To amend the Internal Revenue Code of 1986 to exclude $100 of interest from gross income and to raise the threshhold for reporting interest paid to $100.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Savers Relief Act of 2003''.

SEC. 2. EXCLUSION OF INTEREST RECEIVED BY INDIVIDUALS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to amounts specifically 
excluded from gross income) is amended by inserting after section 115 
the following new section:

``SEC. 116. EXCLUSION OF INTEREST RECEIVED BY INDIVIDUALS.

    ``(a) Exclusion From Gross Income.--Gross income does not include 
interest received during the taxable year by an individual.
    ``(b) Limitation.--The aggregate amount excluded under subsection 
(a) for any taxable year shall not exceed $100 ($200 in the case of a 
joint return).
    ``(c) Interest.--For purposes of this section, the term `interest' 
means--
            ``(1) interest on deposits with a bank (as defined in 
        section 581),
            ``(2) amounts (whether or not designated as interest) paid 
        in respect of deposits, investment certificates, or 
        withdrawable or repurchasable shares, by--
                    ``(A) a mutual savings bank, cooperative bank, 
                domestic building and loan association, industrial loan 
                association or bank, or credit union, or
                    ``(B) any other savings or thrift institution which 
                is chartered and supervised under Federal or State law,
        the deposits or accounts in which are insured under Federal or 
        State law or which are protected and guaranteed under State 
        law,
            ``(3) interest on--
                    ``(A) evidences of indebtedness (including bonds, 
                debentures, notes, and certificates) issued by a 
                domestic corporation in registered form, and
                    ``(B) to the extent provided in regulations 
                prescribed by the Secretary, other evidences of 
                indebtedness issued by a domestic corporation of a type 
                offered by corporations to the public,
            ``(4) interest on obligations of the United States, a 
        State, or a political subdivision of a State (not excluded from 
        gross income of the taxpayer under any other provision of law), 
        and
            ``(5) interest attributable to participation shares in a 
        trust established and maintained by a corporation established 
        pursuant to Federal law.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Distributions from regulated investment companies and 
        real estate investment trusts.--Subsection (a) shall apply with 
        respect to distributions by--
                    ``(A) regulated investment companies to the extent 
                provided in section 854(c), and
                    ``(B) real estate investment trusts to the extent 
                provided in section 857(c).
            ``(2) Distributions by a trust.--For purposes of subsection 
        (a), the amount of interest properly allocable to a beneficiary 
        under section 652 or 662 shall be deemed to have been received 
        by the beneficiary ratably on the same date that the interest 
        was received by the estate or trust.
            ``(3) Certain nonresident aliens ineligible for 
        exclusion.--In the case of a nonresident alien individual, 
        subsection (a) shall apply only--
                    ``(A) in determining the tax imposed for the 
                taxable year pursuant to section 871(b)(1) and only in 
                respect of interest which are effectively connected 
                with the conduct of a trade or business within the 
                United States, or
                    ``(B) in determining the tax imposed for the 
                taxable year pursuant to section 877(b).''
    (b) Clerical and Conforming Amendments.--
            (1) The table of sections for part III of subchapter B of 
        chapter 1 of such Code is amended by inserting after the item 
        relating to section 115 the following new item:

                              ``Sec. 116. Exclusion of interest 
                                        received by individuals who 
                                        have attained age 65.''
            (2) Paragraph (2) of section 265(a) of such Code is amended 
        by inserting before the period at the end thereof the 
        following: ``, or to purchase or carry obligations or shares, 
        or to make deposits, to the extent the interest thereon is 
        excludable from gross income under section 116''.
            (3) Subsection (c) of section 584 of such Code is amended 
        by adding at the end thereof the following new sentence:
``The proportionate share of each participant in the amount of interest 
received by the common trust fund and to which section 116 applies 
shall be considered for purposes of such section as having been 
received by such participant.''
            (4) Subsection (a) of section 643 of such Code is amended 
        by redesignating paragraph (7) as paragraph (8) and by 
        inserting after paragraph (6) the following new paragraph:
            ``(7) Interest.--There shall be included the amount of any 
        interest excluded from gross income pursuant to section 116.''
            (5) Section 854 of such Code is amended by adding at the 
        end thereof the following new subsection:
    ``(c) Treatment Under Section 116.--
            ``(1) In general.--For purposes of section 116, in the case 
        of any dividend (other than a dividend described in subsection 
        (a)) received from a regulated investment company which meets 
        the requirements of section 852 for the taxable year in which 
        it paid the dividend--
                    ``(A) the entire amount of such dividend shall be 
                treated as interest if the aggregate interest received 
                by such company during the taxable year equals or 
                exceeds 75 percent of its gross income, or
                    ``(B) if subparagraph (A) does not apply, a portion 
                of such dividend shall be treated as interest based on 
                the portion of the company's gross income which 
                consists of aggregate interest.
        For purposes of the preceding sentence, gross income and 
        aggregate interest received shall each be reduced by so much of 
        the deduction allowable by section 163 for the taxable year as 
        does not exceed aggregate interest received for the taxable 
        year.
            ``(2) Notice to shareholders.--The amount of any 
        distribution by a regulated investment company which may be 
        taken into account as interest for purposes of the exclusion 
        under section 116 shall not exceed the amount so designated by 
        the company in a written notice to its shareholders mailed not 
        later than 45 days after the close of its taxable year.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) The term `gross income' does not include gain 
                from the sale or other disposition of stock or 
                securities.
                    ``(B) The term `aggregate interest received' 
                includes only interest described in section 116(c).''
            (6) Subsection (c) of section 857 of such Code is amended 
        to read as follows:
    ``(c) Limitations Applicable to Dividends Received From Real Estate 
Investment Trusts.--
            ``(1) Denial of dividends received deduction.--For purposes 
        of section 243 (relating to deductions for dividends received 
        by corporations), a dividend received from a real estate 
        investment trust which meets the requirements of this part 
        shall not be considered as a dividend.
            ``(2) Treatment as interest.--For purposes of section 116, 
        in the case of a dividend (other than a capital gain dividend, 
        as defined in subsection (b)(3)(C)) received from a real estate 
        investment trust which meets the requirements of this part for 
        the taxable year in which it paid the dividend--
                    ``(A) such dividend shall be treated as interest if 
                the aggregate interest received by the real estate 
                investment trust for the taxable year equals or exceeds 
                75 percent of its gross income, or
                    ``(B) if subparagraph (A) does not apply, the 
                portion of such dividend which bears the same ratio to 
                the amount of such dividend as the aggregate interest 
                received bears to gross income shall be treated as 
                interest.
            ``(3) Adjustments to gross income and aggregate interest 
        received.--For purposes of paragraph (2)--
                    ``(A) gross income does not include the net capital 
                gain,
                    ``(B) gross income and aggregate interest received 
                shall each be reduced by so much of the deduction 
                allowable by section 163 for the taxable year (other 
                than for interest on mortgages on real property owned 
                by the real estate investment trust) as does not exceed 
                aggregate interest received by the taxable year, and
                    ``(C) gross income shall be reduced by the sum of 
                the taxes imposed by paragraphs (4), (5), and (6) of 
                section 857(b).
            ``(4) Aggregate interest received.--The term `aggregate 
        interest received' includes only interest described in section 
        116(b).
            ``(5) Notice to shareholders.--The amount of any 
        distribution by a real estate investment trust which may be 
        taken into account as interest for purposes of the exclusion 
        under section 116 shall not exceed the amount so designated by 
        the trust in a written notice to its shareholders mailed not 
        later than 45 days after the close of its taxable year.''
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to taxable years beginning after December 31, 2002.

SEC. 3. INCREASE IN MINIMUM AMOUNT OF INTEREST REQUIRED TO BE REPORTED.

    (a) In General.--Subsection (a) of section 6049 of the Internal 
Revenue Code of 1986 (relating to requirements for reporting) is 
amended by striking ``$10'' each place it appears and inserting 
``$100''.
    (b) Conforming Amendment.--Section 6049(d)(5)(C) of such Code is 
amended--
            (1) in the text by striking ``$10'' and inserting ``$100'', 
        and
            (2) in the heading by striking ``$10'' and inserting 
        ``$100''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to taxable years beginning after December 31, 2002.

Summary: Small Savers Relief Act of 2003 - Amends the Internal Revenue Code to exclude up to $100 of interest earned by individuals from gross income. Provides special rules for: (1) distributions from trusts, regulated investment companies, and real estate investment trusts. And (2) nonresident alien eligibility for such exclusion. Increases the threshold for reporting interest paid from $10 to $100.