5'' each place it appears and
inserting ``4''.
SEC. 204. PAYMENTS TO STATES HAVING AGREEMENTS FOR THE PAYMENT OF
TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION.
(a) General Rule.--There shall be paid to each State that has
entered into an agreement under this title an amount equal to
100 percent of the temporary extended unemployment compensation
paid to individuals by the State pursuant to such agreement.
(b) Treatment of Reimbursable Compensation.--No payment shall
be made to any State under this section in respect of any
compensation to the extent the State is entitled to
reimbursement in respect of such compensation under the
provisions of any Federal law other than this title or chapter
85 of title 5, United States Code. A State shall not be
entitled to any reimbursement under such chapter 85 in respect
of any compensation to the extent the State is entitled to
reimbursement under this title in respect of such compensation.
(c) Determination of Amount.--Sums payable to any State by
reason of such State having an agreement under this title shall
be payable, either in advance or by way of reimbursement (as
may be determined by the Secretary), in such amounts as the
Secretary estimates the State will be entitled to receive under
this title for each calendar month, reduced or increased, as
the case may be, by any amount by which the Secretary finds
that the Secretary's estimates for any prior calendar month
were greater or less than the amounts which should have been
paid to the State. Such estimates may be made on the basis of
such statistical, sampling, or other method as may be agreed
upon by the Secretary and the State agency of the State
involved.
SEC. 205. FINANCING PROVISIONS.
(a) In General.--Funds in the extended unemployment
compensation account (as established by section 905(a) of the
Social Security Act (42 U.S.C. 1105(a)) ofthe Unemployment
Trust Fund (as established by section 904(a) of such Act (42 U.S.C.
1104(a)) shall be used for the making of payments to States having
agreements entered into under this title.
(b) Certification.--The Secretary shall from time to time
certify to the Secretary of the Treasury for payment to each
State the sums payable to such State under this title. The
Secretary of the Treasury, prior to audit or settlement by the
General Accounting Office, shall make payments to the State in
accordance with such certification, by transfers from the
extended unemployment compensation account (as so established)
to the account of such State in the Unemployment Trust Fund (as
so established).
(c) Assistance to States.--There are appropriated out of the
employment security administration account (as established by
section 901(a) of the Social Security Act (42 U.S.C. 1101(a))
of the Unemployment Trust Fund, without fiscal year limitation,
such funds as may be necessary for purposes of assisting States
(as provided in title III of the Social Security Act (42 U.S.C.
501 et seq.)) in meeting the costs of administration of
agreements under this title.
(d) Appropriations for Certain Payments.--There are
appropriated from the general fund of the Treasury, without
fiscal year limitation, to the extended unemployment
compensation account (as so established) of the Unemployment
Trust Fund (as so established) such sums as the Secretary
estimates to be necessary to make the payments under this
section in respect of--
(1) compensation payable under chapter 85 of title 5,
United States Code; and
(2) compensation payable on the basis of services to
which section 3309(a)(1) of the Internal Revenue Code
of 1986 applies.
Amounts appropriated pursuant to the preceding sentence shall
not be required to be repaid.
SEC. 206. FRAUD AND OVERPAYMENTS.
(a) In General.--If an individual knowingly has made, or
caused to be made by another, a false statement or
representation of a material fact, or knowingly has failed, or
caused another to fail, to disclose a material fact, and as a
result of such false statement or representation or of such
nondisclosure such individual has received an amount of
temporary extended unemployment compensation under this title
to which he was not entitled, such individual--
(1) shall be ineligible for further temporary
extended unemployment compensation under this title in
accordance with the provisions of the applicable State
unemployment compensation law relating to fraud in
connection with a claim for unemployment compensation;
and
(2) shall be subject to prosecution under section
1001 of title 18, United States Code.
(b) Repayment.--In the case of individuals who have received
amounts of temporary extended unemployment compensation under
this title to which they were not entitled, the State shall
require such individuals to repay the amounts of such temporary
extended unemployment compensation to the State agency, except
that the State agency may waive such repayment if it determines
that--
(1) the payment of such temporary extended
unemployment compensation was without fault on the part
of any such individual; and
(2) such repayment would be contrary to equity and
good conscience.
(c) Recovery by State Agency.--
(1) In general.--The State agency may recover the
amount to be repaid, or any part thereof, by deductions
from any temporary extended unemployment compensation
payable to such individual under this title or from any
unemployment compensation payable to such individual
under any Federal unemployment compensation law
administered by the State agency or under any other
Federal law administered by the State agency which
provides for the payment of any assistance or allowance
with respect to any week of unemployment, during the 3-
year period after the date such individuals received
the payment of the temporary extended unemployment
compensation to which they were not entitled, except
that no single deduction may exceed 50 percent of the
weekly benefit amount from which such deduction is
made.
(2) Opportunity for hearing.--No repayment shall be
required, and no deduction shall be made, until a
determination has been made, notice thereof and an
opportunity for a fair hearing has been given to the
individual, and the determination has become final.
(d) Review.--Any determination by a State agency under this
section shall be subject to review in the same manner and to
the same extent as determinations under the State unemployment
compensation law, and only in that manner and to that extent.
SEC. 207. DEFINITIONS.
In this title, the terms ``compensation'', ``regular
compensation'', ``extended compensation'', ``additional
compensation'', ``benefit year'', ``base period'', ``State'',
``State agency'', ``State law'', and ``week'' have the
respective meanings given such terms under section 205 of the
Federal-State Extended Unemployment Compensation Act of 1970
(26 U.S.C. 3304 note).
SEC. 208. APPLICABILITY.
An agreement entered into under this title shall apply to
weeks of unemployment--
(1) beginning after the date on which such agreement
is entered into; and
(2) ending before January 1, 2003.
SEC. 209. SPECIAL REED ACT TRANSFER IN FISCAL YEAR 2002.
(a) Repeal of Certain Provisions Added by the Balanced Budget
Act of 1997.--
(1) In general.--The following provisions of section
903 of the Social Security Act (42 U.S.C. 1103) are
repealed:
(A) Paragraph (3) of subsection (a).
(B) The last sentence of subsection (c)(2).
(2) Savings provision.--Any amounts transferred
before the date of enactment of this Act under the
provision repealed by paragraph (1)(A) shall remain
subject to section 903 of the Social Security Act, as
last in effect before such date of enactment.
(b) Special Transfer in Fiscal Year 2002.--Section 903 of the
Social Security Act is amended by adding at the end the
following:
``Special Transfer in Fiscal Year 2002
``(d)(1) The Secretary of the Treasury shall transfer (as of
the date determined under paragraph (5)) from the Federal
unemployment account to the account of each State in the
Unemployment Trust Fund the amount determined with respect to
such State under paragraph (2).
``(2)(A) The amount to be transferred under this subsection
to a State account shall (as determined by the Secretary of
Labor and certified by such Secretary to the Secretary of the
Treasury) be equal to--
``(i) the amount which would have been required to
have been transferred under this section to such
account at the beginning of fiscal year 2002 if--
``(I) section 209(a)(1) of the Temporary
Extended Unemployment Compensation Act of 2002
had been enacted before the close of fiscal
year 2001, and
``(II) section 5402 of Public Law 105-33
(relating to increase in Federal unemployment
account ceiling) had not been enacted, minus
``(ii) the amount which was in fact transferred under
this section to such account at the beginning of fiscal
year 2002.
``(B) Notwithstanding the provisions of subparagraph (A)--
``(i) the aggregate amount transferred to the States
under this subsection may not exceed a total of
$8,000,000,000; and
``(ii) all amounts determined under subparagraph (A)
shall be reduced ratably, if and to the extent
necessary in order to comply with the limitation under
clause (i).
``(3)(A) Except as provided in paragraph (4), amounts
transferred to a State account pursuant to this subsection may
be used only in the payment of cash benefits--
``(i) to individuals with respect to their
unemployment, and
``(ii) which are allowable under subparagraph (B) or
(C).
``(B)(i) At the option of the State, cash benefits under this
paragraph may include amounts which shall be payable as--
``(I) regular compensation, or
``(II) additional compensation, upon the exhaustion
of any temporary extended unemployment compensation (if
such State has entered into an agreement under the
Temporary Extended Unemployment Compensation Act of
2002), for individuals eligible for regular
compensation under the unemployment compensation law of
such State.
``(ii) Any additional compensation under clause (i) may not
be taken into account for purposes of any determination
relating to the amount of any extended compensation for which
an individual might be eligible.
``(C)(i) At the option of the State, cash benefits under this
paragraph may include amounts which shall be payable to 1 or
more categories of individuals not otherwise eligible for
regular compensation under the unemployment compensation law of
such State, including those described in clause (iii).
``(ii) The benefits paid under this subparagraph to any
individual may not, for any period of unemployment, exceed the
maximum amount of regular compensation authorized under the
unemployment compensation law of such State for that same
period, plus any additional compensation (described in
subparagraph (B)(i)) which could have been paid with respect to
that amount.
``(iii) The categories of individuals described in this
clause include the following:
``(I) Individuals who are seeking, or available for,
only part-time (and not full-time) work.
``(II) Individuals who would be eligible for regular
compensation under the unemployment compensation law of
such State under an alternative base period.
``(D) Amounts transferred to a State account under this
subsection may be used in the payment of cash benefits to
individuals only for weeks of unemployment beginning after the
date of enactment of this subsection.
``(4) Amounts transferred to a State account under this
subsection may be used for the administration of its
unemployment compensation law and public employment offices
(including in connection with benefits described in paragraph
(3) and any recipients thereof), subject to the same conditions
as set forth in subsection (c)(2) (excluding subparagraph (B)
thereof, and deeming the reference to `subsections (a) and (b)'
in subparagraph (D) thereof to include this subsection).
``(5) Transfers under this subsection shall be made within 10
days after the date of enactment of this paragraph.''.
(c) Limitations on Transfers.--Section 903(b) of the Social
Security Act shall apply to transfers under section 903(d) of
such Act (as amended by this section). For purposes of the
preceding sentence, such section 903(b) shall be deemed to be
amended as follows:
(1) By substituting ``the transfer date described in
subsection (d)(5)'' for ``October 1 of any fiscal
year''.
(2) By substituting ``remain in the Federal
unemployment account'' for ``be transferred to the
Federal unemployment account as of the beginning of
such October 1''.
(3) By substituting ``fiscal year 2002 (after the
transfer date described in subsection (d)(5))'' for
``the fiscal year beginning on such October 1''.
(4) By substituting ``under subsection (d)'' for ``as
of October 1 of such fiscal year''.
(5) By substituting ``(as of the close of fiscal year
2002)'' for ``(as of the close of such fiscal year)''.
(d) Technical Amendments.--(1) Sections 3304(a)(4)(B) and
3306(f)(2) of the Internal Revenue Code of 1986 are amended by
inserting ``or 903(d)(4)'' before ``of the Social Security
Act''.
(2) Section 303(a)(5) of the Social Security Act is amended
in the second proviso by inserting ``or 903(d)(4)'' after
``903(c)(2)''.
(e) Regulations.--The Secretary of Labor may prescribe any
operating instructions or regulations necessary to carry out
this section and the amendments made by this section.
TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS
SEC. 301. TAX BENEFITS FOR AREA OF NEW YORK CITY DAMAGED IN TERRORIST
ATTACKS ON SEPTEMBER 11, 2001.
(a) In General.--Chapter 1 is amended by adding at the end
the following new subchapter:
``Subchapter Y--New York Liberty Zone Benefits
``Sec. 1400L. Tax benefits for New York Liberty Zone.
``SEC. 1400L. TAX BENEFITS FOR NEW YORK LIBERTY ZONE.
``(a) Expansion of Work Opportunity Tax Credit.--
``(1) In general.--For purposes of section 51, a New
York Liberty Zone business employee shall be treated as
a member of a targeted group.
``(2) New york liberty zone business employee.--For
purposes of this subsection--
``(A) In general.--The term `New York Liberty
Zone business employee' means, with respect to
any period, any employee of a New York Liberty
Zone business if substantially all the services
performed during such period by such employee
for such business are performed in the New York
Liberty Zone.
``(B) Inclusion of certain employees outside
the new york liberty zone.--
``(i) In general.--In the case of a
New York Liberty Zone business
described in subclause (II) of
subparagraph (C)(i), the term `New York
Liberty Zone business employee'
includes any employee of such business
(not described in subparagraph (A)) if
substantially all the services
performed during such period by such
employee for such business are
performed in the City of New York, New
York.
``(ii) Limitation.--The number of
employees of such a business that are
treated as New York Liberty zone
business employees on any day by reason
of clause (i) shall not exceed the
excess of--
``(I) the number of employees
of such business on September
11, 2001, in the New York
Liberty Zone, over
``(II) the number of New York
Liberty Zone business employees
(determined without regard to
this subparagraph) of such
business on the day to which
the limitation is being
applied.
The Secretary may require any trade or
business to have the number determined
under subclause (I) verified by the New
York State Department of Labor.
``(C) New york liberty zone business.--
``(i) In general.--The term `New York
Liberty Zone business' means any trade
or business which is--
``(I) located in the New York
Liberty Zone, or
``(II) located in the City of
New York, New York, outside the
New York Liberty Zone, as a
result of the physical
destruction or damage of such
place of business by the
September 11, 2001, terrorist
attack.
``(ii) Credit not allowed for large
businesses.--The term `New York Liberty
Zone business' shall not include any
trade or business for any taxable year
if such trade or business employed an
average of more than 200 employees on
business days during the taxable year.
``(D) Special rules for determining amount of
credit.--For purposes of applying subpart F of
part IV of subchapter B of this chapter to
wages paid or incurred to any New York Liberty
Zone business employee--
``(i) section 51(a) shall be applied
by substituting `qualified wages' for
`qualified first-year wages',
``(ii) the rules of section 52 shall
apply for purposes of determining the
number of employees under subparagraph
(B),
``(iii) subsections (c)(4) and (i)(2)
of section 51 shall not apply, and
``(iv) in determining qualified
wages, the following shall apply in
lieu of section 51(b):
``(I) Qualified wages.--The
term `qualified wages' means
wages paid or incurred by the
employer to individuals who are
New York Liberty Zone business
employees of such employer for
work performed during calendar
year 2002 or 2003.
``(II) Only first $6,000 of
wages per calendar year taken
into account.--The amount of
the qualified wages which may
be taken into account with
respect to any individual shall
not exceed $6,000 per calendar
year.
``(b) Special Allowance for Certain Property Acquired After
September 10, 2001.--
``(1) Additional allowance.--In the case of any
qualified New York Liberty Zone property--
``(A) the depreciation deduction provided by
section 167(a) for the taxable year in which
such property is placed in service shall
include an allowance equal to 30 percent of the
adjusted basis of such property, and
``(B) the adjusted basis of the qualified New
York Liberty Zone property shall be reduced by
the amount of such deduction before computing
the amount otherwise allowable as a
depreciation deduction under this chapter for
such taxable year and any subsequent taxable
year.
``(2) Qualified new york liberty zone property.--For
purposes of this subsection--
``(A) In general.--The term `qualified New
York Liberty Zone property' means property--
``(i)(I) which is described in
section 168(k)(2)(A)(i), or
``(II) which is nonresidential real
property, or residential rental
property, which is described in
subparagraph (B),
``(ii) substantially all of the use
of which is in the New York Liberty
Zone and is in the active conduct of a
trade or business by the taxpayer in
such Zone,
``(iii) the original use of which in
the New York Liberty Zone commences
with the taxpayer after September 10,
2001,
``(iv) which is acquired by the
taxpayer by purchase (as defined in
section 179(d)) after September 10,
2001, but only if no written binding
contract for the acquisition was in
effect before September 11, 2001, and
``(v) which is placed in service by
the taxpayer on or before the
termination date.
The term `termination date' means December 31,
2006 (December 31, 2009, in the case of
nonresidential real property and residential
rental property).
``(B) Eligible real property.--Nonresidential
real property or residential rental property is
described in this subparagraph only to the
extent it rehabilitates real property damaged,
or replaces real property destroyed or
condemned, as a result of the September 11,
2001, terrorist attack. For purposes of the
preceding sentence, property shall be treated
as replacing real property destroyed or
condemned if, as part of an integrated plan,
such property replaces real property which is
included in a continuous area which includes
real property destroyed or condemned.
``(C) Exceptions.--
``(i) 30 percent additional allowance
property.--Such term shall not include
property to which section 168(k)
applies.
``(ii) Alternative depreciation
property.--The term `qualified New York
Liberty Zone property' shall not
include any property described in
section 168(k)(2)(C)(i).
``(iii) Qualified new york liberty
zone leasehold improvement property.--
Such term shall not include any
qualified New York Liberty Zone
leasehold improvement property.
``(iv) Election out.--For purposes of
this subsection, rules similar to the
rules of section 168(k)(2)(C)(iii)
shall apply.
``(D) Special rules.--For purposes of this
subsection, rules similar to the rules of
section 168(k)(2)(D) shall apply, except that
clause (i) thereof shall be applied without
regard to `and before September 11, 2004'.
``(E) Allowance against alternative minimum
tax.--For purposes of this subsection, rules
similar to the rules of section 168(k)(2)(F)
shall apply.
``(c) 5-Year Recovery Period for Depreciation of Certain
Leasehold Improvements.--
``(1) In general.--For purposes of section 168, the
term `5-year property' includes any qualified New York
Liberty Zone leasehold improvement property.
``(2) Qualified new york liberty zone leasehold
improvement property.--For purposes of this section,
the term `qualified New York Liberty Zone leasehold
improvement property' means qualified leasehold
improvement property (as defined in section 168(k)(3))
if--
``(A) such building is located in the New
York Liberty Zone,
``(B) such improvement is placed in service
after September 10, 2001, and before January 1,
2007, and
``(C) no written binding contract for such
improvement was in effect before September 11,
2001.
``(3) Requirement to use straight line method.--The
applicable depreciation method under section 168 shall
be the straight line method in the case of qualified
New York Liberty Zone leasehold improvement property.
``(4) 9-year recovery period under alternative
system.--For purposes of section 168(g), the class life
of qualified New York Liberty Zone leasehold
improvement property shall be 9 years.
``(d) Tax-Exempt Bond Financing.--
``(1) In general.--For purposes of this title, any
qualified New York Liberty Bond shall be treated as an
exempt facility bond.
``(2) Qualified new york liberty bond.--For purposes
of this subsection, the term `qualified New York
Liberty Bond' means any bond issued as part of an issue
if--
``(A) 95 percent or more of the net proceeds
(as defined in section 150(a)(3)) of such issue
are to be used for qualified project costs,
``(B) such bond is issued by the State of New
York or any political subdivision thereof,
``(C) the Governor or the Mayor designates
such bond for purposes of this section, and
``(D) such bond is issued after the date of
the enactment of this section and before
January 1, 2005.
``(3) Limitations on amount of bonds.--
``(A) Aggregate amount designated.--The
maximum aggregate face amount of bonds which
may be designated under this subsection shall
not exceed $8,000,000,000, of which not to
exceed $4,000,000,000 may be designated by the
Governor and not to exceed $4,000,000,000 may
be designated by the Mayor.
``(B) Specific limitations.--The aggregate
face amount of bonds issued which are to be
used for--
``(i) costs for property located
outside the New York Liberty Zone shall
not exceed $2,000,000,000,
``(ii) residential rental property
shall not exceed $1,600,000,000, and
``(iii) costs with respect to
property used for retail sales of
tangible property and functionally
related and subordinate property shall
not exceed $800,000,000.
The limitations under clauses (i), (ii), and
(iii) shall be allocated proportionately
between the bonds designated by the Governor
and the bonds designated by the Mayor in
proportion to the respective amounts of bonds
designated by each.
``(C) Movable property.--No bonds shall be
issued which are to be used for movable
fixtures and equipment.
``(4) Qualified project costs.--For purposes of this
subsection--
``(A) In general.--The term `qualified
project costs' means the cost of acquisition,
construction, reconstruction, and renovation
of--
``(i) nonresidential real property
and residential rental property
(including fixed tenant improvements
associated with such property) located
in the New York Liberty Zone, and
``(ii) public utility property (as
defined in section 168(i)(10)) located
in the New York Liberty Zone.
``(B) Costs for certain property outside zone
included.--Such term includes the cost of
acquisition, construction, reconstruction, and
renovation of nonresidential real property
(including fixed tenant improvements associated
with such property) located outside the New
York Liberty Zone but within the City of New
York, New York, if such property is part of a
project which consists of at least 100,000
square feet of usable office or other
commercial space located in a single building
or multiple adjacent buildings.
``(5) Special rules.--In applying this title to any
qualified New York Liberty Bond, the following
modifications shall apply:
``(A) Section 146 (relating to volume cap)
shall not apply.
``(B) Section 147(d) (relating to acquisition
of existing property not permitted) shall be
applied by substituting `50 percent' for `15
percent' each place it appears.
``(C) Section 148(f)(4)(C) (relating to
exception from rebate for certain proceeds to
be used to finance construction expenditures)
shall apply to the available construction
proceeds of bonds issued under this section.
``(D) Repayments of principal on financing
provided by the issue--
``(i) may not be used to provide
financing, and
``(ii) must be used not later than
the close of the 1st semiannual period
beginning after the date of the
repayment to redeem bonds which are
part of such issue.
The requirement of clause (ii) shall be treated
as met with respect to amounts received within
10 years after the date of issuance of the
issue (or, in the case of a refunding bond, the
date of issuance of the original bond) if such
amounts are used by the close of such 10 years
to redeem bonds which are part of such issue.
``(E) Section 57(a)(5) shall not apply.
``(6) Separate issue treatment of portions of an
issue.--This subsection shall not apply to the portion
of an issue which (if issued as a separate issue) would
be treated as a qualified bond or as a bond that is not
a private activity bond (determined without regard to
paragraph (1)), if the issuer elects to so treat such
portion.
``(e) Advance Refundings of Certain Tax-Exempt Bonds.--
``(1) In general.--With respect to a bond described
in paragraph (2) issued as part of an issue 90 percent
(95 percent in the case of a bond described in
paragraph (2)(C)) or more of the net proceeds (as
defined in section 150(a)(3)) of which were used to
finance facilities located within the City of New York,
New York (or property which is functionally related and
subordinate to facilities located within the City of
New York for the furnishing of water), one additional
advanced refunding after the date of the enactment of
this section and before January 1, 2005, shall be
allowed under the applicable rules of section 149(d)
if--
``(A) the Governor or the Mayor designates
the advance refunding bond for purposes of this
subsection, and
``(B) the requirements of paragraph (4) are
met.
``(2) Bonds described.--A bond is described in this
paragraph if such bond was outstanding on September 11,
2001, and is--
``(A) a State or local bond (as defined in
section 103(c)(1)) which is a general
obligation of the City of New York, New York,
``(B) a State or local bond (as so defined)
other than a private activity bond (as defined
in section 141(a)) issued by the New York
Municipal Water Finance Authority or the
Metropolitan Transportation Authority of the
State of New York, or
``(C) a qualified 501(c)(3) bond (as defined
in section 145(a)) which is a qualified
hospital bond (as defined in section 145(c))
issued by or on behalf of the State of New York
or the City of New York, New York.
``(3) Aggregate limit.--For purposes of paragraph
(1), the maximum aggregate face amount of bonds which
may be designated under this subsection by the Governor
shall not exceed $4,500,000,000 and the maximum
aggregate face amount of bonds which may be designated
under this subsection by the Mayor shall not exceed
$4,500,000,000.
``(4) Additional requirements.--The requirements of
this paragraph are met with respect to any advance
refunding of a bond described in paragraph (2) if--
``(A) no advance refundings of such bond
would be allowed under any provision of law
after September 11, 2001,
``(B) the advance refunding bond is the only
other outstanding bond with respect to the
refunded bond, and
``(C) the requirements of section 148 are met
with respect to all bonds issued under this
subsection.
``(f) Increase in Expensing Under Section 179.--
``(1) In general.--For purposes of section 179--
``(A) the limitation under section 179(b)(1)
shall be increased by the lesser of--
``(i) $35,000, or
``(ii) the cost of section 179
property which is qualified New York
Liberty Zone property placed in service
during the taxable year, and
``(B) the amount taken into account under
section 179(b)(2) with respect to any section
179 property which is qualified New York
Liberty Zone property shall be 50 percent of
the cost thereof.
``(2) Qualified new york liberty zone property.--For
purposes of this subsection, the term `qualified New
York Liberty Zone property' has the meaning given such
term by subsection (b)(2).
``(3) Recapture.--Rules similar to the rules under
section 179(d)(10) shall apply with respect to any
qualified New York Liberty Zone property which ceases
to be used in the New York Liberty Zone.
``(g) Extension of Replacement Period for Nonrecognition of
Gain.--Notwithstanding subsections (g) and (h) of section 1033,
clause (i) of section 1033(a)(2)(B) shall be applied by
substituting `5 years' for `2 years' with respect to property
which is compulsorily or involuntarily converted as a result of
the terrorist attacks on September 11, 2001, in the New York
Liberty Zone but only if substantially all of the use of the
replacement property is in the City of New York, New York.
``(h) New York Liberty Zone.--For purposes of this section,
the term `New York Liberty Zone' means the area located on or
south of Canal Street, East Broadway (east of its intersection
with Canal Street), or Grand Street (east of its intersection
with East Broadway) in the Borough of Manhattan in the City of
New York, New York.
``(i) References to Governor and Mayor.--For purposes of this
section, the terms `Governor' and `Mayor' mean the Governor of
the State of New York and the Mayor of the City of New York,
New York, respectively.''.
(b) Credit Allowed Against Regular and Minimum Tax.--
(1) In general.--Subsection (c) of section 38
(relating to limitation based on amount of tax) is
amended by redesignating paragraph (3) as paragraph (4)
and by inserting after paragraph (2) the following new
paragraph:
``(3) Special rules for new york liberty zone
business employee credit.--
``(A) In general.--In the case of the New
York Liberty Zone business employee credit--
``(i) this section and section 39
shall be applied separately with
respect to such credit, and
``(ii) in applying paragraph (1) to
such credit--
``(I) the tentative minimum
tax shall be treated as being
zero, and
``(II) the limitation under
paragraph (1) (as modified by
subclause (I)) shall be reduced
by the credit allowed under
subsection (a) for the taxable
year (other than the New York
Liberty Zone business employee
credit).
``(B) New york liberty zone business employee
credit.--For purposes of this subsection, the
term `New York Liberty Zone business employee
credit' means the portion of work opportunity
credit under section 51 determined under
section 1400L(a).''.
(2) Conforming amendment.--Subclause (II) of section
38(c)(2)(A)(ii) is amended by inserting ``or the New
York Liberty Zone business employee credit'' after
``employment credit''.
(3) Effective date.--The amendments made by this
subsection shall apply to taxable years ending after
December 31, 2001.
(c) Clerical Amendment.--The table of subchapters for chapter
1 is amended by adding at the end the following new item:
``Subchapter Y--New York Liberty Zone Benefits.''.
TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS
Subtitle A--General Miscellaneous Provisions
SEC. 401. ALLOWANCE OF ELECTRONIC 1099'S.
Any person required to furnish a statement under any section
of subpart B of part III of subchapter A of chapter 61 of the
Internal Revenue Code of 1986 for any taxable year ending after
the date of the enactment of this Act, may electronically
furnish such statement (without regard to any first class
mailing requirement) to any recipient who has consented to the
electronic provision of the statement in a manner similar to
the one permitted under regulations issued under section 6051
of such Code or in such other manner as provided by the
Secretary.
SEC. 402. EXCLUDED CANCELLATION OF INDEBTEDNESS INCOME OF S CORPORATION
NOT TO RESULT IN ADJUSTMENT TO BASIS OF STOCK OF
SHAREHOLDERS.
(a) In General.--Subparagraph (A) of section 108(d)(7)
(relating to certain provisions to be applied at corporate
level) is amended by inserting before the period ``, including
by not taking into account under section 1366(a) any amount
excluded under subsection (a) of this section''.
(b) Effective Date.--
(1) In general.--Except as provided in paragraph (2),
the amendment made by this section shall apply to
discharges of indebtedness after October 11, 2001, in
taxable years ending after such date.
(2) Exception.--The amendment made by this section
shall not apply to any discharge of indebtedness before
March 1, 2002, pursuant to a plan of reorganization
filed with a bankruptcy court on or before October 11,
2001.
SEC. 403. LIMITATION ON USE OF NONACCRUAL EXPERIENCE METHOD OF
ACCOUNTING.
(a) In General.--Paragraph (5) of section 448(d) is amended
to read as follows:
``(5) Special rule for certain services.--
``(A) In general.--In the case of any person
using an accrual method of accounting with
respect to amounts to be received for the
performance of services by such person, such
person shall not be required to accrue any
portion of such amounts which (on the basis of
such person's experience) will not be collected
if--
``(i) such services are in fields
referred to in paragraph (2)(A), or
``(ii) such person meets the gross
receipts test of subsection (c) for all
prior taxable years.
``(B) Exception.--This paragraph shall not
apply to any amount if interest is required to
be paid on such amount or there is any penalty
for failure to timely pay such amount.
``(C) Regulations.--The Secretary shall
prescribe regulations to permit taxpayers to
determine amounts referred to in subparagraph
(A) using computations or formulas which, based
on experience, accurately reflect the amount of
income that will not be collected by such
person. A taxpayer may adopt, or request
consent of the Secretary to change to, a
computation or formula that clearly reflects
the taxpayer's experience. A request under the
preceding sentence shall be approved if such
computation or formula clearly reflects the
taxpayer's experience.''.
(b) Effective Date.--
(1) In general.--The amendments made by this section
shall apply to taxable years ending after the date of
the enactment of this Act.
(2) Change in method of accounting.--In the case of
any taxpayer required by the amendments made by this
section to change its method of accounting for its
first taxable year ending after the date of the
enactment of this Act--
(A) such change shall be treated as initiated
by the taxpayer,
(B) such change shall be treated as made with
the consent of the Secretary of the Treasury,
and
(C) the net amount of the adjustments
required to be taken into account by the
taxpayer under section 481 of the Internal
Revenue Code of 1986 shall be taken into
account over a period of 4 years (or if less,
the number of taxable years that the taxpayer
used the method permitted under section
448(d)(5) of such Code as in effect before the
date of the enactment of this Act) beginning
with such first taxable year.
SEC. 404. EXCLUSION FOR FOSTER CARE PAYMENTS TO APPLY TO PAYMENTS BY
QUALIFIED PLACEMENT AGENCIES.
(a) In General.--The matter preceding subparagraph (B) of
section 131(b)(1) (defining qualified foster care payment) is
amended to read as follows:
``(1) In general.--The term `qualified foster care
payment' means any payment made pursuant to a foster
care program of a State or political subdivision
thereof--
``(A) which is paid by--
``(i) a State or political
subdivision thereof, or
``(ii) a qualified foster care
placement agency, and''.
(b) Qualified Foster Individuals To Include Individuals
Placed by Qualified Placement Agencies.--Subparagraph (B) of
section 131(b)(2) (defining qualified foster individual) is
amended to read as follows:
``(B) a qualified foster care placement
agency.''.
(c) Qualified Foster Care Placement Agency Defined.--
Subsection (b) of section 131 is amended by redesignating
paragraph (3) as paragraph (4) and by inserting after paragraph
(2) the following new paragraph:
``(3) Qualified foster care placement agency.--The
term `qualified foster care placement agency' means any
placement agency which is licensed or certified by--
``(A) a State or political subdivision
thereof, or
``(B) an entity designated by a State or
political subdivision thereof,
for the foster care program of such State or political
subdivision to make foster care payments to providers
of foster care.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 2001.
SEC. 405. INTEREST RATE RANGE FOR ADDITIONAL FUNDING REQUIREMENTS.
(a) Amendments to the Internal Revenue Code of 1986.--
(1) Special rule.--Clause (i) of section 412(l)(7)(C)
(relating to interest rate) is amended by adding at the
end the following new subclause:
``(III) Special rule for 2002
and 2003.--For a plan year
beginning in 2002 or 2003,
notwithstanding subclause (I),
in the case that the rate of
interest used under subsection
(b)(5) exceeds the highest rate
permitted under subclause (I),
the rate of interest used to
determine current liability
under this subsection may
exceed the rate of interest
otherwise permitted under
subclause (I); except that such
rate of interest shall not
exceed 120 percent of the
weighted average referred to in
subsection (b)(5)(B)(ii).''.
(2) Quarterly contributions.--Subsection (m) of
section 412 is amended by adding at the end the
following new paragraph:
``(7) Special rules for 2002 and 2004.--In any case
in which the interest rate used to determine current
liability is determined under subsection
(l)(7)(C)(i)(III)--
``(A) 2002.--For purposes of applying
paragraphs (1) and (4)(B)(ii) for plan years
beginning in 2002, the current liability for
the preceding plan year shall be redetermined
using 120 percent as the specified percentage
determined under subsection (l)(7)(C)(i)(II).
``(B) 2004.--For purposes of applying
paragraphs (1) and (4)(B)(ii) for plan years
beginning in 2004, the current liability for
the preceding plan year shall be redetermined
using 105 percent as the specified percentage
determined under subsection
(l)(7)(C)(i)(II).''.
(b) Amendments to the Employee Retirement Income Security Act
of 1974.--
(1) Special rule.--Clause (i) of section 302(d)(7)(C)
of such Act (29 U.S.C. 1082(d)(7)(C)) is amended by
adding at the end the following new subclause:
``(III) Special rule for 2002
and 2003.--For a plan year
beginning in 2002 or 2003,
notwithstanding subclause (I),
in the case that the rate of
interest used under subsection
(b)(5) exceeds the highest rate
permitted under subclause (I),
the rate of interest used to
determine current liability
under this subsection may
exceed the rate of interest
otherwise permitted under
subclause (I); except that such
rate of interest shall not
exceed 120 percent of the
weighted average referred to in
subsection (b)(5)(B)(ii).''.
(2) Quarterly contributions.--Subsection (e) of
section 302 of such Act (29 U.S.C. 1082) is amended by
adding at the end the following new paragraph:
``(7) Special rules for 2002 and 2004.--In any case
in which the interest rate used to determine current
liability is determined under subsection
(d)(7)(C)(i)(III)--
``(A) 2002.--For purposes of applying
paragraphs (1) and (4)(B)(ii) for plan years
beginning in 2002, the current liability for
the preceding plan year shall be redetermined
using 120 percent as the specified percentage
determined under subsection (d)(7)(C)(i)(II).
``(B) 2004.--For purposes of applying
paragraphs (1) and (4)(B)(ii) for plan years
beginning in 2004, the current liability for
the preceding plan year shall be redetermined
using 105 percent as the specified percentage
determined under subsection
(d)(7)(C)(i)(II).''.
(c) PBGC.--Clause (iii) of section 4006(a)(3)(E) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)(3)(E)) is amended by adding at the end the following
new subclause:
``(IV) In the case of plan years beginning after December 31,
2001, and before January 1, 2004, subclause (II) shall be
applied by substituting `100 percent' for `85 percent'.
Subclause (III) shall be applied for such years without regard
to the preceding sentence. Any reference to this clause by any
other sections or subsections shall be treated as a reference
to this clause without regard to this subclause.''.
SEC. 406. ADJUSTED GROSS INCOME DETERMINED BY TAKING INTO ACCOUNT
CERTAIN EXPENSES OF ELEMENTARY AND SECONDARY SCHOOL
TEACHERS.
(a) In General.--Section 62(a)(2) (relating to certain trade
and business deductions of employees) is amended by adding at
the end the following:
``(D) Certain expenses of elementary and
secondary school teachers.--In the case of
taxable years beginning during 2002 or 2003,
the deductions allowed by section 162 which
consist of expenses, not in excess of $250,
paid or incurred by an eligible educator in
connection with books, supplies (other than
nonathletic supplies for courses of instruction
in health or physical education), computer
equipment (including related software and
services) and other equipment, and
supplementary materials used by the eligible
educator in the classroom.''.
(b) Eligible Educator.--Section 62 is amended by adding at
the end the following:
``(d) Definition; Special Rules.--
``(1) Eligible educator.--
``(A) In general.--For purposes of subsection
(a)(2)(D), the term `eligible educator' means,
with respect to any taxable year, an individual
who is a kindergarten through grade 12 teacher,
instructor, counselor, principal, or aide in a
school for at least 900 hours during a school
year.
``(B) School.--The term `school' means any
school which provides elementary education or
secondary education (kindergarten through grade
12), as determined under State law.
``(2) Coordination with exclusions.--A deduction
shall be allowed under subsection (a)(2)(D) for
expenses only to the extent the amount of such expenses
exceeds the amount excludable under section 135,
529(c)(1), or 530(d)(2) for the taxable year.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 2001.
Subtitle B--Technical Corrections
SEC. 411. AMENDMENTS RELATED TO ECONOMIC GROWTH AND TAX RELIEF
RECONCILIATION ACT OF 2001.
(a) Amendments Related to Section 101 of the Act.--
(1) In general.--Subsection (b) of section 6428 is
amended to read as follows:
``(b) Credit Treated as Nonrefundable Personal Credit.--For
purposes of this title, the credit allowed under this section
shall be treated as a credit allowable under subpart A of part
IV of subchapter A of chapter 1.''.
(2) Conforming amendments.--
(A) Subsection (d) of section 6428 is amended
to read as follows:
``(d) Coordination with Advance Refunds of Credit.--
``(1) In general.--The amount of credit which would
(but for this paragraph) be allowable under this
section shall be reduced (but not below zero) by the
aggregate refunds and credits made or allowed to the
taxpayer under subsection (e). Any failure to so reduce
the credit shall be treated as arising out of a
mathematical or clerical error and assessed according
to section 6213(b)(1).
``(2) Joint returns.--In the case of a refund or
credit made or allowed under subsection (e) with
respect to a joint return, half of such refund or
credit shall be treated as having been made or allowed
to each individual filing such return.''.
(B) Paragraph (2) of section 6428(e) is
amended to read as follows:
``(2) Advance refund amount.--For purposes of
paragraph (1), the advance refund amount is the amount
that would have been allowed as a credit under this
section for such first taxable year if--
``(A) this section (other than subsections
(b) and (d) and this subsection) had applied to
such taxable year, and
``(B) the credit for such taxable year were
not allowed to exceed the excess (if any) of--
``(i) the sum of the regular tax
liability (as defined in section 26(b))
plus the tax imposed by section 55,
over
``(ii) the sum of the credits
allowable under part IV of subchapter A
of chapter 1 (other than the credits
allowable under subpart C thereof,
relating to refundable credits).''
(b) Amendment Related to Section 201 of the Act.--
Subparagraph (B) of section 24(d)(1) is amended by striking
``amount of credit allowed by this section'' and inserting
``aggregate amount of credits allowed by this subpart''.
(c) Amendments Related to Section 202 of the Act.--
(1) Corrections to credit for adoption expenses.--
(A) Paragraph (1) of section 23(a) is amended
to read as follows:
``(1) In general.--In the case of an individual,
there shall be allowed as a credit against the tax
imposed by this chapter the amount of the qualified
adoption expenses paid or incurred by the taxpayer.''
(B) Subsection (a) of section 23 is amended
by adding at the end the following new
paragraph:
``(3) $10,000 credit for adoption of child with
special needs regardless of expenses.--In the case of
an adoption of a child with special needs which becomes
final during a taxable year, the taxpayer shall be
treated as having paid during such year qualified
adoption expenses with respect to such adoption in an
amount equal to the excess (if any) of $10,000 over the
aggregate qualified adoption expenses actually paid or
incurred by the taxpayer with respect to such adoption
during such taxable year and all prior taxable years.''
(C) Paragraph (2) of section 23(a) is amended
by striking the last sentence.
(D) Paragraph (1) of section 23(b) is amended
by striking ``subsection (a)(1)(A)'' and
inserting ``subsection (a)''.
(E) Subsection (i) of section 23 is amended
by striking ``the dollar limitation in
subsection (b)(1)'' and inserting ``the dollar
amounts in subsections (a)(3) and (b)(1)''.
(F) Expenses paid or incurred during any
taxable year beginning before January 1, 2002,
may be taken into account in determining the
credit under section 23 of the Internal Revenue
Code of 1986 only to the extent the aggregate
of such expenses does not exceed the applicable
limitation under section 23(b)(1) of such Code
as in effect on the day before the date of the
enactment of the Economic Growth and Tax Relief
Reconciliation Act of 2001.
(2) Corrections to exclusion for employer-provided
adoption assistance.--
(A) Subsection (a) of section 137 is amended
to read as follows:
``(a) Exclusion.--
``(1) In general.--Gross income of an employee does
not include amounts paid or expenses incurred by the
employer for qualified adoption expenses in connection
with the adoption of a child by an employee if such
amounts are furnished pursuant to an adoption
assistance program.
``(2) $10,000 exclusion for adoption of child with
special needs regardless of expenses.--In the case of
an adoption of a child with special needs which becomes
final during a taxable year, the qualified adoption
expenses with respect to such adoption for such year
shall be increased by an amount equal to the excess (if
any) of $10,000 over the actual aggregate qualified
adoption expenses with respect to such adoption during
such taxable year and all prior taxable years.''
(B) Paragraph (2) of section 137(b) is
amended by striking ``subsection (a)(1)'' and
inserting ``subsection (a)''.
(3) Effective date.--The amendments made by this
subsection shall apply to taxable years beginning after
December 31, 2002; except that the amendments made by
paragraphs (1)(C), (1)(D), and (2)(B) shall apply to
taxable years beginning after December 31, 2001.
(d) Amendments Related to Section 205 of the Act.--
(1) Section 45F(d)(4)(B) is amended by striking
``subpart A, B, or D of this part'' and inserting
``this chapter or for purposes of section 55''.
(2) Section 38(b)(15) is amended by striking ``45F''
and inserting ``45F(a)''.
(e) Amendments Related to Section 301 of the Act.--
(1) Section 63(c)(2) is amended--
(A) in subparagraph (A), by striking
``subparagraph (C)'' and inserting
``subparagraph (D)'',
(B) by striking ``or'' at the end of
subparagraph (B),
(C) by redesignating subparagraph (C) as
subparagraph (D),
(D) by inserting after subparagraph (B) the
following new subparagraph:
``(C) one-half of the amount in effect under
subparagraph (A) in the case of a married
individual filing a separate return, or'', and
(E) by inserting the following flush sentence
at the end:
``If any amount determined under subparagraph
(A) is not a multiple of $50, such amount shall
be rounded to the next lowest multiple of
$50.''
(2)(A) Section 63(c)(4) is amended by striking
``paragraph (2) or (5)'' and inserting ``paragraph
(2)(B), (2)(D), or (5)''.
(B) Section 63(c)(4)(B)(i) is amended by striking
``paragraph (2)'' and inserting ``paragraph (2)(B),
(2)(D),''.
(C) Section 63(c)(4) is amended by striking the flush
sentence at the end (as added by section 301(c)(2) of
Public Law 107-17).
(f) Amendment Related to Section 401 of the Act.--Section
530(d)(4)(B)(iv) is amended by striking ``because the taxpayer
elected under paragraph (2)(C) to waive the application of
paragraph (2)'' and inserting ``by application of paragraph
(2)(C)(i)(II)''.
(g) Amendments Related to Section 511 of the Act.--
(1) Section 2511(c) is amended by striking ``taxable
gift under section 2503,'' and inserting ``transfer of
property by gift,''.
(2) Section 2101(b) is amended by striking the last
sentence.
(h) Amendment Related to Section 532 of the Act.--Section
2016 is amended by striking ``any State, any possession of the
United States, or the District of Columbia,''.
(i) Amendments Relating to Section 602 of the Act.--
(1) Subparagraph (A) of section 408(q)(3) is amended
to read as follows:
``(A) Qualified employer plan.--The term
`qualified employer plan' has the meaning given
such term by section 72(p)(4)(A)(i); except
that such term shall also include an eligible
deferred compensation plan (as defined in
section 457(b)) of an eligible employer
described in section 457(e)(1)(A).''.
(2) Section 4(c) of Employee Retirement Income
Security Act of 1974 is amended--
(A) by inserting ``and part 5 (relating to
administration and enforcement)'' before the
period at the end, and
(B) by adding at the end the following new
sentence: ``Such provisions shall apply to such
accounts and annuities in a manner similar to
their application to a simplified employee
pension under section 408(k) of the Internal
Revenue Code of 1986.''.
(j) Amendments Relating to Section 611 of the Act.--
(1) Section 408(k) is amended--
(A) in paragraph (2)(C) by striking ``$300''
and inserting ``$450'', and
(B) in paragraph (8) by striking ``$300''
both places it appears and inserting ``$450''.
(2) Section 409(o)(1)(C)(ii) is amended--
(A) by striking ``$500,000'' both places it
appears and inserting ``$800,000'', and
(B) by striking ``$100,000'' and inserting
``$160,000''.
(3) Section 611(i) of the Economic Growth and Tax
Relief Reconciliation Act of 2001 is amended by adding
at the end the following new paragraph:
``(3) Special rule.--In the case of plan that, on
June 7, 2001, incorporated by reference the limitation
of section 415(b)(1)(A) of the Internal Revenue Code of
1986, section 411(d)(6) of such Code and section
204(g)(1) of the Employee Retirement Income Security
Act of 1974 do not apply to a plan amendment that--
``(A) is adopted on or before June 30, 2002,
``(B) reduces benefits to the level that
would have applied without regard to the
amendments made by subsection (a) of this
section, and
``(C) is effective no earlier than the years
described in paragraph (2).''.
(k) Amendments Relating to Section 613 of the Act.--
(1) Section 416(c)(1)(C)(iii) is amended by striking
``Exception for frozen plan'' and inserting ``Exception
for plan under which no key employee (or former key
employee) benefits for plan year''.
(2) Section 416(g)(3)(B) is amended by striking
``separation from service'' and inserting ``severance
from employment''.
(l) Amendments Relating to Sections 614 and 616 of the Act.--
(1) Section 404(a)(12) is amended by striking
``(9),'' and inserting ``(9) and subsection
(h)(1)(C),''.
(2) Section 404(n) is amended by striking
``subsection (a),'' and inserting ``subsection (a) or
paragraph (1)(C) of subsection (h)''.
(3) Section 402(h)(2)(A) is amended by striking ``15
percent'' and inserting ``25 percent''.
(4) Section 404(a)(7)(C) is amended to read as
follows:
``(C) Paragraph not to apply in certain
cases.--
``(i) Beneficiary test.--This
paragraph shall not have the effect of
reducing the amount otherwise
deductible under paragraphs (1), (2),
and (3), if no employee is a
beneficiary under more than 1 trust or
under a trust and an annuity plan.
``(ii) Elective deferrals.--If, in
connection with 1 or more defined
contribution plans and 1 or more
defined benefit plans, no amounts
(other than elective deferrals (as
defined in section 402(g)(3))) are
contributed to any of the defined
contribution plans for the taxable
year, then subparagraph (A) shall not
apply with respect to any of such
defined contribution plans and defined
benefit plans.''.
(m) Amendment Relating to Section 618 of the Act.--Section
25B(d)(2)(A) is amended to read as follows:
``(A) In general.--The qualified retirement
savings contributions determined under
paragraph (1) shall be reduced (but not below
zero) by the aggregate distributions received
by the individual during the testing period
from any entity of a type to which
contributions under paragraph (1) may be made.
The preceding sentence shall not apply to the
portion of any distribution which is not
includible in gross income by reason of a
trustee-to-trustee transfer or a rollover
distribution.''.
(n) Amendments Relating to Section 619 of the Act.--
(1) Section 45E(e)(1) is amended by striking ``(n)''
and inserting ``(m)''.
(2) Section 619(d) of the Economic Growth and Tax
Relief Reconciliation Act of 2001 is amended by
striking ``established'' and inserting ``first
effective''.
(o) Amendments Relating to Section 631 of the Act.--
(1) Section 402(g)(1) is amended by adding at the end
the following:
``(C) Catch-up contributions.--In addition to
subparagraph (A), in the case of an eligible
participant (as defined in section 414(v)),
gross income shall not include elective
deferrals in excess of the applicable dollar
amount under subparagraph (B) to the extent
that the amount of such elective deferrals does
not exceed the applicable dollar amount under
section 414(v)(2)(B)(i) for the taxable year
(without regard to the treatment of the
elective deferrals by an applicable employer
plan under section 414(v)).''.
(2) Section 401(a)(30) is amended by striking
``402(g)(1)'' and inserting ``402(g)(1)(A)''.
(3) Section 414(v)(2) is amended by adding at the end
the following:
``(D) Aggregation of plans.--For purposes of
this paragraph, plans described in clauses (i),
(ii), and (iv) of paragraph (6)(A) that are
maintained by the same employer (as determined
under subsection (b), (c), (m) or (o)) shall be
treated as a single plan, and plans described
in clause (iii) of paragraph (6)(A) that are
maintained by the same employer shall be
treated as a single plan.''.
(4) Section 414(v)(3)(A)(i) is amended by striking
``section 402(g), 402(h), 403(b), 404(a), 404(h),
408(k), 408(p), 415, or 457'' and inserting ``section
401(a)(30), 402(h), 403(b), 408, 415(c), and 457(b)(2)
(determined without regard to section 457(b)(3))''.
(5) Section 414(v)(3)(B) is amended by striking
``section 401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11),
401(k)(12), 403(b)(12), 408(k), 408(p), 408B, 410(b),
or 416'' and inserting ``section 401(a)(4), 401(k)(3),
401(k)(11), 403(b)(12), 408(k), 410(b), or 416''.
(6) Section 414(v)(4)(B) is amended by inserting
before the period at the end the following: ``, except
that a plan described in clause (i) of section
410(b)(6)(C) shall not be treated as a plan of the
employer until the expiration of the transition
period with respect to such plan (as determined under
clause (ii) of such section)''.
(7) Section 414(v)(5) is amended--
(A) by striking ``, with respect to any plan
year,'' in the matter preceding subparagraph
(A),
(B) by amending subparagraph (A) to read as
follows:
``(A) who would attain age 50 by the end of
the taxable year,'', and
(C) in subparagraph (B) by striking ``plan
year'' and inserting ``plan (or other
applicable) year''.
(8) Section 414(v)(6)(C) is amended to read as
follows:
``(C) Exception for section 457 plans.--This
subsection shall not apply to a participant for
any year for which a higher limitation applies
to the participant under section 457(b)(3).''.
(9) Section 457(e) is amended by adding at the end
the following new paragraph:
``(18) Coordination with catch-up contributions for
individuals age 50 or older.--In the case of an
individual who is an eligible participant (as defined
by section 414(v)) and who is a participant in an
eligible deferred compensation plan of an employer
described in paragraph (1)(A), subsections (b)(3) and
(c) shall be applied by substituting for the amount
otherwise determined under the applicable subsection
the greater of--
``(A) the sum of--
``(i) the plan ceiling established
for purposes of subsection (b)(2)
(without regard to subsection (b)(3)),
plus
``(ii) the applicable dollar amount
for the taxable year determined under
section 414(v)(2)(B)(i), or
``(B) the amount determined under the
applicable subsection (without regard to this
paragraph).''.
(p) Amendments Relating to Section 632 of the Act.--
(1) Section 403(b)(1) is amended in the matter
following subparagraph (E) by striking ``then amounts
contributed'' and all that follows and inserting the
following:
``then contributions and other additions by such
employer for such annuity contract shall be excluded
from the gross income of the employee for the taxable
year to the extent that the aggregate of such
contributions and additions (when expressed as an
annual addition (within the meaning of section
415(c)(2))) does not exceed the applicable limit under
section 415. The amount actually distributed to any
distributee under such contract shall be taxable to the
distributee (in the year in which so distributed) under
section 72 (relating to annuities). For purposes of
applying the rules of this subsection to contributions
and other additions by an employer for a taxable year,
amounts transferred to a contract described in this
paragraph by reason of a rollover contribution
described in paragraph (8) of this subsection or
section 408(d)(3)(A)(ii) shall not be considered
contributed by such employer.''.
(2) Section 403(b) is amended by striking paragraph
(6).
(3) Section 403(b)(3) is amended--
(A) in the first sentence by inserting the
following before the period at the end: ``, and
which precedes the taxable year by no more than
five years'', and
(B) in the second sentence by striking ``or
any amount received by a former employee after
the fifth taxable year following the taxable
year in which such employee was terminated''.
(4) Section 415(c)(7) is amended to read as follows:
``(7) Special rules relating to church plans.--
``(A) Alternative contribution limitation.--
``(i) In general.--Notwithstanding
any other provision of this subsection,
at the election of a participant who is
an employee of a church or a convention
or association of churches, including
an organization described in section
414(e)(3)(B)(ii), contributions and
other additions for an annuity contract
or retirement income account described
in section 403(b) with respect to such
participant, when expressed as an
annual addition to such participant's
account, shall be treated as not
exceeding the limitation of paragraph
(1) if such annual addition is not in
excess of $10,000.
``(ii) $40,000 aggregate
limitation.--The total amount of
additions with respect to any
participant which may be taken into
account for purposes of this
subparagraph for all years may not
exceed $40,000.
``(B) Number of years of service for duly
ordained, commissioned, or licensed ministers
or lay employees.--For purposes of this
paragraph--
``(i) all years of service by--
``(I) a duly ordained,
commissioned, or licensed
minister of a church, or
``(II) a lay person,
as an employee of a church, a
convention or association of churches,
including an organization described in
section 414(e)(3)(B)(ii), shall be
considered as years of service for 1
employer, and
``(ii) all amounts contributed for
annuity contracts by each such church
(or convention or association of
churches) or such organization during
such years for such minister or lay
person shall be considered to have been
contributed by 1 employer.
``(C) Foreign missionaries.--In the case of
any individual described in subparagraph (D)
performing services outside the United States,
contributions and other additions for an
annuity contract or retirement income account
described in section 403(b) with respect to
such employee, when expressed as an annual
addition to such employee's account, shall not
be treated as exceeding the limitation of
paragraph (1) if such annual addition is not in
excess of the greater of $3,000 or the
employee's includible compensation determined
under section 403(b)(3).
``(D) Annual addition.--For purposes of this
paragraph, the term `annual addition' has the
meaning given such term by paragraph (2).
``(E) Church, convention or association of
churches.--For purposes of this paragraph, the
terms `church' and `convention or association
of churches' have the same meaning as when used
in section 414(e).''.
(5) Section 457(e)(5) is amended to read as follows:
``(5) Includible compensation.--The term `includible
compensation' has the meaning given to the term
`participant's compensation' by section 415(c)(3).''.
(6) Section 402(g)(7)(B) is amended by striking
``2001.'' and inserting ``2001).''.
(q) Amendments Relating to Section 643 of the Act.--
(1) Section 401(a)(31)(C)(i) is amended by inserting
``is a qualified trust which is part of a plan which is
a defined contribution plan and'' before ``agrees''.
(2) Section 402(c)(2) is amended by adding at the end
the following flush sentence:
``In the case of a transfer described in subparagraph
(A) or (B), the amount transferred shall be treated as
consisting first of the portion of such distribution
that is includible in gross income (determined without
regard to paragraph (1)).''.
(r) Amendments Relating to Section 648 of the Act.--
(1) Section 417(e) is amended--
(A) in paragraph (1) by striking ``exceed the
dollar limit under section 411(a)(11)(A)'' and
inserting ``exceed the amount that can be
distributed without the participant's consent
under section 411(a)(11)'', and
(B) in paragraph (2)(A) by striking ``exceeds
the dollar limit under section 411(a)(11)(A)''
and inserting ``exceeds the amount that can be
distributed without the participant's consent
under section 411(a)(11)''.
(2) Section 205(g) of the Employee Retirement Income
Security Act of 1974 is amended--
(A) in paragraph (1) by striking ``exceed the
dollar limit under section 203(e)(1)'' and
inserting ``exceed the amount that can be
distributed without the participant's consent
under section 203(e)'', and
(B) in paragraph (2)(A) by striking ``exceeds
the dollar limit under section 203(e)(1)'' and
inserting ``exceeds the amount that can be
distributed without the participant's consent
under section 203(e)''.
(s) Amendment Relating to Section 652 of the Act.--Section
404(a)(1)(D)(iv) is amended by striking ``Plans maintained by
professional service employers'' and inserting ``Special rule
for terminating plans''.
(t) Amendments Relating to Section 657 of the Act.--Section
404(c)(3) of the Employee Retirement Income Security Act of
1974 is amended--
(1) by striking ``the earlier of'' in subparagraph
(A) the second place it appears, and
(2) by striking ``if the transfer'' and inserting ``a
transfer that''.
(u) Amendments Relating to Section 659 of the Act.--
(1) Section 4980F is amended--
(A) in subsection (e)(1) by striking
``written notice'' and inserting ``the notice
described in paragraph (2)'',
(B) by amending subsection (f)(2)(A) to read
as follows:
``(A) any defined benefit plan described in
section 401(a) which includes a trust exempt
from tax under section 501(a), or'', and
(C) in subsection (f)(3) by striking
``significantly'' both places it appears.
(2) Section 204(h)(9) of the Employee Retirement
Income Security Act of 1974 is amended by striking
``significantly'' both places it appears.
(3) Section 659(c)(3)(B) of the Economic Growth and
Tax Relief Reconciliation Act of 2001 is amended by
striking ``(or'' and inserting ``(and''.
(v) Amendments Relating to Section 661 of the Act.--
(1) Section 412(c)(9)(B) is amended--
(A) in clause (ii) by striking ``125
percent'' and inserting ``100 percent'', and
(B) by adding at the end the following new
clause:
``(iv) Limitation.--A change in
funding method to use a prior year
valuation, as provided in clause (ii),
may not be made unless as of the
valuation date within the prior plan
year, the value of the assets of the
plan are not less than 125 percent of
the plan's current liability (as
defined in paragraph (7)(B)).''.
(2) Section 302(c)(9)(B) of the Employee Retirement
Income Security Act of 1974 is amended--
(A) in clause (ii) by striking ``125
percent'' and inserting ``100 percent'', and
(B) by adding at the end the following new
clause:
``(iv) A change in funding method to use a prior year
valuation, as provided in clause (ii), may not be made unless
as of the valuation date within the prior plan year, the value
of the assets of the plan are not less than 125 percent of the
plan's current liability (as defined in paragraph (7)(B)).''.
(w) Amendments Relating to Section 662 of the Act.--
(1) Section 404(k) is amended--
(A) in paragraph (1) by striking ``during the
taxable year'',
(B) in paragraph (2)(B) by striking
``(A)(iii)'' and inserting ``(A)(iv)'',
(C) in paragraph (4)(B) by striking ``(iii)''
and inserting ``(iv)'', and
(D) by redesignating subparagraph (B) of
paragraph (4) (as amended by subparagraph (C))
as subparagraph (C) of paragraph (4) and by
inserting after subparagraph (A) the following
new subparagraph:
``(B) Reinvestment dividends.--For purposes
of subparagraph (A), an applicable dividend
reinvested pursuant to clause (iii)(II) of
paragraph (2)(A) shall be treated as paid in
the taxable year of the corporation in which
such dividend is reinvested in qualifying
employer securities or in which the election
under clause (iii) of paragraph (2)(A) is made,
whichever is later.''.
(2) Section 404(k) is amended by adding at the end
the following new paragraph:
``(7) Full vesting.--In accordance with section 411,
an applicable dividend described in clause (iii)(II) of
paragraph (2)(A) shall be subject to the requirements
of section 411(a)(1).''.
(x) Effective Date.--Except as provided in subsection (c),
the amendments made by this section shall take effect as if
included in the provisions of the Economic Growth and Tax
Relief Reconciliation Act of 2001 to which they relate.
SEC. 412. AMENDMENTS RELATED TO COMMUNITY RENEWAL TAX RELIEF ACT OF
2000.
(a) Amendment Related to Section 101 of the Act.--Section
469(i)(3)(E) is amended by striking clauses (ii), (iii), and
(iv) and inserting the following:
``(ii) second to the portion of such
loss to which subparagraph (C) applies,
``(iii) third to the portion of the
passive activity credit to which
subparagraph (B) or (D) does not apply,
``(iv) fourth to the portion of such
credit to which subparagraph (B)
applies, and''.
(b) Amendment Related to Section 306 of the Act.--Section
151(c)(6)(C) is amended--
(1) by striking ``for earned income credit.--For
purposes of section 32, an'' and inserting ``for
principal place of abode requirements.--An'', and
(2) by striking ``requirement of section
32(c)(3)(A)(ii)'' and inserting ``principal place of
abode requirements of section 2(a)(1)(B), section
2(b)(1)(A), and section 32(c)(3)(A)(ii)''.
(c) Amendment Related to Section 309 of the Act.--
Subparagraph (A) of section 358(h)(1) is amended to read as
follows:
``(A) which is assumed by another person as
part of the exchange, and''.
(d) Amendments Related to Section 401 of the Act.--
(1)(A) Section 1234A is amended by inserting ``or''
after the comma at the end of paragraph (1), by
striking ``or'' at the end of paragraph (2), and by
striking paragraph (3).
(B)(i) Section 1234B is amended in subsection (a)(1)
and in subsection (b) by striking ``sale or exchange''
the first place it appears in each subsection and
inserting ``sale, exchange, or termination''.
(ii) Section 1234B is amended by adding at the end
the following new subsection:
``(f) Cross Reference.--
``For special rules relating to dealer securities futures
contracts, see section 1256.''
(2) Section 1091(e) is amended--
(A) in the heading, by striking
``Securities.--'' and inserting ``Securities
and Securities Futures Contracts To Sell.--'',
(B) by inserting after ``closing of a short
sale of'' the following: ``(or the sale,
exchange, or termination of a securities
futures contract to sell)'',
(C) in paragraph (2), by inserting after
``short sale of'' the following: ``(or
securities futures contracts to sell)'', and
(D) by adding at the end the following:
``For purposes of this subsection, the term `securities futures
contract' has the meaning provided by section 1234B(c).''.
(3)(A) Section 1233(e)(2) is amended by striking
``and'' at the end of subparagraph (C), by striking the
period and inserting ``; and'' at the end of
subparagraph (D), and inserting after subparagraph (D)
the following:
``(E) entering into a securities futures
contract (as so defined) to sell shall be
considered to be a short sale, and the
settlement of such contract shall be considered
to be the closing of such short sale.''.
(B) Section 1234B(b) is amended by inserting after
``or this section,'' the following: ``or in section
1233,''.
(e) Effective Date.--The amendments made by this section
shall take effect as if included in the provisions of the
Community Renewal Tax Relief Act of 2000 to which they relate.
SEC. 413. AMENDMENTS RELATED TO THE TAX RELIEF EXTENSION ACT OF 1999.
(a) Amendments Related to Section 545 of the Act.--Section
857(b)(7) is amended--
(1) in clause (i) of subparagraph (B), by striking
``the amount of which'' and inserting ``to the extent
the amount of the rents'', and
(2) in subparagraph (C), by striking ``if the
amount'' and inserting ``to the extent the amount''.
(b) Effective Date.--The amendments made by this section
shall take effect as if included in section 545 of the Tax
Relief Extension Act of 1999.
SEC. 414. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF 1997.
(a) Amendments Related to Section 311 of the Act.--Section
311(e) of the Taxpayer Relief Act of 1997 (Public Law 105-34;
111 Stat. 836) is amended--
(1) in paragraph (2)(A), by striking ``recognized''
and inserting ``included in gross income'', and
(2) by adding at the end the following new paragraph:
``(5) Disposition of interest in passive activity.--
Section 469(g)(1)(A) of the Internal Revenue Code of
1986 shall not apply by reason of an election made
under paragraph (1).''.
(b) Effective Date.--The amendments made by this section
shall take effect as if included in section 311 of the Taxpayer
Relief Act of 1997.
SEC. 415. AMENDMENT RELATED TO THE BALANCED BUDGET ACT OF 1997.
(a) Amendment Related to Section 4006 of the Act.--Section
26(b)(2) is amended by striking ``and'' at the end of
subparagraph (P), by striking the period and inserting ``,
and'' at the end of subparagraph (Q), and by adding at the end
the following new subparagraph:
``(R) section 138(c)(2) (relating to penalty
for distributions from Medicare+Choice MSA not
used for qualified medical expenses if minimum
balance not maintained).''.
(b) Effective Date.--The amendment made by this section shall
take effect as if included in section 4006 of the Balanced
Budget Act of 1997.
SEC. 416. OTHER TECHNICAL CORRECTIONS.
(a) Coordination of Advanced Payments of Earned Income
Credit.--
(1) Section 32(g)(2) is amended by striking
``subpart'' and inserting ``part''.
(2) The amendment made by this subsection shall take
effect as if included in section 474 of the Tax Reform
Act of 1984.
(b) Special Rule Related to Wash Sale Losses.--
(1) Section 1256(f) is amended by adding at the end
the following new paragraph:
``(5) Special rule related to losses.--
Section 1091 (relating to loss from wash sales
of stock or securities) shall not apply to any
loss taken into account by reason of paragraph
(1) of subsection (a).''.
(2) The amendment made by this subsection shall take
effect as if included in section 5075 of the Technical
and Miscellaneous Revenue Act of 1988.
(c) Disclosure by Social Security Administration to Federal
Child Support Agencies.--
(1) Section 6103(l)(8) is amended--
(A) in the heading, by striking ``state and
local'' and inserting ``federal, state, and
local'', and
(B) in subparagraph (A), by inserting
``Federal or'' before ``State or local''.
(2) The amendments made by this subsection shall take
effect on the date of the enactment of this Act.
(d) Treatment of Settlements Under Partnership Audit Rules.--
(1) The following provisions are each amended by
inserting ``or the Attorney General (or his delegate)''
after ``Secretary'' each place it appears:
(A) Paragraphs (1) and (2) of section
6224(c).
(B) Section 6229(f)(2).
(C) Section 6231(b)(1)(C).
(D) Section 6234(g)(4)(A).
(2) The amendments made by this subsection shall
apply with respect to settlement agreements entered
into after the date of the enactment of this Act.
(e) Amendment Related to Procedure and Administration.--
(1) Section 6331(k)(3) (relating to no levy while
certain offers pending or installment agreement pending
or in effect) is amended to read as follows:
``(3) Certain rules to apply.--Rules similar to the
rules of--
``(A) paragraphs (3) and (4) of subsection
(i), and
``(B) except in the case of paragraph (2)(C),
paragraph (5) of subsection (i),
shall apply for purposes of this subsection.''.
(2) The amendment made by this subsection shall take
effect on the date of the enactment of this Act.
(f) Modified Endowment Contracts.--Paragraph (2) of section
318(a) of the Community Renewal Tax Relief Act of 2000 (114
Stat. 2763A-645) is repealed, and clause (ii) of section
7702A(c)(3)(A) shall read and be applied as if the amendment
made by such paragraph had not been enacted.
SEC. 417. CLERICAL AMENDMENTS.
(1) The subsection (g) of section 25B that relates to
termination is redesignated as subsection (h).
(2) The second sentence of section 42(h)(3)(C) is
amended by striking ``the amounts described in'' and
all that follows through the period and inserting ``the
amounts described in clauses (ii) through (iv) over the
aggregate housing credit dollar amount allocated for
such year.''
(3) Clause (ii) of section 42(m)(1)(B) is amended by
striking the second ``and'' at the end of subclause
(II) and by inserting ``and'' at the end of subclause
(III).
(4) Section 51A(c)(1) is amended by striking
``51(d)(10)'' and inserting ``51(d)(11)''.
(5) The flush sentence at the end of clause (ii) of
section 56(a)(1)(A) is amended by striking ``such
1250'' and inserting ``such section 1250''.
(6) Section 151(c)(6)(B)(iii) is amended by inserting
``as'' before ``such terms''.
(7) Section 170(e)(6)(B)(i)(III) is amended by
striking ``2000,'' and inserting ``2000),''.
(8) Section 172(b)(1)(F)(i) is amended--
(A) by striking ``3 years'' and inserting ``3
taxable years'', and
(B) by striking ``2 years'' and inserting ``2
taxable years''.
(9) Section 351(h)(1) is amended by inserting a comma
after ``liability''.
(10) Section 475(g)(3) is amended by striking
``sections'' and inserting ``section''.
(11) Section 529(e)(3)(B)(i) is amended by striking
``subsection (b)(7)'' and inserting ``subsection
(b)(6)''.
(12) Section 741 is amended by striking ``which have
appreciated substantially in value''.
(13) Section 857(b)(7)(B)(i) is amended by striking
``subsection 856(d)'' and inserting ``section 856(d)''.
(14) Subparagraph (B) of section 943(e)(4) is amended
by aligning the left margin of the flush language with
subparagraph (A).
(15) Subparagraph (B) of section 995(b)(3) is amended
by striking ``International Security Assistance and
Arms Export Control Act of 1976'' and inserting ``Arms
Export Control Act''.
(16) Section 1394(c)(2) is amended by striking
``subparagraph (A)'' and inserting ``paragraph (1)''.
(17)(A) The section heading for section 4980E is
amended to read as follows:
``SEC. 4980E. FAILURE OF EMPLOYER TO MAKE COMPARABLE ARCHER MSA
CONTRIBUTIONS.''.
(B) The item relating to section 4980E in the table
of sections for chapter 43 is amended to read as
follows:
``Sec. 4980E. Failure of employer to make comparable Archer MSA
contributions.''.
(18) Section 6105(c)(1) is amended by striking
``any'' in subparagraphs (C) and (E).
(19)(A) Section 6227(d) is amended by striking
``subsection (b)'' and inserting ``subsection (c)''.
(B) Section 6228 is amended--
(i) in subsection (a)(1), by striking
``subsection (b) of section 6227'' and
inserting ``subsection (c) of section 6227'',
(ii) in subsection (a)(3)(A), by striking
``subsection (b) of'', and
(iii) in subsections (b)(1) and (b)(2)(A), by
striking ``subsection (c) of section 6227'' and
inserting ``subsection (d) of section 6227''.
(C) Section 6231(b)(2)(B)(i) is amended by striking
``section 6227(c)'' and inserting ``section 6227(d)''.
(20) Section 1221(b)(1)(B)(i) is amended by striking
``1256(b))'' and inserting ``1256(b)))''.
(21) Section 159 of the Community Renewal Tax Relief
Act of 2000 (114 Stat. 2763A-624) is amended by
striking ``fuctions'' and inserting ``functions''.
(22) The amendment to section 170(e)(6)(B)(iv) made
by section 165(b)(1) of the Community Renewal Tax
Relief Act of 2000 (114 Stat. 2763A-626) shall be
applied as if it struck ``in any of the grades K-12''.
(23) Section 618(b)(2) of the Economic Growth and Tax
Relief Reconciliation Act of 2001 (Public Law 107-16;
115 Stat. 108) is amended--
(A) in subparagraph (A) by striking
``203(d)'' and inserting ``202(f)'', and
(B) in subparagraphs (C), (D), and (E) by
striking ``203'' and inserting ``202(f)''.
(24)(A) Section 525 of the Ticket to Work and Work
Incentives Improvement Act of 1999 (Public Law 106-170;
113 Stat. 1928) is amended by striking ``7200'' and
inserting ``7201''.
(B) Section 532(c)(2) of such Act (113 Stat. 1930) is
amended--
(i) in subparagraph (D), by striking
``341(d)(3)'' and inserting ``341(d)'', and
(ii) in subparagraph (Q), by striking
``954(c)(1)(B)(iii) and inserting
``954(c)(1)(B)''.
SEC. 418. ADDITIONAL CORRECTIONS.
(a) Amendments Related to Section 202 of the Economic Growth
and Tax Relief Reconciliation Act of 2001.--
(1) Subsection (h) of section 23 is amended--
(A) by striking ``subsection (a)(1)(B)'' and
inserting ``subsection (a)(3)'', and
(B) by adding at the end the following new
flush sentence:
``If any amount as increased under the preceding sentence is
not a multiple of $10, such amount shall be rounded to the
nearest multiple of $10.''
(2) Subsection (f) of section 137 is amended by
adding at the end the following new flush sentence:
``If any amount as increased under the preceding sentence is
not a multiple of $10, such amount shall be rounded to the
nearest multiple of $10.''
(b) Amendments Related to Section 204 of the Economic Growth
and Tax Relief Reconciliation Act of 2001.--Section 21(d)(2) is
amended--
(1) in subparagraph (A) by striking ``$200'' and
inserting ``$250'', and
(2) in subparagraph (B) by striking ``$400'' and
inserting ``$500''.
(c) Effective Date.--The amendments made by this section
shall take effect as if included in the provisions of the
Economic Growth and Tax Relief Reconciliation Act of 2001 to
which they relate.
TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT
SEC. 501. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.
(a) In General.--Nothing in this Act (or an amendment made by
this Act) shall be construed to alter or amend title II of the
Social Security Act (or any regulation promulgated under that
Act).
(b) Transfers.--
(1) Estimate of secretary.--The Secretary of the
Treasury shall annually estimate the impact that the
enactment of this Act has on the income and balances of
the trust funds established under section 201 of the
Social Security Act (42 U.S.C. 401).
(2) Transfer of funds.--If, under paragraph (1), the
Secretary of the Treasury estimates that the enactment
of this Act has a negative impact on the income and
balances of the trust funds established under section
201 of the Social Security Act (42 U.S.C. 401), the
Secretary shall transfer, not less frequently than
quarterly, from the general revenues of the Federal
Government an amount sufficient so as to ensure that
the income and balances of such trust funds are not
reduced as a result of the enactment of this Act.
SEC. 502. EMERGENCY DESIGNATION.
Congress designates as emergency requirements pursuant to
section 252(e) of the Balanced Budget and Emergency Deficit
Control Act of 1985 the following amounts:
(1) An amount equal to the amount by which revenues
are reduced by this Act below the recommended levels of
Federal revenues for fiscal year 2002, the total of
fiscal years 2002 through 2006, and the total of fiscal
years 2002 through 2011, provided in the conference
report accompanying H. Con. Res. 83, the concurrent
resolution on the budget for fiscal year 2002.
(2) Amounts equal to the amounts of new budget
authority and outlays provided in this Act in excess of
the allocations under section 302(a) of the
Congressional Budget Act of 1974 to the Committee on
Finance of the Senate for fiscal year 2002, the total
of fiscal years 2002 through 2006, and the total of
fiscal years 2002 through 2011.
TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS
SEC. 601. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST REGULAR
AND MINIMUM TAX LIABILITY.
(a) In General.--Paragraph (2) of section 26(a) is amended--
(1) by striking ``rule for 2000 and 2001.--'' and
inserting ``rule for 2000, 2001, 2002, and 2003.--'',
and
(2) by striking ``during 2000 or 2001,'' and
inserting ``during 2000, 2001, 2002, or 2003,''.
(b) Conforming Amendments.--
(1) Section 904(h) is amended by striking ``during
2000 or 2001'' and inserting ``during 2000, 2001, 2002,
or 2003''.
(2) The amendments made by sections 201(b), 202(f),
and 618(b) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 shall not apply to taxable
years beginning during 2002 and 2003.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 2001.
SEC. 602. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.
(a) In General.--Section 30 is amended--
(1) in subsection (b)(2)--
(A) by striking ``December 31, 2001,'' and
inserting ``December 31, 2003,'', and
(B) in subparagraphs (A), (B), and (C), by
striking ``2002'', ``2003'', and ``2004'',
respectively, and inserting ``2004'', ``2005'',
and ``2006'', respectively, and
(2) in subsection (e), by striking ``December 31,
2004'' and inserting ``December 31, 2006''.
(b) Conforming Amendments.--
(1) Subparagraph (C) of section 280F(a)(1) is amended
by adding at the end the following new clause:
``(iii) Application of
subparagraph.--This subparagraph shall
apply to property placed in service
after August 5, 1997, and before
January 1, 2007.''.
(2) Subsection (b) of section 971 of the Taxpayer
Relief Act of 1997 is amended by striking ``and before
January 1, 2005''.
(c) Effective Date.--The amendments made by this section
shall apply to property placed in service after December 31,
2001.
SEC. 603. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE
RESOURCES.
(a) In General.--Subparagraphs (A), (B), and (C) of section
45(c)(3) are both amended by striking ``2002'' and inserting
``2004''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to facilities placed in service after December 31,
2001.
SEC. 604. WORK OPPORTUNITY CREDIT.
(a) In General.--Subparagraph (B) of section 51(c)(4) is
amended by striking ``2001'' and inserting ``2003''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to individuals who begin work for the employer
after December 31, 2001.
SEC. 605. WELFARE-TO-WORK CREDIT.
(a) In General.--Subsection (f) of section 51A is amended by
striking ``2001'' and inserting ``2003''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to individuals who begin work for the employer
after December 31, 2001.
SEC. 606. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN REFUELING
PROPERTY.
(a) In General.--Section 179A is amended--
(1) in subsection (b)(1)(B)--
(A) by striking ``December 31, 2001,'' and
inserting ``December 31, 2003,'', and
(B) in clauses (i), (ii), and (iii), by
striking ``2002'', ``2003'', and ``2004'',
respectively, and inserting ``2004'', ``2005'',
and ``2006'', respectively, and
(2) in subsection (f), by striking ``December 31,
2004'' and inserting ``December 31, 2006''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to property placed in service after December 31,
2001.
SEC. 607. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR OIL AND
NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES.
(a) In General.--Subparagraph (H) of section 613A(c)(6) is
amended by striking ``2002'' and inserting ``2004''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31, 2001.
SEC. 608. QUALIFIED ZONE ACADEMY BONDS.
(a) In General.--Paragraph (1) of section 1397E(e) is amended
by striking ``2000, and 2001'' and inserting ``2000, 2001,
2002, and 2003''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to obligations issued after the date of the
enactment of this Act.
SEC. 609. COVER OVER OF TAX ON DISTILLED SPIRITS.
(a) In General.--Paragraph (1) of section 7652(f) is amended
by striking ``January 1, 2002'' and inserting ``January 1,
2004''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to articles brought into the United States after
December 31, 2001.
SEC. 610. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH
BENEFITS.
(a) In General.--Subsection (f) of section 9812, as amended
by the Departments of Labor, Health and Human Services, and
Education, and Related Agencies Appropriations Act, 2002, is
amended to read as follows:
``(f) Application of Section.--This section shall not apply
to benefits for services furnished--
``(1) on or after September 30, 2001, and before
January 10, 2002, and
``(2) after December 31, 2003.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to plan years beginning after December 31, 2000.
SEC. 611. TEMPORARY SPECIAL RULES FOR TAXATION OF LIFE INSURANCE
COMPANIES.
(a) Reduction in Mutual Life Insurance Company Deductions Not
To Apply in Certain Years.--Section 809 (relating to reduction
in certain deductions of material life insurance companies) is
amended by adding at the end the following:
``(j) Differential Earnings Rate Treated as Zero for Certain
Years.--Notwithstanding subsection (c) or (f), the differential
earnings rate shall be treated as zero for purposes of
computing both the differential earnings amount and the
recomputed differential earnings amount for a mutual life
insurance company's taxable years beginning in 2001, 2002, or
2003.''.
(b) Effective Date.--The amendment made by this section shall
apply to taxable years beginning after December 31, 2000.
SEC. 612. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.
(a) In General.--Paragraphs (2) and (3)(B) of section 220(i)
(defining cut-off year) are each amended by striking ``2002''
each place it appears and inserting ``2003''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 220(j) is amended by
striking ``1998, 1999, or 2001'' each place it appears
and inserting ``1998, 1999, 2001, or 2002''.
(2) Subparagraph (A) of section 220(j)(4) is amended
by striking ``and 2001'' and inserting ``2001, and
2002''.
(c) Effective Date.--The amendments made by this section
shall take effect on January 1, 2002.
SEC. 613. INCENTIVES FOR INDIAN EMPLOYMENT AND PROPERTY ON INDIAN
RESERVATIONS.
(a) Employment.--Subsection (f) of section 45A is amended by
striking ``December 31, 2003'' and inserting ``December 31,
2004''.
(b) Property.--Paragraph (8) of section 168(j) is amended by
striking ``December 31, 2003'' and inserting ``December 31,
2004''.
SEC. 614. SUBPART F EXEMPTION FOR ACTIVE FINANCING.
(a) In General.--
(1) Section 953(e)(10) is amended--
(A) by striking ``January 1, 2002'' and
inserting ``January 1, 2007'', and
(B) by striking ``December 31, 2001'' and
inserting ``December 31, 2006''.
(2) Section 954(h)(9) is amended by striking
``January 1, 2002'' and inserting ``January 1, 2007''.
(b) Life Insurance and Annuity Contracts.--
(1) In general.--Subparagraph (B) of section
954(i)(4) is amended to read as follows:
``(B) Life insurance and annuity contracts.--
``(i) In general.--Except as provided
in clause (ii), the amount of the
reserve of a qualifying insurance
company or qualifying insurance company
branch for any life insurance or
annuity contract shall be equal to the
greater of--
``(I) the net surrender value
of such contract (as defined in
section 807(e)(1)(A)), or
``(II) the reserve determined
under paragraph (5).
``(ii) Ruling request, etc.--The
amount of the reserve under clause (i)
shall be the foreign statement reserve
for the contract (less any catastrophe,
deficiency, equalization, or similar
reserves), if, pursuant to a ruling
request submitted by the taxpayer or as
provided in published guidance, the
Secretary determines that the factors
taken into account in determining the
foreign statement reserve provide an
appropriate means of measuring
income.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31, 2001.
SEC. 615. REPEAL OF REQUIREMENT FOR APPROVED DIESEL OR KEROSENE
TERMINALS.
(a) In General.--Subsection (e) of section 4101 is hereby
repealed.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on January 1, 2002.
SEC. 616. REAUTHORIZATION OF TANF SUPPLEMENTAL GRANTS FOR POPULATION
INCREASES FOR FISCAL YEAR 2002.
Section 403(a)(3) of the Social Security Act (42 U.S.C.
603(a)(3)) is amended by adding at the end the following:
``(H) Reauthorization of grants for fiscal
year 2002.--Notwithstanding any other provision
of this paragraph--
``(i) any State that was a qualifying
State under this paragraph for fiscal
year 2001 or any prior fiscal year
shall be entitled to receive from the
Secretary for fiscal year 2002 a grant
in an amount equal to the amount
required to be paid to the State under
this paragraph for the most recent
fiscal year in which the State was a
qualifying State;
``(ii) subparagraph (G) shall be
applied as if `2002' were substituted
for `2001'; and
``(iii) out of any money in the
Treasury of the United States not
otherwise appropriated, there are
appropriated for fiscal year 2002 such
sums as are necessary for grants under
this subparagraph.''.
SEC. 617. 1-YEAR EXTENSION OF CONTINGENCY FUND UNDER THE TANF PROGRAM.
Section 403(b) of the Social Security Act (42 U.S.C. 603(b))
is amended--
(1) in paragraph (2), by striking ``and 2001'' and
inserting ``2001, and 2002''; and
(2) in paragraph (3)(C)(ii), by striking ``2001'' and
inserting ``2002''.