To modernize the legal tender of the United States, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Legal Tender Modernization Act''.

SEC. 2. REDESIGN AND ISSUANCE OF COMMEMORATIVE CIRCULATING $2 FEDERAL 
              RESERVE NOTES.

    (a) In General.--Notwithstanding the authority of the Secretary of 
the Treasury under the 8th undesignated paragraph of section 16 of the 
Federal Reserve Act, during the 5-year period beginning January 1, 
2003, $2 Federal reserve notes issued or otherwise placed into 
circulation by any Federal reserve bank shall have such designs and be 
in such form and tenor as the Secretary may select in accordance with 
this section.
    (b) Issuance of New Design Each Year.--A new design shall be 
selected for $2 Federal reserve notes issued or otherwise placed into 
circulation by any Federal reserve bank during each year of the 5-year 
period referred to in subsection (a).
    (c) Selection of Design.--
            (1) In general.--Each of the 5 designs required under this 
        section for $2 Federal reserve notes shall--
                    (A) be emblematic of the history of the United 
                States; and
                    (B) be selected by the Secretary of the Treasury, 
                after consultation with the Commission of Fine Arts.
            (2) Prohibition on certain representations.--No portrait of 
        a living person may be included in the design of any $2 Federal 
        reserve note under this subsection.
    (d) Production.--Except as provided in subsection (a), the 8th 
undesignated paragraph of section 16 of the Federal Reserve Act shall 
apply to all $2 Federal reserve notes to which this section applies.
    (e) Return to Other Design.--After the end of the 5-year period 
referred to in subsection (a), the $2 Federal reserve note shall bear 
such design, and be in such form and tenor, as the Secretary of the 
Treasury may determine to be appropriate in accordance with the 8th 
undesignated paragraph of section 16 of the Federal Reserve Act, except 
that, in making any such determination, the Secretary shall take into 
account the 5 designs selected for such 5-year period and shall give 
such designs priority in making the final determination.

SEC. 3. CASH TRANSACTION ROUNDING.

    (a) Rounding of Cash Transaction Values to Nearest 5 Cents 
Required.--Notwithstanding any other provision of law, any person 
selling goods or services shall determine the total transaction value 
of such goods or services in the following manner:
            (1) Total transaction values.--The transaction values of 
        goods and services shall be totaled, any discount or deduction 
        therefor made, and sales tax or other tax imposed, if any, 
        added to that total in accordance with the law of the State in 
        which such goods or services are sold.
            (2) Rounding.--
                    (A) Rounding down.--If 1 cent, 2 cents, 6 cents, or 
                7 cents shall be contained in the resulting sum, that 
                sum shall be rounded down to the nearest amount 
                divisible by 5 for those individuals seeking to make 
                payment with legal tender.
                    (B) Rounding up.--If 3 cents, 4 cents, 8 cents, or 
                9 cents shall be contained in the resulting sum, that 
                sum shall be rounded up to the nearest amount divisible 
                by 5 for any person seeking to make payment with legal 
                tender.
    (b) Exception.--The provisions of subsection (a)(2) shall not apply 
to--
            (1) transactions the total amount of which is 2 cents or 
        less, or
            (2) transactions for which payment is made by any demand or 
        negotiable instrument, electronic fund transfer, money order, 
        credit card, or other like instrument.
    (c) No Effect on Legal Tender.--All coins and currencies of the 
United States, regardless of when coined, printed, or issued, shall 
continue to be legal tender for all debts, public and private, public 
charges, taxes, duties, and dues, in accordance with law.
    (d) Coordination With Certain State or Local Tax Laws.--Any tax 
imposed by any State or municipal taxing authority shall not apply to 
gains or losses resulting from rounding.
    (e) Numismatic Items.--The Secretary of the Treasury may produce so 
many one-cent pieces as the Secretary determines are sufficient to 
include in uncirculated sets, proof sets, and other collector sets as, 
from time to time, the Secretary shall determine.
    (f) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), this 
        section shall take effect at the end of the 180-day period 
        beginning on the date of the enactment of this Act.
            (2) Delayed effective date.--If the end of the 180-day 
        period referred to in paragraph (1) occurs during the 3-month 
        period beginning on November 1 of any year, this section shall 
        take effect on February 1 of the year immediately following 
        such year.
    (g) Rule of Construction.--No provision of this section shall be 
construed as evidence of any intention to eliminate the pricing of 
goods or services to the nearest cent or mill or to alter the amount of 
sales tax collected or paid to any State or municipal taxing authority.

SEC. 4. PRODUCTION OF DOCUMENTS FOR FOREIGN GOVERNMENTS.

    (a) In General.--Section 5114(a) of title 31, United States Code 
(relating to engraving and printing currency and security documents) is 
amended--
            (1) by striking ``(a) The Secretary of the Treasury'' and 
        inserting:
    ``(a) Authority To Engrave and Print.--
            ``(1) In general.--The Secretary of the Treasury''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Engraving and printing for foreign governments.--The 
        Secretary of the Treasury may, if the Secretary determines that 
        it will not interfere with engraving and printing needs of the 
        United States--
                    ``(A) produce currency, postage stamps, and other 
                security documents for foreign governments, subject to 
                a determination by the Secretary of State that such 
                production would be consistent with the foreign policy 
                of the United States; and
                    ``(B) produce security documents for States and 
                their political subdivisions.''.
    (b) Payment for Services.--Section 5143 of title 31, United States 
Code (relating to payment for services of the Bureau of Engraving and 
Printing) is amended--
            (1) in the 1st sentence, by inserting ``, any foreign 
        government, any State, or any political subdivision of any 
        State'' after ``agency''; and
            (2) in the last sentence, by inserting ``, foreign 
        government, State, or political subdivision of a State'' after 
        ``agency''.

SEC. 5. CLARIFICATION OF EXISTING LAW REGARDING INCLUSION OF 
              SEIGNIORAGE IN BUDGET.

    The 9th proviso of section 522 of Public Law 104-52 (31 U.S.C. 
5136) is amended by inserting ``and such amount shall be included as an 
estimated receipt of the Government and a receipt of the Government 
under paragraphs (6) and (7), respectively, of section 1105(a) of title 
31, United States Code, in any budget submitted under such section'' 
before the colon after ``miscellaneous receipts''.

SEC. 6. REDESIGN OF $1 FEDERAL RESERVE NOTE PROHIBITED.

    Notwithstanding the authority of the Secretary of the Treasury 
under the 8th undesignated paragraph of section 16 of the Federal 
Reserve Act, the Secretary may not select or approve any new design 
for, or implement any change in the design of, $1 Federal reserve notes 
after the date of the enactment of this Act.

Summary: Legal Tender Modernization Act - Mandates that: (1) during the five-year period beginning January 1, 2003, two-dollar Federal reserve notes placed into circulation by any Federal reserve bank shall have such designs and be in such form and tenor as the Secretary of the Treasury may select. And (2) a new design shall be selected during each year of such five-year period. Prohibits the portrait of any living person from being included in such designs. Prescribes guidelines for rounding cash transaction values to the nearest five cents. Exempts transactions for which payment is made by demand or negotiable instrument, electronic fund transfer, money order, credit card, or other like instrument. States that all coins and currencies of the United States shall continue to be legal tender. Amends Federal law relating to engraving and printing currency and security documents to authorize the Secretary to produce: (1) currency, postage stamps, and other security documents for foreign governments. And (2) security documents for States and their political subdivisions. Amends Federal law governing the United States Mint Public Enterprise Fund to provide that any amounts in such Fund determined to be excess shall be included as an estimated Government receipt in the President's annual submission of the budget to Congress. Prohibits the Secretary from selecting or approving any new design for, or implementing any change in the design of, one-dollar Federal reserve notes.