SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Unredeemed U.S. Savings Bond Return 
Act of 2006''.

SEC. 2. PROGRAM TO REUNITE BONDHOLDERS WITH MATURED UNREDEEMED FEDERAL 
              SAVINGS BONDS.

    (a) Owner Location and Claims.--
            (1) In general.--Not later than 180 days after the date of 
        the enactment of this Act, the Secretary of the Treasury shall 
        prescribe regulations providing that States may enter into 
        owner location and claims agreements with the Secretary for the 
        purposes of locating owners of specified unredeemed savings 
        bonds, identifying such owners to the Secretary, and processing 
        and verifying claims for the redemption of such savings bonds. 
        Such regulations shall provide 1 year (beginning with the date 
        of publication of such regulations) for the agency with 
        responsibility for administration of unclaimed property to 
        enter into an owner location and claims agreement with the 
        Secretary. If no such agreement is entered into during such 
        year, such agency or the chief executive of the State shall 
        have 6 months (beginning at the end of such 1-year period) to 
        enter into such an agreement with the Secretary. If, at the end 
        of such 6-month period, no agreement has been entered into, the 
        Secretary shall conduct owner location and claims processing 
        with respect to such State.
            (2) Owner location and claims agreements.--Each owner 
        location and claims agreement shall be substantially the same 
        for each State and shall provide for the following with respect 
        to specified unredeemed savings bonds assigned for processing 
        to such State:
                    (A) Provision of records to states.--The Secretary 
                shall provide the State or its representative such 
                records with respect to such bonds as the Secretary 
                determines are necessary or appropriate to carry out 
                the purposes of this section.
                    (B) Written notification to bondholders of 
                record.--The State or its representative shall mail to 
                each owner of record of such a bond, with respect to 
                whom an address suitable for the delivery of mail is 
                determined under subsection (b), a written notification 
                regarding the existence of such bond and that such bond 
                is no longer earning interest.
                    (C) Additional notification efforts; 
                restrictions.--The State or its representative shall 
                make such additional efforts to locate the owners of 
                such bonds as the Secretary may provide. The Secretary 
                may provide for such restrictions on efforts utilized 
                to locate such owners as the Secretary determines 
                appropriate, including any restrictions on the use of 
                commercial locator services.
                    (D) Claims processing and verification.--The State 
                or its representative shall receive, process, and 
                verify claims for such bonds and shall transmit to the 
                Secretary verified claims.
                    (E) Reunification payments to states.--Subject to 
                the limitation of subsection (c)(4)(B), the Secretary 
                shall direct the Federal depositary referred to in 
                subsection (c) to pay the State a fee each month equal 
                to 25 percent of the amount paid under subsection 
                (c)(3) during the preceding month with respect to bonds 
                verified by such State. Any fee otherwise payable under 
                this subparagraph shall be reduced by the amount of any 
                payment made under subparagraph (F).
                    (F) Advance payment of state administrative 
                costs.--Subject to the limitation of subsection 
                (c)(4)(B), the Secretary shall, upon request from the 
                State, direct the Federal depositary referred to in 
                subsection (c) to pay the State such amount as the 
                Secretary determines reasonable for the estimated cost 
                of the State to carry out activities pursuant to this 
                subsection. The aggregate amount paid to the State 
                under this subparagraph may not exceed 5 percent of the 
                aggregate amount which would be paid from the 
                redemption account if all the specified unredeemed 
                savings bonds assigned to the State were redeemed.
    (b) Examination of Bond Records; Establishment of Database.--Not 
later than 90 days after the date of the enactment of this Act, the 
Secretary shall enter into a cooperative agreement (within the meaning 
of section 6305 of title 31, United States Code) with the State 
coordinator which provides for the following with respect to the 
specified unredeemed savings bonds:
            (1) Access to bond records.--The Secretary shall provide 
        the State coordinator with full access to records related to 
        such bonds.
            (2) Compilation of information.--The State coordinator 
        shall compile relevant information with respect to such bonds 
        and make the results of such compilation available to the 
        Secretary for the Secretary's review and concurrence.
            (3) Assignment of bonds to states for processing.--The 
        State coordinator shall make a recommendation to the Secretary 
        regarding to which State each bond should be assigned for 
        processing under subsection (a). Such recommendation shall be 
        based on the registered owner's address of record as determined 
        in accordance with Government Auditing Standards for relevance, 
        competence, and sufficiency. The Secretary shall make the final 
        determination regarding the State to which each bond is 
        assigned for processing after taking into account the 
        recommendation of the State coordinator. Such determination by 
        the Secretary shall be conclusive and shall not be subject to 
        judicial review.
            (4) Searchable database.--After the Secretary concurs with 
        the information compiled under paragraph (2), the State 
        coordinator shall establish a searchable database which 
        includes such information with respect to each bond and the 
        State to which each bond is assigned for processing. The State 
        coordinator shall update the information contained in such 
        database (including information indicating which bonds have 
        been redeemed) in such manner as the Secretary may provide.
    (c) Agreement With Federal Depositary.--Not later than 90 days 
after the date of the enactment of this Act, the Secretary shall enter 
into an agreement with a Federal depositary which provides for the 
following:
            (1) Transfer of funds.--The Secretary shall transfer to the 
        Federal depositary the excess of--
                    (A) the aggregate amount payable upon redemption of 
                each specified unredeemed savings bond, over
                    (B) the amount of tax withheld under subsection (d) 
                with respect to such bond.
            (2) Separate account; investment of funds.--The Federal 
        depositary shall establish and maintain a separate account (the 
        reunification account) which shall consist of amounts 
        transferred under paragraph (1) and any earnings thereon. The 
        Federal depositary shall invest amounts in such account in 
        accordance with such standards as may be specified by the 
        Secretary.
            (3) Payments on redeemed bonds.--The Secretary shall notify 
        the Federal depositary of any redemption of a specified 
        unredeemed savings bond. The Federal depositary shall, promptly 
        after notification by the Secretary, make the appropriate 
        payment from the redemption account with respect to such 
        redemption as directed by the Secretary and notify the State 
        coordinator that such bond has been redeemed. The amount of any 
        payment under this paragraph with respect to the redemption of 
        any bond (determined without regard to this sentence) shall be 
        reduced by the amount of the tax withheld under subsection (d) 
        with respect to such bond.
            (4) Use of earnings for administrative expenses, etc.--
                    (A) In general.--The Federal depositary shall make 
                the following payments as directed by the Secretary:
                            (i) Fees of federal depositary.--Payment of 
                        reasonable fees of the Federal depositary for 
                        services provided by the Federal depositary.
                            (ii) Expense of bond examination, etc.--
                        Payment to the State coordinator designated 
                        under subsection (b) for reasonable costs in 
                        carrying out such subsection.
                            (iii) Reunification payments to states.--
                        Payment of the administrative and reunification 
                        payments described in subparagraphs (E) and (F) 
                        of subsection (a)(2).
                            (iv) Administrative costs of treasury.--
                        Payment to the Secretary, not in excess of 
                        $5,000,000 for any fiscal year, for the 
                        administrative costs of the Department of the 
                        Treasury in carrying out this Act.
                            (v) Account excess transferred to general 
                        fund.--Payment to the general fund of the 
                        Treasury of such amounts as the Secretary 
                        determines, from time to time, are in excess of 
                        those necessary to provide for the payments 
                        from the reunification account which are 
                        required under this Act (other than this 
                        clause).
                    (B) Administrative costs limited to reunification 
                account earnings.--No payment may be made under 
                subparagraph (A) if such payment would result in the 
                balance of the reunification account being less than 
                the excess of--
                            (i) the aggregate amounts transferred under 
                        paragraph (1), over
                            (ii) the aggregate payments made from such 
                        account under paragraph (3).
    (d) Withholding of Tax on Unclaimed Interest.--
            (1) In general.--The Secretary shall deduct and withhold 
        from any amount transferred under subsection (c)(1) with 
        respect to any bond a tax in an amount equal to 33 percent of 
        the amount which, if such bond were redeemed, would constitute 
        interest.
            (2) Treatment in same manner as wage withholding.--Except 
        as otherwise provided by the Secretary, for purposes of section 
        3403 and 3404 of the Internal Revenue Code of 1986 and for 
        purposes of so much of subtitle F of such Code (except section 
        7205 of such Code ) as relates to chapter 24 of such Code, 
        payments to any person under subsection (c)(3) with respect to 
        any bond subject to withholding under this subsection shall be 
        treated as if such payments were wages paid by an employer to 
        an employee.
    (e) Report to Congress.--The Secretary shall annually report to the 
Congress regarding the program established under this section. Such 
report shall include a description of the actions taken under this 
section and the amount and number of bonds redeemed pursuant to the 
program during the preceding fiscal year. The report for fiscal year 
2016 shall include the recommendations of the Secretary regarding the 
steps which should be taken with respect to any specified unredeemed 
savings bonds still outstanding and the balance of the reunification 
account.
    (f) Definitions.--For purposes of this section:
            (1) Reunification account.--The term ``reunification 
        account'' means the account established under subsection 
        (c)(2).
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
            (3) Specified unredeemed savings bonds.--The term 
        ``specified unredeemed savings bond'' means each outstanding 
        series E bond, except that such bond shall not be treated as a 
        specified unredeemed savings bond until the later of--
                    (A) the end of the 1-year period beginning on the 
                date that such bond ceases to accrue interest, or
                    (B) the date of the enactment of this Act.
            (4) State.--The term ``State'' includes the District of 
        Columbia and any territory or possession of the United States.
            (5) State coordinator.--The term ``State coordinator'' 
        means the eligible entity which is determined by the Secretary, 
        after consultation with the States, to be best suited to carry 
        out the activities described in subsection (b). For purposes of 
        the preceding sentence, the term ``eligible entity'' means any 
        State (including any representative of a State) or the National 
        Association of Unclaimed Property Administrators.
    (g) Conforming Amendment.--Subsection (b) of section 1324 of title 
31, United States Code, is amended by striking ``and'' at the end of 
paragraph (1), by striking the period at the end of paragraph (2) and 
inserting ``; and'', and by adding at the end the following new 
paragraph:
            ``(3) refunds due from the credit provision of section 
        2(d)(2) of the Unredeemed U.S. Savings Bond Return Act of 
        2006.''.
Unredeemed U.S. Savings Bond Return Act of 2006 - Instructs the Secretary of the Treasury to prescribe regulations authorizing states to enter into owner location and claims agreements with the Secretary in order to: (1) locate owners of specified unredeemed savings bonds; (2) identify such owners; and (3) process and verify claims for the redemption of such savings bonds.
To establish a program to reunite bondholders with matured unredeemed Federal savings bonds.