89–008 

111TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 111–497 

PROVIDING FOR CONSIDERATION OF THE SENATE AMENDMENT TO THE 

BILL (H.R. 4213) TO AMEND THE INTERNAL REVENUE CODE OF 1986 TO 

EXTEND CERTAIN EXPIRING PROVISIONS, AND FOR OTHER PURPOSES 

MAY 26, 2010.—Referred to the House Calendar and ordered to be printed 

Mr. HASTINGS of Florida, from the Committee on Rules, 

submitted the following 

R E P O R T 

[To accompany H. Res. 1403] 

The Committee on Rules, having had under consideration House 

Resolution 1403, 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 the consideration of the Senate 

amendment to H.R. 4213, to amend the Internal Revenue Code of 

1986 to extend certain expiring provisions, and for other purposes. 

The resolution makes in order a motion offered by the chair of the 

Committee on Ways and Means or his designee that the House concur in the Senate amendment to H.R. 4213 with the amendment 

printed in part A of this report, modified by the amendment printed in part B. The resolution provides one hour of debate on the motion equally divided and controlled by the chair and ranking minority member of the Committee on Ways and Means. The resolution 

waives all points of order against consideration of the motion. The 

resolution provides that the Senate amendment and the motion 

shall be considered as read. The rule tables House Resolution 1392. 

EXPLANATION OF WAIVERS

The waiver of all points of order against consideration of the motion includes a waiver of clause 10 of rule XXI (PAYGO). The 

House amendment, as amended, complies with all statutory 

PAYGO requirements. 

COMMITTEE VOTES

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: 


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Rules Committee record vote No. 423 

Date: May 26, 2010. 

Measure: Senate amendment to H.R. 4213. 

Motion by: Mr. Dreier. 

Summary of motion: To make in order and provide appropriate 

waivers for an amendment by Rep. Brady (TX), #4, which would exempt real estate from changes in taxation of carried interest. 

Results: Defeated 3–8. 

Vote by Members: McGovern—Nay; Hastings (FL)—Nay; Matsui—Nay; Cardoza—Nay; Arcuri—Nay; Perlmutter—Nay; Pingree—Nay; Dreier—Yea; Sessions—Yea; Foxx—Yea; Slaughter— 

Nay. 

Rules Committee record vote No. 424 

Date: May 26, 2010. 

Measure: Senate amendment to H.R. 4213. 

Motion by: Mr. Sessions. 

Summary of motion: To make in order and provide appropriate 

waivers for an amendment by Rep. Brown-Waite (FL), #1, which 

would strike Section 523 (Medicare Physician Payments) and replace it with a reimbursement increase of 2 percent for every year 

through 2013. This would be paid for implementing limiting medical liability. 

Results: Defeated 3–8, Present—1. 

Vote by Members: McGovern—Nay; Hastings (FL)—Nay; Matsui—Nay; Cardoza—Present; Arcuri—Nay; Perlmutter—Nay; Pingree—Nay; Polis—Nay; Dreier—Yea; Sessions—Yea; Foxx—Yea; 

Slaughter—Nay. 

Rules Committee record vote No. 425 

Date: May 26, 2010. 

Measure: Senate amendment to H.R. 4213. 

Motion by: Dr. Foxx. 

Summary of motion: To make in order and provide appropriate 

waivers for an amendment by Rep. Brown-Waite (FL), #2, which 

would strike title IV (revenue provisions) of the bill and use unobligated funds from the American Recovery and Reinvestment Act of 

2009 as an offset. 

Results: Defeated 3–9. 

Vote by Members: McGovern—Nay; Hastings (FL)—Nay; Matsui—Nay; Cardoza—Nay; Arcuri—Nay; Perlmutter—Nay; Pingree—Nay; Polis—Nay; Dreier—Yea; Sessions—Yea; Foxx—Yea; 

Slaughter—Nay. 

Rules Committee record vote No. 426 

Date: May 26, 2010. 

Measure: Senate amendment to H.R. 4213. 

Motion by: Dr. Foxx. 

Summary of motion: To make in order and provide appropriate 

waivers for an amendment by Rep. Cassidy (LA), #5, which would 

require that all revenue from the excise tax on oil production continue to fund strictly the Oil Spill Liability Trust Fund, and may 

not be used for any other purposes. 

Results: Defeated 3–9. 


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Vote by Members: McGovern—Nay; Hastings (FL)—Nay; Matsui—Nay; Cardoza—Nay; Arcuri—Nay; Perlmutter—Nay; Pingree—Nay; Polis—Nay; Dreier—Yea; Sessions—Yea; Foxx—Yea; 

Slaughter—Nay. 

SUMMARY OF AMENDMENT IN PART A

The House amendment contains provisions to extend American 

Recovery and Reinvestment Act job programs, provide tax relief to 

working families, extend business tax credits, provide pension relief, extension of Unemployment Insurance and COBRA, extension 

of TANF, extension of FMAP and flood insurance, relief for disaster 

areas, relief for agriculture disaster areas, domestic energy tax provisions, close tax loopholes, and prevent outsourcing. 

SUMMARY OF AMENDMENT IN PART B CONSIDERED AS ADOPTED

Drops the amendment to the long title of the bill. 

Clarifies the modification on who is a ‘‘market participant’’ for 

purposes of section 451(i). 

Modifies the provision so the deduction is unavailable to a taxpayer for whom a credit for higher education under section 25A 

(the Hope and Lifetime Learning Credits) would have provided a 

greater net reduction in tax liability, without regard to any disallowance or reduction in value of the credit as a result of the alternative minimum tax. 

Clarifies the exception from the matching rule for shareholder 

payments for redemptions of securities that are not listed on an established securities market. 

Provides that the geographic diversity requirement for special 

transition rules for pension plans sponsored by certain charities is 

satisfied if employees are located in at least 20 states. 

Provides that disclosure of transaction costs for an investment 

option may alternatively reference a plan’s allocable share of such 

costs, that disclosure of investment returns is based on the calendar year to date, and that plan service providers and administrators are treated as complying with the fee disclosure requirements 

based on a reasonable, good faith interpretation of the provisions 

until 12 months after final regulations are issued. 

Clarifies that the Secretary of the Treasury may add to the types 

of reorganizations in which the earnings and profits of each party 

to the reorganization are taken into account in determining dividend treatment. 

Increases the Oil Spill Liability Trust Fund financing rate to 34 

cents per barrel (rather than 32 cents). 

The extension of unemployment compensation benefits under the 

bill is shortened by one month. Also clarifies that conditions on the 

receipt of EUC benefits include conditions related to the availability for work, active search for work and refusal to accept work. 

Changes the word ‘‘household’’ to ‘‘family’’ to clarify eligibility for 

subsidized employment positions under the TANF Emergency 

Fund. 

The extension of subsidized COBRA benefits under the bill is 

shortened by one month. 

Clarifies that the policy relating to treatment of voluntary contributions set forth in the Patient Protection and Affordable Care 

Act applies to increases in the federal medical assistance percentVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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age (FMAP) under the American Recovery and Reinvestment Act 

of 2009. 

Replaces section 523 of the bill with an increase in payment 

rates of 2.2 percent for the rest of 2010 and 1 percent in 2011. Instead of rates returning to present law after 2013, rates would return to present law after 2011. 

Deletes the provision pertaining to the Medicare Improvement 

Fund. 

The language would allow State departments of agriculture to 

use the grant funds to contract with the Farm Service Agency to 

administer the funds or to use a percentage of the funds to administer the funds from their offices. 

Clarifies the definition of the term ‘‘settlement agreement’’ to 

make clear that any modifications of the agreement by the parties, 

with the approval of the court, are part of the term settlement 

agreement. 

The provision adds a savings clause to section 614 regarding revisions to the highway funding distribution under Pub. L. No. 111– 

147, the Hiring Incentives to Restore Employment Act (the ‘‘HIRE 

Act’’). The savings clause provides that, with regard to funding 

based on the Projects of National and Regional Significance program and the National Corridor Infrastructure Improvement program, each State shall receive the greater of the amount that the 

State received under the HIRE Act or the amount that the State 

is authorized to receive under this bill. The provision authorizes 

such sums as may be necessary from the Highway Trust Fund to 

carry out the provision. 

Makes other minor technical drafting changes to the bill. 

PART A—TEXT OF AMENDMENT

The House concurs in the Senate Amendment to H.R. 4213 with 

the following amendments: 

In lieu of the matter proposed to be inserted by the Senate 

amendment to the text of the bill, insert the following: 

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘American Jobs 

and Closing Tax Loopholes Act of 2010’’. 

(b) AMENDMENT OF 1986 CODE.—Except as otherwise expressly 

provided, whenever in titles I, II, and IV of 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.—The table of contents for this Act is as 

follows: 

Sec. 1. Short title; amendment of 1986 Code; table of contents. 

TITLE I—INFRASTRUCTURE INCENTIVES 

Sec. 101. Extension of Build America Bonds. 

Sec. 102. Exempt-facility bonds for sewage and water supply facilities. 

Sec. 103. Extension of exemption from alternative minimum tax treatment for certain tax-exempt bonds. 

Sec. 104. Extension and additional allocations of recovery zone bond authority. 

Sec. 105. Allowance of new markets tax credit against alternative minimum tax. 


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Sec. 106. Extension of tax-exempt eligibility for loans guaranteed by Federal home 

loan banks. 

Sec. 107. Extension of temporary small issuer rules for allocation of tax-exempt interest expense by financial institutions. 

TITLE II—EXTENSION OF EXPIRING PROVISIONS 

Subtitle A—Energy 

Sec. 201. Alternative motor vehicle credit for new qualified hybrid motor vehicles 

other than passenger automobiles and light trucks. 

Sec. 202. Incentives for biodiesel and renewable diesel. 

Sec. 203. Credit for electricity produced at certain open-loop biomass facilities. 

Sec. 204. Extension and modification of credit for steel industry fuel. 

Sec. 205. Credit for producing fuel from coke or coke gas. 

Sec. 206. New energy efficient home credit. 

Sec. 207. Excise tax credits and outlay payments for alternative fuel and alternative fuel mixtures. 

Sec. 208. Special rule for sales or dispositions to implement FERC or State electric 

restructuring policy for qualified electric utilities. 

Sec. 209. Suspension of limitation on percentage depletion for oil and gas from 

marginal wells. 

Sec. 210. Direct payment of energy efficient appliances tax credit. 

Sec. 211. Modification of standards for windows, doors, and skylights with respect 

to the credit for nonbusiness energy property. 

Subtitle B—Individual Tax Relief 

PART I—MISCELLANEOUS PROVISIONS

Sec. 221. Deduction for certain expenses of elementary and secondary school teachers. 

Sec. 222. Additional standard deduction for State and local real property taxes. 

Sec. 223. Deduction of State and local sales taxes. 

Sec. 224. Contributions of capital gain real property made for conservation purposes. 

Sec. 225. Above-the-line deduction for qualified tuition and related expenses. 

Sec. 226. Tax-free distributions from individual retirement plans for charitable purposes. 

Sec. 227. Look-thru of certain regulated investment company stock in determining 

gross estate of nonresidents. 

PART II—LOW-INCOME HOUSING CREDITS

Sec. 231. Election for direct payment of low-income housing credit for 2010. 

Subtitle C—Business Tax Relief 

Sec. 241. Research credit. 

Sec. 242. Indian employment tax credit. 

Sec. 243. New markets tax credit. 

Sec. 244. Railroad track maintenance credit. 

Sec. 245. Mine rescue team training credit. 

Sec. 246. Employer wage credit for employees who are active duty members of the 

uniformed services. 

Sec. 247. 5-year depreciation for farming business machinery and equipment. 

Sec. 248. 15-year straight-line cost recovery for qualified leasehold improvements, 

qualified restaurant buildings and improvements, and qualified retail 

improvements. 

Sec. 249. 7-year recovery period for motorsports entertainment complexes. 

Sec. 250. Accelerated depreciation for business property on an Indian reservation. 

Sec. 251. Enhanced charitable deduction for contributions of food inventory. 

Sec. 252. Enhanced charitable deduction for contributions of book inventories to 

public schools. 

Sec. 253. Enhanced charitable deduction for corporate contributions of computer inventory for educational purposes. 

Sec. 254. Election to expense mine safety equipment. 

Sec. 255. Special expensing rules for certain film and television productions. 

Sec. 256. Expensing of environmental remediation costs. 

Sec. 257. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico. 

Sec. 258. Modification of tax treatment of certain payments to controlling exempt 

organizations. 


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Sec. 259. Exclusion of gain or loss on sale or exchange of certain brownfield sites 

from unrelated business income. 

Sec. 260. Timber REIT modernization. 

Sec. 261. Treatment of certain dividends of regulated investment companies. 

Sec. 262. RIC qualified investment entity treatment under FIRPTA. 

Sec. 263. Exceptions for active financing income. 

Sec. 264. Look-thru treatment of payments between related controlled foreign corporations under foreign personal holding company rules. 

Sec. 265. Basis adjustment to stock of S corps making charitable contributions of 

property. 

Sec. 266. Empowerment zone tax incentives. 

Sec. 267. Tax incentives for investment in the District of Columbia. 

Sec. 268. Renewal community tax incentives. 

Sec. 269. Temporary increase in limit on cover over of rum excise taxes to Puerto 

Rico and the Virgin Islands. 

Sec. 270. Payment to American Samoa in lieu of extension of economic development 

credit. 

Sec. 271. Election to temporarily utilize unused AMT credits determined by domestic investment. 

Sec. 272. Study of extended tax expenditures. 

Subtitle D—Temporary Disaster Relief Provisions 

PART I—NATIONAL DISASTER RELIEF

Sec. 281. Waiver of certain mortgage revenue bond requirements. 

Sec. 282. Losses attributable to federally declared disasters. 

Sec. 283. Special depreciation allowance for qualified disaster property. 

Sec. 284. Net operating losses attributable to federally declared disasters. 

Sec. 285. Expensing of qualified disaster expenses. 

PART II—REGIONAL PROVISIONS

SUBPART A—NEW YORK LIBERTY ZONE

Sec. 291. Special depreciation allowance for nonresidential and residential real 

property. 

Sec. 292. Tax-exempt bond financing. 

SUBPART B—GO ZONE

Sec. 295. Increase in rehabilitation credit. 

Sec. 296. Work opportunity tax credit with respect to certain individuals affected 

by Hurricane Katrina for employers inside disaster areas. 

Sec. 297. Extension of low-income housing credit rules for buildings in GO zones. 

TITLE III—PENSION PROVISIONS 

Subtitle A—Pension Funding Relief 

PART 1—SINGLE-EMPLOYER PLANS

Sec. 301. Extended period for single-employer defined benefit plans to amortize certain shortfall amortization bases. 

Sec. 302. Application of extended amortization period to plans subject to prior law 

funding rules. 

Sec. 303. Suspension of certain funding level limitations. 

Sec. 304. Lookback for credit balance rule. 

Sec. 305. Information reporting. 

Sec. 306. Rollover of amounts received in airline carrier bankruptcy. 

PART 2—MULTIEMPLOYER PLANS

Sec. 311. Optional use of 30-year amortization periods. 

Sec. 312. Optional longer recovery periods for multiemployer plans in endangered 

or critical status. 

Sec. 313. Modification of certain amortization extensions under prior law. 

Sec. 314. Alternative default schedule for plans in endangered or critical status. 

Sec. 315. Transition rule for certifications of plan status. 

Subtitle B—Fee Disclosure 

Sec. 321. Short title of subtitle. 

Sec. 322. Amendments to the Employee Retirement Income Security Act of 1974. 

Sec. 323. Amendments to the Internal Revenue Code of 1986. 


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Sec. 324. Regulatory authority and coordination. 

Sec. 325. Effective date of subtitle. 

TITLE IV—REVENUE OFFSETS 

Subtitle A—Foreign Provisions 

Sec. 401. Rules to prevent splitting foreign tax credits from the income to which 

they relate. 

Sec. 402. Denial of foreign tax credit with respect to foreign income not subject to 

United States taxation by reason of covered asset acquisitions. 

Sec. 403. Separate application of foreign tax credit limitation, etc., to items 

resourced under treaties. 

Sec. 404. Limitation on the amount of foreign taxes deemed paid with respect to 

section 956 inclusions. 

Sec. 405. Special rule with respect to certain redemptions by foreign subsidiaries. 

Sec. 406. Modification of affiliation rules for purposes of rules allocating interest 

expense. 

Sec. 407. Termination of special rules for interest and dividends received from persons meeting the 80-percent foreign business requirements. 

Sec. 408. Source rules for income on guarantees. 

Sec. 409. Limitation on extension of statute of limitations for failure to notify Secretary of certain foreign transfers. 

Subtitle B—Personal Service Income Earned in Pass-thru Entities 

Sec. 411. Partnership interests transferred in connection with performance of services. 

Sec. 412. Income of partners for performing investment management services treated as ordinary income received for performance of services. 

Sec. 413. Employment tax treatment of professional service businesses. 

Subtitle C—Corporate Provisions 

Sec. 421. Treatment of securities of a controlled corporation exchanged for assets 

in certain reorganizations. 

Sec. 422. Taxation of boot received in reorganizations. 

Subtitle D—Other Provisions 

Sec. 431. Modifications with respect to Oil Spill Liability Trust Fund. 

Sec. 432. Time for payment of corporate estimated taxes. 

TITLE V—UNEMPLOYMENT, HEALTH, AND OTHER ASSISTANCE 

Subtitle A—Unemployment Insurance and Other Assistance 

Sec. 501. Extension of unemployment insurance provisions. 

Sec. 502. Coordination of emergency unemployment compensation with regular 

compensation. 

Sec. 503. Extension of the Emergency Contingency Fund. 

Subtitle B—Health Provisions 

Sec. 511. Extension of premium assistance for COBRA benefits. 

Sec. 512. Extension of section 508 reclassifications. 

Sec. 513. Repeal of delay of RUG-IV. 

Sec. 514. Limitation on reasonable costs payments for certain clinical diagnostic 

laboratory tests furnished to hospital patients in certain rural areas. 

Sec. 515. Funding for claims reprocessing. 

Sec. 516. Extension of ARRA increase in FMAP. 

Sec. 517. Medicaid and CHIP technical corrections. 

Sec. 518. Addition of inpatient drug discount program to 340B drug discount program. 

Sec. 519. Continued inclusion of orphan drugs in definition of covered outpatient 

drugs with respect to children’s hospitals under the 340B drug discount 

program. 

Sec. 520. Conforming amendment related to waiver of coinsurance for preventive 

services. 

Sec. 521. Establish a CMS–IRS data match to identify fraudulent providers. 

Sec. 522. Clarification of effective date of part B special enrollment period for disabled TRICARE beneficiaries. 

Sec. 523. Medicare sustainable growth rate reform. 


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Sec. 524. Adjustment to Medicare payment localities. 

Sec. 525. Clarification of 3-day payment window. 

TITLE VI—OTHER PROVISIONS 

Sec. 601. Extension of national flood insurance program. 

Sec. 602. Allocation of geothermal receipts. 

Sec. 603. Small business loan guarantee enhancement extensions. 

Sec. 604. Emergency agricultural disaster assistance. 

Sec. 605. Summer employment for youth. 

Sec. 606. Housing Trust Fund. 

Sec. 607. The Individual Indian Money Account Litigation Settlement Act of 2010. 

Sec. 608. Appropriation of funds for final settlement of claims from In re Black 

Farmers Discrimination Litigation. 

Sec. 609. Expansion of eligibility for concurrent receipt of military retired pay and 

veterans’ disability compensation to include all chapter 61 disability retirees regardless of disability rating percentage or years of service. 

Sec. 610. Extension of use of 2009 poverty guidelines. 

Sec. 611. Refunds disregarded in the administration of Federal programs and federally assisted programs. 

Sec. 612. State court improvement program. 

Sec. 613. Qualifying timber contract options. 

Sec. 614. Extension and flexibility for certain allocated surface transportation programs. 

Sec. 615. Community College and Career Training Grant Program. 

Sec. 616. Extensions of duty suspensions on cotton shirting fabrics and related provisions. 

Sec. 617. Modification of Wool Apparel Manufacturers Trust Fund. 

Sec. 618. Department of Commerce Study. 

Sec. 619. ARRA planning and reporting. 

TITLE VII—BUDGETARY PROVISIONS 

Sec. 701. Budgetary provisions. 

TITLE I—INFRASTRUCTURE 

INCENTIVES 

SEC. 101. EXTENSION OF BUILD AMERICA BONDS. 

(a) IN GENERAL.—Subparagraph (B) of section 54AA(d)(1) is 

amended by striking ‘‘January 1, 2011’’ and inserting ‘‘January 1, 

2013’’. 

(b) EXTENSION OF PAYMENTS TO ISSUERS.— 

(1) IN GENERAL.—Section 6431 is amended— 

(A) by striking ‘‘January 1, 2011’’ in subsection (a) and 

inserting ‘‘January 1, 2013’’, and 

(B) by striking ‘‘January 1, 2011’’ in subsection (f)(1)(B) 

and inserting ‘‘a particular date’’. 

(2) CONFORMING AMENDMENTS.—Subsection (g) of section 

54AA is amended— 

(A) by striking ‘‘January 1, 2011’’ and inserting ‘‘January 

1, 2013’’; and 

(B) by striking ‘‘QUALIFIED BONDS ISSUED BEFORE 2011’’ 

in the heading and inserting ‘‘CERTAIN QUALIFIED BONDS’’. 

(c) REDUCTION IN PERCENTAGE OF PAYMENTS TO ISSUERS.—Subsection (b) of section 6431 is amended— 

(1) by striking ‘‘The Secretary’’ and inserting the following: 

‘‘(1) IN GENERAL.—The Secretary’’; 

(2) by striking ‘‘35 percent’’ and inserting ‘‘the applicable percentage’’; and 

(3) by adding at the end the following new paragraph: 


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‘‘(2) APPLICABLE PERCENTAGE.—For purposes of this subsection, the term ‘applicable percentage’ means the percentage 

determined in accordance with the following table: 

‘‘In the case of a qualified bond issued during calendar year: The applicable percentage is: 

2009 or 2010 .................................................. 35 percent 

2011 ................................................................ 32 percent 

2012 ................................................................ 30 percent.’’. 

(d) CURRENT REFUNDINGS PERMITTED.—Subsection (g) of section 

54AA is amended by adding at the end the following new paragraph: 

‘‘(3) TREATMENT OF CURRENT REFUNDING BONDS.— 

‘‘(A) IN GENERAL.—For purposes of this subsection, the 

term ‘qualified bond’ includes any bond (or series of bonds) 

issued to refund a qualified bond if— 

‘‘(i) the average maturity date of the issue of which 

the refunding bond is a part is not later than the average maturity date of the bonds to be refunded by such 

issue, 

‘‘(ii) the amount of the refunding bond does not exceed the outstanding amount of the refunded bond, 

and 

‘‘(iii) the refunded bond is redeemed not later than 

90 days after the date of the issuance of the refunding 

bond. 

‘‘(B) APPLICABLE PERCENTAGE.—In the case of a refunding bond referred to in subparagraph (A), the applicable 

percentage with respect to such bond under section 6431(b) 

shall be the lowest percentage specified in paragraph (2) of 

such section. 

‘‘(C) DETERMINATION OF AVERAGE MATURITY.—For purposes of subparagraph (A)(i), average maturity shall be determined in accordance with section 147(b)(2)(A).’’. 

(e) CLARIFICATION RELATED TO LEVEES AND FLOOD CONTROL

PROJECTS.—Subparagraph (A) of section 54AA(g)(2) is amended by 

inserting ‘‘(including capital expenditures for levees and other flood 

control projects)’’ after ‘‘capital expenditures’’. 

SEC. 102. EXEMPT-FACILITY BONDS FOR SEWAGE AND WATER SUPPLY 

FACILITIES. 

(a) BONDS FOR WATER AND SEWAGE FACILITIES EXEMPT FROM

VOLUME CAP ON PRIVATE ACTIVITY BONDS.— 

(1) IN GENERAL.—Paragraph (3) of section 146(g) is amended 

by inserting ‘‘(4), (5),’’ after ‘‘(2),’’. 

(2) CONFORMING AMENDMENT.—Paragraphs (2) and (3)(B) of 

section 146(k) are both amended by striking ‘‘(4), (5), (6),’’ and 

inserting ‘‘(6)’’. 

(b) TAX-EXEMPT ISSUANCE BY INDIAN TRIBAL GOVERNMENTS.— 

(1) IN GENERAL.—Subsection (c) of section 7871 is amended 

by adding at the end the following new paragraph: 


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‘‘(4) EXCEPTION FOR BONDS FOR WATER AND SEWAGE FACILI- TIES.—Paragraph (2) shall not apply to an exempt facility bond 

95 percent or more of the net proceeds (as defined in section 

150(a)(3)) of which are to be used to provide facilities described 

in paragraph (4) or (5) of section 142(a).’’. 

(2) CONFORMING AMENDMENT.—Paragraph (2) of section 

7871(c) is amended by striking ‘‘paragraph (3)’’ and inserting 

‘‘paragraphs (3) and (4)’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to obligations issued after the date of the enactment of 

this Act. 

SEC. 103. EXTENSION OF EXEMPTION FROM ALTERNATIVE MINIMUM 

TAX TREATMENT FOR CERTAIN TAX-EXEMPT BONDS. 

(a) IN GENERAL.—Clause (vi) of section 57(a)(5)(C) is amended— 

(1) by striking ‘‘January 1, 2011’’ in subclause (I) and inserting ‘‘January 1, 2012’’; and 

(2) by striking ‘‘AND 2010’’ in the heading and inserting ‘‘, 

2010, AND 2011’’. 

(b) ADJUSTED CURRENT EARNINGS.—Clause (iv) of section 

56(g)(4)(B) is amended— 

(1) by striking ‘‘January 1, 2011’’ in subclause (I) and inserting ‘‘January 1, 2012’’; and 

(2) by striking ‘‘AND 2010’’ in the heading and inserting ‘‘, 

2010, AND 2011’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to obligations issued after December 31, 2010. 

SEC. 104. EXTENSION AND ADDITIONAL ALLOCATIONS OF RECOVERY 

ZONE BOND AUTHORITY. 

(a) EXTENSION OF RECOVERY ZONE BOND AUTHORITY.—Section 

1400U–2(b)(1) and section 1400U–3(b)(1)(B) are each amended by 

striking ‘‘January 1, 2011’’ and inserting ‘‘January 1, 2012’’. 

(b) ADDITIONAL ALLOCATIONS OF RECOVERY ZONE BOND AUTHOR- ITY BASED ON UNEMPLOYMENT.—Section 1400U–1 is amended by 

adding at the end the following new subsection: 

‘‘(c) ALLOCATION OF 2010 RECOVERY ZONE BOND LIMITATIONS

BASED ON UNEMPLOYMENT.— ‘‘(1) IN GENERAL.—The Secretary shall allocate the 2010 national recovery zone economic development bond limitation and 

the 2010 national recovery zone facility bond limitation among 

the States in the proportion that each such State’s 2009 unemployment number bears to the aggregate of the 2009 unemployment numbers for all of the States. 

‘‘(2) MINIMUM ALLOCATION.—The Secretary shall adjust the 

allocations under paragraph (1) for each State to the extent 

necessary to ensure that no State (prior to any reduction under 

paragraph (3)) receives less than 0.9 percent of the 2010 national recovery zone economic development bond limitation and 

0.9 percent of the 2010 national recovery zone facility bond 

limitation. 

‘‘(3) ALLOCATIONS BY STATES.— ‘‘(A) IN GENERAL.—Each State with respect to which an 

allocation is made under paragraph (1) shall reallocate 

such allocation among the counties and large municipalities (as defined in subsection (a)(3)(B)) in such State in the 

proportion that each such county’s or municipality’s 2009 


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unemployment number bears to the aggregate of the 2009 

unemployment numbers for all the counties and large municipalities (as so defined) in such State. 

‘‘(B) 2010 ALLOCATION REDUCED BY AMOUNT OF PREVIOUS

ALLOCATION.—Each State shall reduce (but not below 

zero)— 

‘‘(i) the amount of the 2010 national recovery zone 

economic development bond limitation allocated to 

each county or large municipality (as so defined) in 

such State by the amount of the national recovery 

zone economic development bond limitation allocated 

to such county or large municipality under subsection 

(a)(3)(A) (determined without regard to any waiver 

thereof), and 

‘‘(ii) the amount of the 2010 national recovery zone 

facility bond limitation allocated to each county or 

large municipality (as so defined) in such State by the 

amount of the national recovery zone facility bond limitation allocated to such county or large municipality 

under subsection (a)(3)(A) (determined without regard 

to any waiver thereof). 

‘‘(C) WAIVER OF SUBALLOCATIONS.—A county or municipality may waive any portion of an allocation made under 

this paragraph. A county or municipality shall be treated 

as having waived any portion of an allocation made under 

this paragraph which has not been allocated to a bond 

issued before May 1, 2011. Any allocation waived (or treated as waived) under this subparagraph may be used or reallocated by the State. 

‘‘(D) SPECIAL RULE FOR A MUNICIPALITY IN A COUNTY.— In the case of any large municipality any portion of which 

is in a county, such portion shall be treated as part of such 

municipality and not part of such county. 

‘‘(4) 2009 UNEMPLOYMENT NUMBER.—For purposes of this 

subsection, the term ‘2009 unemployment number’ means, with 

respect to any State, county or municipality, the number of individuals in such State, county, or municipality who were determined to be unemployed by the Bureau of Labor Statistics 

for December 2009. 

‘‘(5) 2010 NATIONAL LIMITATIONS.— 

‘‘(A) RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS.— 

The 2010 national recovery zone economic development 

bond limitation is $10,000,000,000. Any allocation of such 

limitation under this subsection shall be treated for purposes of section 1400U–2 in the same manner as an allocation of national recovery zone economic development bond 

limitation. 

‘‘(B) RECOVERY ZONE FACILITY BONDS.—The 2010 national recovery zone facility bond limitation is 

$15,000,000,000. Any allocation of such limitation under 

this subsection shall be treated for purposes of section 

1400U–3 in the same manner as an allocation of national 

recovery zone facility bond limitation.’’. 

(c) AUTHORITY OF STATE TO WAIVE CERTAIN 2009 ALLOCATIONS.—Subparagraph (A) of section 1400U–1(a)(3) is amended by 


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adding at the end the following: ‘‘A county or municipality shall be 

treated as having waived any portion of an allocation made under 

this subparagraph which has not been allocated to a bond issued 

before May 1, 2011. Any allocation waived (or treated as waived) 

under this subparagraph may be used or reallocated by the State.’’. 

SEC. 105. ALLOWANCE OF NEW MARKETS TAX CREDIT AGAINST ALTERNATIVE MINIMUM TAX. 

(a) IN GENERAL.—Subparagraph (B) of section 38(c)(4), as amended by the Patient Protection and Affordable Care Act, is amended 

by redesignating clauses (v) through (ix) as clauses (vi) through (x), 

respectively, and by inserting after clause (iv) the following new 

clause: 

‘‘(v) the credit determined under section 45D, but 

only with respect to credits determined with respect to 

qualified equity investments (as defined in section 

45D(b)) initially made before January 1, 2012,’’. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall apply to credits determined with respect to qualified equity 

investments (as defined in section 45D(b) of the Internal Revenue 

Code of 1986) initially made after March 15, 2010. 

SEC. 106. EXTENSION OF TAX-EXEMPT ELIGIBILITY FOR LOANS GUARANTEED BY FEDERAL HOME LOAN BANKS. 

Clause (iv) of section 149(b)(3)(A) is amended by striking ‘‘December 31, 2010’’ and inserting ‘‘December 31, 2011’’. 

SEC. 107. EXTENSION OF TEMPORARY SMALL ISSUER RULES FOR ALLOCATION OF TAX-EXEMPT INTEREST EXPENSE BY FINANCIAL INSTITUTIONS. 

(a) IN GENERAL.—Clauses (i), (ii), and (iii) of section 265(b)(3)(G) 

are each amended by striking ‘‘or 2010’’ and inserting ‘‘, 2010, or 

2011’’. 

(b) CONFORMING AMENDMENT.—Subparagraph (G) of section 

265(b)(3) is amended by striking ‘‘AND 2010’’ in the heading and inserting ‘‘, 2010, AND 2011’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to obligations issued after December 31, 2010. 

TITLE II—EXTENSION OF EXPIRING 

PROVISIONS 

Subtitle A—Energy 

SEC. 201. ALTERNATIVE MOTOR VEHICLE CREDIT FOR NEW QUALIFIED HYBRID MOTOR VEHICLES OTHER THAN PASSENGER AUTOMOBILES AND LIGHT TRUCKS. 

(a) IN GENERAL.—Paragraph (3) of section 30B(k) is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to property purchased after December 31, 2009. 

SEC. 202. INCENTIVES FOR BIODIESEL AND RENEWABLE DIESEL. 

(a) CREDITS FOR BIODIESEL AND RENEWABLE DIESEL USED AS

FUEL.—Subsection (g) of section 40A is amended by striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 


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(b) EXCISE TAX CREDITS AND OUTLAY PAYMENTS FOR BIODIESEL

AND RENEWABLE DIESEL FUEL MIXTURES.— 

(1) Paragraph (6) of section 6426(c) is amended by striking 

‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(2) Subparagraph (B) of section 6427(e)(6) is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 

2010’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to fuel sold or used after December 31, 2009. 

SEC. 203. CREDIT FOR ELECTRICITY PRODUCED AT CERTAIN OPENLOOP BIOMASS FACILITIES. 

(a) IN GENERAL.—Clause (ii) of section 45(b)(4)(B) is amended— 

(1) by striking ‘‘5-year period’’ and inserting ‘‘6-year period’’, 

and 

(2) by adding at the end the following: ‘‘In the case of the 

last year of the 6-year period described in the preceding sentence, the credit determined under subsection (a) with respect 

to electricity produced during such year shall not exceed 80 

percent of such credit determined without regard to this sentence.’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to electricity produced and sold after December 31, 2009. 

SEC. 204. EXTENSION AND MODIFICATION OF CREDIT FOR STEEL INDUSTRY FUEL. 

(a) CREDIT PERIOD.— 

(1) IN GENERAL.—Subclause (II) of section 45(e)(8)(D)(ii) is 

amended to read as follows: 

‘‘(II) CREDIT PERIOD.—In lieu of the 10-year period referred to in clauses (i) and (ii)(II) of subparagraph (A), the credit period shall be the period beginning on the date that the facility first 

produces steel industry fuel that is sold to an unrelated person after September 30, 2008, and ending 2 years after such date.’’. 

(2) CONFORMING AMENDMENT.—Section 45(e)(8)(D) is amended by striking clause (iii) and by redesignating clause (iv) as 

clause (iii). 

(b) EXTENSION OF PLACED-IN-SERVICE DATE.—Subparagraph (A) 

of section 45(d)(8) is amended— 

(1) by striking ‘‘(or any modification to a facility)’’, and 

(2) by striking ‘‘2010’’ and inserting ‘‘2011’’. 

(c) CLARIFICATIONS.— 

(1) STEEL INDUSTRY FUEL.—Subclause (I) of section 

45(c)(7)(C)(i) is amended by inserting ‘‘, a blend of coal and petroleum coke, or other coke feedstock’’ after ‘‘on coal’’. 

(2) OWNERSHIP INTEREST.—Section 45(d)(8) is amended by 

adding at the end the following new flush sentence: 

‘‘With respect to a facility producing steel industry fuel, no person (including a ground lessor, customer, supplier, or technology licensor) shall be treated as having an ownership interest in the facility or as otherwise entitled to the credit allowable under subsection (a) with respect to such facility if such 

person’s rent, license fee, or other entitlement to net payments 

from the owner of such facility is measured by a fixed dollar 


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amount or a fixed amount per ton, or otherwise determined 

without regard to the profit or loss of such facility.’’. 

(3) PRODUCTION AND SALE.—Subparagraph (D) of section 

45(e)(8), as amended by subsection (a)(2), is amended by redesignating clause (iii) as clause (iv) and by inserting after clause 

(ii) the following new clause: 

‘‘(iii) PRODUCTION AND SALE.—The owner of a facility 

producing steel industry fuel shall be treated as producing and selling steel industry fuel where that 

owner manufactures such steel industry fuel from 

coal, a blend of coal and petroleum coke, or other coke 

feedstock to which it has title. The sale of such steel 

industry fuel by the owner of the facility to a person 

who is not the owner of the facility shall not fail to 

qualify as a sale to an unrelated person solely because 

such purchaser may also be a ground lessor, supplier, 

or customer.’’. 

(d) SPECIFIED CREDIT FOR PURPOSES OF ALTERNATIVE MINIMUM

TAX EXCLUSION.—Subclause (II) of section 38(c)(4)(B)(iii) is amended by inserting ‘‘(in the case of a refined coal production facility 

producing steel industry fuel, during the credit period set forth in 

section 45(e)(8)(D)(ii)(II))’’ after ‘‘service’’. 

(e) EFFECTIVE DATES.— (1) IN GENERAL.—The amendments made by subsections (a), 

(b), and (d) shall take effect on the date of the enactment of 

this Act. 

(2) CLARIFICATIONS.—The amendments made by subsection 

(c) shall take effect as if included in the amendments made by 

the Energy Improvement and Extension Act of 2008. 

SEC. 205. CREDIT FOR PRODUCING FUEL FROM COKE OR COKE GAS. 

(a) IN GENERAL.—Paragraph (1) of section 45K(g) is amended by 

striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to facilities placed in service after December 31, 2009. 

SEC. 206. NEW ENERGY EFFICIENT HOME CREDIT. 

(a) IN GENERAL.—Subsection (g) of section 45L is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to homes acquired after December 31, 2009. 

SEC. 207. EXCISE TAX CREDITS AND OUTLAY PAYMENTS FOR ALTERNATIVE FUEL AND ALTERNATIVE FUEL MIXTURES. 

(a) ALTERNATIVE FUEL CREDIT.—Paragraph (5) of section 6426(d) 

is amended by striking ‘‘after December 31, 2009’’ and all that follows and inserting ‘‘after— 

‘‘(A) September 30, 2014, in the case of liquefied hydrogen, 

‘‘(B) December 31, 2010, in the case of fuels described in 

subparagraph (A), (C), (F), or (G) of paragraph (2), and 

‘‘(C) December 31, 2009, in any other case.’’. 

(b) ALTERNATIVE FUEL MIXTURE CREDIT.—Paragraph (3) of section 6426(e) is amended by striking ‘‘after December 31, 2009’’ and 

all that follows and inserting ‘‘after— 

‘‘(A) September 30, 2014, in the case of liquefied hydrogen, 


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‘‘(B) December 31, 2010, in the case of fuels described in 

subparagraph (A), (C), (F), or (G) of subsection (d)(2), and 

‘‘(C) December 31, 2009, in any other case.’’. 

(c) PAYMENT AUTHORITY.— 

(1) IN GENERAL.—Paragraph (6) of section 6427(e) is amended by striking ‘‘and’’ at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting ‘‘, 

and’’ , and by adding at the end the following new subparagraph: 

‘‘(E) any alternative fuel or alternative fuel mixture (as 

so defined) involving fuel described in subparagraph (A), 

(C), (F), or (G) of section 6426(d)(2) sold or used after December 31, 2010.’’. 

(2) CONFORMING AMENDMENT.—Subparagraph (C) of section 

6427(e)(6) is amended by inserting ‘‘or (E)’’ after ‘‘subparagraph 

(D)’’. 

(d) EXCLUSION OF BLACK LIQUOR FROM CREDIT ELIGIBILITY.—The 

last sentence of section 6426(d)(2) is amended by striking ‘‘or biodiesel’’ and inserting ‘‘biodiesel, or any fuel (including lignin, wood 

residues, or spent pulping liquors) derived from the production of 

paper or pulp’’. 

(e) EFFECTIVE DATE.—The amendments made by this section 

shall apply to fuel sold or used after December 31, 2009. 

SEC. 208. SPECIAL RULE FOR SALES OR DISPOSITIONS TO IMPLEMENT 

FERC OR STATE ELECTRIC RESTRUCTURING POLICY FOR 

QUALIFIED ELECTRIC UTILITIES. 

(a) IN GENERAL.—Paragraph (3) of section 451(i) is amended by 

striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’. 

(b) MODIFICATION OF DEFINITION OF INDEPENDENT TRANSMISSION

COMPANY.— 

(1) IN GENERAL.—Clause (i) of section 451(i)(4)(B) is amended 

to read as follows: 

‘‘(i) who the Federal Energy Regulatory Commission 

determines— 

‘‘(I) in its authorization of the transaction under 

section 203 of the Federal Power Act (16 U.S.C. 

824b) or by declaratory order is not itself a market 

participant within the meaning of such Commission’s rules applicable to independent transmission providers and is not controlled by any 

such market participant, 

‘‘(II) to be independent from market participants 

(within the meaning of such rules), or 

‘‘(III) to be an independent transmission company (within the meaning of such rules), and’’. 

(2) RELATED PERSONS.—Paragraph (4) of section 451(i) is 

amended by adding at the end the following flush sentence: 

‘‘For purposes of subparagraph (B)(i)(I), a person shall be treated as controlled by another person if such persons would be 

treated as a single employer under section 52.’’. 

(c) EFFECTIVE DATE.— 

(1) IN GENERAL.—The amendment made by subsection (a) 

shall apply to dispositions after December 31, 2009. 


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(2) MODIFICATIONS.—The amendments made by subsection 

(b) shall apply to dispositions after the date of the enactment 

of this Act. 

SEC. 209. SUSPENSION OF LIMITATION ON PERCENTAGE DEPLETION 

FOR OIL AND GAS FROM MARGINAL WELLS. 

(a) IN GENERAL.—Clause (ii) of section 613A(c)(6)(H) is amended 

by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to taxable years beginning after December 31, 2009. 

SEC. 210. DIRECT PAYMENT OF ENERGY EFFICIENT APPLIANCES TAX 

CREDIT. 

In the case of any taxable year which includes the last day of calendar year 2009 or calendar year 2010, a taxpayer who elects to 

waive the credit which would otherwise be determined with respect 

to the taxpayer under section 45M of the Internal Revenue Code 

of 1986 for such taxable year shall be treated as making a payment 

against the tax imposed under subtitle A of such Code for such taxable year in an amount equal to 85 percent of the amount of the 

credit which would otherwise be so determined. Such payment 

shall be treated as made on the later of the due date of the return 

of such tax or the date on which such return is filed. Elections 

under this section may be made separately for 2009 and 2010, but 

once made shall be irrevocable. No amount shall be includible in 

gross income or alternative minimum taxable income by reason of 

this section. 

SEC. 211. MODIFICATION OF STANDARDS FOR WINDOWS, DOORS, AND 

SKYLIGHTS WITH RESPECT TO THE CREDIT FOR NONBUSINESS ENERGY PROPERTY. 

(a) IN GENERAL.—Paragraph (4) of section 25C(c) is amended by 

striking ‘‘unless’’ and all that follows and inserting ‘‘unless— 

‘‘(A) in the case of any component placed in service after 

the date which is 90 days after the date of the enactment 

of the American Jobs and Closing Tax Loopholes Act of 

2010, such component meets the criteria for such components established by the 2010 Energy Star Program Requirements for Residential Windows, Doors, and Skylights, 

Version 5.0 (or any subsequent version of such requirements which is in effect after January 4, 2010), 

‘‘(B) in the case of any component placed in service after 

the date of the enactment of the American Jobs and Closing Tax Loopholes Act of 2010 and on or before the date 

which is 90 days after such date, such component meets 

the criteria described in subparagraph (A) or is equal to or 

below a U factor of 0.30 and SHGC of 0.30, and 

‘‘(C) in the case of any component which is a garage 

door, such component is equal to or below a U factor of 

0.30 and SHGC of 0.30.’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to property placed in service after the date of the enactment 

of this Act. 


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Subtitle B—Individual Tax Relief 

PART I—MISCELLANEOUS PROVISIONS 

SEC. 221. DEDUCTION FOR CERTAIN EXPENSES OF ELEMENTARY AND 

SECONDARY SCHOOL TEACHERS. 

(a) IN GENERAL.—Subparagraph (D) of section 62(a)(2) is amended by striking ‘‘or 2009’’ and inserting ‘‘2009, or 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to taxable years beginning after December 31, 2009. 

SEC. 222. ADDITIONAL STANDARD DEDUCTION FOR STATE AND LOCAL 

REAL PROPERTY TAXES. 

(a) IN GENERAL.—Subparagraph (C) of section 63(c)(1) is amended by striking ‘‘or 2009’’ and inserting ‘‘2009, or 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to taxable years beginning after December 31, 2009. 

SEC. 223. DEDUCTION OF STATE AND LOCAL SALES TAXES. 

(a) IN GENERAL.—Subparagraph (I) of section 164(b)(5) is amended by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to taxable years beginning after December 31, 2009. 

SEC. 224. CONTRIBUTIONS OF CAPITAL GAIN REAL PROPERTY MADE 

FOR CONSERVATION PURPOSES. 

(a) IN GENERAL.—Clause (vi) of section 170(b)(1)(E) is amended 

by striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 

2010’’. 

(b) CONTRIBUTIONS BY CERTAIN CORPORATE FARMERS AND

RANCHERS.—Clause (iii) of section 170(b)(2)(B) is amended by striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to contributions made in taxable years beginning after 

December 31, 2009. 

SEC. 225. ABOVE-THE-LINE DEDUCTION FOR QUALIFIED TUITION AND 

RELATED EXPENSES. 

(a) IN GENERAL.—Subsection (e) of section 222 is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to taxable years beginning after December 31, 2009. 

SEC. 226. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT 

PLANS FOR CHARITABLE PURPOSES. 

(a) IN GENERAL.—Subparagraph (F) of section 408(d)(8) is 

amended by striking ‘‘December 31, 2009’’ and inserting ‘‘December 

31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to distributions made in taxable years beginning after December 31, 2009. 

SEC. 227. LOOK-THRU OF CERTAIN REGULATED INVESTMENT COMPANY STOCK IN DETERMINING GROSS ESTATE OF NONRESIDENTS. 

(a) IN GENERAL.—Paragraph (3) of section 2105(d) is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to estates of decedents dying after December 31, 2009. 


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PART II—LOW-INCOME HOUSING CREDITS 

SEC. 231. ELECTION FOR DIRECT PAYMENT OF LOW-INCOME HOUSING 

CREDIT FOR 2010. 

(a) IN GENERAL.—Section 42 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) 

the following new subsection: 

‘‘(n) ELECTION FOR DIRECT PAYMENT OF CREDIT.— 

‘‘(1) IN GENERAL.—The housing credit agency of each State 

shall be allowed a credit in an amount equal to such State’s 

2010 low-income housing refundable credit election amount, 

which shall be payable by the Secretary as provided in paragraph (5). 

‘‘(2) 2010 LOW-INCOME HOUSING REFUNDABLE CREDIT ELECTION AMOUNT.—For purposes of this subsection, the term ‘2010 

low-income housing refundable credit election amount’ means, 

with respect to any State, such amount as the State may elect 

which does not exceed 85 percent of the product of— 

‘‘(A) the sum of— 

‘‘(i) 100 percent of the State housing credit ceiling 

for 2010 which is attributable to amounts described in 

clauses (i) and (iii) of subsection (h)(3)(C), and 

‘‘(ii) 40 percent of the State housing credit ceiling for 

2010 which is attributable to amounts described in 

clauses (ii) and (iv) of such subsection, multiplied by 

‘‘(B) 10. 

‘‘(3) COORDINATION WITH NON-REFUNDABLE CREDIT.—For purposes of this section, the amounts described in clauses (i) 

through (iv) of subsection (h)(3)(C) with respect to any State 

for 2010 shall each be reduced by so much of such amount as 

is taken into account in determining the amount of the credit 

allowed with respect to such State under paragraph (1). 

‘‘(4) SPECIAL RULE FOR BASIS.—Basis of a qualified low-income building shall not be reduced by the amount of any payment made under this subsection. 

‘‘(5) PAYMENT OF CREDIT; USE TO FINANCE LOW-INCOME

BUILDINGS.—The Secretary shall pay to the housing credit 

agency of each State an amount equal to the credit allowed 

under paragraph (1). Rules similar to the rules of subsections 

(c) and (d) of section 1602 of the American Recovery and Reinvestment Tax Act of 2009 shall apply with respect to any payment made under this paragraph, except that such subsection 

(d) shall be applied by substituting ‘January 1, 2012’ for ‘January 1, 2011’.’’. 

(b) CONFORMING AMENDMENT.—Section 1324(b)(2) of title 31, 

United States Code, is amended by inserting ‘‘42(n),’’ after ‘‘36C,’’. 

Subtitle C—Business Tax Relief 

SEC. 241. RESEARCH CREDIT. 

(a) IN GENERAL.—Subparagraph (B) of section 41(h)(1) is amended by striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 

2010’’. 


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(b) CONFORMING AMENDMENT.—Subparagraph (D) of section 

45C(b)(1) is amended by striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to amounts paid or incurred after December 31, 2009. 

SEC. 242. INDIAN EMPLOYMENT TAX CREDIT. 

(a) IN GENERAL.—Subsection (f) of section 45A is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to taxable years beginning after December 31, 2009. 

SEC. 243. NEW MARKETS TAX CREDIT. 

(a) IN GENERAL.—Subparagraph (F) of section 45D(f)(1) is 

amended by inserting ‘‘and 2010’’ after ‘‘2009’’. 

(b) CONFORMING AMENDMENT.—Paragraph (3) of section 45D(f) is 

amended by striking ‘‘2014’’ and inserting ‘‘2015’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to calendar years beginning after 2009. 

SEC. 244. RAILROAD TRACK MAINTENANCE CREDIT. 

(a) IN GENERAL.—Subsection (f) of section 45G is amended by 

striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to expenditures paid or incurred in taxable years beginning 

after December 31, 2009. 

SEC. 245. MINE RESCUE TEAM TRAINING CREDIT. 

(a) IN GENERAL.—Subsection (e) of section 45N is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) CREDIT ALLOWABLE AGAINST AMT.—Subparagraph (B) of section 38(c)(4), as amended by section 105, is amended— 

(1) by redesignating clauses (vii) through (x) as clauses (viii) 

through (xi), respectively, and 

(2) by inserting after clause (vi) the following new clause: 

‘‘(vii) the credit determined under section 45N,’’. 

(c) EFFECTIVE DATE.— 

(1) IN GENERAL.—Except as provided in paragraph (2), the 

amendments made by this section shall apply to taxable years 

beginning after December 31, 2009. 

(2) ALLOWANCE AGAINST AMT.—The amendments made by 

subsection (b) shall apply to credits determined for taxable 

years beginning after December 31, 2009, and to carrybacks of 

such credits. 

SEC. 246. EMPLOYER WAGE CREDIT FOR EMPLOYEES WHO ARE ACTIVE DUTY MEMBERS OF THE UNIFORMED SERVICES. 

(a) IN GENERAL.—Subsection (f) of section 45P is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to payments made after December 31, 2009. 

SEC. 247. 5-YEAR DEPRECIATION FOR FARMING BUSINESS MACHINERY AND EQUIPMENT. 

(a) IN GENERAL.—Clause (vii) of section 168(e)(3)(B) is amended 

by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to property placed in service after December 31, 2009. 


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SEC. 248. 15-YEAR STRAIGHT-LINE COST RECOVERY FOR QUALIFIED 

LEASEHOLD IMPROVEMENTS, QUALIFIED RESTAURANT 

BUILDINGS AND IMPROVEMENTS, AND QUALIFIED RETAIL IMPROVEMENTS. 

(a) IN GENERAL.—Clauses (iv), (v), and (ix) of section 168(e)(3)(E) 

are each amended by striking ‘‘January 1, 2010’’ and inserting 

‘‘January 1, 2011’’. 

(b) CONFORMING AMENDMENTS.— 

(1) Clause (i) of section 168(e)(7)(A) is amended by striking 

‘‘if such building is placed in service after December 31, 2008, 

and before January 1, 2010,’’. 

(2) Paragraph (8) of section 168(e) is amended by striking 

subparagraph (E). 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to property placed in service after December 31, 2009. 

SEC. 249. 7-YEAR RECOVERY PERIOD FOR MOTORSPORTS ENTERTAINMENT COMPLEXES. 

(a) IN GENERAL.—Subparagraph (D) of section 168(i)(15) is 

amended by striking ‘‘December 31, 2009’’ and inserting ‘‘December 

31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to property placed in service after December 31, 2009. 

SEC. 250. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY 

ON AN INDIAN RESERVATION. 

(a) IN GENERAL.—Paragraph (8) of section 168(j) is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to property placed in service after December 31, 2009. 

SEC. 251. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS 

OF FOOD INVENTORY. 

(a) IN GENERAL.—Clause (iv) of section 170(e)(3)(C) is amended 

by striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 

2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to contributions made after December 31, 2009. 

SEC. 252. ENHANCED CHARITABLE DEDUCTION FOR CONTRIBUTIONS 

OF BOOK INVENTORIES TO PUBLIC SCHOOLS. 

(a) IN GENERAL.—Clause (iv) of section 170(e)(3)(D) is amended 

by striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 

2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to contributions made after December 31, 2009. 

SEC. 253. ENHANCED CHARITABLE DEDUCTION FOR CORPORATE CONTRIBUTIONS OF COMPUTER INVENTORY FOR EDUCATIONAL PURPOSES. 

(a) IN GENERAL.—Subparagraph (G) of section 170(e)(6) is 

amended by striking ‘‘December 31, 2009’’ and inserting ‘‘December 

31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to contributions made in taxable years beginning after December 31, 2009. 

SEC. 254. ELECTION TO EXPENSE MINE SAFETY EQUIPMENT. 

(a) IN GENERAL.—Subsection (g) of section 179E is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 


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(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to property placed in service after December 31, 2009. 

SEC. 255. SPECIAL EXPENSING RULES FOR CERTAIN FILM AND TELEVISION PRODUCTIONS. 

(a) IN GENERAL.—Subsection (f) of section 181 is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to productions commencing after December 31, 2009. 

SEC. 256. EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS. 

(a) IN GENERAL.—Subsection (h) of section 198 is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to expenditures paid or incurred after December 31, 2009. 

SEC. 257. DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES IN 

PUERTO RICO. 

(a) IN GENERAL.—Subparagraph (C) of section 199(d)(8) is 

amended— 

(1) by striking ‘‘first 4 taxable years’’ and inserting ‘‘first 5 

taxable years’’, and 

(2) by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 

2011’’. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall apply to taxable years beginning after December 31, 2009. 

SEC. 258. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS 

TO CONTROLLING EXEMPT ORGANIZATIONS. 

(a) IN GENERAL.—Clause (iv) of section 512(b)(13)(E) is amended 

by striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 

2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to payments received or accrued after December 31, 2009. 

SEC. 259. EXCLUSION OF GAIN OR LOSS ON SALE OR EXCHANGE OF 

CERTAIN BROWNFIELD SITES FROM UNRELATED BUSINESS INCOME. 

(a) IN GENERAL.—Subparagraph (K) of section 512(b)(19) is 

amended by striking ‘‘December 31, 2009’’ and inserting ‘‘December 

31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to property acquired after December 31, 2009. 

SEC. 260. TIMBER REIT MODERNIZATION. 

(a) IN GENERAL.—Paragraph (8) of section 856(c) is amended by 

striking ‘‘means’’ and all that follows and inserting ‘‘means December 31, 2010.’’. 

(b) CONFORMING AMENDMENTS.— 

(1) Subparagraph (I) of section 856(c)(2) is amended by striking ‘‘the first taxable year beginning after the date of the enactment of this subparagraph’’ and inserting ‘‘a taxable year 

beginning on or before the termination date’’. 

(2) Clause (iii) of section 856(c)(5)(H) is amended by inserting 

‘‘in taxable years beginning’’ after ‘‘dispositions’’. 

(3) Clause (v) of section 857(b)(6)(D) is amended by inserting 

‘‘in a taxable year beginning’’ after ‘‘sale’’. 


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(4) Subparagraph (G) of section 857(b)(6) is amended by inserting ‘‘in a taxable year beginning’’ after ‘‘In the case of a 

sale’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to taxable years ending after May 22, 2009. 

SEC. 261. TREATMENT OF CERTAIN DIVIDENDS OF REGULATED INVESTMENT COMPANIES. 

(a) IN GENERAL.—Paragraphs (1)(C) and (2)(C) of section 871(k) 

are each amended by striking ‘‘December 31, 2009’’ and inserting 

‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall apply to taxable years beginning after December 31, 2009. 

SEC. 262. RIC QUALIFIED INVESTMENT ENTITY TREATMENT UNDER 

FIRPTA. 

(a) IN GENERAL.—Clause (ii) of section 897(h)(4)(A) is amended 

by striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 

2010’’. 

(b) EFFECTIVE DATE.— 

(1) IN GENERAL.—The amendment made by subsection (a) 

shall take effect on January 1, 2010. Notwithstanding the preceding sentence, such amendment shall not apply with respect 

to the withholding requirement under section 1445 of the Internal Revenue Code of 1986 for any payment made before the 

date of the enactment of this Act. 

(2) AMOUNTS WITHHELD ON OR BEFORE DATE OF ENACTMENT.—In the case of a regulated investment company— 

(A) which makes a distribution after December 31, 2009, 

and before the date of the enactment of this Act, and 

(B) which would (but for the second sentence of paragraph (1)) have been required to withhold with respect to 

such distribution under section 1445 of such Code, 

such investment company shall not be liable to any person to 

whom such distribution was made for any amount so withheld 

and paid over to the Secretary of the Treasury. 

SEC. 263. EXCEPTIONS FOR ACTIVE FINANCING INCOME. 

(a) IN GENERAL.—Sections 953(e)(10) and 954(h)(9) are each 

amended by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 

2011’’. 

(b) CONFORMING AMENDMENT.—Section 953(e)(10) is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to taxable years of foreign corporations beginning after 

December 31, 2009, and to taxable years of United States shareholders with or within which any such taxable year of such foreign 

corporation ends. 

SEC. 264. LOOK-THRU TREATMENT OF PAYMENTS BETWEEN RELATED 

CONTROLLED FOREIGN CORPORATIONS UNDER FOREIGN 

PERSONAL HOLDING COMPANY RULES. 

(a) IN GENERAL.—Subparagraph (C) of section 954(c)(6) is 

amended by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 

2011’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to taxable years of foreign corporations beginning after December 31, 2009, and to taxable years of United States shareVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00022 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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holders with or within which any such taxable year of such foreign 

corporation ends. 

SEC. 265. BASIS ADJUSTMENT TO STOCK OF S CORPS MAKING CHARITABLE CONTRIBUTIONS OF PROPERTY. 

(a) IN GENERAL.—Paragraph (2) of section 1367(a) is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to contributions made in taxable years beginning after December 31, 2009. 

SEC. 266. EMPOWERMENT ZONE TAX INCENTIVES. 

(a) IN GENERAL.—Section 1391 is amended— 

(1) by striking ‘‘December 31, 2009’’ in subsection (d)(1)(A)(i) 

and inserting ‘‘December 31, 2010’’, and 

(2) by striking the last sentence of subsection (h)(2). 

(b) INCREASED EXCLUSION OF GAIN ON STOCK OF EMPOWERMENT

ZONE BUSINESSES.—Subparagraph (C) of section 1202(a)(2) is 

amended— 

(1) by striking ‘‘December 31, 2014’’ and inserting ‘‘December 

31, 2015’’, and 

(2) by striking ‘‘2014’’ in the heading and inserting ‘‘2015’’. 

(c) TREATMENT OF CERTAIN TERMINATION DATES SPECIFIED IN

NOMINATIONS.—In the case of a designation of an empowerment 

zone the nomination for which included a termination date which 

is contemporaneous with the date specified in subparagraph (A)(i) 

of section 1391(d)(1) of the Internal Revenue Code of 1986 (as in 

effect before the enactment of this Act), subparagraph (B) of such 

section shall not apply with respect to such designation unless, 

after the date of the enactment of this section, the entity which 

made such nomination reconfirms such termination date, or 

amends the nomination to provide for a new termination date, in 

such manner as the Secretary of the Treasury (or the Secretary’s 

designee) may provide. 

(d) EFFECTIVE DATE.—The amendments made by this section 

shall apply to periods after December 31, 2009. 

SEC. 267. TAX INCENTIVES FOR INVESTMENT IN THE DISTRICT OF COLUMBIA. 

(a) IN GENERAL.—Subsection (f) of section 1400 is amended by 

striking ‘‘December 31, 2009’’ each place it appears and inserting 

‘‘December 31, 2010’’. 

(b) TAX-EXEMPT DC EMPOWERMENT ZONE BONDS.—Subsection (b) 

of section 1400A is amended by striking ‘‘December 31, 2009’’ and 

inserting ‘‘December 31, 2010’’. 

(c) ZERO-PERCENT CAPITAL GAINS RATE.— 

(1) ACQUISITION DATE.—Paragraphs (2)(A)(i), (3)(A), (4)(A)(i), 

and (4)(B)(i)(I) of section 1400B(b) are each amended by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’. 

(2) LIMITATION ON PERIOD OF GAINS.— 

(A) IN GENERAL.—Paragraph (2) of section 1400B(e) is 

amended— 

(i) by striking ‘‘December 31, 2014’’ and inserting 

‘‘December 31, 2015’’, and 

(ii) by striking ‘‘2014’’ in the heading and inserting 

‘‘2015’’. 


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(B) PARTNERSHIPS AND S-CORPS.—Paragraph (2) of section 1400B(g) is amended by striking ‘‘December 31, 2014’’ 

and inserting ‘‘December 31, 2015’’. 

(d) FIRST-TIME HOMEBUYER CREDIT.—Subsection (i) of section 

1400C is amended by striking ‘‘January 1, 2010’’ and inserting 

‘‘January 1, 2011’’. 

(e) EFFECTIVE DATES.— (1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to 

periods after December 31, 2009. 

(2) TAX-EXEMPT DC EMPOWERMENT ZONE BONDS.—The 

amendment made by subsection (b) shall apply to bonds issued 

after December 31, 2009. 

(3) ACQUISITION DATES FOR ZERO-PERCENT CAPITAL GAINS

RATE.—The amendments made by subsection (c) shall apply to 

property acquired or substantially improved after December 

31, 2009. 

(4) HOMEBUYER CREDIT.—The amendment made by subsection (d) shall apply to homes purchased after December 31, 

2009. 

SEC. 268. RENEWAL COMMUNITY TAX INCENTIVES. 

(a) IN GENERAL.—Subsection (b) of section 1400E is amended— 

(1) by striking ‘‘December 31, 2009’’ in paragraphs (1)(A) and 

(3) and inserting ‘‘December 31, 2010’’, and 

(2) by striking ‘‘January 1, 2010’’ in paragraph (3) and inserting ‘‘January 1, 2011’’. 

(b) ZERO-PERCENT CAPITAL GAINS RATE.— (1) ACQUISITION DATE.—Paragraphs (2)(A)(i), (3)(A), (4)(A)(i), 

and (4)(B)(i) of section 1400F(b) are each amended by striking 

‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’. 

(2) LIMITATION ON PERIOD OF GAINS.—Paragraph (2) of section 1400F(c) is amended— 

(A) by striking ‘‘December 31, 2014’’ and inserting ‘‘December 31, 2015’’, and 

(B) by striking ‘‘2014’’ in the heading and inserting ‘‘2015’’. 

(3) CLERICAL AMENDMENT.—Subsection (d) of section 1400F 

is amended by striking ‘‘and ‘December 31, 2014’ for ‘December 

31, 2014’ ’’. 

(c) COMMERCIAL REVITALIZATION DEDUCTION.— (1) IN GENERAL.—Subsection (g) of section 1400I is amended 

by striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 

2010’’. 

(2) CONFORMING AMENDMENT.—Subparagraph (A) of section 

1400I(d)(2) is amended by striking ‘‘after 2001 and before 

2010’’ and inserting ‘‘which begins after 2001 and before the 

date referred to in subsection (g)’’. 

(d) INCREASED EXPENSING UNDER SECTION 179.—Subparagraph 

(A) of section 1400J(b)(1) is amended by striking ‘‘January 1, 2010’’ 

and inserting ‘‘January 1, 2011’’. 

(e) TREATMENT OF CERTAIN TERMINATION DATES SPECIFIED IN

NOMINATIONS.—In the case of a designation of a renewal community the nomination for which included a termination date which 

is contemporaneous with the date specified in subparagraph (A) of 

section 1400E(b)(1) of the Internal Revenue Code of 1986 (as in effect before the enactment of this Act), subparagraph (B) of such 


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section shall not apply with respect to such designation unless, 

after the date of the enactment of this section, the entity which 

made such nomination reconfirms such termination date, or 

amends the nomination to provide for a new termination date, in 

such manner as the Secretary of the Treasury (or the Secretary’s 

designee) may provide. 

(f) EFFECTIVE DATES.— (1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to 

periods after December 31, 2009. 

(2) ACQUISITIONS.—The amendments made by subsections 

(b)(1) and (d) shall apply to acquisitions after December 31, 

2009. 

(3) COMMERCIAL REVITALIZATION DEDUCTION.— (A) IN GENERAL.—The amendment made by subsection 

(c)(1) shall apply to buildings placed in service after December 31, 2009. 

(B) CONFORMING AMENDMENT.—The amendment made 

by subsection (c)(2) shall apply to calendar years beginning 

after December 31, 2009. 

SEC. 269. TEMPORARY INCREASE IN LIMIT ON COVER OVER OF RUM 

EXCISE TAXES TO PUERTO RICO AND THE VIRGIN ISLANDS. 

(a) IN GENERAL.—Paragraph (1) of section 7652(f) is amended by 

striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to distilled spirits brought into the United States after December 31, 2009. 

SEC. 270. PAYMENT TO AMERICAN SAMOA IN LIEU OF EXTENSION OF 

ECONOMIC DEVELOPMENT CREDIT. 

The Secretary of the Treasury (or his designee) shall pay $18,000,000 to the Government of American Samoa for purposes of 

economic development. The payment made under the preceding 

sentence shall be treated for purposes of section 1324 of title 31, 

United States Code, as a refund of internal revenue collections to 

which such section applies. 

SEC. 271. ELECTION TO TEMPORARILY UTILIZE UNUSED AMT CREDITS 

DETERMINED BY DOMESTIC INVESTMENT. 

(a) IN GENERAL.—Section 53 is amended by adding at the end 

the following new subsection: 

‘‘(g) ELECTION FOR CORPORATIONS WITH NEW DOMESTIC INVESTMENTS.— 

‘‘(1) IN GENERAL.—If a corporation elects to have this subsection apply for its first taxable year beginning after December 31, 2009, the limitation imposed by subsection (c) for such 

taxable year shall be increased by the AMT credit adjustment 

amount. 

‘‘(2) AMT CREDIT ADJUSTMENT AMOUNT.—For purposes of 

paragraph (1), the term ‘AMT credit adjustment amount’ 

means, the lesser of— 

‘‘(A) 50 percent of a corporation’s minimum tax credit for 

its first taxable year beginning after December 31, 2009, 

determined under subsection (b), or 

‘‘(B) 10 percent of new domestic investments made during such taxable year. 


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‘‘(3) NEW DOMESTIC INVESTMENTS.—For purposes of this subsection, the term ‘new domestic investments’ means the cost of 

qualified property (as defined in section 168(k)(2)(A)(i))— 

‘‘(A) the original use of which commences with the taxpayer during the taxable year, and 

‘‘(B) which is placed in service in the United States by 

the taxpayer during such taxable year. 

‘‘(4) CREDIT REFUNDABLE.—For purposes of subsection (b) of 

section 6401, the aggregate increase in the credits allowable 

under this part for any taxable year resulting from the application of this subsection shall be treated as allowed under subpart C (and not under any other subpart). For purposes of section 6425, any amount treated as so allowed shall be treated 

as a payment of estimated income tax for the taxable year. 

‘‘(5) ELECTION.—An election under this subsection shall be 

made at such time and in such manner as prescribed by the 

Secretary, and once made, may be revoked only with the consent of the Secretary. Not later than 90 days after the date of 

the enactment of this subsection, the Secretary shall issue 

guidance specifying such time and manner. 

‘‘(6) TREATMENT OF CERTAIN PARTNERSHIP INVESTMENTS.— 

For purposes of this subsection, a corporation shall take into 

account its allocable share of any new domestic investments by 

a partnership for any taxable year if, and only if, more than 

90 percent of the capital and profits interests in such partnership are owned by such corporation (directly or indirectly) at 

all times during such taxable year. 

‘‘(7) NO DOUBLE BENEFIT.— 

‘‘(A) IN GENERAL.—A corporation making an election 

under this subsection may not make an election under 

subparagraph (H) of section 172(b)(1). 

‘‘(B) SPECIAL RULES WITH RESPECT TO TAXPAYERS PREVIOUSLY ELECTING APPLICABLE NET OPERATING LOSSES.— 

In the case of a corporation which made an election under 

subparagraph (H) of section 172(b)(1) and elects the application of this subsection— 

‘‘(i) ELECTION OF APPLICABLE NET OPERATING LOSS

TREATED AS REVOKED.—The election under such subparagraph (H) shall (notwithstanding clause (iii)(II) of 

such subparagraph) be treated as having been revoked 

by the taxpayer. 

‘‘(ii) COORDINATION WITH PROVISION FOR EXPEDITED

REFUND.—The amount otherwise treated as a payment 

of estimated income tax under the last sentence of 

paragraph (4) shall be reduced (but not below zero) by 

the aggregate increase in unpaid tax liability determined under this chapter by reason of the revocation 

of the election under clause (i). 

‘‘(iii) APPLICATION OF STATUTE OF LIMITATIONS.— 

With respect to the revocation of an election under 

clause (i)— 

‘‘(I) the statutory period for the assessment of 

any deficiency attributable to such revocation 

shall not expire before the end of the 3-year period 


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beginning on the date of the election to have this 

subsection apply, and 

‘‘(II) such deficiency may be assessed before the 

expiration of such 3-year period notwithstanding 

the provisions of any other law or rule of law 

which would otherwise prevent such assessment. 

‘‘(C) EXCEPTION FOR ELIGIBLE SMALL BUSINESSES.—Subparagraphs (A) and (B) shall not apply to an eligible small 

business as defined in section 172(b)(1)(H)(v)(II). 

‘‘(8) REGULATIONS.—The Secretary may issue such regulations or other guidance as may be necessary or appropriate to 

carry out the purposes of this subsection, including to prevent 

fraud and abuse under this subsection.’’. 

(b) CONFORMING AMENDMENTS.— (1) Section 6211(b)(4)(A) is amended by inserting ‘‘53(g),’’ 

after ‘‘53(e),’’. 

(2) Section 1324(b)(2) of title 31, United States Code, is 

amended by inserting ‘‘53(g),’’ after ‘‘53(e),’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to taxable years beginning after December 31, 2009. 

SEC. 272. STUDY OF EXTENDED TAX EXPENDITURES. 

(a) FINDINGS.—Congress finds the following: 

(1) Currently, the aggregate cost of Federal tax expenditures 

rivals, or even exceeds, the amount of total Federal discretionary spending. 

(2) Given the escalating public debt, a critical examination of 

this use of taxpayer dollars is essential. 

(3) Additionally, tax expenditures can complicate the Internal Revenue Code of 1986 for taxpayers and complicate tax administration for the Internal Revenue Service. 

(4) To facilitate a better understanding of tax expenditures 

in the future, it is constructive for legislation extending these 

provisions to include a study of such provisions.

(b) REQUIREMENT TO REPORT.—Not later than November 30, 

2010, the Chief of Staff of the Joint Committee on Taxation, in consultation with the Comptroller General of the United States, shall 

submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report 

on each tax expenditure (as defined in section 3(3) of the Congressional Budget Impoundment Control Act of 1974 (2 U.S.C. 622(3)) 

extended by this title. 

(c) ROLLING SUBMISSION OF REPORTS.—The Chief of Staff of the 

Joint Committee on Taxation shall initially submit the reports for 

each such tax expenditure enacted in this subtitle (relating to business tax relief) and subtitle A (relating to energy) in order of the 

tax expenditure incurring the least aggregate cost to the greatest 

aggregate cost (determined by reference to the cost estimate of this 

Act by the Joint Committee on Taxation). Thereafter, such reports 

may be submitted in such order as the Chief of Staff determines 

appropriate. 

(d) CONTENTS OF REPORT.—Such reports shall contain the following: 

(1) An explanation of the tax expenditure and any relevant 

economic, social, or other context under which it was first enacted. 


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(2) A description of the intended purpose of the tax expenditure. 

(3) An analysis of the overall success of the tax expenditure 

in achieving such purpose, and evidence supporting such analysis. 

(4) An analysis of the extent to which further extending the 

tax expenditure, or making it permanent, would contribute to 

achieving such purpose. 

(5) A description of the direct and indirect beneficiaries of 

the tax expenditure, including identifying any unintended 

beneficiaries. 

(6) An analysis of whether the tax expenditure is the most 

cost-effective method for achieving the purpose for which it 

was intended, and a description of any more cost-effective 

methods through which such purpose could be accomplished. 

(7) A description of any unintended effects of the tax expenditure that are useful in understanding the tax expenditure’s 

overall value. 

(8) An analysis of how the tax expenditure could be modified 

to better achieve its original purpose. 

(9) A brief description of any interactions (actual or potential) with other tax expenditures or direct spending programs 

in the same or related budget function worthy of further study. 

(10) A description of any unavailable information the staff of 

the Joint Committee on Taxation may need to complete a more 

thorough examination and analysis of the tax expenditure, and 

what must be done to make such information available. 

(e) MINIMUM ANALYSIS BY DEADLINE.—In the event the Chief of 

Staff of the Joint Committee on Taxation concludes it will not be 

feasible to complete all reports by the date specified in subsection 

(a), at a minimum, the reports for each tax expenditure enacted in 

this subtitle (relating to business tax relief) and subtitle A (relating 

to energy) shall be completed by such date. 

Subtitle D—Temporary Disaster Relief 

Provisions 

PART I—NATIONAL DISASTER RELIEF 

SEC. 281. WAIVER OF CERTAIN MORTGAGE REVENUE BOND REQUIREMENTS. 

(a) IN GENERAL.—Paragraph (11) of section 143(k) is amended by 

striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’. 

(b) SPECIAL RULE FOR RESIDENCES DESTROYED IN FEDERALLY DECLARED DISASTERS.—Paragraph (13) of section 143(k), as redesignated by subsection (c), is amended by striking ‘‘January 1, 2010’’ 

in subparagraphs (A)(i) and (B)(i) and inserting ‘‘January 1, 2011’’. 

(c) TECHNICAL AMENDMENT.—Subsection (k) of section 143 is 

amended by redesignating the second paragraph (12) (relating to 

special rules for residences destroyed in federally declared disasters) as paragraph (13). 

(d) EFFECTIVE DATES.— 


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(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendment made by this section shall apply to 

bonds issued after December 31, 2009. 

(2) RESIDENCES DESTROYED IN FEDERALLY DECLARED DISASTERS.—The amendments made by subsection (b) shall apply 

with respect to disasters occurring after December 31, 2009. 

(3) TECHNICAL AMENDMENT.—The amendment made by subsection (c) shall take effect as if included in section 709 of the 

Tax Extenders and Alternative Minimum Tax Relief Act of 

2008. 

SEC. 282. LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED DISASTERS. 

(a) IN GENERAL.—Subclause (I) of section 165(h)(3)(B)(i) is 

amended by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 

2011’’. 

(b) $500 LIMITATION.—Paragraph (1) of section 165(h) is amended by striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 

2010’’. 

(c) EFFECTIVE DATE.— 

(1) IN GENERAL.—The amendment made by subsection (a) 

shall apply to federally declared disasters occurring after December 31, 2009. 

(2) $500 LIMITATION.—The amendment made by subsection 

(b) shall apply to taxable years beginning after December 31, 

2009. 

SEC. 283. SPECIAL DEPRECIATION ALLOWANCE FOR QUALIFIED DISASTER PROPERTY. 

(a) IN GENERAL.—Subclause (I) of section 168(n)(2)(A)(ii) is 

amended by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 

2011’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to disasters occurring after December 31, 2009. 

SEC. 284. NET OPERATING LOSSES ATTRIBUTABLE TO FEDERALLY DECLARED DISASTERS. 

(a) IN GENERAL.—Subclause (I) of section 172(j)(1)(A)(i) is amended by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2011’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to losses attributable to disasters occurring after December 

31, 2009. 

SEC. 285. EXPENSING OF QUALIFIED DISASTER EXPENSES. 

(a) IN GENERAL.—Subparagraph (A) of section 198A(b)(2) is 

amended by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 

2011’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to expenditures on account of disasters occurring after December 31, 2009. 


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PART II—REGIONAL PROVISIONS 

Subpart A—New York Liberty Zone 

SEC. 291. SPECIAL DEPRECIATION ALLOWANCE FOR NONRESIDENTIAL AND RESIDENTIAL REAL PROPERTY. 

(a) IN GENERAL.—Subparagraph (A) of section 1400L(b)(2) is 

amended by striking ‘‘December 31, 2009’’ and inserting ‘‘December 

31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to property placed in service after December 31, 2009. 

SEC. 292. TAX-EXEMPT BOND FINANCING. 

(a) IN GENERAL.—Subparagraph (D) of section 1400L(d)(2) is 

amended by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 

2011’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to bonds issued after December 31, 2009. 

Subpart B—GO Zone 

SEC. 295. INCREASE IN REHABILITATION CREDIT. 

(a) IN GENERAL.—Subsection (h) of section 1400N is amended by 

striking ‘‘December 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to amounts paid or incurred after December 31, 2009. 

SEC. 296. WORK OPPORTUNITY TAX CREDIT WITH RESPECT TO CERTAIN INDIVIDUALS AFFECTED BY HURRICANE KATRINA 

FOR EMPLOYERS INSIDE DISASTER AREAS. 

(a) IN GENERAL.—Paragraph (1) of section 201(b) of the Katrina 

Emergency Tax Relief Act of 2005 is amended by striking ‘‘4-year’’ 

and inserting ‘‘5-year’’. 

(b) EFFECTIVE DATE.—The amendment made by subsection (a) 

shall apply to individuals hired after August 27, 2009. 

SEC. 297. EXTENSION OF LOW-INCOME HOUSING CREDIT RULES FOR 

BUILDINGS IN GO ZONES. 

Section 1400N(c)(5) is amended by striking ‘‘January 1, 2011’’ 

and inserting ‘‘January 1, 2013’’. 

TITLE III—PENSION PROVISIONS 

Subtitle A—Pension Funding Relief 

PART 1—SINGLE-EMPLOYER PLANS 

SEC. 301. EXTENDED PERIOD FOR SINGLE-EMPLOYER DEFINED BENEFIT PLANS TO AMORTIZE CERTAIN SHORTFALL AMORTIZATION BASES. 

(a) ERISA AMENDMENTS.— 

(1) IN GENERAL.—Section 303(c)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1083(c)(2)) is 

amended by adding at the end the following subparagraphs: 

‘‘(D) SPECIAL RULE.— 


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‘‘(i) IN GENERAL.—In the case of the shortfall amortization base of a plan for any applicable plan year, the 

shortfall amortization installments are the amounts 

described in clause (ii) or (iii), if made applicable by an 

election under clause (iv). In the absence of a timely 

election, such installments shall be determined without regard to this subparagraph. 

‘‘(ii) 2 PLUS 7 AMORTIZATION SCHEDULE.—The shortfall amortization installments described in this clause 

are— 

‘‘(I) in the case of the first 2 plan years in the 

9-plan-year period beginning with the applicable 

plan year, interest on the shortfall amortization 

base (determined by using the effective interest 

rate for the applicable plan year), and 

‘‘(II) in the case of the last 7 plan years in such 

9-plan-year period, the amounts necessary to amortize the balance of such shortfall amortization 

base in level annual installments over such last 7 

plan years (determined using the segment rates 

determined under subparagraph (C) of subsection 

(h)(2) for the applicable plan year, applied under 

rules similar to the rules of subparagraph (B) of 

subsection (h)(2)). 

‘‘(iii) 15-YEAR AMORTIZATION.—The shortfall amortization installments described in this clause are the 

amounts under subparagraphs (A) and (B) determined 

by substituting ‘15 plan-year period’ for ‘7-plan-year 

period’. 

‘‘(iv) ELECTION.— 

‘‘(I) IN GENERAL.—The plan sponsor may, with 

respect to a plan, elect, with respect to any of not 

more than 2 applicable plan years, to determine 

shortfall amortization installments under this 

subparagraph. An election under either clause (ii) 

or clause (iii) may be made with respect to either 

of such applicable plan years. 

‘‘(II) ELIGIBILITY FOR ELECTION.—An election 

may be made to determine shortfall amortization 

installments under this subparagraph with respect to a plan only if, as of the date of the election— 

‘‘(aa) the plan sponsor is not a debtor in a 

case under title 11, United States Code, or 

similar Federal or State law, 

‘‘(bb) there are no unpaid minimum required contributions with respect to the plan 

for purposes of section 4971 of the Internal 

Revenue Code of 1986, 

‘‘(cc) there is no lien in favor of the plan 

under subsection (k) or under section 430(k) 

of such Code, and 

‘‘(dd) a distress termination has not been 

initiated for the plan under section 4041(c). 


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‘‘(III) RULES RELATING TO ELECTION.—Such election shall be made at such times, and in such 

form and manner, as shall be prescribed by the 

Secretary of the Treasury and shall be irrevocable, 

except under such limited circumstances, and subject to such conditions, as such Secretary may prescribe. 

‘‘(E) APPLICABLE PLAN YEAR.— 

‘‘(i) IN GENERAL.—For purposes of this paragraph, 

the term ‘applicable plan year’ means, subject to the 

election of the plan sponsor under subparagraph 

(D)(iv), each of not more than 2 of the plan years beginning in 2008, 2009, 2010, or 2011. 

‘‘(ii) SPECIAL RULE RELATING TO 2008.—A plan year 

may be elected as an applicable plan year pursuant to 

this subparagraph only if the due date under subsection (j)(1) for the payment of the minimum required 

contribution for such plan year occurs on or after 

March 10, 2010. 

‘‘(F) INCREASES IN SHORTFALL AMORTIZATION INSTALLMENTS IN CASES OF EXCESS COMPENSATION OR CERTAIN

DIVIDENDS OR STOCK REDEMPTIONS.— 

‘‘(i) IN GENERAL.—If, with respect to an election for 

an applicable plan year under subparagraph (D), there 

is an installment acceleration amount with respect to 

a plan for any plan year in the restriction period (or 

if there is an installment acceleration amount carried 

forward to a plan year not in the restriction period), 

then the shortfall amortization installment otherwise 

determined and payable under this paragraph for such 

plan year shall be increased by such amount. 

‘‘(ii) BACK-END ADJUSTMENT TO AMORTIZATION

SCHEDULE.—Subject to rules prescribed by the Secretary of the Treasury, if a shortfall amortization installment with respect to any shortfall amortization 

base for an applicable plan year is required to be increased for any plan year under clause (i), subsequent 

shortfall amortization installments with respect to 

such base shall be reduced, in reverse order of the otherwise required installments beginning with the final 

scheduled installment, to the extent necessary to limit 

the present value of such subsequent shortfall amortization installments (after application of this subparagraph) to the present value of the remaining 

unamortized shortfall amortization base. 

‘‘(iii) INSTALLMENT ACCELERATION AMOUNT.—For 

purposes of this subparagraph— 

‘‘(I) IN GENERAL.—The term ‘installment acceleration amount’ means, with respect to any plan 

year in a restriction period with respect to an applicable plan year, the sum of— 

‘‘(aa) the aggregate amount of excess employee compensation determined under clause 

(iv) for the plan year, plus 


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‘‘(bb) the dividend and redemption amount 

determined under clause (v) for the plan year. 

‘‘(II) CUMULATIVE LIMITATION.—The installment 

acceleration amount for any plan year shall not 

exceed the excess (if any) of— 

‘‘(aa) the sum of the shortfall amortization 

installments for the plan year and all preceding plan years in the amortization period 

elected under subparagraph (D) with respect 

to the shortfall amortization base with respect 

to an applicable year, determined without regard to subparagraph (D) and this subparagraph, over 

‘‘(bb) the sum of the shortfall amortization 

installments for such plan year and all such 

preceding plan years, determined after application of subparagraph (D) (and in the case of 

any preceding plan year, after application of 

this subparagraph). 

‘‘(III) CARRYOVER OF EXCESS INSTALLMENT ACCELERATION AMOUNTS.— 

‘‘(aa) IN GENERAL.—If the installment acceleration amount for any plan year (determined 

without regard to subclause (II)) exceeds the 

limitation under subclause (II), then, subject 

to item (bb), such excess shall be treated as 

an installment acceleration amount for the 

succeeding plan year. 

‘‘(bb) CAP TO APPLY.—If any amount treated 

as an installment acceleration amount under 

item (aa) or this item with respect any succeeding plan year, when added to other installment acceleration amounts (determined 

without regard to subclause (II)) with respect 

to the plan year, exceeds the limitation under 

subclause (II), the portion of such amount representing such excess shall be treated as an 

installment acceleration amount with respect 

to the next succeeding plan year. 

‘‘(cc) LIMITATION ON YEARS TO WHICH

AMOUNTS CARRIED FORWARD.—No amount 

shall be carried forward under item (aa) or 

(bb) to a plan year which begins after the last 

plan year in the restriction period (or after 

the second plan year following such last plan 

year in the case of an election year with respect to which 15-year amortization was elected under subparagraph (D)(iii)). 

‘‘(dd) ORDERING RULES.—For purposes of applying item (bb), installment acceleration 

amounts for the plan year (determined without regard to any carryover under this clause) 

shall be applied first against the limitation 

under subclause (II) and then carryovers to 


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such plan year shall be applied against such 

limitation on a first-in, first-out basis. 

‘‘(iv) EXCESS EMPLOYEE COMPENSATION.— 

‘‘(I) IN GENERAL.—For purposes of this paragraph, the term ‘excess employee compensation’ 

means the sum of— 

‘‘(aa) with respect to any employee, for any 

plan year, the excess (if any) of— 

‘‘(AA) the aggregate amount includible 

in income under chapter 1 of the Internal 

Revenue Code of 1986 for remuneration 

during the calendar year in which such 

plan year begins for services performed 

by the employee for the plan sponsor 

(whether or not performed during such 

calendar year), over 

‘‘(BB) $1,000,000, plus 

‘‘(bb) the amount of assets set aside or reserved (directly or indirectly) in a trust (or 

other arrangement as determined by the Secretary of the Treasury), or transferred to such 

a trust or other arrangement, during the calendar year by a plan sponsor for purposes of 

paying deferred compensation of an employee 

under a nonqualified deferred compensation 

plan (as defined in section 409A of such Code) 

of the plan sponsor. 

‘‘(II) NO DOUBLE COUNTING.—No amount shall 

be taken into account under subclause (I) more 

than once. 

‘‘(III) EMPLOYEE; REMUNERATION.—For purposes 

of this clause, the term ‘employee’ includes, with 

respect to a calendar year, a self-employed individual who is treated as an employee under section 401(c) of the Internal Revenue Code of 1986 

for the taxable year ending during such calendar 

year, and the term ‘remuneration’ shall include 

earned income of such an individual. 

‘‘(IV) CERTAIN PAYMENTS UNDER EXISTING CONTRACTS.—There shall not be taken into account 

under subclause (I)(aa) any remuneration consisting of nonqualified deferred compensation, restricted stock (or restricted stock units), stock options, or stock appreciation rights payable or 

granted under a written binding contract that was 

in effect on March 1, 2010, and which was not 

modified in any material respect before such remuneration is paid. 

‘‘(V) ONLY REMUNERATION FOR POST-2009 SERVICES COUNTED.—Remuneration shall be taken into 

account under subclause (I)(aa) only to the extent 

attributable to services performed by the employee 

for the plan sponsor after December 31, 2009. 

‘‘(VI) COMMISSIONS.— 


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‘‘(aa) IN GENERAL.—There shall not be 

taken into account under subclause (I)(aa) 

any remuneration payable on a commission 

basis solely on account of income directly generated by the individual performance of the 

individual to whom such remuneration is payable. 

‘‘(bb) SPECIFIED EMPLOYEES.—Item (aa) 

shall not apply in the case of any specified 

employee (within the meaning of section 

409A(a)(2)(B)(i) of the Internal Revenue Code 

of 1986) or any employee who would be such 

a specified employee if the plan sponsor were 

a corporation described in such section. 

‘‘(VII) INDEXING OF AMOUNT.—In the case of any 

calendar year beginning after 2010, the dollar 

amount under subclause (I)(aa)(BB) shall be increased by an amount equal to— 

‘‘(aa) such dollar amount, multiplied by 

‘‘(bb) the cost-of-living adjustment determined under section 1(f)(3) of the Internal 

Revenue Code of 1986 for the calendar year, 

determined by substituting ‘calendar year 

2009’ for ‘calendar year 1992’ in subparagraph 

(B) thereof. 

If the amount of any increase under clause (i) is 

not a multiple of $20,000, such increase shall be 

rounded to the next lowest multiple of $20,000. 

‘‘(v) CERTAIN DIVIDENDS AND REDEMPTIONS.— ‘‘(I) IN GENERAL.—The dividend and redemption 

amount determined under this clause for any plan 

year is the lesser of— 

‘‘(aa) the excess of— 

‘‘(AA) the sum of the dividends paid 

during the plan year by the plan sponsor, 

plus the amounts paid for the redemption 

of stock of the plan sponsor redeemed 

during the plan year, over 

‘‘(BB) an amount equal to the average 

of adjusted annual net income of the plan 

sponsor for the last 5 fiscal years of the 

plan sponsor ending before such plan 

year, or 

‘‘(bb) the sum of— 

‘‘(AA) the amounts paid for the redemption of stock of the plan sponsor redeemed 

during the plan year, plus 

‘‘(BB) the excess of dividends paid during the plan year by the plan sponsor 

over the dividend base amount. 

‘‘(II) DEFINITIONS.— 

‘‘(aa) ADJUSTED ANNUAL NET INCOME.—For 

purposes of subclause (I)(aa)(BB), the term 

‘adjusted annual net income’ with respect to 

any fiscal year means annual net income, deVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00035 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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termined in accordance with generally accepted accounting principles (before after-tax gain 

or loss on any sale of assets), but without regard to any reduction by reason of depreciation or amortization, except that in no event 

shall adjusted annual net income for any fiscal year be less than zero. 

‘‘(bb) DIVIDEND BASE AMOUNT.—For purposes of this clause, the term ‘dividend base 

amount’ means, with respect to a plan year, 

an amount equal to the greater of— 

‘‘(AA) the median of the amounts of the 

dividends paid during each of the last 5 

fiscal years of the plan sponsor ending before such plan year, or 

‘‘(BB) the amount of dividends paid 

during such plan year on preferred stock 

that was issued on or before May 21, 

2010, or that is replacement stock for 

such preferred stock. 

‘‘(III) ONLY CERTAIN POST-2009 DIVIDENDS AND

REDEMPTIONS COUNTED.—For purposes of subclause (I) (other than for purposes of calculating 

the dividend base amount), there shall only be 

taken into account dividends declared, and redemptions occurring, after February 28, 2010. 

‘‘(IV) EXCEPTION FOR INTRA-GROUP DIVIDENDS.— Dividends paid by one member of a controlled 

group (as defined in section 302(d)(3)) to another 

member of such group shall not be taken into account under subclause (I). 

‘‘(V) EXCEPTION FOR STOCK DIVIDENDS.—Any 

distribution by the plan sponsor to its shareholders of stock issued by the plan sponsor shall 

not be taken into account under subclause (I). 

‘‘(VI) EXCEPTION FOR CERTAIN REDEMPTIONS.— Redemptions of securities which are not readily 

tradable on an established securities market 

which— 

‘‘(aa) are made pursuant to a pension plan 

that is qualified under section 401 of the Internal Revenue Code of 1986 or a shareholder-approved program, 

‘‘(bb) are made on account of an employee’s 

termination of employment with the plan 

sponsor, or the death or disability of a shareholder, or 

‘‘(cc) were, immediately before redemption, 

held directly or indirectly by, or for the benefit of, the Federal Government or a Federal 

reserve bank, 

shall not be taken into account under subclause 

(I). 

‘‘(vi) OTHER DEFINITIONS AND RULES.—For purposes 

of this subparagraph— 


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‘‘(I) PLAN SPONSOR.—The term ‘plan sponsor’ includes any member of the plan sponsor’s controlled group (as defined in section 302(d)(3)). 

‘‘(II) RESTRICTION PERIOD.—The term ‘restriction 

period’ means, with respect to any applicable plan 

year with respect to which an election is made 

under subparagraph (D)— 

‘‘(aa) except as provided in item (bb), the 3- 

year period beginning with the applicable 

plan year (or, if later, the first plan year beginning after December 31, 2009), or 

‘‘(bb) if the plan sponsor elects 15-year amortization for the shortfall amortization base 

for the applicable plan year, the 5-year period 

beginning with such plan year (or, if later, the 

first plan year beginning after December 31, 

2009). 

‘‘(III) ELECTIONS FOR MULTIPLE PLANS.—If a 

plan sponsor makes elections under subparagraph 

(D) with respect to 2 or more plans, the Secretary 

of the Treasury shall provide rules for the application of this subparagraph to such plans, including 

rules for the ratable allocation of any installment 

acceleration amount among such plans on the 

basis of each plan’s relative reduction in the plan’s 

shortfall amortization installment for the first 

plan year in the amortization period described in 

clause (i) (determined without regard to this subparagraph). 

‘‘(G) MERGERS AND ACQUISITIONS.—The Secretary of the 

Treasury shall prescribe rules for the application of subparagraphs (D) and (F) in any case where there is a merger or acquisition involving a plan sponsor making the election under subparagraph (D). 

‘‘(H) REGULATIONS AND GUIDANCE.—The Secretary of the 

Treasury may prescribe such regulations and other guidance of general applicability as such Secretary may determine necessary to achieve the purposes of subparagraphs 

(D) and (F).’’. 

(2) NOTICE REQUIREMENT.—Section 204 of such Act (29 

U.S.C. 1054) is amended— 

(A) by redesignating subsection (k) as subsection (l); and 

(B) by inserting after subsection (j) the following new 

subsection: 

‘‘(k) NOTICE IN CONNECTION WITH SHORTFALL AMORTIZATION

ELECTION.— 

‘‘(1) IN GENERAL.—Not later 30 days after the date of an election under clause (iv) of section 303(c)(2)(D) in connection with 

a single-employer plan, the plan administrator shall provide 

notice of such election in accordance with this subsection to 

each plan participant and beneficiary, each labor organization 

representing such participants and beneficiaries, and the Pension Benefit Guaranty Corporation. 

‘‘(2) MATTERS INCLUDED IN NOTICE.—Each notice provided 

pursuant to this subsection shall set forth— 


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‘‘(A) a statement that recently enacted legislation permits employers to delay pension funding; 

‘‘(B) with respect to required contributions— 

‘‘(i) the amount of contributions that would have 

been required had the election not been made; 

‘‘(ii) the amount of the reduction in required contributions for the applicable plan year that occurs on 

account of the election; and 

‘‘(iii) the number of plan years to which such reduction will apply; 

‘‘(C) with respect to a plan’s funding status as of the end 

of the plan year preceding the applicable plan year— 

‘‘(i) the liabilities determined under section 

4010(d)(1)(A); and 

‘‘(ii) the market value of assets of the plan; and 

‘‘(D) with respect to installment acceleration amounts (as 

defined in section 303(c)(2)(F)(iii)(I))— 

‘‘(i) an explanation of section 303(c)(2)(F) (relating to 

increases in shortfall amortization installments in 

cases of excess compensation or certain dividends or 

stock redemptions); and 

‘‘(ii) a statement that increases in required contributions may occur in the event of future payments of excess employee compensation or certain share repurchasing or dividend activity and that subsequent notices of any such payments or activity will be provided 

in the annual funding notice provided pursuant to section 101(f). 

‘‘(3) OTHER REQUIREMENTS.— ‘‘(A) FORM.—The notice required by paragraph (1) shall 

be written in a manner calculated to be understood by the 

average plan participant. The Secretary of the Treasury 

shall prescribe a model notice that a plan administrator 

may use to satisfy the requirements of paragraph (1). 

‘‘(B) PROVISION TO DESIGNATED PERSONS.—Any notice 

under paragraph (1) may be provided to a person designated, in writing, by the person to which it would otherwise be provided. 

‘‘(4) EFFECT OF EGREGIOUS FAILURE.— ‘‘(A) IN GENERAL.—In the case of any egregious failure to 

meet any requirement of this subsection with respect to 

any election, such election shall be treated as having not 

been made. 

‘‘(B) EGREGIOUS FAILURE.—For purposes of subparagraph 

(A), there is an egregious failure to meet the requirements 

of this subsection if such failure is in the control of the 

plan sponsor and is— 

‘‘(i) an intentional failure (including any failure to 

promptly provide the required notice or information 

after the plan administrator discovers an unintentional failure to meet the requirements of this subsection), 

‘‘(ii) a failure to provide most of the participants and 

beneficiaries with most of the information they are entitled to receive under this subsection, or 


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‘‘(iii) a failure which is determined to be egregious 

under regulations prescribed by the Secretary of the 

Treasury. 

‘‘(5) USE OF NEW TECHNOLOGIES.—The Secretary of the 

Treasury may, in consultation with the Secretary, by regulations or other guidance of general applicability, allow any notice under this subsection to be provided using new technologies.’’. 

(C) SUBSEQUENT SUPPLEMENTAL NOTICES.—Section 

101(f)(2)(C) of such Act (29 U.S.C. 1021(f)(2)(C)) is amended— 

(i) by striking ‘‘and’’ at the end of clause (i); 

(ii) by redesignating clause (ii) as clause (iii); and 

(iii) by inserting after clause (i) the following new 

clause: 

‘‘(ii) any excess employee compensation amounts and 

any dividends and redemptions amounts determined 

under section 303(c)(2)(F) for the preceding plan year 

with respect to the plan, and’’. 

(3) DISREGARD OF INSTALLMENT ACCELERATION AMOUNTS IN

DETERMINING QUARTERLY CONTRIBUTIONS.—Section 303(j)(3) of 

such Act (29 U.S.C. 1083(j)(3)) is amended by adding at the 

end the following new subparagraph: 

‘‘(F) DISREGARD OF INSTALLMENT ACCELERATION

AMOUNTS.—Subparagraph (D) shall be applied without regard to any increase under subsection (c)(2)(F).’’. 

(4) CONFORMING AMENDMENT.—Section 303(c)(1) of such Act 

(29 U.S.C. 1083(c)(1)) is amended by striking ‘‘the shortfall amortization bases for such plan year and each of the 6 preceding 

plan years’’ and inserting ‘‘any shortfall amortization base 

which has not been fully amortized under this subsection’’. 

(b) IRC AMENDMENTS.— 

(1) IN GENERAL.—Section 430(c)(2) of the Internal Revenue 

Code of 1986 is amended by adding at the end the following 

subparagraphs: 

‘‘(D) SPECIAL RULE.— ‘‘(i) IN GENERAL.—In the case of the shortfall amortization base of a plan for any applicable plan year, the 

shortfall amortization installments are the amounts 

described in clause (ii) or (iii), if made applicable by an 

election under clause (iv). In the absence of a timely 

election, such installments shall be determined without regard to this subparagraph. 

‘‘(ii) 2 PLUS 7 AMORTIZATION SCHEDULE.—The shortfall amortization installments described in this clause 

are— 

‘‘(I) in the case of the first 2 plan years in the 

9-plan-year period beginning with the applicable 

plan year, interest on the shortfall amortization 

base (determined by using the effective interest 

rate for the applicable plan year), and 

‘‘(II) in the case of the last 7 plan years in such 

9-plan-year period, the amounts necessary to amortize the balance of such shortfall amortization 

base in level annual installments over such last 7 


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plan years (determined using the segment rates 

determined under subparagraph (C) of subsection 

(h)(2) for the applicable plan year, applied under 

rules similar to the rules of subparagraph (B) of 

subsection (h)(2)). 

‘‘(iii) 15-YEAR AMORTIZATION.—The shortfall amortization installments described in this clause are the 

amounts under subparagraphs (A) and (B) determined 

by substituting ‘15 plan-year period’ for ‘7-plan-year 

period’. 

‘‘(iv) ELECTION.— 

‘‘(I) IN GENERAL.—The plan sponsor may, with 

respect to a plan, elect, with respect to any of not 

more than 2 applicable plan years, to determine 

shortfall amortization installments under this 

subparagraph. An election under either clause (ii) 

or clause (iii) may be made with respect to either 

of such applicable plan years. 

‘‘(II) ELIGIBILITY FOR ELECTION.—An election 

may be made to determine shortfall amortization 

installments under this subparagraph with respect to a plan only if, as of the date of the election— 

‘‘(aa) the plan sponsor is not a debtor in a 

case under title 11, United States Code, or 

similar Federal or State law, 

‘‘(bb) there are no unpaid minimum required contributions with respect to the plan 

for purposes of section 4971, 

‘‘(cc) there is no lien in favor of the plan 

under subsection (k) or under section 303(k) 

of the Employee Retirement Income Security 

Act of 1974, and 

‘‘(dd) a distress termination has not been 

initiated for the plan under section 4041(c) of 

such Act. 

‘‘(III) RULES RELATING TO ELECTION.—Such election shall be made at such times, and in such 

form and manner, as shall be prescribed by the 

Secretary and shall be irrevocable, except under 

such limited circumstances, and subject to such 

conditions, as the Secretary may prescribe. 

‘‘(E) APPLICABLE PLAN YEAR.— 

‘‘(i) IN GENERAL.—For purposes of this paragraph, 

the term ‘applicable plan year’ means, subject to the 

election of the plan sponsor under subparagraph 

(D)(iv), each of not more than 2 of the plan years beginning in 2008, 2009, 2010, or 2011. 

‘‘(ii) SPECIAL RULE RELATING TO 2008.—A plan year 

may be elected as an applicable plan year pursuant to 

this subparagraph only if the due date under subsection (j)(1) for the payment of the minimum required 

contribution for such plan year occurs on or after 

March 10, 2010. 


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‘‘(F) INCREASES IN SHORTFALL AMORTIZATION INSTALLMENTS IN CASES OF EXCESS COMPENSATION OR CERTAIN

DIVIDENDS OR STOCK REDEMPTIONS.— 

‘‘(i) IN GENERAL.—If, with respect to an election for 

an applicable plan year under subparagraph (D), there 

is an installment acceleration amount with respect to 

a plan for any plan year in the restriction period (or 

if there is an installment acceleration amount carried 

forward to a plan year not in the restriction period), 

then the shortfall amortization installment otherwise 

determined and payable under this paragraph for such 

plan year shall be increased by such amount. 

‘‘(ii) BACK-END ADJUSTMENT TO AMORTIZATION

SCHEDULE.—Subject to rules prescribed by the Secretary, if a shortfall amortization installment with respect to any shortfall amortization base for an applicable plan year is required to be increased for any plan 

year under clause (i), subsequent shortfall amortization installments with respect to such base shall be reduced, in reverse order of the otherwise required installments beginning with the final scheduled installment, to the extent necessary to limit the present 

value of such subsequent shortfall amortization installments (after application of this subparagraph) to 

the present value of the remaining unamortized shortfall amortization base. 

‘‘(iii) INSTALLMENT ACCELERATION AMOUNT.—For 

purposes of this subparagraph— 

‘‘(I) IN GENERAL.—The term ‘installment acceleration amount’ means, with respect to any plan 

year in a restriction period with respect to an applicable plan year, the sum of— 

‘‘(aa) the aggregate amount of excess employee compensation determined under clause 

(iv) for the plan year, plus 

‘‘(bb) the dividend and redemption amount 

determined under clause (v) for the plan year. 

‘‘(II) CUMULATIVE LIMITATION.—The installment 

acceleration amount for any plan year shall not 

exceed the excess (if any) of— 

‘‘(aa) the sum of the shortfall amortization 

installments for the plan year and all preceding plan years in the amortization period 

elected under subparagraph (D) with respect 

to the shortfall amortization base with respect 

to an applicable year, determined without regard to subparagraph (D) and this subparagraph, over 

‘‘(bb) the sum of the shortfall amortization 

installments for such plan year and all such 

preceding plan years, determined after application of subparagraph (D) (and in the case of 

any preceding plan year, after application of 

this subparagraph). 


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‘‘(III) CARRYOVER OF EXCESS INSTALLMENT AC- CELERATION AMOUNTS.— ‘‘(aa) IN GENERAL.—If the installment acceleration amount for any plan year (determined 

without regard to subclause (II)) exceeds the 

limitation under subclause (II), then, subject 

to item (bb), such excess shall be treated as 

an installment acceleration amount for the 

succeeding plan year. 

‘‘(bb) CAP TO APPLY.—If any amount treated 

as an installment acceleration amount under 

item (aa) or this item with respect any succeeding plan year, when added to other installment acceleration amounts (determined 

without regard to subclause (II)) with respect 

to the plan year, exceeds the limitation under 

subclause (II), the portion of such amount representing such excess shall be treated as an 

installment acceleration amount with respect 

to the next succeeding plan year. 

‘‘(cc) LIMITATION ON YEARS TO WHICH

AMOUNTS CARRIED FORWARD.—No amount 

shall be carried forward under item (aa) or 

(bb) to a plan year which begins after the last 

plan year in the restriction period (or after 

the second plan year following such last plan 

year in the case of an election year with respect to which 15-year amortization was elected under subparagraph (D)(iii)). 

‘‘(dd) ORDERING RULES.—For purposes of applying item (bb), installment acceleration 

amounts for the plan year (determined without regard to any carryover under this clause) 

shall be applied first against the limitation 

under subclause (II) and then carryovers to 

such plan year shall be applied against such 

limitation on a first-in, first-out basis. 

‘‘(iv) EXCESS EMPLOYEE COMPENSATION.— ‘‘(I) IN GENERAL.—For purposes of this paragraph, the term ‘excess employee compensation’ 

means the sum of— 

‘‘(aa) with respect to any employee, for any 

plan year, the excess (if any) of— 

‘‘(AA) the aggregate amount includible 

in income under chapter 1 for remuneration during the calendar year in which 

such plan year begins for services performed by the employee for the plan sponsor (whether or not performed during 

such calendar year), over 

‘‘(BB) $1,000,000, plus 

‘‘(bb) the amount of assets set aside or reserved (directly or indirectly) in a trust (or 

other arrangement as determined by the Secretary), or transferred to such a trust or other 


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43 

arrangement, during the calendar year by a 

plan sponsor for purposes of paying deferred 

compensation of an employee under a nonqualified deferred compensation plan (as defined in section 409A) of the plan sponsor. 

‘‘(II) NO DOUBLE COUNTING.—No amount shall 

be taken into account under subclause (I) more 

than once. 

‘‘(III) EMPLOYEE; REMUNERATION.—For purposes 

of this clause, the term ‘employee’ includes, with 

respect to a calendar year, a self-employed individual who is treated as an employee under section 401(c) for the taxable year ending during 

such calendar year, and the term ‘remuneration’ 

shall include earned income of such an individual. 

‘‘(IV) CERTAIN PAYMENTS UNDER EXISTING CONTRACTS.—There shall not be taken into account 

under subclause (I) any remuneration consisting 

of nonqualified deferred compensation, restricted 

stock (or restricted stock units), stock options, or 

stock appreciation rights payable or granted under 

a written binding contract that was in effect on 

March 1, 2010, and which was not modified in any 

material respect before such remuneration is paid. 

‘‘(V) ONLY REMUNERATION FOR POST-2009 SERVICES COUNTED.—Remuneration shall be taken into 

account under subclause (I)(aa) only to the extent 

attributable to services performed by the employee 

for the plan sponsor after December 31, 2009. 

‘‘(VI) COMMISSIONS.— 

‘‘(aa) IN GENERAL.—There shall not be 

taken into account under subclause (I)(aa) 

any remuneration payable on a commission 

basis solely on account of income directly generated by the individual performance of the 

individual to whom such remuneration is payable. 

‘‘(bb) SPECIFIED EMPLOYEES.—Item (aa) 

shall not apply in the case of any specified 

employee (within the meaning of section 

409A(a)(2)(B)(i)) or any employee who would 

be such a specified employee if the plan sponsor were a corporation described in such section. 

‘‘(VII) INDEXING OF AMOUNT.—In the case of any 

calendar year beginning after 2010, the dollar 

amount under subclause (I)(aa)(BB) shall be increased by an amount equal to— 

‘‘(aa) such dollar amount, multiplied by 

‘‘(bb) the cost-of-living adjustment determined under section 1(f)(3) for the calendar 

year, determined by substituting ‘calendar 

year 2009’ for ‘calendar year 1992’ in subparagraph (B) thereof. 


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If the amount of any increase under clause (i) is 

not a multiple of $20,000, such increase shall be 

rounded to the next lowest multiple of $20,000. 

‘‘(v) CERTAIN DIVIDENDS AND REDEMPTIONS.— 

‘‘(I) IN GENERAL.—The dividend and redemption 

amount determined under this clause for any plan 

year is the lesser of— 

‘‘(aa) the excess of— 

‘‘(AA) the sum of the dividends paid 

during the plan year by the plan sponsor, 

plus the amounts paid for the redemption 

of stock of the plan sponsor redeemed 

during the plan year, over 

‘‘(BB) an amount equal to the average 

of adjusted annual net income of the plan 

sponsor for the last 5 fiscal years of the 

plan sponsor ending before such plan 

year, or 

‘‘(bb) the sum of— 

‘‘(AA) the amounts paid for the redemption of stock of the plan sponsor redeemed 

during the plan year, plus 

‘‘(BB) the excess of dividends paid during the plan year by the plan sponsor 

over the dividend base amount. 

‘‘(II) DEFINITIONS.— 

‘‘(aa) ADJUSTED ANNUAL NET INCOME.—For 

purposes of subclause (I)(aa)(BB), the term 

‘adjusted annual net income’ with respect to 

any fiscal year means annual net income, determined in accordance with generally accepted accounting principles (before after-tax gain 

or loss on any sale of assets), but without regard to any reduction by reason of depreciation or amortization, except that in no event 

shall adjusted annual net income for any fiscal year be less than zero. 

‘‘(bb) DIVIDEND BASE AMOUNT.—For purposes of this clause, the term ‘dividend base 

amount’ means, with respect to a plan year, 

an amount equal to the greater of— 

‘‘(AA) the median of the amounts of the 

dividends paid during each of the last 5 

fiscal years of the plan sponsor ending before such plan year, or 

‘‘(BB) the amount of dividends paid 

during such plan year on preferred stock 

that was issued on or before May 21, 

2010, or that is replacement stock for 

such preferred stock. 

‘‘(III) ONLY CERTAIN POST-2009 DIVIDENDS AND

REDEMPTIONS COUNTED.—For purposes of subclause (I) (other than for purposes of calculating 

the dividend base amount), there shall only be 


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taken into account dividends declared, and redemptions occurring, after February 28, 2010. 

‘‘(IV) EXCEPTION FOR INTRA-GROUP DIVIDENDS.— Dividends paid by one member of a controlled 

group (as defined in section 412(d)(3)) to another 

member of such group shall not be taken into account under subclause (I). 

‘‘(V) EXCEPTION FOR STOCK DIVIDENDS.—Any 

distribution by the plan sponsor to its shareholders of stock issued by the plan sponsor shall 

not be taken into account under subclause (I). 

‘‘(VI) EXCEPTION FOR CERTAIN REDEMPTIONS.— Redemptions of securities which are not readily 

tradable on an established securities market 

which— 

‘‘(aa) are made pursuant to a plan which is 

qualified under section 401 or a shareholderapproved program, 

‘‘(bb) are made on account of an employee’s 

termination of employment with the plan 

sponsor, or the death or disability of a shareholder, or 

‘‘(cc) were, immediately before redemption, 

held directly or indirectly by, or for the benefit of, the Federal Government or a Federal 

reserve bank, 

shall not be taken into account under subclause 

(I). 

‘‘(vi) OTHER DEFINITIONS AND RULES.—For purposes 

of this subparagraph— 

‘‘(I) PLAN SPONSOR.—The term ‘plan sponsor’ includes any group of which the plan sponsor is a 

member and which is treated as a single employer 

under subsection (b), (c), (m), or (o) of section 414. 

‘‘(II) RESTRICTION PERIOD.—The term ‘restriction 

period’ means, with respect to any applicable plan 

year with respect to which an election is made 

under subparagraph (D)— 

‘‘(aa) except as provided in item (bb), the 3- 

year period beginning with the applicable 

plan year (or, if later, the first plan year beginning after December 31, 2009), or 

‘‘(bb) if the plan sponsor elects 15-year amortization for the shortfall amortization base 

for the applicable plan year, the 5-year period 

beginning with such plan year (or, if later, the 

first plan year beginning after December 31, 

2009). 

‘‘(III) ELECTIONS FOR MULTIPLE PLANS.—If a 

plan sponsor makes elections under subparagraph 

(D) with respect to 2 or more plans, the Secretary 

shall provide rules for the application of this subparagraph to such plans, including rules for the 

ratable allocation of any installment acceleration 

amount among such plans on the basis of each 


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plan’s relative reduction in the plan’s shortfall 

amortization installment for the first plan year in 

the amortization period described in clause (i) (determined without regard to this subparagraph). 

‘‘(G) MERGERS AND ACQUISITIONS.—The Secretary shall 

prescribe rules for the application of subparagraphs (D) 

and (F) in any case where there is a merger or acquisition 

involving a plan sponsor making the election under subparagraph (D). 

‘‘(H) REGULATIONS AND GUIDANCE.—The Secretary may 

prescribe such regulations and other guidance of general 

applicability as the Secretary may determine necessary to 

achieve the purposes of subparagraphs (D) and (F).’’. 

(2) NOTICE REQUIREMENT.— 

(A) IN GENERAL.—Section 4980F of such Code is amended— 

(i) by striking ‘‘subsection (e)’’ each place it appears 

in subsection (a) and paragraphs (1) and (3) of subsection (c) and inserting ‘‘subsections (e) and (f)’’, 

(ii) by striking ‘‘subsection (e)’’ in subsection (c)(2)(A) 

and inserting ‘‘subsection (e), (f), or both, as the case 

may be’’, and 

(iii) by redesignating subsection (f) as subsection (g) 

and by inserting after subsection (e) the following new 

subsection: 

‘‘(f) NOTICE IN CONNECTION WITH SHORTFALL AMORTIZATION

ELECTION.— 

‘‘(1) IN GENERAL.—Not later 30 days after the date of an election under clause (iv) of section 430(c)(2)(D) in connection with 

a plan, the plan administrator shall provide notice of such election in accordance with this subsection to each plan participant 

and beneficiary, each labor organization representing such participants and beneficiaries, and the Pension Benefit Guaranty 

Corporation. 

‘‘(2) MATTERS INCLUDED IN NOTICE.—Each notice provided 

pursuant to this subsection shall set forth— 

‘‘(A) a statement that recently enacted legislation permits employers to delay pension funding; 

‘‘(B) with respect to required contributions— 

‘‘(i) the amount of contributions that would have 

been required had the election not been made; 

‘‘(ii) the amount of the reduction in required contributions for the applicable plan year that occurs on 

account of the election; and 

‘‘(iii) the number of plan years to which such reduction will apply; 

‘‘(C) with respect to a plan’s funding status as of the end 

of the plan year preceding the applicable plan year— 

‘‘(i) the liabilities determined under section 

4010(d)(1)(A) of the Employee Retirement Income Security Act of 1974; and 

‘‘(ii) the market value of assets of the plan; and 

‘‘(D) with respect to installment acceleration amounts (as 

defined in section 430(c)(2)(F)(iii)(I))— 


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‘‘(i) an explanation of section 430(c)(2)(F) (relating to 

increases in shortfall amortization installments in 

cases of excess compensation or certain dividends or 

stock redemptions); and 

‘‘(ii) a statement that increases in required contributions may occur in the event of future payments of excess employee compensation or certain share repurchasing or dividend activity and that subsequent notices of any such payments or activity will be provided 

in the annual funding notice provided pursuant to section 101(f) of the Employee Retirement Income Security Act of 1974. 

‘‘(3) OTHER REQUIREMENTS.— ‘‘(A) FORM.—The notice required by paragraph (1) shall 

be written in a manner calculated to be understood by the 

average plan participant and shall provide sufficient information (as determined in accordance with regulations or 

other guidance of general applicability prescribed by the 

Secretary) to allow plan participants and beneficiaries to 

understand the effect of the election. The Secretary shall 

prescribe a model notice that a plan administrator may 

use to satisfy the requirements of paragraph (1). 

‘‘(B) PROVISION TO DESIGNATED PERSONS.—Any notice 

under paragraph (1) may be provided to a person designated, in writing, by the person to which it would otherwise be provided.’’. 

(B) CONFORMING AMENDMENT.—Subsection (g) of section 

4980F of such Code is amended by inserting ‘‘or (f)’’ after 

‘‘subsection (e)’’. 

(3) DISREGARD OF INSTALLMENT ACCELERATION AMOUNTS IN

DETERMINING QUARTERLY CONTRIBUTIONS.—Section 430(j)(3) of 

such Code is amended by adding at the end the following new 

subparagraph: 

‘‘(F) DISREGARD OF INSTALLMENT ACCELERATION

AMOUNTS.—Subparagraph (D) shall be applied without regard to any increase under subsection (c)(2)(F).’’. 

(4) CONFORMING AMENDMENT.—Paragraph (1) of section 

430(c) of such Code is amended by striking ‘‘the shortfall amortization bases for such plan year and each of the 6 preceding 

plan years’’ and inserting ‘‘any shortfall amortization base 

which has not been fully amortized under this subsection’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to plan years beginning after December 31, 2007. 

SEC. 302. APPLICATION OF EXTENDED AMORTIZATION PERIOD TO 

PLANS SUBJECT TO PRIOR LAW FUNDING RULES. 

(a) IN GENERAL.—Title I of the Pension Protection Act of 2006 is 

amended by redesignating section 107 as section 108 and by inserting the following after section 106: 

‘‘SEC. 107. APPLICATION OF FUNDING RELIEF TO PLANS WITH DELAYED EFFECTIVE DATE. 

‘‘(a) ALTERNATIVE ELECTIONS.— 

‘‘(1) IN GENERAL.—Subject to this section, a plan sponsor of 

a plan to which section 104, 105, or 106 of this Act applies may 

either elect the application of subsection (b) with respect to the 

plan for not more than 2 applicable plan years or elect the apVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00047 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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plication of subsection (c) with respect to the plan for 1 applicable plan year. 

‘‘(2) ELIGIBILITY FOR ELECTIONS.—An election may be made 

by a plan sponsor under paragraph (1) with respect to a plan 

only if at the time of the election— 

‘‘(A) the plan sponsor is not a debtor in a case under title 

11, United States Code, or similar Federal or State law, 

‘‘(B) there are no accumulated funding deficiencies (as 

defined in section 302(a)(2) of the Employee Retirement Income Security Act of 1974 (as in effect immediately before 

the enactment of this Act) or in section 412(a) of the Internal Revenue Code of 1986 (as so in effect)) with respect to 

the plan, 

‘‘(C) there is no lien in favor of the plan under section 

302(d) (as so in effect) or under section 412(n) of such Code 

(as so in effect), and 

‘‘(D) a distress termination has not been initiated for the 

plan under section 4041(c) of the Employee Retirement Income Security Act of 1974. 

‘‘(b) ALTERNATIVE ADDITIONAL FUNDING CHARGE.—If the plan 

sponsor elects the application of this subsection with respect to the 

plan, for purposes of applying section 302(d) of the Employee Retirement Income Security Act of 1974 (as in effect before the 

amendments made by this subtitle and subtitle B) and section 

412(l) of the Internal Revenue Code of 1986 (as so in effect)— 

‘‘(1) the deficit reduction contribution under paragraph (2) of 

such section 302(d) and paragraph (2) of such section 412(l) for 

such plan for any applicable plan year, shall be zero, and 

‘‘(2) the additional funding charge under paragraph (1) of 

such section 302(d) and paragraph (1) of such section 412(l) for 

such plan for any applicable plan year shall be increased by an 

amount equal to the installment acceleration amount (as defined in sections 303(c)(2)(F)(iii)(I) of such Act (as amended by 

the American Jobs and Closing Tax Loopholes Act of 2010) and 

430(c)(2)(F)(iii)(I) of such Code (as so amended)) with respect 

to the plan sponsor for such plan year, determined by treating 

the later of such plan year or the first plan year beginning 

after December 31, 2009, as the restriction period. 

‘‘(c) APPLICATION OF 15-YEAR AMORTIZATION.—If the plan sponsor 

elects the application of this subsection with respect to the plan, for 

purposes of applying section 302(d) of such Act (as in effect before 

the amendments made by this subtitle and subtitle B) and section 

412(l) of such Code (as so in effect)— 

‘‘(1) in the case of the increased unfunded new liability of the 

plan, the applicable percentage described in paragraph (4)(C) 

of such section 302(d) and paragraph (4)(C) of such section 

412(l) for any pre-effective date plan year beginning with or 

after the applicable plan year shall be the ratio of— 

‘‘(A) the annual installments payable in each plan year 

if the increased unfunded new liability for such plan year 

were amortized in equal installments over the period beginning with such plan year and ending with the last plan 

year in the period of 15 plan years beginning with the applicable plan year, using an interest rate equal to the third 


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segment rate described in sections 104(b), 105(b), and 

106(b) of this Act, to 

‘‘(B) the increased unfunded new liability for such plan 

year, 

‘‘(2) in the case of the excess of the unfunded new liability 

over the increased unfunded new liability, such applicable percentage shall be determined without regard to this section, and 

‘‘(3) the additional funding charge with respect to the plan 

for a plan year shall be increased by an amount equal to the 

installment acceleration amount (as defined in section 

303(c)(2)(F)(iii) of such Act (as amended by the American Jobs 

and Closing Tax Loopholes Act of 2010 and section 

430(c)(2)(F)(iii) of such Code (as so amended)) with respect to 

the plan sponsor for such plan year, determined without regard 

to subclause (II) of such sections 303(c)(2)(F)(iii) and 

430(c)(2)(F)(iii). 

‘‘(d) DEFINITIONS AND SPECIAL RULES.—For purposes of this section—— 

‘‘(1) APPLICABLE PLAN YEAR.— 

‘‘(A) IN GENERAL.—The term ‘applicable plan year’ with 

respect to a plan means, subject to the election of the plan 

sponsor under subsection (a), a plan year beginning in 

2009, 2010, or 2011. 

‘‘(B) ELECTION.— 

‘‘(i) IN GENERAL.—The election described in subsection (a) shall be made at such times, and in such 

form and manner, as shall be prescribed by the Secretary of the Treasury. 

‘‘(ii) REDUCTION IN YEARS WHICH MAY BE ELECTED.— 

The number of applicable plan years for which an election may be made under section 303(c)(2)(D) of the 

Employee Retirement Income Security Act of 1974 (as 

amended by the American Jobs and Closing Tax Loopholes Act of 2010) or section 430(c)(2)(D) of the Internal Revenue Code of 1986 (as so amended) shall be reduced by the number of applicable plan years for 

which an election under this section is made. 

‘‘(C) ALLOCATION OF INSTALLMENT ACCELERATION

AMOUNT FOR MULTIPLE PLAN ELECTION.—In the case of an 

election under this section with respect to 2 or more plans 

by the same plan sponsor, the installment acceleration 

amount shall be apportioned ratably with respect to such 

plans in proportion to the deficit reduction contributions of 

the plans determined without regard to subsection (b)(1). 

‘‘(2) PLAN SPONSOR.—The term ‘plan sponsor’ shall have the 

meaning provided such term in section 303(c)(2)(F)(vi)(I) of the 

Employee Retirement Income Security Act of 1974 (as amended by the American Jobs and Closing Tax Loopholes Act of 

2010) and section 430(c)(2)(F)(vi)(I) of the Internal Revenue 

Code of 1986 (as so amended). 

‘‘(3) PRE-EFFECTIVE DATE PLAN YEAR.—The term ‘pre-effective 

date plan year’ means, with respect to a plan, any plan year 

prior to the first year in which the amendments made by this 

subtitle and subtitle B apply to the plan. 


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‘‘(4) INCREASED UNFUNDED NEW LIABILITY.—The term ‘increased unfunded new liability’ means, with respect to a year, 

the excess (if any) of the unfunded new liability over the 

amount of unfunded new liability determined as if the value of 

the plan’s assets determined under subsection 302(c)(2) of such 

Act (as in effect before the amendments made by this subtitle 

and subtitle B) and section 412(c)(2) of such Code (as so in effect) equaled the product of the current liability of the plan for 

the year multiplied by the funded current liability percentage 

(as defined in section 302(d)(8)(B) of such Act (as so in effect) 

and 412(l)(8)(B) of such Code (as so in effect)) of the plan for 

the second plan year preceding the first applicable plan year 

of such plan for which an election under this section is made. 

‘‘(5) OTHER DEFINITIONS.—The terms ‘unfunded new liability’ 

and ‘current liability’ shall have the meanings set forth in section 302(d) of such Act (as so in effect) and section 412(l) of 

such Code (as so in effect). 

‘‘(6) ADDITIONAL FUNDING CHARGE INCREASE NOT TO EXCEED

RELIEF.— 

‘‘(A) ELECTION UNDER SUBSECTION (B).—In the case of an 

election under subsection (b), an increase resulting from 

the application of subsection (b)(2) in the additional funding charge with respect to a plan for a plan year shall not 

exceed the excess (if any) of— 

‘‘(i) the deficit reduction contribution under section 

302(d)(2) of such Act (as so in effect) and section 

412(l)(2) of such Code (as so in effect) for such plan 

year, determined as if the election had not been made, 

over 

‘‘(ii) the deficit reduction contribution under such 

sections for such plan (determined without regard to 

any increase under subsection (b)(2)). 

‘‘(B) ELECTION UNDER SUBSECTION (C).—An increase resulting from the application of subsection (c)(3) in the additional funding charge with respect to a plan for a plan 

year shall not exceed the excess (if any) of— 

‘‘(i) the sum of the deficit reduction contributions 

under section 302(d)(2) of such Act (as so in effect) and 

section 412(l)(2) of such Code (as so in effect) for such 

plan for such plan year and for all preceding plan 

years beginning with or after the applicable plan year, 

determined as if the election had not been made, over 

‘‘(ii) the sum of the deficit reduction contributions 

under such sections for such plan years (determined 

without regard to any increase under subsection 

(c)(3)). 

‘‘(e) NOTICE.—Not later 30 days after the date of an election 

under subsection (a) in connection with a plan, the plan administrator shall provide notice pursuant to, and subject to, rules similar 

to the rules of sections 204(k) of the Employee Retirement Income 

Security Act of 1974 (as amended by the American Jobs and Closing Tax Loopholes Act of 2010) and 4980F(f) of the Internal Revenue Code of 1986 (as so amended).’’. 

(b) ELIGIBLE CHARITY PLANS.—Section 104 of such Act is amended— 


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(1) by striking ‘‘eligible cooperative plan’’ wherever it appears 

in subsections (a) and (b) and inserting ‘‘eligible cooperative 

plan or an eligible charity plan’’, and 

(2) by adding at the end the following new subsection: 

‘‘(d) ELIGIBLE CHARITY PLAN DEFINED.—For purposes of this section, a plan shall be treated as an eligible charity plan for a plan 

year if— 

‘‘(1) the plan is maintained by one or more employers employing employees who are accruing benefits based on service 

for the plan year, 

‘‘(2) such employees are employed in at least 40 States, 

‘‘(3) each such employee (other than a de minimis number of 

employees) is employed by an employer described in section 

501(c)(3) of such Code and the primary exempt purpose of each 

such employer is to provide services with respect to children, 

and 

‘‘(4) the plan sponsor elects (at such time and in such form 

and manner as shall be prescribed by the Secretary of the 

Treasury) to be so treated. 

Any election under this subsection may be revoked only with the 

consent of the Secretary of the Treasury.’’. 

(c) REGULATIONS.—The Secretary of the Treasury may prescribe 

such regulations as may be necessary to carry out the purposes of 

the amendments made by this section. 

(d) EFFECTIVE DATE.— (1) IN GENERAL.—The amendment made by subsection (a) 

shall apply to plan years beginning on or after January 1, 

2009. 

(2) ELIGIBLE CHARITY PLANS.—The amendments made by 

subsection (b) shall apply to plan years beginning after December 31, 2009. 

SEC. 303. SUSPENSION OF CERTAIN FUNDING LEVEL LIMITATIONS. 

(a) LIMITATIONS ON BENEFIT ACCRUALS.—Section 203 of the 

Worker, Retiree, and Employer Recovery Act of 2008 (Public Law 

110-458; 122 Stat. 5118) is amended— 

(1) by striking ‘‘the first plan year beginning during the period beginning on October 1, 2008, and ending on September 

30, 2009’’ and inserting ‘‘any plan year beginning during the 

period beginning on October 1, 2008, and ending on December 

31, 2011’’; 

(2) by striking ‘‘substituting’’ and all that follows through 

‘‘for such plan year’’ and inserting ‘‘substituting for such percentage the plan’s adjusted funding target attainment percentage for the last plan year ending before September 30, 2009,’’; 

and 

(3) by striking ‘‘for the preceding plan year is greater’’ and 

inserting ‘‘for such last plan year is greater’’. 

(b) SOCIAL SECURITY LEVEL-INCOME OPTIONS.— 

(1) ERISA AMENDMENT.—Section 206(g)(3)(E) of the Employee Retirement Income Security Act of 1974 is amended by 

adding at the end the following new sentence: ‘‘For purposes of 

applying clause (i) in the case of payments the annuity starting 

date for which occurs on or before December 31, 2011, payments under a social security leveling option shall be treated 

as not in excess of the monthly amount paid under a single life 


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annuity (plus an amount not in excess of a social security supplement described in the last sentence of section 

204(b)(1)(G)).’’. 

(2) IRC AMENDMENT.—Section 436(d)(5) of the Internal Revenue Code of 1986 is amended by adding at the end the following new sentence: ‘‘For purposes of applying subparagraph 

(A) in the case of payments the annuity starting date for which 

occurs on or before December 31, 2011, payments under a social security leveling option shall be treated as not in excess 

of the monthly amount paid under a single life annuity (plus 

an amount not in excess of a social security supplement described in the last sentence of section 411(a)(9)).’’. 

(3) EFFECTIVE DATE.— 

(A) IN GENERAL.—The amendments made by this subsection shall apply to annuity payments the annuity starting date for which occurs on or after January 1, 2011. 

(B) PERMITTED APPLICATION.—A plan shall not be treated as failing to meet the requirements of sections 206(g) of 

the Employee Retirement Income Security Act of 1974 (as 

amended by this subsection) and section 436(d) of the Internal Revenue Code of 1986 (as so amended) if the plan 

sponsor elects to apply the amendments made by this subsection to payments the annuity starting date for which occurs on or after the date of the enactment of this Act and 

before January 1, 2011. 

(c) APPLICATION OF CREDIT BALANCE WITH RESPECT TO LIMITATIONS ON SHUTDOWN BENEFITS AND UNPREDICTABLE CONTINGENT

EVENT BENEFITS.—With respect to plan years beginning on or before December 31, 2011, in applying paragraph (5)(C) of subsection 

(g) of section 206 of the Employee Retirement Income Security Act 

of 1974 and subsection (f)(3) of section 436 of the Internal Revenue 

Code of 1986 in the case of unpredictable contingent events (within 

the meaning of section 206(g)(1)(C) of such Act and section 

436(b)(3) of such Code) occurring on or after January 1, 2010, the 

references, in clause (i) of such paragraph (5)(C) and subparagraph 

(A) of such subsection (f)(3), to paragraph (1)(B) of such subsection 

(g) and subsection (b)(2) of such section 436 shall be disregarded. 

SEC. 304. LOOKBACK FOR CREDIT BALANCE RULE. 

(a) AMENDMENT TO ERISA.—Paragraph (3) of section 303(f) of the 

Employee Retirement Income Security Act of 1974 is amended by 

adding the following at the end thereof: 

‘‘(D) SPECIAL RULE FOR CERTAIN PLAN YEARS.— 

‘‘(i) IN GENERAL.—For purposes of applying subparagraph (C) for plan years beginning after June 30, 

2009, and on or before December 31, 2011, the ratio 

determined under such subparagraph for the preceding plan year shall be the greater of— 

‘‘(I) such ratio, as determined without regard to 

this subparagraph, or 

‘‘(II) the ratio for such plan for the plan year beginning after June 30, 2007, and on or before 

June 30, 2008, as determined under rules prescribed by the Secretary of the Treasury. 


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‘‘(ii) SPECIAL RULE.—In the case of a plan for which 

the valuation date is not the first day of the plan 

year— 

‘‘(I) clause (i) shall apply to plan years beginning after December 31, 2008, and on or before 

December 31, 2010, and 

‘‘(II) clause (i)(II) shall apply based on the last 

plan year beginning before July 1, 2007, as determined under rules prescribed by the Secretary of 

the Treasury.’’. 

(b) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.—Paragraph (3) of section 430(f) of the Internal Revenue Code of 1986 is 

amended by adding the following at the end thereof: 

‘‘(D) SPECIAL RULE FOR CERTAIN PLAN YEARS.— 

‘‘(i) IN GENERAL.—For purposes of applying subparagraph (C) for plan years beginning after June 30, 

2009, and on or before December 31, 2011, the ratio 

determined under such subparagraph for the preceding plan year shall be the greater of— 

‘‘(I) such ratio, as determined without regard to 

this subparagraph, or 

‘‘(II) the ratio for such plan for the plan year beginning after June 30, 2007, and on or before 

June 30, 2008, as determined under rules prescribed by the Secretary. 

‘‘(ii) SPECIAL RULE.—In the case of a plan for which 

the valuation date is not the first day of the plan 

year— 

‘‘(I) clause (i) shall apply to plan years beginning after December 31, 2008, and on or before 

December 31, 2010, and 

‘‘(II) clause (i)(II) shall apply based on the last 

plan year beginning before July 1, 2007, as determined under rules prescribed by the Secretary.’’. 

SEC. 305. INFORMATION REPORTING. 

(a) IN GENERAL.—Section 4010(b) of the Employee Retirement 

Security Act of 1974 (29 U.S.C. 1310(b)) is amended by striking 

paragraph (1) and inserting the following: 

‘‘(1) either of the following requirements are met: 

‘‘(A) the funding target attainment percentage (as defined in subsection (d)(2)(B)) at the end of the preceding 

plan year of a plan maintained by the contributing sponsor 

or any member of its controlled group is less than 80 percent; or 

‘‘(B) the aggregate unfunded vested benefits (as determined under section 4006(a)(3)(E)(iii)) of plans maintained 

by the contributing sponsor and the members of its controlled group exceed $75,000,000 (disregarding plans with 

no unfunded vested benefits);’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to years beginning after 2009. 

SEC. 306. ROLLOVER OF AMOUNTS RECEIVED IN AIRLINE CARRIER 

BANKRUPTCY. 

(a) GENERAL RULES.— 


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(1) ROLLOVER OF AIRLINE PAYMENT AMOUNT.—If a qualified 

airline employee receives any airline payment amount and 

transfers any portion of such amount to a traditional IRA within 180 days of receipt of such amount (or, if later, within 180 

days of the date of the enactment of this Act), then such 

amount (to the extent so transferred) shall be treated as a rollover contribution described in section 402(c) of the Internal 

Revenue Code of 1986. A qualified airline employee making 

such a transfer may exclude from gross income the amount 

transferred, in the taxable year in which the airline payment 

amount was paid to the qualified airline employee by the commercial passenger airline carrier. 

(2) TRANSFER OF AMOUNTS ATTRIBUTABLE TO AIRLINE PAY- MENT AMOUNT FOLLOWING ROLLOVER TO ROTH IRA.—A qualified 

airline employee who has contributed an airline payment 

amount to a Roth IRA that is treated as a qualified rollover 

contribution pursuant to section 125 of the Worker, Retiree, 

and Employer Recovery Act of 2008 may transfer to a traditional IRA, in a trustee-to-trustee transfer, all or any part of 

the contribution (together with any net income allocable to 

such contribution), and the transfer to the traditional IRA will 

be deemed to have been made at the time of the rollover to the 

Roth IRA, if such transfer is made within 180 days of the date 

of the enactment of this Act. A qualified airline employee making such a transfer may exclude from gross income the airline 

payment amount previously rolled over to the Roth IRA, to the 

extent an amount attributable to the previous rollover was 

transferred to a traditional IRA, in the taxable year in which 

the airline payment amount was paid to the qualified airline 

employee by the commercial passenger airline carrier. No 

amount so transferred to a traditional IRA may be treated as 

a qualified rollover contribution with respect to a Roth IRA 

within the 5-taxable year period beginning with the taxable 

year in which such transfer was made. 

(3) EXTENSION OF TIME TO FILE CLAIM FOR REFUND.—A qualified airline employee who excludes an amount from gross income in a prior taxable year under paragraph (1) or (2) may 

reflect such exclusion in a claim for refund filed within the period of limitation under section 6511(a) (or, if later, April 15, 

2011). 

(b) TREATMENT OF AIRLINE PAYMENT AMOUNTS AND TRANSFERS

FOR EMPLOYMENT TAXES.—For purposes of chapter 21 of the Internal Revenue Code of 1986 and section 209 of the Social Security 

Act, an airline payment amount shall not fail to be treated as a 

payment of wages by the commercial passenger airline carrier to 

the qualified airline employee in the taxable year of payment because such amount is excluded from the qualified airline employee’s gross income under subsection (a). 

(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this section— 

(1) AIRLINE PAYMENT AMOUNT.— 

(A) IN GENERAL.—The term ‘‘airline payment amount’’ 

means any payment of any money or other property which 

is payable by a commercial passenger airline carrier to a 

qualified airline employee— 


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(i) under the approval of an order of a Federal bankruptcy court in a case filed after September 11, 2001, 

and before January 1, 2007, and 

(ii) in respect of the qualified airline employee’s interest in a bankruptcy claim against the carrier, any 

note of the carrier (or amount paid in lieu of a note 

being issued), or any other fixed obligation of the carrier to pay a lump sum amount. 

The amount of such payment shall be determined without 

regard to any requirement to deduct and withhold tax 

from such payment under sections 3102(a) and 3402(a). 

(B) EXCEPTION.—An airline payment amount shall not 

include any amount payable on the basis of the carrier’s 

future earnings or profits. 

(2) QUALIFIED AIRLINE EMPLOYEE.—The term ‘‘qualified airline employee’’ means an employee or former employee of a 

commercial passenger airline carrier who was a participant in 

a defined benefit plan maintained by the carrier which— 

(A) is a plan described in section 401(a) of the Internal 

Revenue Code of 1986 which includes a trust exempt from 

tax under section 501(a) of such Code, and 

(B) was terminated or became subject to the restrictions 

contained in paragraphs (2) and (3) of section 402(b) of the 

Pension Protection Act of 2006. 

(3) TRADITIONAL IRA.—The term ‘‘traditional IRA’’ means an 

individual retirement plan (as defined in section 7701(a)(37) of 

the Internal Revenue Code of 1986) which is not a Roth IRA. 

(4) ROTH IRA.—The term ‘‘Roth IRA’’ has the meaning given 

such term by section 408A(b) of such Code. 

(d) SURVIVING SPOUSE.—If a qualified airline employee died after 

receiving an airline payment amount, or if an airline payment 

amount was paid to the surviving spouse of a qualified airline employee in respect of the qualified airline employee, the surviving 

spouse of the qualified airline employee may take all actions permitted under section 125 of the Worker, Retiree and Employer Recovery Act of 2008, or under this section, to the same extent that 

the qualified airline employee could have done had the qualified 

airline employee survived. 

(e) EFFECTIVE DATE.—This section shall apply to transfers made 

after the date of the enactment of this Act with respect to airline 

payment amounts paid before, on, or after such date. 

PART 2—MULTIEMPLOYER PLANS 

SEC. 311. OPTIONAL USE OF 30-YEAR AMORTIZATION PERIODS. 

(a) ELECTIVE SPECIAL RELIEF RULES.— 

(1) ERISA AMENDMENT.—Section 304(b) of the Employee Retirement Income Security Act of 1974 is amended by adding at 

the end the following new paragraph: 

‘‘(8) ELECTIVE SPECIAL RELIEF RULES.—Notwithstanding any 

other provision of this subsection— 

‘‘(A) AMORTIZATION OF NET INVESTMENT LOSSES.— 

‘‘(i) IN GENERAL.—The plan sponsor of a multiemployer plan with respect to which the solvency test 

under subparagraph (B) is met may elect to treat the 


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portion of any experience loss or gain for a plan year 

that is attributable to the allocable portion of the net 

investment losses incurred in either or both of the first 

two plan years ending on or after June 30, 2008, as an 

experience loss separate from other experience losses 

or gains to be amortized in equal annual installments 

(until fully amortized) over the period— 

‘‘(I) beginning with the plan year for which the 

allocable portion is determined, and 

‘‘(II) ending with the last plan year in the 30- 

plan year period beginning with the plan year following the plan year in which such net investment loss was incurred. 

‘‘(ii) COORDINATION WITH EXTENSIONS.—If an election 

is made under clause (i) for any plan year— 

‘‘(I) no extension of the amortization period 

under clause (i) shall be allowed under subsection 

(d), and 

‘‘(II) if an extension was granted under subsection (d) for any plan year before the plan year 

for which the election under this subparagraph is 

made, such extension shall not result in such amortization period exceeding 30 years. 

‘‘(iii) DEFINITIONS AND RULES.—For purposes of this 

subparagraph— 

‘‘(I) NET INVESTMENT LOSSES.— ‘‘(aa) IN GENERAL.—The net investment loss 

incurred by a plan in a plan year is equal to 

the excess of— 

‘‘(AA) the expected value of the assets 

as of the end of the plan year, over 

‘‘(BB) the market value of the assets as 

of the end of the plan year, 

including any difference attributable to a 

criminally fraudulent investment arrangement. 

‘‘(bb) EXPECTED VALUE.—For purposes of 

item (aa), the expected value of the assets as 

of the end of a plan year is the excess of— 

‘‘(AA) the market value of the assets at 

the beginning of the plan year plus contributions made during the plan year, 

over 

‘‘(BB) disbursements made during the 

plan year. 

The amounts described in subitems (AA) and 

(BB) shall be adjusted with interest at the 

valuation rate to the end of the plan year. 

‘‘(II) CRIMINALLY FRAUDULENT INVESTMENT AR- RANGEMENTS.—The determination as to whether 

an arrangement is a criminally fraudulent investment arrangement shall be made under rules substantially similar to the rules prescribed by the 

Secretary of the Treasury for purposes of section 

165 of the Internal Revenue Code of 1986. 


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‘‘(III) AMOUNT ATTRIBUTABLE TO ALLOCABLE POR- TION OF NET INVESTMENT LOSS.—The amount attributable to the allocable portion of the net investment loss for a plan year shall be an amount 

equal to the allocable portion of net investment 

loss for the plan year under subclauses (IV) and 

(V), increased with interest at the valuation rate 

determined from the plan year after the plan year 

in which the net investment loss was incurred. 

‘‘(IV) ALLOCABLE PORTION OF NET INVESTMENT

LOSSES.—Except as provided in subclause (V), the 

net investment loss incurred in a plan year shall 

be allocated among the 5 plan years following the 

plan year in which the investment loss is incurred 

in accordance with the following table: 

‘‘Plan year after the plan year 

in which the net investment 

loss was incurred 

Allocable 

portion of net 

investment loss 

1st .................................................................................................... 1⁄2

2nd ................................................................................................... 0 

3rd .................................................................................................... 1⁄6

4th .................................................................................................... 1⁄6

5th .................................................................................................... 1⁄6

‘‘(V) SPECIAL RULE FOR PLANS THAT ADOPT

LONGER SMOOTHER PERIOD.—If a plan sponsor 

elects an extended smoothing period for its asset 

valuation method under subsection (c)(2)(B), then 

the allocable portion of net investment loss for the 

first two plan years following the plan year the investment loss is incurred is the same as determined under subclause (IV), but the remaining 1⁄2

of the net investment loss is allocated ratably over 

the period beginning with the third plan year following the plan year the net investment loss is incurred and ending with the last plan year in the 

extended smoothing period. 

‘‘(VI) SPECIAL RULE FOR OVERSTATEMENT OF

LOSS.—If, for a plan year, there is an experience 

loss for the plan and the amount described in subclause (III) exceeds the total amount of the experience loss for the plan year, then the excess shall 

be treated as an experience gain. 

‘‘(VII) SPECIAL RULE IN YEARS FOR WHICH OVERALL EXPERIENCE IS GAIN.—If, for a plan year, there 

is no experience loss for the plan, then, in addition 

to amortization of net investment losses under 

clause (i), the amount described in subclause (III) 

shall be treated as an experience gain in addition 

to any other experience gain. 

‘‘(B) SOLVENCY TEST.— 

‘‘(i) IN GENERAL.—An election may be made under 

this paragraph if the election includes certification by 

the plan actuary in connection with the election that 

the plan is projected to have a funded percentage at 

the end of the first 15 plan years that is not less than 

100 percent of the funded percentage for the plan year 

of the election. 


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‘‘(ii) FUNDED PERCENTAGE.— For purposes of clause 

(i), the term ‘funded percentage’ has the meaning provided in section 305(i)(2), except that the value of the 

plan’s assets referred to in section 305(i)(2)(A) shall be 

the market value of such assets. 

‘‘(iii) ACTUARIAL ASSUMPTIONS.—In making any certification under this subparagraph, the plan actuary 

shall use the same actuarial estimates, assumptions, 

and methods as those applicable for the most recent 

certification under section 305, except that the plan 

actuary may take into account benefit reductions and 

increases in contribution rates, under either funding 

improvement plans adopted under section 305(c) or 

under section 432(c) of the Internal Revenue Code of 

1986 or rehabilitation plans adopted under section 

305(e) or under section 432(e) of such Code, that the 

plan actuary reasonably anticipates will occur without 

regard to any change in status of the plan resulting 

from the election. 

‘‘(C) ADDITIONAL RESTRICTION ON BENEFIT INCREASES.— 

If an election is made under subparagraph (A), then, in addition to any other applicable restrictions on benefit increases, a plan amendment which is adopted on or after 

March 10, 2010, and which increases benefits may not go 

into effect during the period beginning on such date and 

ending with the second plan year beginning after such 

date unless— 

‘‘(i) the plan actuary certifies that— 

‘‘(I) any such increase is paid for out of additional contributions not allocated to the plan immediately before the election to have this paragraph apply to the plan, and 

‘‘(II) the plan’s funded percentage and projected 

credit balances for the first 3 plan years ending on 

or after such date are reasonably expected to be at 

least as high as such percentage and balances 

would have been if the benefit increase had not 

been adopted, or 

‘‘(ii) the amendment is required as a condition of 

qualification under part I of subchapter D of chapter 

1 of the Internal Revenue Code of 1986 or to comply 

with other applicable law. 

‘‘(D) TIME, FORM, AND MANNER OF ELECTION.—An election under this paragraph shall be made not later than 

June 30, 2011, and shall be made in such form and manner as the Secretary of the Treasury may prescribe. 

‘‘(E) REPORTING.—A plan sponsor of a plan to which this 

paragraph applies shall— 

‘‘(i) give notice of such election to participants and 

beneficiaries of the plan, and 

‘‘(ii) inform the Pension Benefit Guaranty Corporation of such election in such form and manner as the 

Pension Benefit Guaranty Corporation may prescribe.’’. 


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(2) IRC AMENDMENT.—Section 431(b) of the Internal Revenue 

Code of 1986 is amended by adding at the end the following 

new paragraph: 

‘‘(8) ELECTIVE SPECIAL RELIEF RULES.—Notwithstanding any 

other provision of this subsection— 

‘‘(A) AMORTIZATION OF NET INVESTMENT LOSSES.— 

‘‘(i) IN GENERAL.—The plan sponsor of a multiemployer plan with respect to which the solvency test 

under subparagraph (B) is met may elect to treat the 

portion of any experience loss or gain for a plan year 

that is attributable to the allocable portion of the net 

investment losses incurred in either or both of the first 

two plan years ending on or after June 30, 2008, as an 

experience loss separate from other experience losses 

and gains to be amortized in equal annual installments (until fully amortized) over the period— 

‘‘(I) beginning with the plan year for which the 

allocable portion is determined, and 

‘‘(II) ending with the last plan year in the 30- 

plan year period beginning with the plan year following the plan year in which such net investment loss was incurred. 

‘‘(ii) COORDINATION WITH EXTENSIONS.—If an election 

is made under clause (i) for any plan year— 

‘‘(I) no extension of the amortization period 

under clause (i) shall be allowed under subsection 

(d), and 

‘‘(II) if an extension was granted under subsection (d) for any plan year before the plan year 

for which the election under this subparagraph is 

made, such extension shall not result in such amortization period exceeding 30 years. 

‘‘(iii) DEFINITIONS AND RULES.—For purposes of this 

subparagraph— 

‘‘(I) NET INVESTMENT LOSSES.— 

‘‘(aa) IN GENERAL.—The net investment loss 

incurred by a plan in a plan year is equal to 

the excess of— 

‘‘(AA) the expected value of the assets 

as of the end of the plan year, over 

‘‘(BB) the market value of the assets as 

of the end of the plan year, 

including any difference attributable to a 

criminally fraudulent investment arrangement. 

‘‘(bb) EXPECTED VALUE.—For purposes of 

item (aa), the expected value of the assets as 

of the end of a plan year is the excess of— 

‘‘(AA) the market value of the assets at 

the beginning of the plan year plus contributions made during the plan year, 

over 

‘‘(BB) disbursements made during the 

plan year. 


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The amounts described in subitems (AA) and 

(BB) shall be adjusted with interest at the 

valuation rate to the end of the plan year. 

‘‘(II) CRIMINALLY FRAUDULENT INVESTMENT ARRANGEMENTS.—The determination as to whether 

an arrangement is a criminally fraudulent investment arrangement shall be made under rules substantially similar to the rules prescribed by the 

Secretary for purposes of section 165. 

‘‘(III) AMOUNT ATTRIBUTABLE TO ALLOCABLE PORTION OF NET INVESTMENT LOSS.—The amount attributable to the allocable portion of the net investment loss for a plan year shall be an amount 

equal to the allocable portion of net investment 

loss for the plan year under subclauses (IV) and 

(V), increased with interest at the valuation rate 

determined from the plan year after the plan year 

in which the net investment loss was incurred. 

‘‘(IV) ALLOCABLE PORTION OF NET INVESTMENT

LOSSES.—Except as provided in subclause (V), the 

net investment loss incurred in a plan year shall 

be allocated among the 5 plan years following the 

plan year in which the investment loss is incurred 

in accordance with the following table: 

‘‘Plan year after the plan year 

in which the net investment 

loss was incurred 

Allocable 

portion of net 

investment loss 

1st .................................................................................................... 1⁄2

2nd ................................................................................................... 0 

3rd .................................................................................................... 1⁄6

4th .................................................................................................... 1⁄6

5th .................................................................................................... 1⁄6

‘‘(V) SPECIAL RULE FOR PLANS THAT ADOPT

LONGER SMOOTHER PERIOD.—If a plan sponsor 

elects an extended smoothing period for its asset 

valuation method under subsection (c)(2)(B), then 

the allocable portion of net investment loss for the 

first two plan years following the plan year the investment loss is incurred is the same as determined under subclause (IV), but the remaining 1⁄2

of the net investment loss is allocated ratably over 

the period beginning with the third plan year following the plan year the net investment loss is incurred and ending with the last plan year in the 

extended smoothing period. 

‘‘(VI) SPECIAL RULE FOR OVERSTATEMENT OF

LOSS.—If, for a plan year, there is an experience 

loss for the plan and the amount described in subclause (III) exceeds the total amount of the experience loss for the plan year, then the excess shall 

be treated as an experience gain. 

‘‘(VII) SPECIAL RULE IN YEARS FOR WHICH OVERALL EXPERIENCE IS GAIN.—If, for a plan year, there 

is no experience loss for the plan, then, in addition 

to amortization of net investment losses under 

clause (i), the amount described in subclause (III) 


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shall be treated as an experience gain in addition 

to any other experience gain. 

‘‘(B) SOLVENCY TEST.— ‘‘(i) IN GENERAL.—An election may be made under 

this paragraph if the election includes certification by 

the plan actuary in connection with the election that 

the plan is projected to have a funded percentage at 

the end of the first 15 plan years that is not less than 

100 percent of the funded percentage for the plan year 

of the election. 

‘‘(ii) FUNDED PERCENTAGE.— For purposes of clause 

(i), the term ‘funded percentage’ has the meaning provided in section 432(i)(2), except that the value of the 

plan’s assets referred to in section 432(i)(2)(A) shall be 

the market value of such assets. 

‘‘(iii) ACTUARIAL ASSUMPTIONS.—In making any certification under this subparagraph, the plan actuary 

shall use the same actuarial estimates, assumptions, 

and methods as those applicable for the most recent 

certification under section 432, except that the plan 

actuary may take into account benefit reductions and 

increases in contribution rates, under either funding 

improvement plans adopted under section 432(c) or 

under section 305(c) of the Employee Retirement Income Security Act of 1974 or rehabilitation plans 

adopted under section 432(e) or under section 305(e) of 

such Act, that the plan actuary reasonably anticipates 

will occur without regard to any change in status of 

the plan resulting from the election. 

‘‘(C) ADDITIONAL RESTRICTION ON BENEFIT INCREASES.— If an election is made under subparagraph (A), then, in addition to any other applicable restrictions on benefit increases, a plan amendment which is adopted on or after 

March 10, 2010, and which increases benefits may not go 

into effect during the period beginning on such date and 

ending with the second plan year beginning after such 

date unless— 

‘‘(i) the plan actuary certifies that— 

‘‘(I) any such increase is paid for out of additional contributions not allocated to the plan immediately before the election to have this paragraph apply to the plan, and 

‘‘(II) the plan’s funded percentage and projected 

credit balances for the first 3 plan years ending on 

or after such date are reasonably expected to be at 

least as high as such percentage and balances 

would have been if the benefit increase had not 

been adopted, or 

‘‘(ii) the amendment is required as a condition of 

qualification under part I or to comply with other applicable law. 

‘‘(D) TIME, FORM, AND MANNER OF ELECTION.—An election under this paragraph shall be made not later than 

June 30, 2011, and shall be made in such form and manner as the Secretary may prescribe. 


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‘‘(E) REPORTING.—A plan sponsor of a plan to which this 

paragraph applies shall— 

‘‘(i) give notice of such election to participants and 

beneficiaries of the plan, and 

‘‘(ii) inform the Pension Benefit Guaranty Corporation of such election in such form and manner as the 

Pension Benefit Guaranty Corporation may prescribe.’’. 

(b) ASSET SMOOTHING FOR MULTIEMPLOYER PLANS.— (1) ERISA AMENDMENT.—Section 304(c)(2) of the Employee 

Retirement Income Security Act of 1974 (29 U.S.C. 1084(c)(2)) 

is amended— 

(A) by redesignating subparagraph (B) as subparagraph 

(C); and 

(B) by inserting after subparagraph (A) the following 

new subparagraph: 

‘‘(B) EXTENDED ASSET SMOOTHING PERIOD FOR CERTAIN

INVESTMENT LOSSES.—The Secretary of the Treasury shall 

not treat the asset valuation method of a multiemployer 

plan as unreasonable solely because such method spreads 

the difference between expected and actual returns for either or both of the first 2 plan years ending on or after 

June 30, 2008, over a period of not more than 10 years. 

Any change in valuation method to so spread such difference shall be treated as approved, but only if, in the 

case that the plan sponsor has made an election under 

subsection (b)(8), any resulting change in asset value is 

treated for purposes of amortization as a net experience 

loss or gain.’’. 

(2) IRC AMENDMENT.—Section 431(c)(2) of the Internal Revenue Code of 1986 is amended— 

(A) by redesignating subparagraph (B) as subparagraph 

(C); and 

(B) by inserting after subparagraph (A) the following 

new subparagraph: 

‘‘(B) EXTENDED ASSET SMOOTHING PERIOD FOR CERTAIN

INVESTMENT LOSSES.—The Secretary shall not treat the 

asset valuation method of a multiemployer plan as unreasonable solely because such method spreads the difference 

between expected and actual returns for either or both of 

the first 2 plan years ending on or after June 30, 2008, 

over a period of not more than 10 years. Any change in 

valuation method to so spread such difference shall be 

treated as approved, but only if, in the case that the plan 

sponsor has made an election under subsection (b)(8), any 

resulting change in asset value is treated for purposes of 

amortization as a net experience loss or gain.’’. 

(c) EFFECTIVE DATE AND SPECIAL RULES.— 

(1) EFFECTIVE DATE.—The amendments made by this section 

shall take effect as of the first day of the first plan year beginning after June 30, 2008, except that any election a plan sponsor makes pursuant to this section or the amendments made 

thereby that affects the plan’s funding standard account for 

any plan year beginning before October 1, 2009, shall be disregarded for purposes of applying the provisions of section 305 


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of the Employee Retirement Income Security Act of 1974 and 

section 432 of the Internal Revenue Code of 1986 to that plan 

year. 

(2) DEEMED APPROVAL FOR CERTAIN FUNDING METHOD

CHANGES.—In the case of a multiemployer plan with respect to 

which an election has been made under section 304(b)(8) of the 

Employee Retirement Income Security Act of 1974 (as amended by this section) or section 431(b)(8) of the Internal Revenue 

Code of 1986 (as so amended)— 

(A) any change in the plan’s funding method for a plan 

year beginning on or after July 1, 2008, and on or before 

December 31, 2010, from a method that does not establish 

a base for experience gains and losses to one that does establish such a base shall be treated as approved by the 

Secretary of the Treasury, and 

(B) any resulting funding method change base shall be 

treated for purposes of amortization as a net experience 

loss or gain. 

SEC. 312. OPTIONAL LONGER RECOVERY PERIODS FOR MULTIEMPLOYER PLANS IN ENDANGERED OR CRITICAL STATUS. 

(a) ERISA AMENDMENTS.— 

(1) FUNDING IMPROVEMENT PERIOD.—Section 305(c)(4) of the 

Employee Retirement Income Security Act of 1974 is amended— 

(A) by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively; and 

(B) by inserting after subparagraph (B) the following 

new subparagraph: 

‘‘(C) ELECTION TO EXTEND PERIOD.—The plan sponsor of 

an endangered or seriously endangered plan may elect to 

extend the applicable funding improvement period by up to 

5 years, reduced by any extension of the period previously 

elected pursuant to section 205 of the Worker, Retiree and 

Employer Relief Act of 2008. Such an election shall be 

made not later than June 30, 2011, and in such form and 

manner as the Secretary of the Treasury may prescribe.’’. 

(2) REHABILITATION PERIOD.—Section 305(e)(4) of such Act is 

amended— 

(A) by redesignating subparagraph (B) as subparagraph 

(C); 

(B) in last sentence of subparagraph (A), by striking 

‘‘subparagraph (B)’’ each place it appears and inserting 

‘‘subparagraph (C)’’; and 

(C) by inserting after subparagraph (A) the following 

new subparagraph: 

‘‘(B) ELECTION TO EXTEND PERIOD.—The plan sponsor of 

a plan in critical status may elect to extend the rehabilitation period by up to five years, reduced by any extension 

of the period previously elected pursuant to section 205 of 

the Worker, Retiree and Employer Relief Act of 2008. Such 

an election shall be made not later than June 30, 2011, 

and in such form and manner as the Secretary of the 

Treasury may prescribe.’’. 

(b) IRC AMENDMENTS.— 


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(1) FUNDING IMPROVEMENT PERIOD.—Section 432(c)(4) of the 

Internal Revenue Code of 1986 is amended— 

(A) by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively; and 

(B) by inserting after subparagraph (B) the following 

new subparagraph: 

‘‘(C) ELECTION TO EXTEND PERIOD.—The plan sponsor of 

an endangered or seriously endangered plan may elect to 

extend the applicable funding improvement period by up to 

5 years, reduced by any extension of the period previously 

elected pursuant to section 205 of the Worker, Retiree and 

Employer Relief Act of 2008. Such an election shall be 

made not later than June 30, 2011, and in such form and 

manner as the Secretary may prescribe.’’. 

(2) REHABILITATION PERIOD.—Section 432(e)(4) of such Code 

is amended— 

(A) by redesignating subparagraph (B) as subparagraph 

(C); 

(B) in last sentence of subparagraph (A), by striking 

‘‘subparagraph (B)’’ each place it appears and inserting 

‘‘subparagraph (C)’’; and 

(C) by inserting after subparagraph (A) the following 

new subparagraph: 

‘‘(B) ELECTION TO EXTEND PERIOD.—The plan sponsor of 

a plan in critical status may elect to extend the rehabilitation period by up to five years, reduced by any extension 

of the period previously elected pursuant to section 205 of 

the Worker, Retiree and Employer Relief Act of 2008. Such 

an election shall be made not later than June 30, 2011, 

and in such form and manner as the Secretary may prescribe.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply with respect to funding improvement periods and rehabilitation periods in connection with funding improvement plans 

and rehabilitation plans adopted or updated on or after the date of 

the enactment of this Act. 

SEC. 313. MODIFICATION OF CERTAIN AMORTIZATION EXTENSIONS 

UNDER PRIOR LAW. 

(a) IN GENERAL.—In the case of an amortization extension that 

was granted to a multiemployer plan under the terms of section 

304 of the Employee Retirement Income Security Act of 1974 (as 

in effect immediately prior to enactment of the Pension Protection 

Act of 2006) or section 412(e) of the Internal Revenue Code (as so 

in effect), the determination of whether any financial condition on 

the amortization extension is satisfied shall be made by assuming 

that for any plan year that contains some or all of the period beginning June 30, 2008, and ending October 31, 2008, the actual rate 

of return on the plan assets was equal to the interest rate used for 

purposes of charging or crediting the funding standard account in 

such plan year, unless the plan sponsor elects otherwise in such 

form and manner as shall be prescribed by the Secretary of Treasury. 

(b) REVOCATION OF AMORTIZATION EXTENSIONS.—The plan sponsor of a multiemployer plan may, in such form and manner and 

after such notice as may be prescribed by the Secretary, revoke any 


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amortization extension described in subsection (a), effective for 

plan years following the date of the revocation. 

SEC. 314. ALTERNATIVE DEFAULT SCHEDULE FOR PLANS IN ENDANGERED OR CRITICAL STATUS. 

(a) ERISA AMENDMENTS.— (1) ENDANGERED STATUS.—Section 305(c)(7) of the Employee 

Retirement Income Security Act of 1974 (29 U.S.C. 1085(c)(7)) 

is amended by adding at the end the following new subparagraph: 

‘‘(D) ALTERNATIVE DEFAULT SCHEDULE.— ‘‘(i) IN GENERAL.—A plan sponsor may, for purposes 

of this paragraph, designate an alternative schedule of 

contribution rates and related benefit changes meeting 

the requirements of clause (ii) as the default schedule, 

in lieu of the default schedule referred to in subparagraph (A). 

‘‘(ii) REQUIREMENTS.—An alternative schedule designated pursuant to clause (i) meets the requirements 

of this clause if such schedule has been adopted in collective bargaining agreements covering at least 75 percent of the active participants as of the date of the 

designation.’’. 

(2) CRITICAL STATUS.—Section 305(e)(3) of such Act (29 

U.S.C. 1085(e)(3)) is amended by adding at the end the following new subparagraph: 

‘‘(D) ALTERNATIVE DEFAULT SCHEDULE.— 

‘‘(i) IN GENERAL.—A plan sponsor may, for purposes 

of subparagraph (C), designate an alternative schedule 

of contribution rates and related benefit changes meeting the requirements of clause (ii) as the default 

schedule, in lieu of the default schedule referred to in 

subparagraph (C)(i). 

‘‘(ii) REQUIREMENTS.—An alternative schedule designated pursuant to clause (i) meets the requirements 

of this clause if such schedule has been adopted in collective bargaining agreements covering at least 75 percent of the active participants as of the date of the 

designation.’’. 

(b) INTERNAL REVENUE CODE AMENDMENTS.— 

(1) ENDANGERED STATUS.—Section 432(c)(7) of the Internal 

Revenue Code of 1986 is amended by adding at the end the following new subparagraph: 

‘‘(C) ALTERNATIVE DEFAULT SCHEDULE.— 

‘‘(i) IN GENERAL.—A plan sponsor may, for purposes 

of this paragraph, designate an alternative schedule of 

contribution rates and related benefit changes meeting 

the requirements of clause (ii) as the default schedule, 

in lieu of the default schedule referred to in subparagraph (A). 

‘‘(ii) REQUIREMENTS.—An alternative schedule designated pursuant to clause (i) meets the requirements 

of this clause if such schedule has been adopted in collective bargaining agreements covering at least 75 percent of the active participants as of the date of the 

designation.’’. 


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(2) CRITICAL STATUS.—Section 432(e)(3) of such Code is 

amended by adding at the end the following new subparagraph: 

‘‘(D) ALTERNATIVE DEFAULT SCHEDULE.— ‘‘(i) IN GENERAL.—A plan sponsor may, for purposes 

of subparagraph (C), designate an alternative schedule 

of contribution rates and related benefit changes meeting the requirements of clause (ii) as the default 

schedule, in lieu of the default schedule referred to in 

subparagraph (C)(i). 

‘‘(ii) REQUIREMENTS.—An alternative schedule designated pursuant to clause (i) meets the requirements 

of this clause if such schedule has been adopted in collective bargaining agreements covering at least 75 percent of the active participants as of the date of the 

designation.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to designations of default schedules by plan sponsors on 

or after the date of the enactment of this Act. 

(d) CROSS-REFERENCE.—For sunset of the amendments made by 

this section, see section 221(c) of the Pension Protection Act of 

2006. 

SEC. 315. TRANSITION RULE FOR CERTIFICATIONS OF PLAN STATUS. 

(a) IN GENERAL.—A plan actuary shall not be treated as failing 

to meet the requirements of section 305(b)(3)(A) of the Employee 

Retirement Income Security Act of 1974 and section 432(b)(3)(A) of 

the Internal Revenue Code of 1986 in connection with a certification required under such sections the deadline for which is after 

the date of the enactment of this Act if the plan actuary makes 

such certification at any time earlier than 75 days after the date 

of the enactment of this Act. 

(b) REVISION OF PRIOR CERTIFICATION.— (1) IN GENERAL.—If— 

(A) a plan sponsor makes an election under section 

304(b)(8) of the Employee Retirement Income Security Act 

of 1974 and section 431(b)(8) of the Internal Revenue Code 

of 1986, or under section 304(c)(2)(B) of such Act and section 432(c)(2)(B) such Code, with respect to a plan for a 

plan year beginning on or after October 1, 2009, and 

(B) the plan actuary’s certification of the plan status for 

such plan year (hereinafter in this subsection referred to 

as ‘‘original certification’’) did not take into account any 

election so made, 

then the plan sponsor may direct the plan actuary to make a 

new certification with respect to the plan for the plan year 

which takes into account such election (hereinafter in this subsection referred to as ‘‘new certification’’) if the plan’s status 

under section 305 of such Act and section 432 of such Code 

would change as a result of such election. Any such new certification shall be treated as the most recent certification referred 

to in section 304(b)(3)(B)(iii) of such Act and section 

431(b)(8)(B)(iii) of such Code. 

(2) DUE DATE FOR NEW CERTIFICATION.—Any such new certification shall be made pursuant to section 305(b)(3) of such 

Act and section 432(b)(3) of such Code; except that any such 


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new certification shall be made not later than 75 days after the 

date of the enactment of this Act. 

(3) NOTICE.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), any such new certification shall be treated as the 

original certification for purposes of section 305(b)(3)(D) of 

such Act and section 432(b)(3)(D) of such Code. 

(B) NOTICE ALREADY PROVIDED.—In any case in which 

notice has been provided under such sections with respect 

to the original certification, not later than 30 days after 

the new certification is made, the plan sponsor shall provide notice of any change in status under rules similar to 

the rules such sections. 

(4) EFFECT OF CHANGE IN STATUS.—If a plan ceases to be in 

critical status pursuant to the new certification, then the plan 

shall, not later than 30 days after the due date described in 

paragraph (2), cease any restriction of benefit payments, and 

imposition of contribution surcharges, under section 305 of 

such Act and section 432 of such Code by reason of the original 

certification. 

Subtitle B—Fee Disclosure 

SEC. 321. SHORT TITLE OF SUBTITLE. 

This subtitle may be cited as the ‘‘Defined Contribution Fee Disclosure Act of 2010’’. 

SEC. 322. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974. 

(a) REQUIREMENTS RELATING TO SERVICE PROVIDERS AND PLAN

ADMINISTRATORS OF INDIVIDUAL ACCOUNT PLANS.— 

(1) IN GENERAL.—Part 1 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended— 

(A) by redesignating section 111 (29 U.S.C. 1031) as section 113; and 

(B) by inserting after section 110 (29 U.S.C. 1030) the 

following new sections: 

‘‘SEC. 111. REQUIREMENT TO PROVIDE NOTICE OF PLAN FEE INFORMATION TO PLAN ADMINISTRATORS. 

‘‘(a) INITIAL STATEMENT OF SERVICES PROVIDED AND REVENUES

RECEIVED.— 

‘‘(1) IN GENERAL.—In any case in which a service provider 

enters into a contract or arrangement to provide services to an 

individual account plan, the service provider shall, before entering into such contract or arrangement, provide to the plan 

administrator a single written statement which includes, with 

respect to the first plan year covered under such contract or arrangement, the following information: 

‘‘(A) A detailed description of the services which will be 

provided to the plan by the service provider, the amount 

of total expected annual revenue with respect to such services, the manner in which such revenue will be collected, 

and the extent to which such revenue varies between specific investment options. 


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‘‘(B)(i) In the case of a service provider who is providing 

recordkeeping services with respect to any investment option, such information as is necessary for the plan administrator to satisfy the requirements of subparagraphs 

(B)(ii)(IV) and (C) of section 105(a)(2) and paragraphs (1) 

and (3) of section 112(a) with respect to such option, including specifying the method used by the service provider 

in disclosing or estimating expenses under subparagraphs 

(C)(iv) and (E) of section 105(a)(2). 

‘‘(ii) To the extent provided in regulations issued by the 

Secretary, clause (i) shall not apply in the case of a service 

provider described in such clause if the service provider receives a written notification from the plan administrator 

that the information described in such clause in connection 

with the investment option is provided by another service 

provider pursuant to a contract or arrangement to provide 

services to the plan. 

‘‘(C) A statement indicating— 

‘‘(i) the identity of any investment options offered 

under the plan with respect to which the service provider provides substantial investment, trustee, custodial, or administrative services, and 

‘‘(ii) in the case of any investment option, whether 

the service provider expects to receive any component 

of total expected annual revenue described in paragraph (2)(A)(ii)(II) with respect to such option and the 

amount of any such component. 

‘‘(D) The portion of total expected annual revenue which 

is properly allocable to each of the following: 

‘‘(i) Administration and recordkeeping. 

‘‘(ii) Investment management. 

‘‘(iii) Other services or amounts not described in 

clause (i) or (ii). 

‘‘(2) DEFINITION OF TOTAL EXPECTED ANNUAL REVENUE.—For 

purposes of this section— 

‘‘(A) IN GENERAL.—The term ‘total expected annual revenue’ means, with respect to any plan year— 

‘‘(i) any amount expected to be received during such 

plan year from the plan (including amounts paid from 

participant accounts), any participant or beneficiary, 

or any plan sponsor in connection with the contract or 

arrangement referred to in paragraph (1), and 

‘‘(ii) any amount not taken into account under clause 

(i) which is expected to be received during such plan 

year by the service provider in connection with— 

‘‘(I) plan administration, recordkeeping, consulting, management, or investment or other service activities undertaken by the service provider 

with respect to the plan, or 

‘‘(II) plan administration, recordkeeping, consulting, management, or investment or other service activities undertaken by any other person with 

respect to the plan. 

‘‘(B) EXPRESSED AS DOLLAR AMOUNT OR PERCENTAGE OF

ASSETS.—Total expected annual revenue and any amount 


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indicated under paragraph (1)(C)(ii) may be expressed as 

a dollar amount or as a percentage of assets (or a combination thereof), as appropriate. To the extent that total expected annual revenue is expressed as a percentage of assets, such percentage shall be properly allocated among 

clauses (i), (ii), and (iii) of paragraph (1)(D). 

‘‘(C) PROVISION OF FEE SCHEDULE FOR CERTAIN PARTICI- PANT INITIATED TRANSACTIONS.—In the case of amounts expected to be received from participants or beneficiaries 

under the plan (or from an account of a participant or beneficiary) as a fee or charge in connection with a transaction 

initiated by the participant (other than loads, commissions, 

brokerage fees, and other investment related transactions)— 

‘‘(i) such amounts shall not be taken into account in 

determining total expected annual revenue, and 

‘‘(ii) the service provider shall provide to the plan 

administrator, as part of the statement referred to in 

paragraph (1), a fee schedule which describes each 

such fee or charge, the amount thereof, and the manner in which such amount is collected. 

‘‘(D) ESTIMATIONS.—In determining under this subsection any amount which is expected to be received by the 

service provider, the service provider shall provide a reasonable estimate of such amount and shall indicate in the 

statement referred to in paragraph (1) whether such 

amount disclosed is an estimate. Any such estimate shall 

be based on reasonable assumptions specified in such 

statement. 

‘‘(3) ALLOCATION RULES.—The Secretary shall provide rules 

for defining total expected annual revenue and for the appropriate and consistent allocation of total expected annual revenue among clauses (i), (ii), and (iii) of paragraph (1)(D), except 

that the entire amount of such revenue shall be allocated 

among such clauses and no amount may be taken into account 

under more than one clause. 

‘‘(4) DISCLOSURE OF DIFFERENT PRICING OF INVESTMENT OP- TIONS.—In the case of investment options with more than one 

share class or price level, the Secretary shall prescribe regulations for the disclosure of the different share classes or price 

levels available as part of the statement in paragraph (1). Such 

regulations shall provide guidance with respect to the disclosure of the basis for qualifying for such share classes or price 

levels, which may include amounts invested, number of participants, or other factors. 

‘‘(5) DISCLOSURE OF INVESTMENT TRANSACTION COSTS.—To 

the extent provided in regulations issued by the Secretary, a 

service provider shall separately disclose the transaction costs 

(including sales commissions) for each investment option for 

the preceding year. 

‘‘(b) ANNUAL STATEMENTS.—With respect to each plan year after 

the plan year covered by the statement described in subsection (a), 

the service provider shall provide the plan administrator a single 

written statement which includes the information described in subsection (a) with respect to such subsequent plan year. 


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‘‘(c) MATERIAL CHANGE STATEMENTS.—In the case of any event or 

other change during a plan year which causes the information included in any statement described in subsection (a) or (b) with respect to such plan year to become materially incorrect, the service 

provider shall provide the plan administrator a written statement 

providing the corrected information not later than 30 days after the 

service provider knows, or exercising reasonable diligence would 

have known, of such event or other change. 

‘‘(d) TIME AND MANNER OF PROVIDING STATEMENT AND OTHER

MATERIALS.—The statement referred to in subsections (a)(1) and 

(b) shall be made at such time and in such manner as the Secretary may provide. Other materials required to be provided under 

this section shall be provided in such manner as the Secretary may 

provide. All information included in such statements and other materials shall be presented in a manner which is easily understood 

by the typical plan administrator. 

‘‘(e) EXCEPTION FOR SMALL SERVICE PROVIDERS.—The requirements of this section shall not apply with respect to any contract 

or arrangement for services provided with respect to an individual 

account plan for any plan year if— 

‘‘(1) the total annual revenue expected by the service provider to be received with respect to the plan for such plan year 

is less than $5,000, and 

‘‘(2) the service provider provides a written statement to the 

plan administrator that the total annual revenue expected by 

the service provider to be received with respect to the plan is 

less than $5,000. 

Service providers who expect to receive de minimis annual revenue 

from the plan need not provide the written statement described in 

paragraph (2). The Secretary may by regulation or other guidance 

adjust the dollar amount specified in this subsection. 

‘‘(f) DEFINITION OF SERVICE PROVIDER.—For purposes of this section— 

‘‘(1) IN GENERAL.—The term ‘service provider’ includes any 

person providing administration, recordkeeping, consulting, investment management services, or investment advice to an individual account plan under a contract or arrangement. 

‘‘(2) CONTROLLED GROUPS TREATED AS ONE SERVICE PRO- VIDER.—All persons which would be treated as a single employer under subsection (b) or (c) of section 414 of the Internal 

Revenue Code of 1986 if section 1563(a)(1) of such Code were 

applied— 

‘‘(A) except as provided by subparagraph (B), by substituting ‘more than 50 percent’ for ‘at least 80 percent’ 

each place it appears therein, or 

‘‘(B) for purposes of subsection (a)(1)(C)(i), by substituting ‘at least 20 percent’ for ‘at least 80 percent’ each 

place it appears therein, 

shall be treated as one person for purposes of this section. 

‘‘SEC. 112. REQUIREMENT TO PROVIDE NOTICE TO PARTICIPANTS OF 

PLAN FEE INFORMATION. 

‘‘(a) DISCLOSURES TO PARTICIPANTS AND BENEFICIARIES.— 

‘‘(1) ADVANCE NOTICE OF AVAILABLE INVESTMENT OPTIONS.— 

‘‘(A) IN GENERAL.—The plan administrator of an applicable individual account plan shall provide to the participant 


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or beneficiary notice of the investment options available 

under the plan before— 

‘‘(i) the earliest date provided for under the plan for 

the participant’s initial investment of any contribution 

made on behalf of such participant, and 

‘‘(ii) the effective date of any change in the list of investment options available under the plan, unless 

such advance notice is impracticable, and in such case, 

as soon as is practicable. 

‘‘(B) INFORMATION INCLUDED IN NOTICE.—The notice required under subparagraph (A) shall— 

‘‘(i) set forth, with respect to each available investment option— 

‘‘(I) the name of the option, 

‘‘(II) a general description of the option’s investment objectives and principal investment strategies, principal risk and return characteristics, and 

the name of the option’s investment manager, 

‘‘(III) whether the investment option is designed 

to be a comprehensive, stand-alone investment for 

retirement that provides varying degrees of longterm appreciation and capital preservation 

through a mix of equity and fixed income exposures, 

‘‘(IV) the extent to which the investment option 

is actively managed or passively managed in relation to an index and the difference between active 

management and passive management, 

‘‘(V) where, and the manner in which, additional 

plan-specific, option-specific, and generally available investment information may be obtained, and 

‘‘(VI) a statement explaining that investment 

options should not be evaluated solely on the basis 

of the charges for each option but should also be 

based on consideration of other key factors, including the risk level of the option, the investment 

objectives of the option, historical returns of the 

option, and the participant’s personal investment 

objectives, 

‘‘(ii) include a statement of the right under paragraph (2) of participants and beneficiaries to request, 

and a description of how a participant or beneficiary 

may request, a copy of the statements received by the 

plan administrator under section 111 with respect to 

the plan, and 

‘‘(iii) include the plan fee comparison chart described 

in subparagraph (C). 

‘‘(C) PLAN FEE COMPARISON CHART.— 

‘‘(i) IN GENERAL.— ‘‘(I) IN GENERAL.—The notice provided under 

this paragraph shall include a plan fee comparison chart consisting of a comparison of the service 

and investment charges that will or could be assessed against the account of the participant or 

beneficiary with respect to the plan year. 


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‘‘(II) EXPRESSED AS DOLLAR AMOUNT OR FORMULA.—For purposes of this subparagraph, such 

charges shall be provided in the form of a dollar 

amount or as a formula (such as a percentage of 

assets), as appropriate. 

‘‘(ii) CATEGORIZATION OF CHARGES.—The plan fee 

comparison chart shall provide information in relation 

to the following categories of charges that will or could 

be assessed against the account of the participant or 

beneficiary: 

‘‘(I) ASSET-BASED CHARGES SPECIFIC TO INVESTMENT.—Charges that vary depending on the investment options selected by the participant or 

beneficiary, including the annual operating expenses of the investment option and investmentspecific asset-based charges (such as loads, commissions, brokerage fees, exchange fees, redemption fees, and surrender charges). Except as provided by the Secretary in regulations under this 

section, the information relating to such charges 

shall include a statement noting any charges for 

1 or more investment options which pay for services other than investment management. 

‘‘(II) RECURRING ASSET-BASED CHARGES NOT SPECIFIC TO INVESTMENT.—Charges that are assessed 

as a percentage of the total assets in the account 

of the participant or beneficiary, regardless of the 

investment option selected. 

‘‘(III) ADMINISTRATIVE AND TRANSACTION-BASED

CHARGES.—Administration and transaction-based 

charges, including fees charged to participants to 

cover plan administration, compliance, and recordkeeping costs, plan loan origination fees, possible 

redemption fees, and possible surrender charges, 

that are not assessed as a percentage of the total 

assets in the account and are either automatically 

deducted each year or result from certain transactions engaged in by the participant or beneficiary. 

‘‘(IV) OTHER CHARGES.—Any other charges 

which may be deducted from participants’ or beneficiaries’ accounts and which are not described in 

subclauses (I), (II), and (III). 

‘‘(iii) FEES AND HISTORICAL RETURNS.—The plan fee 

comparison chart shall include— 

‘‘(I) the historical returns, net of fees and expenses, for the previous year, 5 years, and 10 

years (or for the period since inception, if shorter) 

with respect to such investment option, and 

‘‘(II) the historical returns of an appropriate 

benchmark, index, or other point of comparison for 

each such period. 

‘‘(D) MODEL NOTICES.—The Secretary shall prescribe one 

or more model notices that may be used for purposes of 


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satisfying the requirements of this paragraph, including 

model plan fee comparison charts. 

‘‘(E) ESTIMATIONS.—For purposes of providing the notice 

required under this paragraph, the plan administrator 

may provide a reasonable and representative estimate for 

any charges or percentages disclosed under subparagraph 

(B) or (C) and shall indicate whether the amount of any 

such charges or percentages disclosed is an estimate. 

‘‘(2) DISCLOSURE OF SERVICE PROVIDER STATEMENTS.—The 

plan administrator shall provide to any participant or beneficiary a copy of any statement received pursuant to section 

111 within 30 days after receipt of a request for such a statement. 

‘‘(3) NOTICE OF MATERIAL CHANGES.—In the case of any event 

or other change which causes the information included in any 

notice described in paragraph (1) to become materially incorrect, the plan administrator shall provide participants and 

beneficiaries a written statement providing the corrected information not later than 30 days after the plan administrator 

knows, or exercising reasonable diligence would have known, of 

such event or other change. 

‘‘(4) TIME AND MANNER OF PROVIDING NOTICES AND DISCLOSURES.— 

‘‘(A) IN GENERAL.—The notices described in paragraph 

(1) shall be provided at such times and in such manner as 

the Secretary may provide. Other notices and materials required to be provided under this subsection shall be provided in such manner as the Secretary may provide. 

‘‘(B) MANNER OF PRESENTATION.— 

‘‘(i) IN GENERAL.—All information included in such 

notices or explanations shall be presented in a manner 

which is easily understood by the typical participant. 

‘‘(ii) GENERIC EXAMPLE OF OPERATING EXPENSES OF

INVESTMENT OPTIONS.—The information described in 

paragraph (1)(C)(ii)(I) shall include a generic example 

describing the charges that would apply during an annual period with respect to a $10,000 investment in 

the investment option. 

‘‘(b) APPLICABLE INDIVIDUAL ACCOUNT PLAN.—For purposes of 

this section, the term ‘applicable individual account plan’ means 

the portion of any individual account plan which permits a participant or beneficiary to exercise control over assets in his or her account. 

‘‘(c) REGULATIONS.—The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry 

out the purposes of this section, including regulations or other 

guidance which— 

‘‘(1) provide a later deadline for providing the notice of investment menu changes described in subsection (a)(3) in appropriate circumstances, and 

‘‘(2) provide guidelines, and a safe harbor, for the selection 

of an appropriate benchmark, index, or other point of comparison for an investment option under subsection 

(a)(1)(C)(iii)(II).’’. 


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(2) CLERICAL AMENDMENT.—The table of contents in section 

1 of such Act is amended by striking the item relating to section 111 and inserting the following new items: 

‘‘Sec. 111. Requirement to provide notice of plan fee information to plan administrators. 

‘‘Sec. 112. Requirement to provide notice to participants of plan fee information. 

‘‘Sec. 113. Repeal and effective date.’’. 

(b) QUARTERLY BENEFIT STATEMENTS.—Section 105 of such Act 

(29 U.S.C. 1025) is amended— 

(1) in subsection (a)(2)— 

(A) by redesignating subparagraph (C) as subparagraph 

(G); 

(B) in subparagraph (B)(ii)— 

(i) in subclause (II), by striking ‘‘diversified, and’’ 

and inserting ‘‘diversified,’’; 

(ii) in subclause (III) by striking the period and inserting ‘‘, and’’; and 

(iii) by adding after subclause (III) the following new 

subclause: 

‘‘(IV) with respect to the portion of a participant’s account for which the participant has the 

right to direct the investment of assets, the information described in subparagraph (C).’’; and 

(C) by inserting after subparagraph (B) the following 

new subparagraphs: 

‘‘(C) QUARTERLY BENEFIT STATEMENTS.—The plan administrator shall provide to each participant and beneficiary, 

at least once each calendar quarter, an explanation describing the investment options in which the participant’s 

or beneficiary’s account is invested as of the last day of the 

preceding quarter. Such explanation shall provide, to the 

extent applicable, the following for the preceding quarter: 

‘‘(i) As of the last day of the quarter, a statement of 

the different asset classes that the participant’s or 

beneficiary’s account is invested in and the percentage 

of the account allocated to each asset class. 

‘‘(ii) A statement of the starting and ending balance 

of the participant’s or beneficiary’s account for such 

quarter. 

‘‘(iii) A statement of the total contributions made to 

the participant’s or beneficiary’s account during the 

quarter and a separate statement of— 

‘‘(I) the amount of such contributions, and the 

total amount of any restorative payments, which 

were made by the employer during the quarter, 

and 

‘‘(II) the amount of such contributions which 

were made by the employee. 

‘‘(iv) A statement of the total fees and expenses 

which were directly deducted from the participant’s or 

beneficiary’s account during the quarter and an 

itemization of such fees and expenses. 

‘‘(v) A statement of the net returns for the plan year 

to date, expressed as a percentage, and a statement as 


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to whether the net returns include amounts described 

in clause (iv). 

‘‘(vi) With respect to each investment option in 

which the participant or beneficiary was invested as of 

the last day of the quarter, the following: 

‘‘(I) A statement of the percentage of the participant’s or beneficiary’s account that is invested in 

such option as of the last day of such quarter. 

‘‘(II) A statement of the starting and ending balance of the participant’s or beneficiary’s account 

that is invested in such option for such quarter. 

‘‘(III) A statement of the annual operating expenses of the investment option. 

‘‘(IV) A statement of whether the disclosure described in clause (iv) includes the annual operating expenses of the investment options of the 

participant or beneficiary. 

‘‘(vii) The statement described in section 

112(a)(1)(B)(i)(VI). 

‘‘(viii) A statement regarding how a participant or 

beneficiary may access the information required to be 

disclosed under section 112(a)(1). 

‘‘(D) MODEL EXPLANATIONS.—The Secretary shall prescribe one or more model explanations that may be used 

for purposes of satisfying the requirements of subparagraph (C). 

‘‘(E) DETERMINATION OF EXPENSES.—For purposes of subparagraph (C)(v)(III)— 

‘‘(i) Expenses may be expressed as a dollar amount 

or as a percentage of assets (or a combination thereof). 

‘‘(ii) The plan administrator may provide disclosure 

of the expenses for the quarter or may provide a reasonable and representative estimate of such expenses 

and shall indicate any such estimate as being an estimate. Any such estimate shall be based on reasonable 

assumptions stated together with such estimate. 

‘‘(iii) To the extent that estimated expenses are expressed as a percentage of assets, the disclosure shall 

also include one of the following, stated in dollar 

amounts: 

‘‘(I) an estimate of the expenses for the quarter 

based on the amount invested in the option; or 

‘‘(II) an example describing the expenses that 

would apply during the quarter with respect to a 

hypothetical $10,000 investment in the option. 

‘‘(F) ANNUAL COMPLIANCE FOR SMALL PLANS.—A plan 

that has fewer than 100 participants and beneficiaries as 

of the first day of the plan year may provide the explanation described in subparagraph (C) on an annual rather 

than a quarterly basis.’’. 

(c) ASSISTANCE FROM THE DEPARTMENT OF LABOR.—Section 105 

of such Act (29 U.S.C. 1025) is amended by adding at the end the 

following new subsections: 

‘‘(d) ASSISTANCE TO SMALL EMPLOYERS.—The Secretary shall 

make available to employers with 100 or fewer employees— 


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‘‘(1) educational and compliance materials designed to assist 

such employers in selecting and monitoring service providers 

for individual account plans which permit a participant or beneficiary to exercise control over the assets in the account of the 

participant or beneficiary, investment options under such 

plans, and charges relating to such options, and 

‘‘(2) services designed to assist such employers in finding and 

understanding affordable investment options for such plans 

and in comparing the investment performance of, and charges 

for, such options on an ongoing basis against appropriate 

benchmarks or other appropriate measures. 

‘‘(e) ASSISTANCE TO PLAN SPONSORS AND PLAN PARTICIPANTS AND

BENEFICIARIES.—The Secretary shall provide plan administrators 

and plan sponsors of individual account plans and participants and 

beneficiaries under such plans assistance with any questions or 

problems regarding compliance with the requirements of subparagraphs (B)(ii)(IV) and (C) of subsection (a)(2) and section 112.’’. 

(d) ENFORCEMENT.— (1) PENALTIES.—Section 502 of such Act (29 U.S.C. 1132) is 

amended— 

(A) in subsection (a)(6), by striking ‘‘under paragraph 

(2)’’ and all that follows through ‘‘subsection (c)’’ and inserting ‘‘under paragraph (2), (4), (5), (6), (7), (8), (9), (10), 

(11), or (12) of subsection (c)’’; and 

(B) in subsection (c), by redesignating the second paragraph (10) as paragraph (13), and by inserting after the 

first paragraph (10) the following new paragraphs: 

‘‘(11)(A) In the case of any failure by a service provider (as defined in section 111(f)(1)) to provide a statement in violation of section 111, the service provider may be assessed by the Secretary a 

civil penalty of up to $1,000 for each day in the noncompliance period. 

‘‘(B) For purposes of subparagraph (A), the noncompliance period 

with respect to the failure to provide any statement is the period 

beginning on the date that such statement was required to be provided and ending on the date that such statement is provided or 

the failure is otherwise corrected. 

‘‘(C)(i) The total amount of a penalty assessed under this paragraph on any service provider with respect to any individual account plan for any plan year shall not exceed an amount equal to 

the lesser of— 

‘‘(I) 10 percent of the assets of the plan, determined as of the 

first day of such plan year, or 

‘‘(II) $1,000,000. 

‘‘(ii) No penalty shall be imposed by subparagraph (A) on any 

failure if— 

‘‘(I) the service provider subject to liability for the penalty 

under subparagraph (A) exercised reasonable diligence to meet 

the requirement with respect to which the failure relates, and 

‘‘(II) such service provider provides the information required 

under section 111 during the 30-day period beginning on the 

date such person knew, or exercising reasonable diligence 

would have known, that such failure existed. 

‘‘(iii) In the case of a failure which is due to reasonable cause and 

not to willful neglect, the Secretary may waive part or all of the 


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penalty under subparagraph (A) to the extent that the payment of 

such penalty would be excessive or otherwise inequitable relative 

to the failure involved. 

‘‘(D) The penalty imposed under this paragraph with respect to 

any failure shall be reduced by the amount of any tax imposed on 

such person with respect to such failure under section 4980J of the 

Internal Revenue Code of 1986. 

‘‘(12)(A) Any plan administrator with respect to a plan who fails 

or refuses to provide a notice, explanation, or statement to participants and beneficiaries in accordance with subparagraphs 

(B)(ii)(IV) and (C) of section 105(a)(2) and section 112 may be assessed by the Secretary a civil penalty of up to $110 for each day 

in the noncompliance period. 

‘‘(B) For purposes of subparagraph (A), the noncompliance period 

with respect to the failure to provide any notice, explanation, or 

statement referred to in subparagraph (B)(ii)(IV) or (C) of section 

105(a)(2) or section 112 with respect to any participant or beneficiary is the period beginning on the date that such notice, explanation, or statement was required to be provided and ending on the 

date that such notice, explanation, or statement is provided or the 

failure is otherwise corrected. 

‘‘(C)(i) The total amount of penalty assessed under this paragraph with respect to any plan for any plan year shall not exceed 

an amount equal to the lesser of— 

‘‘(I) 10 percent of the assets of the plan, determined as of the 

first day of such plan year, or ‘‘(II) $500,000. 

‘‘(ii) No penalty shall be imposed under subparagraph (A) on any 

failure to meet the requirements of subparagraphs (B)(ii)(IV) and 

(C) of section 105(a)(2) and section 112 if— 

‘‘(I) any person subject to liability for the penalty under subparagraph (A) exercised reasonable diligence to meet such requirements, and 

‘‘(II) such person provides the notice, explanation, or statement to which the failure relates during the 30-day period beginning on the date such person knew, or exercising reasonable 

diligence would have known, that such failure existed. 

‘‘(iii) In the case of a failure which is due to reasonable cause and 

not to willful neglect, the Secretary shall waive part or all of the 

penalty under subparagraph (A) to the extent that the payment of 

such penalty would be excessive or otherwise inequitable relative 

to the failure involved. 

‘‘(iv) The penalty imposed under this paragraph with respect to 

any failure shall be reduced by the amount of any tax imposed on 

such person with respect to such failure under section 4980K of the 

Internal Revenue Code of 1986.’’. 

(2) ENFORCEMENT COORDINATION AND REVIEW BY THE DE- PARTMENT OF LABOR.—Section 502 of such Act (29 U.S.C. 1132) 

is amended by adding at the end the following new subsection: 

‘‘(n) ENFORCEMENT COORDINATION OF CERTAIN DISCLOSURE RE- QUIREMENTS RELATING TO INDIVIDUAL ACCOUNT PLANS AND REVIEW

BY THE DEPARTMENT OF LABOR.— ‘‘(1) NOTIFICATION AND ACTION RELATING TO SERVICE PRO- VIDERS.—The Secretary shall notify the applicable regulatory 

authority in any case in which the Secretary determines that 


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a service provider is engaged in a pattern or practice that precludes compliance by plan administrators with subparagraphs 

(B)(ii)(IV) and (C) of section 105(a)(2) and section 112. The Secretary shall, in consultation with the applicable authority, take 

such timely enforcement action under this title as is necessary 

to assure that such pattern or practice ceases and desists and 

assess any appropriate penalties. 

‘‘(2) ANNUAL AUDIT OF REPRESENTATIVE SAMPLING OF INDIVIDUAL ACCOUNT PLANS.—The Secretary shall annually audit a 

representative sampling of individual account plans covered by 

this title to determine compliance with the requirements of 

subparagraphs (B)(ii)(IV) and (C) of section 105(a)(2), section 

111, and section 112. The Secretary shall annually report the 

results of such audit and any related recommendations of the 

Secretary to the Committee on Education and Labor of the 

House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate.’’. 

(e) REVIEW AND REPORT TO THE CONGRESS BY SECRETARY OF

LABOR RELATING TO REPORTING AND DISCLOSURE REQUIREMENTS.— 

(1) STUDY.—As soon as practicable after the date of the enactment of this Act, the Secretary of Labor shall review the reporting and disclosure requirements of part 1 of subtitle B of 

title I of the Employee Retirement Income Security Act of 1974 

and related provisions of the Pension Protection Act of 2006. 

(2) REPORT.—Not later than 18 months after the date of the 

enactment of this Act, the Secretary of Labor, in consultation 

with the Secretary of the Treasury, shall make such recommendations as the Secretary of Labor considers appropriate 

to the appropriate committees of the Congress to consolidate, 

simplify, standardize, and improve the applicable reporting 

and disclosure requirements so as to simplify reporting for employee pension benefit plans and ensure that needed understandable information is provided to participants and beneficiaries of such plans. 

SEC. 323. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986. 

(a) IN GENERAL.—Chapter 43 of the Internal Revenue Code of 

1986 (relating to qualified pension, etc. plans) is amended by adding at the end the following new sections: 

‘‘SEC. 4980J. FAILURE TO PROVIDE NOTICE OF PLAN FEE INFORMATION TO PLAN ADMINISTRATORS. 

‘‘(a) IMPOSITION OF TAX.— 

‘‘(1) IN GENERAL.—There is hereby imposed a tax on each 

failure of a service provider to meet the requirements of paragraph (2) with respect to any applicable defined contribution 

plan. 

‘‘(2) FAILURES DESCRIBED.—The failures described in this 

paragraph are— 

‘‘(A) any failure to provide an initial statement described 

in subsection (d), 

‘‘(B) any failure to provide an annual statement described in subsection (e), and 

‘‘(C) any failure to provide a material change statement 

described in subsection (f). 

‘‘(b) AMOUNT OF TAX.— 


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‘‘(1) IN GENERAL.—The amount of the tax imposed by subsection (a) on any failure shall be $1,000 for each day in the 

noncompliance period. 

‘‘(2) NONCOMPLIANCE PERIOD.—For purposes of paragraph 

(1), the noncompliance period with respect to the failure to provide any statement is the period beginning on the date that 

such statement was required to be provided and ending on the 

date that such statement is provided or the failure is otherwise 

corrected. 

‘‘(c) LIMITATIONS.— 

‘‘(1) AGGREGATE LIMITATION.—The total amount of tax imposed by this section on any service provider with respect to 

any applicable defined contribution plan for any plan year 

shall not exceed an amount equal to the lesser of— 

‘‘(A) 10 percent of the assets of the plan, determined as 

of the first day of such plan year, or 

‘‘(B) $1,000,000. 

‘‘(2) TAX NOT TO APPLY TO FAILURES CORRECTED WITHIN 30

DAYS.—No tax shall be imposed by subsection (a) on any failure if— 

‘‘(A) the service provider subject to liability for the tax 

under subsection (a) exercised reasonable diligence to meet 

the requirement with respect to which the failure relates, 

and 

‘‘(B) such service provider provides the information required under subsection (a) during the 30-day period beginning on the date such person knew, or exercising reasonable diligence would have known, that such failure existed. 

‘‘(3) WAIVER BY SECRETARY.—In the case of a failure which 

is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by subsection 

(a) to the extent that the payment of such tax would be excessive or otherwise inequitable relative to the failure involved. 

‘‘(d) INITIAL STATEMENT OF SERVICES PROVIDED AND REVENUES

RECEIVED.— 

‘‘(1) IN GENERAL.—Before entering into any contract or arrangement to provide services to an applicable defined contribution plan, the service provider shall provide to the plan 

administrator a single written statement which includes, with 

respect to the first plan year covered under such contract or arrangement, the following: 

‘‘(A) A detailed description of the services which will be 

provided to the plan by the service provider, the amount 

of total expected annual revenue with respect to such services, the manner in which such revenue will be collected, 

and the extent to which such revenue varies between specific investment options. 

‘‘(B)(i) In the case of a service provider who is providing 

recordkeeping services with respect to any investment option, such information as is necessary for the plan administrator to satisfy the requirements of paragraphs (1), (2) 

and (4) of section 4980K(e) with respect to such option, including specifying the method used by the service provider 


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in disclosing or estimating expenses under subparagraphs 

(A)(iv) and (C) of such paragraph (2). 

‘‘(ii) To the extent provided in regulations issued by the 

Secretary of Labor, clause (i) shall not apply in the case of 

a service provider described in such clause if the service 

provider receives a written notification from the plan administrator that the information described in such clause 

in connection with the investment option is provided by 

another service provider pursuant to a contract or arrangement to provide services to the plan. 

‘‘(C) A statement indicating— 

‘‘(i) the identity of any investment options offered 

under the plan with respect to which the service provider provides substantial investment, trustee, custodial, or administrative services, and 

‘‘(ii) in the case of any investment option, whether 

the service provider expects to receive any component 

of total expected annual revenue described in paragraph (2)(A)(ii)(II) with respect to such option and the 

amount of any such component. 

‘‘(D) The portion of total expected annual revenue which 

is properly allocable to each of the following: 

‘‘(i) Administration and recordkeeping. 

‘‘(ii) Investment management. 

‘‘(iii) Other services or amounts not described in 

clause (i) or (ii). 

‘‘(2) DEFINITION OF TOTAL EXPECTED ANNUAL REVENUE.—For 

purposes of this section— 

‘‘(A) IN GENERAL.—The term ‘total expected annual revenue’ means, with respect to any plan year— 

‘‘(i) any amount expected to be received during such 

plan year from the plan (including amounts paid from 

participant accounts), any participant or beneficiary, 

or any plan sponsor in connection with the contract or 

arrangement referred to in paragraph (1), and 

‘‘(ii) any amount not taken into account under clause 

(i) which is expected to be received during such plan 

year by the service provider in connection with— 

‘‘(I) plan administration, recordkeeping, consulting, management, or investment or other service activities undertaken by the service provider 

with respect to the plan, or 

‘‘(II) plan administration, recordkeeping, consulting, management, or investment or other service activities undertaken by any other person with 

respect to the plan. 

‘‘(B) EXPRESSED AS DOLLAR AMOUNT OR PERCENTAGE OF

ASSETS.—Total expected annual revenue and any amount 

indicated under paragraph (1)(C)(ii) may be expressed as 

a dollar amount or as a percentage of assets (or a combination thereof), as appropriate. To the extent that total expected annual revenue is expressed as a percentage of assets, such percentage shall be properly allocated among 

clauses (i), (ii), and (iii) of paragraph (1)(D). 


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‘‘(C) PROVISION OF FEE SCHEDULE FOR CERTAIN PARTICI- PANT INITIATED TRANSACTIONS.—In the case of amounts expected to be received from participants or beneficiaries 

under the plan (or from the account of a participant or 

beneficiary) as a fee or charge in connection with a transaction initiated by the participant (other than loads, commissions, brokerage fees, and other investment related 

transactions)— 

‘‘(i) such amounts shall not be taken into account in 

determining total expected annual revenue, and 

‘‘(ii) the service provider shall provide to the plan 

administrator, as part of the statement referred to in 

paragraph (1), a fee schedule which describes each 

such fee or charge, the amount thereof, and the manner in which such amount is collected. 

‘‘(D) ESTIMATIONS.—In determining under this subsection any amount which is expected to be received by the 

service provider, the service provider shall provide a reasonable estimate of such amount and shall indicate in the 

statement referred to in paragraph (1) whether such 

amount disclosed is an estimate. Any such estimate shall 

be based on reasonable assumptions specified in such 

statement. 

‘‘(3) ALLOCATION RULES.—The Secretary of Labor shall provide rules for defining total expected annual revenue and for 

the appropriate and consistent allocation of total expected annual revenue among clauses (i), (ii), and (iii) of paragraph 

(1)(D), except that the entire amount of such revenue shall be 

allocated among such clauses and no amount may be taken 

into account under more than one clause. 

‘‘(4) DISCLOSURE OF DIFFERENT PRICING OF INVESTMENT OPTIONS.—In the case of investment options with more than one 

share class or price level, the Secretary of Labor shall prescribe 

regulations for the disclosure of the different share classes or 

price levels available as part of the statement in paragraph (1). 

Such regulations shall provide guidance with respect to the 

disclosure of the basis for qualifying for such share classes or 

price levels, which may include amounts invested, number of 

participants, or other factors. 

‘‘(5) DISCLOSURE OF INVESTMENT TRANSACTION COSTS.—To 

the extent provided in regulations issued by the Secretary of 

Labor, a service provider shall separately disclose the transaction costs (including sales commissions) for each investment 

option for the preceding year. 

‘‘(e) ANNUAL STATEMENTS.—With respect to each plan year after 

the plan year covered by the statement described in subsection (d), 

the service provider shall provide the plan administrator a single 

written statement which includes the information described in subsection (d) with respect to such subsequent plan year. 

‘‘(f) MATERIAL CHANGE STATEMENTS.—In the case of any event or 

other change during a plan year which causes the information included in any statement described in subsection (d) or (e) with respect to such plan year to become materially incorrect, the service 

provider shall provide the plan administrator a written statement 

providing the corrected information not later than 30 days after the 


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service provider knows, or exercising reasonable diligence would 

have known, of such event or other change. 

‘‘(g) TIME AND MANNER OF PROVIDING STATEMENT AND OTHER

MATERIALS.—The statement referred to in subsections (d)(1) and (e) 

shall be made at such time and in such manner as the Secretary 

of Labor may provide. Other materials required to be provided 

under this section shall be provided in such manner as such Secretary may provide. All information included in such statements 

and other materials shall be presented in a manner which is easily 

understood by the typical plan administrator. 

‘‘(h) EXCEPTION FOR SMALL SERVICE PROVIDERS.—The requirements of this section shall not apply with respect to any contract 

or arrangement for services provided with respect to an individual 

account plan for any plan year if— 

‘‘(1) the total annual revenue expected by the service provider to be received with respect to the plan for such plan year 

is less than $5,000, and 

‘‘(2) the service provider provides a written statement to the 

plan administrator that the total annual revenue expected by 

the service provider to be received with respect to the plan is 

less than $5,000. 

Service providers who expect to receive de minimis annual revenue 

from the plan need not provide the written statement described in 

paragraph (2). The Secretary of Labor may by regulation or other 

guidance adjust the dollar amount specified in this subsection. 

‘‘(i) DEFINITIONS.—For purposes of this section— 

‘‘(1) SERVICE PROVIDER.— 

‘‘(A) IN GENERAL.—The term ‘service provider’ includes 

any person providing administration, recordkeeping, consulting, investment management services, or investment 

advice to an applicable defined contribution plan under a 

contract or arrangement. 

‘‘(B) CONTROLLED GROUPS TREATED AS ONE SERVICE PROVIDER.—All persons which would be treated as a single 

employer under subsection (b) or (c) of section 414 if section 1563(a)(1) were applied— 

‘‘(i) except as provided by subparagraph (B), by substituting ‘more than 50 percent’ for ‘at least 80 percent’ each place it appears therein, or 

‘‘(ii) for purposes of subsection (d)(1)(C)(i), by substituting ‘at least 20 percent’ for ‘at least 80 percent’ 

each place it appears therein, 

shall be treated as one person for purposes of this section. 

‘‘(2) APPLICABLE DEFINED CONTRIBUTION PLAN.—The term 

‘applicable defined contribution plan’ means any defined contribution plan described in clauses (iii) through (vi) of section 

402(c)(8)(B). 

‘‘(3) PLAN ADMINISTRATOR.—The term ‘plan administrator’ 

has the meaning given such term by section 414(g). 

‘‘SEC. 4980K. FAILURE TO PROVIDE NOTICE TO PARTICIPANTS OF 

PLAN FEE INFORMATION. 

‘‘(a) IMPOSITION OF TAX.— 

‘‘(1) IN GENERAL.—There is hereby imposed a tax on each 

failure of a plan administrator of an applicable defined conVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00082 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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tribution plan to meet the requirements of paragraph (2) with 

respect to any participant or beneficiary. 

‘‘(2) FAILURES DESCRIBED.—The failures described in this 

paragraph are— 

‘‘(A) any failure to provide an advance notice of available 

investment options described in subsection (e)(1), 

‘‘(B) any failure to provide an account explanation described in subsection (e)(2), 

‘‘(C) any failure to provide a service provider statement 

referred to in subsection (e)(3), and 

‘‘(D) any failure to provide a notice of material change 

described in subsection (e)(4). 

‘‘(b) AMOUNT OF TAX.— 

‘‘(1) IN GENERAL.—The amount of the tax imposed by subsection (a) on any failure with respect to any participant or 

beneficiary shall be $100 for each day in the noncompliance period. 

‘‘(2) NONCOMPLIANCE PERIOD.—For purposes of paragraph 

(1), the noncompliance period with respect to the failure to provide any notice, explanation, or statement referred to in subsection (a)(2) with respect to any participant or beneficiary is 

the period beginning on the date that such notice, explanation, 

or statement was required to be provided and ending on the 

date that such notice, explanation, or statement is provided or 

the failure is otherwise corrected. 

‘‘(c) LIMITATIONS ON AMOUNT OF TAX.— 

‘‘(1) AGGREGATE LIMITATION.—The total amount of tax imposed by this section with respect to any plan for any plan year 

shall not exceed an amount equal to the lesser of— 

‘‘(A) 10 percent of the assets of the plan, determined as 

of the first day of such plan year, or 

‘‘(B) $500,000. 

‘‘(2) TAX NOT TO APPLY TO FAILURES CORRECTED WITHIN 30

DAYS.—No tax shall be imposed by subsection (a) on any failure if— 

‘‘(A) any person subject to liability for the tax under subsection (a) exercised reasonable diligence to meet the requirements of subsection (e), and 

‘‘(B) such person provides the notice, explanation, or 

statement to which the failure relates during the 30-day 

period beginning on the date such person knew, or exercising reasonable diligence would have known, that such 

failure existed. 

‘‘(3) WAIVER BY SECRETARY.—In the case of a failure which 

is due to reasonable cause and not to willful neglect, the Secretary shall waive part or all of the tax imposed by subsection 

(a) to the extent that the payment of such tax would be excessive or otherwise inequitable relative to the failure involved. 

‘‘(d) LIABILITY FOR TAX.—The plan administrator shall be liable 

for the tax imposed by subsection (a). 

‘‘(e) DISCLOSURES TO PARTICIPANTS AND BENEFICIARIES.— 

‘‘(1) ADVANCE NOTICE OF AVAILABLE INVESTMENT OPTIONS.— 

‘‘(A) IN GENERAL.—The plan administrator of an applicable defined contribution plan shall provide to the particiVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00083 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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pant or beneficiary notice of the investment options available under the plan before— 

‘‘(i) the earliest date provided for under the plan for 

the participant’s initial investment of any contribution 

made on behalf of such participant, and 

‘‘(ii) the effective date of any change in the list of investment options available under the plan, unless 

such advance notice is impracticable, and in such case, 

as soon as is practicable. 

‘‘(B) INFORMATION INCLUDED IN NOTICE.—The notice required under subparagraph (A) shall— 

‘‘(i) set forth, with respect to each available investment option— 

‘‘(I) the name of the option, 

‘‘(II) a general description of the option’s investment objectives and principal investment strategies, principal risk and return characteristics, and 

the name of the option’s investment manager, 

‘‘(III) whether the investment option is designed 

to be a comprehensive, stand-alone investment for 

retirement that provides varying degrees of longterm appreciation and capital preservation 

through a mix of equity and fixed income exposures, 

‘‘(IV) the extent to which the investment option 

is actively managed or passively managed in relation to an index and the difference between active 

management and passive management, 

‘‘(V) where, and the manner in which, additional 

plan-specific, option-specific, and generally available investment information may be obtained, and 

‘‘(VI) a statement explaining that investment 

options should not be evaluated solely on the basis 

of the charges for each option but should also be 

based on consideration of other key factors, including the risk level of the option, the investment 

objectives of the option, historical returns of the 

option, and the participant’s personal investment 

objectives, 

‘‘(ii) include a statement of the right under paragraph (3) of participants and beneficiaries to request, 

and a description of how participant or beneficiary 

may request, a copy of the statements received by the 

plan administrator under section 4980J with respect 

to the plan, and 

‘‘(iii) include the plan fee comparison chart described 

in subparagraph (C). 

‘‘(C) PLAN FEE COMPARISON CHART.— 

‘‘(i) IN GENERAL.— ‘‘(I) IN GENERAL.—The notice provided under 

this paragraph shall include a plan fee comparison chart consisting of a comparison of the service 

and investment charges that will or could be assessed against the account of the participant or 

beneficiary with respect to the plan year. 


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‘‘(II) EXPRESSED AS DOLLAR AMOUNT OR FOR- MULA.—For purposes of this subparagraph, such 

charges shall be provided in the form of a dollar 

amount or as a formula (such as a percentage of 

assets), as appropriate. 

‘‘(ii) CATEGORIZATION OF CHARGES.—The plan fee 

comparison chart shall provide information in relation 

to the following categories of charges that will or could 

be assessed against the account of the participant or 

beneficiary: 

‘‘(I) ASSET-BASED CHARGES SPECIFIC TO INVEST- MENT.—Charges that vary depending on the investment options selected by the participant or 

beneficiary, including the annual operating expenses of the investment option and investmentspecific asset-based charges (such as loads, commissions, brokerage fees, exchange fees, redemption fees, and surrender charges). Except as provided by the Secretary of Labor in regulations 

under this section, the information relating to 

such charges shall include a statement noting any 

charges for 1 or more investment options which 

pay for services other than investment management. 

‘‘(II) RECURRING ASSET-BASED CHARGES NOT SPE- CIFIC TO INVESTMENT.—Charges that are assessed 

as a percentage of the total assets in the account 

of the participant or beneficiary, regardless of the 

investment option selected. 

‘‘(III) ADMINISTRATIVE AND TRANSACTION-BASED

CHARGES.—Administration and transaction-based 

charges, including fees charged to participants to 

cover plan administration, compliance, and recordkeeping costs, plan loan origination fees, possible 

redemption fees, and possible surrender charges, 

that are not assessed as a percentage of the total 

assets in the account and are either automatically 

deducted each year or result from certain transactions engaged in by the participant or beneficiary. 

‘‘(IV) OTHER CHARGES.—Any other charges 

which may be deducted from participants’ or beneficiaries’ accounts and which are not described in 

subclauses (I), (II), and (III). 

‘‘(iii) FEES AND HISTORICAL RETURNS.—The plan fee 

comparison chart shall include— 

‘‘(I) the historical returns, net of fees and expenses, for the previous year, 5 years, and 10 

years (or for the period since inception, if shorter) 

with respect to such investment option, and 

‘‘(II) the historical returns of an appropriate 

benchmark, index, or other point of comparison for 

each such period. 

‘‘(D) MODEL NOTICES.—The Secretary of Labor shall prescribe one or more model notices that may be used for purVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00085 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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poses of satisfying the requirements of this paragraph, including model plan fee comparison charts. 

‘‘(E) ESTIMATIONS.—For purposes of providing the notice 

required under this paragraph, the plan administrator 

may provide a reasonable and representative estimate for 

any charges or percentages disclosed under subparagraph 

(B) or (C) and shall indicate whether the amount of any 

such charges or percentages disclosed is an estimate. 

‘‘(2) QUARTERLY BENEFIT STATEMENT.— ‘‘(A) REQUIREMENTS.—The plan administrator shall provide to each participant and beneficiary, at least once each 

calendar quarter, an explanation describing the investment options in which the participant’s or beneficiary’s account is invested as of the last day of the preceding quarter. Such explanation shall provide, to the extent applicable, the following for the preceding quarter: 

‘‘(i) As of the last day of the quarter, a statement of 

the different asset classes that the participant’s or 

beneficiary’s account is invested in and the percentage 

of the account allocated to each asset class. 

‘‘(ii) A statement of the starting and ending balance 

of the participant’s or beneficiary’s account for such 

quarter. 

‘‘(iii) A statement of the total contributions made to 

the participant’s or beneficiary’s account during the 

quarter and a separate statement of— 

‘‘(I) the amount of such contributions, and the 

total amount of any restorative payments, which 

were made by the employer during the quarter, 

and 

‘‘(II) the amount of such contributions which 

were made by the employee. 

‘‘(iv) A statement of the total fees and expenses 

which were directly deducted from the participant’s or 

beneficiary’s account during the quarter and an 

itemization of such fees and expenses. 

‘‘(v) A statement of the net returns for the plan year 

to date, expressed as a percentage, and a statement as 

to whether the net returns include amounts described 

in clause (iv). 

‘‘(vi) With respect to each investment option in 

which the participant or beneficiary was invested as of 

the last day of the quarter, the following: 

‘‘(I) A statement of the percentage of the participant’s or beneficiary’s account that is invested in 

such option as of the last day of such quarter. 

‘‘(II) A statement of the starting and ending balance of the participant’s or beneficiary’s account 

that is invested in such option for such quarter. 

‘‘(III) A statement of the annual operating expenses of the investment option. 

‘‘(IV) A statement of whether the disclosure described in clause (iv) includes the annual operating expenses of the investment options of the 

participant or beneficiary. 


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‘‘(vii) The statement described in paragraph 

(1)(B)(i)(VI). 

‘‘(viii) A statement regarding how a participant or 

beneficiary may access the information required to be 

disclosed under paragraph (1). 

‘‘(B) MODEL EXPLANATIONS.—The Secretary of Labor 

shall prescribe one or more model explanations that may 

be used for purposes of satisfying the requirements of this 

paragraph. 

‘‘(C) DETERMINATION OF EXPENSES.—For purposes of subparagraph (A)(v)(III)— 

‘‘(i) Expenses may be expressed as a dollar amount 

or as a percentage of assets (or a combination thereof). 

‘‘(ii) The plan administrator may provide disclosure 

of the expenses for the quarter or may provide a reasonable and representative estimate of such expenses 

and shall indicate any such estimate as being an estimate. Any such estimate shall be based on reasonable 

assumptions stated together with such estimate. 

‘‘(iii) To the extent that estimated expenses are expressed as a percentage of assets, the disclosure shall 

also include one of the following, stated in dollar 

amounts: 

‘‘(I) an estimate of the expenses for the quarter 

based on the amount invested in the option; or 

‘‘(II) an example describing the expenses that 

would apply during the quarter with respect to a 

hypothetical $10,000 investment in the option. 

‘‘(3) DISCLOSURE OF SERVICE PROVIDER STATEMENTS.—The 

plan administrator shall provide to any participant or beneficiary a copy of any statement received pursuant to section 

4980J within 30 days after receipt of a request for such a 

statement. 

‘‘(4) NOTICE OF MATERIAL CHANGES.—In the case of any event 

or other change which causes the information included in any 

notice described in paragraph (1) to become materially incorrect, the plan administrator shall provide participants and 

beneficiaries a written statement providing the corrected information not later than 30 days after the plan administrator 

knows, or exercising reasonable diligence would have known, of 

such event or other change. 

‘‘(5) TIME AND MANNER OF PROVIDING NOTICES AND DISCLOSURES.— 

‘‘(A) IN GENERAL.—The notices described in paragraph 

(1) shall be provided at such times and in such manner as 

the Secretary of Labor may provide. Other notices and materials required to be provided under this subsection shall 

be provided in such manner as such Secretary may provide. 

‘‘(B) MANNER OF PRESENTATION.— ‘‘(i) IN GENERAL.—All information included in such 

notices or explanations shall be presented in a manner 

which is easily understood by the typical participant. 

‘‘(ii) GENERIC EXAMPLE OF OPERATING EXPENSES OF

INVESTMENT OPTIONS.—The information described in 


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paragraphs (1)(C)(ii)(I) shall include a generic example 

describing the charges that would apply during an annual period with respect to a $10,000 investment in 

the investment option. 

‘‘(C) ANNUAL COMPLIANCE FOR SMALL PLANS.—A plan 

that has fewer than 100 participants and beneficiaries as 

of the first day of the plan year may provide the explanation described in paragraph (2) on an annual rather 

than a quarterly basis. 

‘‘(f) DEFINITIONS.— 

‘‘(1) APPLICABLE DEFINED CONTRIBUTION PLAN.—The term 

‘applicable defined contribution plan’ means the portion of any 

defined contribution plan which— 

‘‘(A) permits a participant or beneficiary to exercise control over assets in his or her account, and 

‘‘(B) is described in clauses (iii) through (vi) of section 

402(c)(8)(B). 

‘‘(2) PLAN ADMINISTRATOR.—The term ‘plan administrator’ 

has the meaning given such term by section 414(g). 

‘‘(g) REGULATIONS.—The Secretary of Labor shall prescribe such 

regulations or other guidance as may be necessary or appropriate 

to carry out the purposes of this section, including regulations or 

other guidance which— 

‘‘(1) provide a later deadline for providing the notice of investment menu changes described in subsection (e)(4) in appropriate circumstances, and 

‘‘(2) provide guidelines, and a safe harbor, for the selection 

of an appropriate benchmark, index, or other point of comparison for an investment option under subsection 

(e)(1)(C)(iii)(II).’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 43 

of such Code is amended by adding at the end the following new 

items: 

‘‘Sec. 4980J. Failure to provide notice of plan fee information to plan administrators. 

‘‘Sec. 4980K. Failure to provide notice to participants of plan fee information.’’. 

SEC. 324. REGULATORY AUTHORITY AND COORDINATION. 

(a) REGULATORY AUTHORITY.—The Secretary of Labor shall prescribe regulations or other guidance to the extent the Secretary determines necessary or appropriate to carry out the purposes of sections 105, 111, and 112 of the Employee Retirement Income Security Act of 1974 and sections 4980J and 4980K of the Internal Revenue Code of 1986, including regulations or other guidance which— 

(1) provide safe harbor and simplified methods for making 

the allocations described in subsection (a)(1)(D) of such section 

111 and subsection (d)(1)(D) of such section 4980J, and 

(2) provide special rules for the application of such sections 

to— 

(A) investments with a guaranteed rate of return, 

(B) investments with an insurance component, and 

(C) employer sponsored retirement plans funded through 

an individual retirement account. 

(3) address notices with respect to investments provided 

through participant directed brokerage trading, 


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(4) address the disclosure of information that is not proprietary to the service provider, and 

(5) provide rules to allow service providers to consolidate information to satisfy the requirements of such sections with respect to all such service providers. 

(b) CERTAIN ELECTRONIC DISCLOSURES PERMITTED.—Any disclosure required under section 112 of the Employee Retirement Income Security Act of 1974 or section 4980K of the Internal Revenue 

Code of 1986 may be provided through an electronic medium under 

such rules as shall be prescribed under such section by the Secretary of Labor not later than 1 year after the date of the enactment of this Act. Such rules shall be similar to those applicable 

under the Internal Revenue Code of 1986 with respect to notices 

to participants in pension plans. Such Secretary shall regularly 

modify such rules as appropriate to take into account new developments, including new forms of electronic media, and to fairly take 

into consideration the interests of plan sponsors, service providers, 

and participants. The rules prescribed by such Secretary pursuant 

to this subsection shall provide for a method for the typical participant or beneficiary to obtain without undue burden any such disclosure in writing on paper in lieu of receipt through an electronic 

medium. 

SEC. 325. EFFECTIVE DATE OF SUBTITLE. 

(a) IN GENERAL.—The amendments made by this subtitle shall 

apply to plan years beginning after December 31, 2011. 

(b) APPLICATION OF SERVICE PROVIDER DISCLOSURES TO EXISTING

CONTRACTS AND ARRANGEMENTS.—For purposes of section 111 of 

the Employee Retirement Income Security Act of 1974 and section 

4980J of the Internal Revenue Code of 1986, any contract or arrangement to provide services to a plan which is in effect on January 1, 2012, shall be treated as a new contract or arrangement entered into on such date. 

TITLE IV—REVENUE OFFSETS 

Subtitle A—Foreign Provisions 

SEC. 401. RULES TO PREVENT SPLITTING FOREIGN TAX CREDITS 

FROM THE INCOME TO WHICH THEY RELATE. 

(a) IN GENERAL.—Subpart A of part III of subchapter N of chapter 1 is amended by adding at the end the following new section: 

‘‘SEC. 909. SUSPENSION OF TAXES AND CREDITS UNTIL RELATED INCOME TAKEN INTO ACCOUNT. 

‘‘(a) IN GENERAL.—If there is a foreign tax credit splitting event 

with respect to a foreign income tax paid or accrued by the taxpayer, such tax shall not be taken into account for purposes of this 

title before the taxable year in which the related income is taken 

into account under this chapter by the taxpayer. 

‘‘(b) SPECIAL RULES WITH RESPECT TO SECTION 902 CORPORATIONS.—If there is a foreign tax credit splitting event with respect 

to a foreign income tax paid or accrued by a section 902 corporation, such tax shall not be taken into account— 

‘‘(1) for purposes of section 902 or 960, or 


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‘‘(2) for purposes of determining earnings and profits under 

section 964(a), 

before the taxable year in which the related income is taken into 

account under this chapter by such section 902 corporation or a domestic corporation which meets the ownership requirements of subsection (a) or (b) of section 902 with respect to such section 902 corporation. 

‘‘(c) SPECIAL RULES.—For purposes of this section— 

‘‘(1) APPLICATION TO PARTNERSHIPS, ETC.—In the case of a 

partnership, subsections (a) and (b) shall be applied at the 

partner level. Except as otherwise provided by the Secretary, 

a rule similar to the rule of the preceding sentence shall apply 

in the case of any S corporation or trust. 

‘‘(2) TREATMENT OF FOREIGN TAXES AFTER SUSPENSION.—In 

the case of any foreign income tax not taken into account by 

reason of subsection (a) or (b), except as otherwise provided by 

the Secretary, such tax shall be so taken into account in the 

taxable year referred to in such subsection (other than for purposes of section 986(a)) as a foreign income tax paid or accrued 

in such taxable year. 

‘‘(d) DEFINITIONS.—For purposes of this section— 

‘‘(1) FOREIGN TAX CREDIT SPLITTING EVENT.—There is a foreign tax credit splitting event with respect to a foreign income 

tax if the related income is (or will be) taken into account 

under this chapter by a covered person. 

‘‘(2) FOREIGN INCOME TAX.—The term ‘foreign income tax’ 

means any income, war profits, or excess profits tax paid or accrued to any foreign country or to any possession of the United 

States. 

‘‘(3) RELATED INCOME.—The term ‘related income’ means, 

with respect to any portion of any foreign income tax, the income (or, as appropriate, earnings and profits) to which such 

portion of foreign income tax relates. 

‘‘(4) COVERED PERSON.—The term ‘covered person’ means, 

with respect to any person who pays or accrues a foreign income tax (hereafter in this paragraph referred to as the 

‘payor’)— 

‘‘(A) any entity in which the payor holds, directly or indirectly, at least a 10 percent ownership interest (determined by vote or value), 

‘‘(B) any person which holds, directly or indirectly, at 

least a 10 percent ownership interest (determined by vote 

or value) in the payor, 

‘‘(C) any person which bears a relationship to the payor 

described in section 267(b) or 707(b), and 

‘‘(D) any other person specified by the Secretary for purposes of this paragraph. 

‘‘(5) SECTION 902 CORPORATION.—The term ‘section 902 corporation’ means any foreign corporation with respect to which 

one or more domestic corporations meets the ownership requirements of subsection (a) or (b) of section 902. 

‘‘(e) REGULATIONS.—The Secretary may issue such regulations or 

other guidance as is necessary or appropriate to carry out the purposes of this section, including regulations or other guidance which 

provides— 


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‘‘(1) appropriate exceptions from the provisions of this section, and 

‘‘(2) for the proper application of this section with respect to 

hybrid instruments.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for subpart A 

of part III of subchapter N of chapter 1 is amended by adding at 

the end the following new item: 

‘‘Sec. 909. Suspension of taxes and credits until related income taken into account.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to— 

(1) foreign income taxes (as defined in section 909(d) of the 

Internal Revenue Code of 1986, as added by this section) paid 

or accrued after May 20, 2010, and 

(2) foreign income taxes (as so defined) paid or accrued by a 

section 902 corporation (as so defined) on or before such date 

(and not deemed paid under section 902(a) or 960 of such Code 

on or before such date), but only for purposes of applying sections 902 and 960 with respect to periods after such date. 

Section 909(b)(2) of the Internal Revenue Code of 1986, as added 

by this section, shall not apply to foreign income taxes described 

in paragraph (2). 

SEC. 402. DENIAL OF FOREIGN TAX CREDIT WITH RESPECT TO FOREIGN INCOME NOT SUBJECT TO UNITED STATES TAXATION BY REASON OF COVERED ASSET ACQUISITIONS. 

(a) IN GENERAL.—Section 901 is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) 

the following new subsection: 

‘‘(m) DENIAL OF FOREIGN TAX CREDIT WITH RESPECT TO FOREIGN

INCOME NOT SUBJECT TO UNITED STATES TAXATION BY REASON OF

COVERED ASSET ACQUISITIONS.— ‘‘(1) IN GENERAL.—In the case of a covered asset acquisition, 

the disqualified portion of any foreign income tax determined 

with respect to the income or gain attributable to the relevant 

foreign assets— 

‘‘(A) shall not be taken into account in determining the 

credit allowed under subsection (a), and 

‘‘(B) in the case of a foreign income tax paid by a section 

902 corporation (as defined in section 909(d)(5)), shall not 

be taken into account for purposes of section 902 or 960. 

‘‘(2) COVERED ASSET ACQUISITION.—For purposes of this section, the term ‘covered asset acquisition’ means— 

‘‘(A) a qualified stock purchase (as defined in section 

338(d)(3)) to which section 338(a) applies, 

‘‘(B) any transaction which— 

‘‘(i) is treated as an acquisition of assets for purposes of this chapter, and 

‘‘(ii) is treated as the acquisition of stock of a corporation (or is disregarded) for purposes of the foreign 

income taxes of the relevant jurisdiction, 

‘‘(C) any acquisition of an interest in a partnership 

which has an election in effect under section 754, and 

‘‘(D) to the extent provided by the Secretary, any other 

similar transaction. 

‘‘(3) DISQUALIFIED PORTION.—For purposes of this section— 


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‘‘(A) IN GENERAL.—The term ‘disqualified portion’ means, 

with respect to any covered asset acquisition, for any taxable year, the ratio (expressed as a percentage) of— 

‘‘(i) the aggregate basis differences (but not below 

zero) allocable to such taxable year under subparagraph (B) with respect to all relevant foreign assets, 

divided by 

‘‘(ii) the income on which the foreign income tax referred to in paragraph (1) is determined (or, if the taxpayer fails to substantiate such income to the satisfaction of the Secretary, such income shall be determined 

by dividing the amount of such foreign income tax by 

the highest marginal tax rate applicable to such income in the relevant jurisdiction). 

‘‘(B) ALLOCATION OF BASIS DIFFERENCE.—For purposes of 

subparagraph (A)(i)— 

‘‘(i) IN GENERAL.—The basis difference with respect 

to any relevant foreign asset shall be allocated to taxable years using the applicable cost recovery method 

under this chapter. 

‘‘(ii) SPECIAL RULE FOR DISPOSITION OF ASSETS.—Except as otherwise provided by the Secretary, in the 

case of the disposition of any relevant foreign asset— 

‘‘(I) the basis difference allocated to the taxable 

year which includes the date of such disposition 

shall be the excess of the basis difference with respect to such asset over the aggregate basis difference with respect to such asset which has been 

allocated under clause (i) to all prior taxable 

years, and 

‘‘(II) no basis difference with respect to such 

asset shall be allocated under clause (i) to any 

taxable year thereafter. 

‘‘(C) BASIS DIFFERENCE.— 

‘‘(i) IN GENERAL.—The term ‘basis difference’ means, 

with respect to any relevant foreign asset, the excess 

of— 

‘‘(I) the adjusted basis of such asset immediately 

after the covered asset acquisition, over 

‘‘(II) the adjusted basis of such asset immediately before the covered asset acquisition. 

‘‘(ii) BUILT-IN LOSS ASSETS.—In the case of a relevant 

foreign asset with respect to which the amount described in clause (i)(II) exceeds the amount described 

in clause (i)(I), such excess shall be taken into account 

under this subsection as a basis difference of a negative amount. 

‘‘(iii) SPECIAL RULE FOR SECTION 338 ELECTIONS.—In 

the case of a covered asset acquisition described in 

paragraph (2)(A), the covered asset acquisition shall 

be treated for purposes of this subparagraph as occurring at the close of the acquisition date (as defined in 

section 338(h)(2)). 

‘‘(4) RELEVANT FOREIGN ASSETS.—For purposes of this section, the term ‘relevant foreign asset’ means, with respect to 


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any covered asset acquisition, any asset (including any goodwill, going concern value, or other intangible) with respect to 

such acquisition if income, deduction, gain, or loss attributable 

to such asset is taken into account in determining the foreign 

income tax referred to in paragraph (1). 

‘‘(5) FOREIGN INCOME TAX.—For purposes of this section, the 

term ‘foreign income tax’ means any income, war profits, or excess profits tax paid or accrued to any foreign country or to any 

possession of the United States. 

‘‘(6) TAXES ALLOWED AS A DEDUCTION, ETC.—Sections 275 and 

78 shall not apply to any tax which is not allowable as a credit 

under subsection (a) by reason of this subsection. 

‘‘(7) REGULATIONS.—The Secretary may issue such regulations or other guidance as is necessary or appropriate to carry 

out the purposes of this subsection, including to exempt from 

the application of this subsection certain covered asset acquisitions, and relevant foreign assets with respect to which the 

basis difference is de minimis.’’. 

(b) EFFECTIVE DATE.— 

(1) IN GENERAL.—Except as provided in paragraph (2), the 

amendments made by this section shall apply to covered asset 

acquisitions (as defined in section 901(m)(2) of the Internal 

Revenue Code of 1986, as added by this section) after— 

(A) May 20, 2010, if the transferor and the transferee 

are related, and 

(B) the date of the enactment of this Act in any other 

case. 

(2) TRANSITION RULE.—The amendments made by this section shall not apply to any covered asset acquisition (as so defined) with respect to which the transferor and the transferee 

are not related if such acquisition is— 

(A) made pursuant to a written agreement which was 

binding on May 20, 2010, and at all times thereafter, 

(B) described in a ruling request submitted to the Internal Revenue Service on or before such date, or 

(C) described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission. 

(3) RELATED PERSONS.—For purposes of this subsection, a 

person shall be treated as related to another person if the relationship between such persons is described in section 267 or 

707(b) of the Internal Revenue Code of 1986. 

SEC. 403. SEPARATE APPLICATION OF FOREIGN TAX CREDIT LIMITATION, ETC., TO ITEMS RESOURCED UNDER TREATIES. 

(a) IN GENERAL.—Subsection (d) of section 904 is amended by redesignating paragraph (6) as paragraph (7) and by inserting after 

paragraph (5) the following new paragraph: 

‘‘(6) SEPARATE APPLICATION TO ITEMS RESOURCED UNDER

TREATIES.— 

‘‘(A) IN GENERAL.—If— 

‘‘(i) without regard to any treaty obligation of the 

United States, any item of income would be treated as 

derived from sources within the United States, 


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‘‘(ii) under a treaty obligation of the United States, 

such item would be treated as arising from sources 

outside the United States, and 

‘‘(iii) the taxpayer chooses the benefits of such treaty 

obligation, 

subsections (a), (b), and (c) of this section and sections 902, 

907, and 960 shall be applied separately with respect to 

each such item. 

‘‘(B) COORDINATION WITH OTHER PROVISIONS.—This paragraph shall not apply to any item of income to which subsection (h)(10) or section 865(h) applies. 

‘‘(C) REGULATIONS.—The Secretary may issue such regulations or other guidance as is necessary or appropriate to 

carry out the purposes of this paragraph, including regulations or other guidance which provides that related items 

of income may be aggregated for purposes of this paragraph.’’. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall apply to taxable years beginning after the date of the enactment of this Act. 

SEC. 404. LIMITATION ON THE AMOUNT OF FOREIGN TAXES DEEMED 

PAID WITH RESPECT TO SECTION 956 INCLUSIONS. 

(a) IN GENERAL.—Section 960 is amended by adding at the end 

the following new subsection: 

‘‘(c) LIMITATION WITH RESPECT TO SECTION 956 INCLUSIONS.— 

‘‘(1) IN GENERAL.—If there is included under section 

951(a)(1)(B) in the gross income of a domestic corporation any 

amount attributable to the earnings and profits of a foreign 

corporation which is a member of a qualified group (as defined 

in section 902(b)) with respect to the domestic corporation, the 

amount of any foreign income taxes deemed to have been paid 

during the taxable year by such domestic corporation under 

section 902 by reason of subsection (a) with respect to such inclusion in gross income shall not exceed the amount of the foreign income taxes which would have been deemed to have been 

paid during the taxable year by such domestic corporation if 

cash in an amount equal to the amount of such inclusion in 

gross income were distributed as a series of distributions (determined without regard to any foreign taxes which would be 

imposed on an actual distribution) through the chain of ownership which begins with such foreign corporation and ends with 

such domestic corporation. 

‘‘(2) AUTHORITY TO PREVENT ABUSE.—The Secretary shall 

issue such regulations or other guidance as is necessary or appropriate to carry out the purposes of this subsection, including 

regulations or other guidance which prevent the inappropriate 

use of the foreign corporation’s foreign income taxes not 

deemed paid by reason of paragraph (1).’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to acquisitions of United States property (as defined in section 956(c) of the Internal Revenue Code of 1986) after May 20, 

2010. 


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SEC. 405. SPECIAL RULE WITH RESPECT TO CERTAIN REDEMPTIONS 

BY FOREIGN SUBSIDIARIES. 

(a) IN GENERAL.—Paragraph (5) of section 304(b) is amended by 

redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: 

‘‘(B) SPECIAL RULE IN CASE OF FOREIGN ACQUIRING CORPORATION.—In the case of any acquisition to which subsection (a) applies in which the acquiring corporation is a 

foreign corporation, no earnings and profits shall be taken 

into account under paragraph (2)(A) (and subparagraph 

(A) shall not apply) if more than 50 percent of the dividends arising from such acquisition (determined without 

regard to this subparagraph) would not— 

‘‘(i) be subject to tax under this chapter for the taxable year in which the dividends arise, or 

‘‘(ii) be includible in the earnings and profits of a 

controlled foreign corporation (as defined in section 

957 and without regard to section 953(c)).’’. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall apply to acquisitions after May 20, 2010. 

SEC. 406. MODIFICATION OF AFFILIATION RULES FOR PURPOSES OF 

RULES ALLOCATING INTEREST EXPENSE. 

(a) IN GENERAL.—Subparagraph (A) of section 864(e)(5) is 

amended by adding at the end the following: ‘‘Notwithstanding the 

preceding sentence, a foreign corporation shall be treated as a 

member of the affiliated group if— 

‘‘(i) more than 50 percent of the gross income of such 

foreign corporation for the taxable year is effectively 

connected with the conduct of a trade or business 

within the United States, and 

‘‘(ii) at least 80 percent of either the vote or value 

of all outstanding stock of such foreign corporation is 

owned directly or indirectly by members of the affiliated group (determined with regard to this sentence).’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to taxable years beginning after the date of the enactment 

of this Act. 

SEC. 407. TERMINATION OF SPECIAL RULES FOR INTEREST AND DIVIDENDS RECEIVED FROM PERSONS MEETING THE 80-PERCENT FOREIGN BUSINESS REQUIREMENTS. 

(a) IN GENERAL.—Paragraph (1) of section 861(a) is amended by 

striking subparagraph (A) and by redesignating subparagraphs (B) 

and (C) as subparagraphs (A) and (B), respectively. 

(b) GRANDFATHER RULE WITH RESPECT TO WITHHOLDING ON IN- TEREST AND DIVIDENDS RECEIVED FROM PERSONS MEETING THE 80- 

PERCENT FOREIGN BUSINESS REQUIREMENTS.— 

(1) IN GENERAL.—Subparagraph (B) of section 871(i)(2) is 

amended to read as follows: 

‘‘(B) The active foreign business percentage of— 

‘‘(i) any dividend paid by an existing 80/20 company, 

and 

‘‘(ii) any interest paid by an existing 80/20 company.’’. 

(2) DEFINITIONS AND SPECIAL RULES.—Section 871 is amended by redesignating subsections (l) and (m) as subsections (m) 


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and (n), respectively, and by inserting after subsection (k) the 

following new subsection: 

‘‘(l) RULES RELATING TO EXISTING 80/20 COMPANIES.—For purposes of this subsection and subsection (i)(2)(B)— 

‘‘(1) EXISTING 80/20 COMPANY.— ‘‘(A) IN GENERAL.—The term ‘existing 80/20 company’ 

means any corporation if— 

‘‘(i) such corporation met the 80-percent foreign 

business requirements of section 861(c)(1) (as in effect 

before the enactment of this subsection) for such corporation’s last taxable year beginning before January 

1, 2011, 

‘‘(ii) such corporation meets the 80-percent foreign 

business requirements of subparagraph (B) with respect to each taxable year after the taxable year referred to in clause (i), and 

‘‘(iii) there has not been an addition of a substantial 

line of business with respect to such corporation after 

the date of the enactment of this subsection. 

‘‘(B) FOREIGN BUSINESS REQUIREMENTS.— ‘‘(i) IN GENERAL.—A corporation meets the 80-percent foreign business requirements of this subparagraph if it is shown to the satisfaction of the Secretary 

that at least 80 percent of the gross income from all 

sources of such corporation for the testing period is active foreign business income. 

‘‘(ii) ACTIVE FOREIGN BUSINESS INCOME.—For purposes of clause (i), the term ‘active foreign business income’ means gross income which— 

‘‘(I) is derived from sources outside the United 

States (as determined under this subchapter), and 

‘‘(II) is attributable to the active conduct of a 

trade or business in a foreign country or possession of the United States. 

‘‘(iii) TESTING PERIOD.—For purposes of this subsection, the term ‘testing period’ means the 3-year period ending with the close of the taxable year of the 

corporation preceding the payment (or such part of 

such period as may be applicable). If the corporation 

has no gross income for such 3-year period (or part 

thereof), the testing period shall be the taxable year in 

which the payment is made. 

‘‘(2) ACTIVE FOREIGN BUSINESS PERCENTAGE.—The term ‘active foreign business percentage’ means, with respect to any 

existing 80/20 company, the percentage which— 

‘‘(A) the active foreign business income of such company 

for the testing period, is of 

‘‘(B) the gross income of such company for the testing period from all sources. 

‘‘(3) AGGREGATION RULES.—For purposes of applying paragraph (1) (other than subparagraph (A)(i) thereof) and paragraph (2)— 

‘‘(A) IN GENERAL.—The corporation referred to in paragraph (1)(A) and all of such corporation’s subsidiaries shall 

be treated as one corporation. 


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‘‘(B) SUBSIDIARIES.—For purposes of subparagraph (A), 

the term ‘subsidiary’ means any corporation in which the 

corporation referred to in subparagraph (A) owns (directly 

or indirectly) stock meeting the requirements of section 

1504(a)(2) (determined by substituting ‘50 percent’ for ‘80 

percent’ each place it appears and without regard to section 1504(b)(3)). 

‘‘(4) REGULATIONS.—The Secretary may issue such regulations or other guidance as is necessary or appropriate to carry 

out the purposes of this section, including regulations or other 

guidance which provide for the proper application of the aggregation rules described in paragraph (3).’’. 

(c) CONFORMING AMENDMENTS.— 

(1) Section 861 is amended by striking subsection (c) and by 

redesignating subsections (d), (e), and (f) as subsections (c), (d), 

and (e), respectively. 

(2) Paragraph (9) of section 904(h) is amended to read as follows: 

‘‘(9) TREATMENT OF CERTAIN DOMESTIC CORPORATIONS.—In 

the case of any dividend treated as not from sources with the 

United States under section 861(a)(2)(A), the corporation paying such dividend shall be treated for purposes of this subsection as a United States-owned foreign corporation.’’. 

(3) Subsection (c) of section 2104 is amended in the last sentence by striking ‘‘or to a debt obligation of a domestic corporation’’ and all that follows and inserting a period. 

(d) EFFECTIVE DATE.— 

(1) IN GENERAL.—Except as provided in paragraph (2), the 

amendments made by this section shall apply to taxable years 

beginning after December 31, 2010. 

(2) GRANDFATHER RULE FOR OUTSTANDING DEBT OBLIGATIONS.— 

(A) IN GENERAL.—The amendments made by this section 

shall not apply to payments of interest on obligations 

issued before the date of the enactment of this Act. 

(B) EXCEPTION FOR RELATED PARTY DEBT.—Subparagraph (A) shall not apply to any interest which is payable 

to a related person (determined under rules similar to the 

rules of section 954(d)(3)). 

(C) SIGNIFICANT MODIFICATIONS TREATED AS NEW

ISSUES.—For purposes of subparagraph (A), a significant 

modification of the terms of any obligation (including any 

extension of the term of such obligation) shall be treated 

as a new issue. 

SEC. 408. SOURCE RULES FOR INCOME ON GUARANTEES. 

(a) AMOUNTS SOURCED WITHIN THE UNITED STATES.—Subsection 

(a) of section 861 is amended by adding at the end the following 

new paragraph: 

‘‘(9) GUARANTEES.—Amounts— 

‘‘(A) received from noncorporate residents or domestic 

corporations with respect to guarantees, and 

‘‘(B) paid by any foreign person with respect to guarantees if such amount is connected with income which is effectively connected (or treated as effectively connected) 


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with the conduct of a trade or business in the United 

States.’’. 

(b) AMOUNTS SOURCED WITHOUT THE UNITED STATES.—Subsection (a) of section 862 is amended by striking ‘‘and’’ at the end 

of paragraph (7), by striking the period at the end of paragraph (8) 

and inserting ‘‘; and’’, and by adding at the end the following new 

paragraph: 

‘‘(9) amounts received with respect to guarantees other than 

those derived from sources within the United States as provided in section 861(a)(9).’’. 

(c) CONFORMING AMENDMENT.—Clause (ii) of section 864(c)(4)(B) 

is amended by striking ‘‘dividends or interest’’ and inserting ‘‘dividends, interest, or amounts with respect to guarantees’’. 

(d) EFFECTIVE DATE.—The amendments made by this section 

shall apply to guarantees issued after the date of the enactment of 

this Act. 

SEC. 409. LIMITATION ON EXTENSION OF STATUTE OF LIMITATIONS 

FOR FAILURE TO NOTIFY SECRETARY OF CERTAIN FOREIGN TRANSFERS. 

(a) IN GENERAL.—Paragraph (8) of section 6501(c) is amended— 

(1) by striking ‘‘In the case of any information’’ and inserting 

the following: 

‘‘(A) IN GENERAL.—In the case of any information’’, and 

(2) by adding at the end the following: 

‘‘(B) APPLICATION TO FAILURES DUE TO REASONABLE

CAUSE.—If the failure to furnish the information referred 

to in subparagraph (A) is due to reasonable cause and not 

willful neglect, subparagraph (A) shall apply only to the 

item or items related to such failure.’’. 

(b) EFFECTIVE DATE.—The amendments made by this section 

shall take effect as if included in section 513 of the Hiring Incentives to Restore Employment Act. 

Subtitle B—Personal Service Income 

Earned in Pass-thru Entities 

SEC. 411. PARTNERSHIP INTERESTS TRANSFERRED IN CONNECTION 

WITH PERFORMANCE OF SERVICES. 

(a) MODIFICATION TO ELECTION TO INCLUDE PARTNERSHIP INTEREST IN GROSS INCOME IN YEAR OF TRANSFER.—Subsection (c) of section 83 is amended by redesignating paragraph (4) as paragraph 

(5) and by inserting after paragraph (3) the following new paragraph: 

‘‘(4) PARTNERSHIP INTERESTS.—Except as provided by the 

Secretary, in the case of any transfer of an interest in a partnership in connection with the provision of services to (or for 

the benefit of) such partnership— 

‘‘(A) the fair market value of such interest shall be treated for purposes of this section as being equal to the 

amount of the distribution which the partner would receive if the partnership sold (at the time of the transfer) 

all of its assets at fair market value and distributed the 

proceeds of such sale (reduced by the liabilities of the partVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00098 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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nership) to its partners in liquidation of the partnership, 

and 

‘‘(B) the person receiving such interest shall be treated 

as having made the election under subsection (b)(1) unless 

such person makes an election under this paragraph to 

have such subsection not apply.’’. 

(b) CONFORMING AMENDMENT.—Paragraph (2) of section 83(b) is 

amended by inserting ‘‘or subsection (c)(4)(B)’’ after ‘‘paragraph 

(1)’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to interests in partnerships transferred after the date 

of the enactment of this Act. 

SEC. 412. INCOME OF PARTNERS FOR PERFORMING INVESTMENT 

MANAGEMENT SERVICES TREATED AS ORDINARY INCOME 

RECEIVED FOR PERFORMANCE OF SERVICES. 

(a) IN GENERAL.—Part I of subchapter K of chapter 1 is amended 

by adding at the end the following new section: 

‘‘SEC. 710. SPECIAL RULES FOR PARTNERS PROVIDING INVESTMENT 

MANAGEMENT SERVICES TO PARTNERSHIP. 

‘‘(a) TREATMENT OF DISTRIBUTIVE SHARE OF PARTNERSHIP

ITEMS.—For purposes of this title, in the case of an investment 

services partnership interest— 

‘‘(1) IN GENERAL.—Notwithstanding section 702(b)— 

‘‘(A) any net income with respect to such interest for any 

partnership taxable year shall be treated as ordinary income, and 

‘‘(B) any net loss with respect to such interest for such 

year, to the extent not disallowed under paragraph (2) for 

such year, shall be treated as an ordinary loss. 

All items of income, gain, deduction, and loss which are taken 

into account in computing net income or net loss shall be treated as ordinary income or ordinary loss (as the case may be). 

‘‘(2) TREATMENT OF LOSSES.— 

‘‘(A) LIMITATION.—Any net loss with respect to such interest shall be allowed for any partnership taxable year 

only to the extent that such loss does not exceed the excess 

(if any) of— 

‘‘(i) the aggregate net income with respect to such 

interest for all prior partnership taxable years, over 

‘‘(ii) the aggregate net loss with respect to such interest not disallowed under this subparagraph for all 

prior partnership taxable years. 

‘‘(B) CARRYFORWARD.—Any net loss for any partnership 

taxable year which is not allowed by reason of subparagraph (A) shall be treated as an item of loss with respect 

to such partnership interest for the succeeding partnership 

taxable year. 

‘‘(C) BASIS ADJUSTMENT.—No adjustment to the basis of 

a partnership interest shall be made on account of any net 

loss which is not allowed by reason of subparagraph (A). 

‘‘(D) PRIOR PARTNERSHIP YEARS.—Any reference in this 

paragraph to prior partnership taxable years shall only include prior partnership taxable years to which this section 

applies. 

‘‘(3) NET INCOME AND LOSS.—For purposes of this section— 


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‘‘(A) NET INCOME.—The term ‘net income’ means, with 

respect to any investment services partnership interest for 

any partnership taxable year, the excess (if any) of— 

‘‘(i) all items of income and gain taken into account 

by the holder of such interest under section 702 with 

respect to such interest for such year, over 

‘‘(ii) all items of deduction and loss so taken into account. 

‘‘(B) NET LOSS.—The term ‘net loss’ means, with respect 

to such interest for such year, the excess (if any) of the 

amount described in subparagraph (A)(ii) over the amount 

described in subparagraph (A)(i). 

‘‘(4) SPECIAL RULE FOR DIVIDENDS.—Any dividend taken into 

account in determining net income or net loss for purposes of 

paragraph (1) shall not be treated as qualified dividend income 

for purposes of section 1(h). 

‘‘(b) DISPOSITIONS OF PARTNERSHIP INTERESTS.— ‘‘(1) GAIN.—Any gain on the disposition of an investment 

services partnership interest shall be— 

‘‘(A) treated as ordinary income, and 

‘‘(B) recognized notwithstanding any other provision of 

this subtitle. 

‘‘(2) LOSS.—Any loss on the disposition of an investment 

services partnership interest shall be treated as an ordinary 

loss to the extent of the excess (if any) of— 

‘‘(A) the aggregate net income with respect to such interest for all partnership taxable years to which this section 

applies, over 

‘‘(B) the aggregate net loss with respect to such interest 

allowed under subsection (a)(2) for all partnership taxable 

years to which this section applies. 

‘‘(3) EXCEPTION FOR THE DISPOSITION OF AN INTEREST IN A

PUBLICLY TRADED PARTNERSHIP BY AN INDIVIDUAL.—Paragraphs 

(1) and (2) shall not apply in the case of the disposition by an 

individual of an investment services partnership interest which 

is an interest in a publicly traded partnership (as defined in 

section 7704) if neither such individual nor any member of 

such individual’s family (within the meaning of section 

318(a)(1)) has (at any time) provided any of the services described in subsection (c)(1) with respect to assets held (directly 

or indirectly) by such publicly traded partnership. 

‘‘(4) ELECTION WITH RESPECT TO CERTAIN EXCHANGES.—Paragraph (1)(B) shall not apply to the contribution of an investment services partnership interest to a partnership in exchange for an interest in such partnership if— 

‘‘(A) the taxpayer makes an irrevocable election to treat 

the partnership interest received in the exchange as an investment services partnership interest, and 

‘‘(B) the taxpayer agrees to comply with such reporting 

and recordkeeping requirements as the Secretary may prescribe. 

‘‘(5) DISPOSITION OF PORTION OF INTEREST.—In the case of 

any disposition of an investment services partnership interest, 

the amount of net loss which otherwise would have (but for 

subsection (a)(2)(C)) applied to reduce the basis of such interest 


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shall be disregarded for purposes of this section for all succeeding partnership taxable years. 

‘‘(6) DISTRIBUTIONS OF PARTNERSHIP PROPERTY.—In the case 

of any distribution of property by a partnership with respect to 

any investment services partnership interest held by a partner— 

‘‘(A) the excess (if any) of— 

‘‘(i) the fair market value of such property at the 

time of such distribution, over 

‘‘(ii) the adjusted basis of such property in the hands 

of the partnership, 

shall be taken into account as an increase in such partner’s distributive share of the taxable income of the partnership (except to the extent such excess is otherwise 

taken into account in determining the taxable income of 

the partnership), 

‘‘(B) such property shall be treated for purposes of subpart B of part II as money distributed to such partner in 

an amount equal to such fair market value, and 

‘‘(C) the basis of such property in the hands of such partner shall be such fair market value. 

Subsection (b) of section 734 shall be applied without regard to 

the preceding sentence. In the case of a taxpayer which satisfies requirements similar to the requirements of subparagraphs (A) and (B) of paragraph (4), this paragraph and paragraph (1)(B) shall not apply to the distribution of a partnership 

interest if such distribution is in connection with a contribution 

(or deemed contribution) of any property of the partnership to 

which section 721 applies pursuant to a transaction described 

in paragraph (1)(B) or (2) of section 708(b). 

‘‘(7) APPLICATION OF SECTION 751.—In applying section 751, 

an investment services partnership interest shall be treated as 

an inventory item. 

‘‘(c) INVESTMENT SERVICES PARTNERSHIP INTEREST.—For purposes of this section— 

‘‘(1) IN GENERAL.—The term ‘investment services partnership 

interest’ means any interest in a partnership which is held (directly or indirectly) by any person if it was reasonably expected 

(at the time that such person acquired such interest) that such 

person (or any person related to such person) would provide 

(directly or indirectly) a substantial quantity of any of the following services with respect to assets held (directly or indirectly) by the partnership: 

‘‘(A) Advising as to the advisability of investing in, purchasing, or selling any specified asset. 

‘‘(B) Managing, acquiring, or disposing of any specified 

asset. 

‘‘(C) Arranging financing with respect to acquiring specified assets. 

‘‘(D) Any activity in support of any service described in 

subparagraphs (A) through (C). 

‘‘(2) SPECIFIED ASSET.—The term ‘specified asset’ means securities (as defined in section 475(c)(2) without regard to the last 

sentence thereof), real estate held for rental or investment, interests in partnerships, commodities (as defined in section 


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475(e)(2)), or options or derivative contracts with respect to any 

of the foregoing. 

‘‘(3) EXCEPTION FOR FAMILY FARMS.—The term ‘specified 

asset’ shall not include any farm used for farming purposes if 

such farm is held by a partnership all of the interests in which 

are held (directly or indirectly) by members of the same family. 

Terms used in the preceding sentence which are also used in 

section 2032A shall have the same meaning as when used in 

such section. 

‘‘(4) RELATED PERSONS.—A person shall be treated as related 

to another person if the relationship between such persons is 

described in section 267 or 707(b). 

‘‘(d) EXCEPTION FOR CERTAIN CAPITAL INTERESTS.— 

‘‘(1) IN GENERAL.—In the case of any portion of an investment services partnership interest which is a qualified capital 

interest, all items of income, gain, loss, and deduction which 

are allocated to such qualified capital interest shall not be 

taken into account under subsection (a) if— 

‘‘(A) allocations of items are made by the partnership to 

such qualified capital interest in the same manner as such 

allocations are made to other qualified capital interests 

held by partners who do not provide any services described 

in subsection (c)(1) and who are not related to the partner 

holding the qualified capital interest, and 

‘‘(B) the allocations made to such other interests are significant compared to the allocations made to such qualified 

capital interest. 

‘‘(2) AUTHORITY TO PROVIDE EXCEPTIONS TO ALLOCATION REQUIREMENTS.—To the extent provided by the Secretary in regulations or other guidance— 

‘‘(A) ALLOCATIONS TO PORTION OF QUALIFIED CAPITAL INTEREST.—Paragraph (1) may be applied separately with respect to a portion of a qualified capital interest. 

‘‘(B) NO OR INSIGNIFICANT ALLOCATIONS TO NONSERVICE

PROVIDERS.—In any case in which the requirements of 

paragraph (1)(B) are not satisfied, items of income, gain, 

loss, and deduction shall not be taken into account under 

subsection (a) to the extent that such items are properly 

allocable under such regulations or other guidance to 

qualified capital interests. 

‘‘(C) ALLOCATIONS TO SERVICE PROVIDERS’ QUALIFIED CAPITAL INTERESTS WHICH ARE LESS THAN OTHER ALLOCATIONS.—Allocations shall not be treated as failing to meet 

the requirement of paragraph (1)(A) merely because the allocations to the qualified capital interest represent a lower 

return than the allocations made to the other qualified 

capital interests referred to in such paragraph. 

‘‘(3) SPECIAL RULE FOR CHANGES IN SERVICES.—In the case of 

an interest in a partnership which is not an investment services partnership interest and which, by reason of a change in 

the services with respect to assets held (directly or indirectly) 

by the partnership, would (without regard to the reasonable 

expectation exception of subsection (c)(1)) have become such an 

interest— 


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‘‘(A) notwithstanding subsection (c)(1), such interest 

shall be treated as an investment services partnership interest as of the time of such change, and 

‘‘(B) for purposes of this subsection, the qualified capital 

interest of the holder of such partnership interest immediately after such change shall not be less than the fair 

market value of such interest (determined immediately before such change). 

‘‘(4) SPECIAL RULE FOR TIERED PARTNERSHIPS.—Except as 

otherwise provided by the Secretary, in the case of tiered partnerships, all items which are allocated in a manner which 

meets the requirements of paragraph (1) to qualified capital interests in a lower-tier partnership shall retain such character 

to the extent allocated on the basis of qualified capital interests in any upper-tier partnership. 

‘‘(5) EXCEPTION FOR NO-SELF-CHARGED CARRY AND MANAGE- MENT FEE PROVISIONS.—Except as otherwise provided by the 

Secretary, an interest shall not fail to be treated as satisfying 

the requirement of paragraph (1)(A) merely because the allocations made by the partnership to such interest do not reflect 

the cost of services described in subsection (c)(1) which are provided (directly or indirectly) to the partnership by the holder 

of such interest (or a related person). 

‘‘(6) SPECIAL RULE FOR DISPOSITIONS.—In the case of any investment services partnership interest any portion of which is 

a qualified capital interest, subsection (b) shall not apply to so 

much of any gain or loss as bears the same proportion to the 

entire amount of such gain or loss as— 

‘‘(A) the distributive share of gain or loss that would 

have been allocated to the qualified capital interest (consistent with the requirements of paragraph (1)) if the partnership had sold all of its assets at fair market value immediately before the disposition, bears to 

‘‘(B) the distributive share of gain or loss that would 

have been so allocated to the investment services partnership interest of which such qualified capital interest is a 

part. 

‘‘(7) QUALIFIED CAPITAL INTEREST.—For purposes of this subsection— 

‘‘(A) IN GENERAL.—The term ‘qualified capital interest’ 

means so much of a partner’s interest in the capital of the 

partnership as is attributable to— 

‘‘(i) the fair market value of any money or other 

property contributed to the partnership in exchange 

for such interest (determined without regard to section 

752(a)), 

‘‘(ii) any amounts which have been included in gross 

income under section 83 with respect to the transfer 

of such interest, and 

‘‘(iii) the excess (if any) of— 

‘‘(I) any items of income and gain taken into account under section 702 with respect to such interest, over 

‘‘(II) any items of deduction and loss so taken 

into account. 


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‘‘(B) ADJUSTMENT TO QUALIFIED CAPITAL INTEREST.— ‘‘(i) DISTRIBUTIONS AND LOSSES.—The qualified capital interest shall be reduced by distributions from the 

partnership with respect to such interest and by the 

excess (if any) of the amount described in subparagraph (A)(iii)(II) over the amount described in subparagraph (A)(iii)(I). 

‘‘(ii) SPECIAL RULE FOR CONTRIBUTIONS OF PROP- ERTY.—In the case of any contribution of property described in subparagraph (A)(i) with respect to which 

the fair market value of such property is not equal to 

the adjusted basis of such property immediately before 

such contribution, proper adjustments shall be made 

to the qualified capital interest to take into account 

such difference consistent with such regulations or 

other guidance as the Secretary may provide. 

‘‘(8) TREATMENT OF CERTAIN LOANS.— ‘‘(A) PROCEEDS OF PARTNERSHIP LOANS NOT TREATED AS

QUALIFIED CAPITAL INTEREST OF SERVICE PROVIDING PART- NERS.—For purposes of this subsection, an investment 

services partnership interest shall not be treated as a 

qualified capital interest to the extent that such interest is 

acquired in connection with the proceeds of any loan or 

other advance made or guaranteed, directly or indirectly, 

by any other partner or the partnership (or any person related to any such other partner or the partnership). 

‘‘(B) REDUCTION IN ALLOCATIONS TO QUALIFIED CAPITAL

INTERESTS FOR LOANS FROM NONSERVICE PROVIDING PART- NERS TO THE PARTNERSHIP.—For purposes of this subsection, any loan or other advance to the partnership made 

or guaranteed, directly or indirectly, by a partner not providing services described in subsection (c)(1) to the partnership (or any person related to such partner) shall be 

taken into account in determining the qualified capital interests of the partners in the partnership. 

‘‘(e) OTHER INCOME AND GAIN IN CONNECTION WITH INVESTMENT

MANAGEMENT SERVICES.— ‘‘(1) IN GENERAL.—If— 

‘‘(A) a person performs (directly or indirectly) investment 

management services for any entity, 

‘‘(B) such person holds (directly or indirectly) a disqualified interest with respect to such entity, and 

‘‘(C) the value of such interest (or payments thereunder) 

is substantially related to the amount of income or gain 

(whether or not realized) from the assets with respect to 

which the investment management services are performed, 

any income or gain with respect to such interest shall be treated as ordinary income. Rules similar to the rules of subsections 

(a)(4) and (d) shall apply for purposes of this subsection. 

‘‘(2) DEFINITIONS.—For purposes of this subsection— 

‘‘(A) DISQUALIFIED INTEREST.— 

‘‘(i) IN GENERAL.—The term ‘disqualified interest’ 

means, with respect to any entity— 

‘‘(I) any interest in such entity other than indebtedness, 


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‘‘(II) convertible or contingent debt of such entity, 

‘‘(III) any option or other right to acquire property described in subclause (I) or (II), and 

‘‘(IV) any derivative instrument entered into (directly or indirectly) with such entity or any investor in such entity. 

‘‘(ii) EXCEPTIONS.—Such term shall not include— 

‘‘(I) a partnership interest, 

‘‘(II) except as provided by the Secretary, any interest in a taxable corporation, and 

‘‘(III) except as provided by the Secretary, stock 

in an S corporation. 

‘‘(B) TAXABLE CORPORATION.—The term ‘taxable corporation’ means— 

‘‘(i) a domestic C corporation, or 

‘‘(ii) a foreign corporation substantially all of the income of which is— 

‘‘(I) effectively connected with the conduct of a 

trade or business in the United States, or 

‘‘(II) subject to a comprehensive foreign income 

tax (as defined in section 457A(d)(2)). 

‘‘(C) INVESTMENT MANAGEMENT SERVICES.—The term ‘investment management services’ means a substantial quantity of any of the services described in subsection (c)(1). 

‘‘(f) REGULATIONS.—The Secretary shall prescribe such regulations or other guidance as is necessary or appropriate to carry out 

the purposes of this section, including regulations or other guidance to— 

‘‘(1) provide modifications to the application of this section 

(including treating related persons as not related to one another) to the extent such modification is consistent with the 

purposes of this section, 

‘‘(2) prevent the avoidance of the purposes of this section, 

and 

‘‘(3) coordinate this section with the other provisions of this 

title. 

‘‘(g) SPECIAL RULES FOR INDIVIDUALS.—In the case of an individual— 

‘‘(1) IN GENERAL.—Subsection (a)(1) shall apply only to the 

applicable percentage of the net income or net loss referred to 

in such subsection. 

‘‘(2) DISPOSITIONS, ETC.—The amount which (but for this 

paragraph) would be treated as ordinary income by reason of 

subsection (b) or (e) shall be the applicable percentage of such 

amount. 

‘‘(3) PRO RATA ALLOCATION TO ITEMS.—For purposes of applying subsections (a) and (e) the aggregate amount treated as ordinary income for any such taxable year shall be allocated ratably among the items of income, gain, loss, and deduction 

taken into account in determining such amount. 

‘‘(4) SPECIAL RULE FOR RECOGNITION OF GAIN.—Gain which 

(but for this section) would not be recognized shall be recognized by reason of subsection (b) only to the extent that such 


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gain is treated as ordinary income after application of paragraph (2). 

‘‘(5) COORDINATION WITH LIMITATION ON LOSSES.—For purposes of applying paragraph (2) of subsection (a) with respect 

to any net loss for any taxable year— 

‘‘(A) such paragraph shall only apply with respect to the 

applicable percentage of such net loss for such taxable 

year, 

‘‘(B) in the case of a prior partnership taxable year referred to in clause (i) or (ii) of subparagraph (A) of such 

paragraph, only the applicable percentage (as in effect for 

such prior taxable year) of net income or net loss for such 

prior partnership taxable year shall be taken into account, 

and 

‘‘(C) any net loss carried forward to the succeeding partnership taxable year under subparagraph (B) of such paragraph shall— 

‘‘(i) be taken into account in such succeeding year 

without reduction under this subsection, and 

‘‘(ii) in lieu of being taken into account as an item 

of loss in such succeeding year, shall be taken into account— 

‘‘(I) as an increase in net loss or as a reduction 

in net income (including below zero), as the case 

may, and 

‘‘(II) after any reduction in the amount of such 

net loss or net income under this subsection. 

A rule similar to the rule of the preceding sentence shall apply 

for purposes of subsection (b)(2)(A). 

‘‘(6) COORDINATION WITH TREATMENT OF DIVIDENDS.—Subsection (a)(4) shall only apply to the applicable percentage of 

dividends described therein. 

‘‘(7) APPLICABLE PERCENTAGE.—For purposes of this subsection, the term ‘applicable percentage’ means 75 percent (50 

percent in the case of any taxable year beginning before January 1, 2013). 

‘‘(h) CROSS REFERENCE.—For 40 percent penalty on certain underpayments due to the avoidance of this section, see section 

6662.’’. 

(b) TREATMENT FOR PURPOSES OF SECTION 7704.—Subsection (d) 

of section 7704 is amended by adding at the end the following new 

paragraph: 

‘‘(6) INCOME FROM INVESTMENT SERVICES PARTNERSHIP INTERESTS NOT QUALIFIED.— 

‘‘(A) IN GENERAL.—Items of income and gain shall not be 

treated as qualifying income if such items are treated as 

ordinary income by reason of the application of section 710 

(relating to special rules for partners providing investment 

management services to partnership). The preceding sentence shall not apply to any item described in paragraph 

(1)(E) (or so much of paragraph (1)(F) as relates to paragraph (1)(E)). 

‘‘(B) SPECIAL RULES FOR CERTAIN PARTNERSHIPS.— 

‘‘(i) CERTAIN PARTNERSHIPS OWNED BY REAL ESTATE

INVESTMENT TRUSTS.—Subparagraph (A) shall not 


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apply in the case of a partnership which meets each 

of the following requirements: 

‘‘(I) Such partnership is treated as publicly traded under this section solely by reason of interests 

in such partnership being convertible into interests in a real estate investment trust which is 

publicly traded. 

‘‘(II) 50 percent or more of the capital and profits interests of such partnership are owned, directly or indirectly, at all times during the taxable 

year by such real estate investment trust (determined with the application of section 267(c)). 

‘‘(III) Such partnership meets the requirements 

of paragraphs (2), (3), and (4) of section 856(c). 

‘‘(ii) CERTAIN PARTNERSHIPS OWNING OTHER PUBLICLY TRADED PARTNERSHIPS.—Subparagraph (A) shall 

not apply in the case of a partnership which meets 

each of the following requirements: 

‘‘(I) Substantially all of the assets of such partnership consist of interests in one or more publicly 

traded partnerships (determined without regard to 

subsection (b)(2)). 

‘‘(II) Substantially all of the income of such partnership is ordinary income or section 1231 gain 

(as defined in section 1231(a)(3)). 

‘‘(C) TRANSITIONAL RULE.—Subparagraph (A) shall not 

apply to any taxable year of the partnership beginning before the date which is 10 years after the date of the enactment of this paragraph.’’. 

(c) IMPOSITION OF PENALTY ON UNDERPAYMENTS.— 

(1) IN GENERAL.—Subsection (b) of section 6662 is amended 

by inserting after paragraph (7) the following new paragraph: 

‘‘(8) The application of subsection (e) of section 710 or the 

regulations prescribed under section 710(f) to prevent the 

avoidance of the purposes of section 710.’’. 

(2) AMOUNT OF PENALTY.— 

(A) IN GENERAL.—Section 6662 is amended by adding at 

the end the following new subsection: 

‘‘(k) INCREASE IN PENALTY IN CASE OF PROPERTY TRANSFERRED

FOR INVESTMENT MANAGEMENT SERVICES.—In the case of any portion of an underpayment to which this section applies by reason of 

subsection (b)(8), subsection (a) shall be applied with respect to 

such portion by substituting ‘40 percent’ for ‘20 percent’.’’. 

(B) CONFORMING AMENDMENT.—Subparagraph (B) of section 6662A(e)(2) is amended by striking ‘‘or (i)’’ and inserting ‘‘, (i), or (k)’’. 

(3) SPECIAL RULES FOR APPLICATION OF REASONABLE CAUSE

EXCEPTION.—Subsection (c) of section 6664 is amended— 

(A) by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively, 

(B) by striking ‘‘paragraph (3)’’ in paragraph (5)(A), as so 

redesignated, and inserting ‘‘paragraph (4)’’, and 

(C) by inserting after paragraph (2) the following new 

paragraph: 


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‘‘(3) SPECIAL RULE FOR UNDERPAYMENTS ATTRIBUTABLE TO IN- VESTMENT MANAGEMENT SERVICES.— ‘‘(A) IN GENERAL.—Paragraph (1) shall not apply to any 

portion of an underpayment to which this section applies 

by reason of subsection (b)(8) unless— 

‘‘(i) the relevant facts affecting the tax treatment of 

the item are adequately disclosed, 

‘‘(ii) there is or was substantial authority for such 

treatment, and 

‘‘(iii) the taxpayer reasonably believed that such 

treatment was more likely than not the proper treatment. 

‘‘(B) RULES RELATING TO REASONABLE BELIEF.—Rules 

similar to the rules of subsection (d)(3) shall apply for purposes of subparagraph (A)(iii).’’. 

(d) INCOME AND LOSS FROM INVESTMENT SERVICES PARTNERSHIP

INTERESTS TAKEN INTO ACCOUNT IN DETERMINING NET EARNINGS

FROM SELF-EMPLOYMENT.— (1) INTERNAL REVENUE CODE.—Section 1402(a) is amended 

by striking ‘‘and’’ at the end of paragraph (16), by striking the 

period at the end of paragraph (17) and inserting ‘‘; and’’, and 

by inserting after paragraph (17) the following new paragraph: 

‘‘(18) notwithstanding the preceding provisions of this subsection, in the case of any individual engaged in the trade or 

business of providing services described in section 710(c)(1) 

with respect to any entity, any amount treated as ordinary income or ordinary loss of such individual under section 710 with 

respect to such entity shall be taken into account in determining the net earnings from self-employment of such individual.’’. 

(2) SOCIAL SECURITY ACT.—Section 211(a) of the Social Security Act is amended by striking ‘‘and’’ at the end of paragraph 

(15), by striking the period at the end of paragraph (16) and 

inserting ‘‘; and’’, and by inserting after paragraph (16) the following new paragraph: 

‘‘(17) Notwithstanding the preceding provisions of this subsection, in the case of any individual engaged in the trade or 

business of providing services described in section 710(c)(1) of 

the Internal Revenue Code of 1986 with respect to any entity, 

any amount treated as ordinary income or ordinary loss of such 

individual under section 710 of such Code with respect to such 

entity shall be taken into account in determining the net earnings from self-employment of such individual.’’. 

(e) CONFORMING AMENDMENTS.— 

(1) Subsection (d) of section 731 is amended by inserting 

‘‘section 710(b)(4) (relating to distributions of partnership property),’’ after ‘‘to the extent otherwise provided by’’. 

(2) Section 741 is amended by inserting ‘‘or section 710 (relating to special rules for partners providing investment management services to partnership)’’ before the period at the end. 

(3) The table of sections for part I of subchapter K of chapter 

1 is amended by adding at the end the following new item: 

‘‘Sec. 710. Special rules for partners providing investment management services to 

partnership.’’. 

(f) EFFECTIVE DATE.— 


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(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to 

taxable years ending after the date of the enactment of this 

Act. 

(2) PARTNERSHIP TAXABLE YEARS WHICH INCLUDE EFFECTIVE

DATE.—In applying section 710(a) of the Internal Revenue 

Code of 1986 (as added by this section) in the case of any partnership taxable year which includes the date of the enactment 

of this Act, the amount of the net income referred to in such 

section shall be treated as being the lesser of the net income 

for the entire partnership taxable year or the net income determined by only taking into account items attributable to the 

portion of the partnership taxable year which is after such 

date. 

(3) DISPOSITIONS OF PARTNERSHIP INTERESTS.—Section 710(b) 

of the Internal Revenue Code of 1986 (as added by this section) 

shall apply to dispositions and distributions after the date of 

the enactment of this Act. 

(4) OTHER INCOME AND GAIN IN CONNECTION WITH INVEST- MENT MANAGEMENT SERVICES.—Section 710(e) of such Code (as 

added by this section) shall take effect on the date of the enactment of this Act. 

(5) WAIVER OF ESTIMATED TAX PENALTIES.—No addition to 

tax shall be made under section 6654 of such Code for any failure to pay estimated tax for a taxable year that includes the 

date of the enactment of this Act with respect to any underpayment to the extent such underpayment was created or increased by this section. 

SEC. 413. EMPLOYMENT TAX TREATMENT OF PROFESSIONAL SERVICE 

BUSINESSES. 

(a) IN GENERAL.—Section 1402 is amended by adding at the end 

the following new subsection: 

‘‘(m) SPECIAL RULES FOR PROFESSIONAL SERVICE BUSINESSES.— ‘‘(1) SHAREHOLDERS PROVIDING SERVICES TO DISQUALIFIED S

CORPORATIONS.— 

‘‘(A) IN GENERAL.—In the case of any disqualified S corporation, each shareholder of such disqualified S corporation who provides substantial services with respect to the 

professional service business referred to in subparagraph 

(C) shall take into account such shareholder’s pro rata 

share of all items of income or loss described in section 

1366 which are attributable to such business in determining the shareholder’s net earnings from self-employment. 

‘‘(B) TREATMENT OF FAMILY MEMBERS.—Except as otherwise provided by the Secretary, the shareholder’s pro rata 

share of items referred to in subparagraph (A) shall be increased by the pro rata share of such items of each member of such shareholder’s family (within the meaning of 

section 318(a)(1)) who does not provide substantial services 

with respect to such professional service business. 

‘‘(C) DISQUALIFIED S CORPORATION.—For purposes of this 

subsection, the term ‘disqualified S corporation’ means— 

‘‘(i) any S corporation which is a partner in a partnership which is engaged in a professional service 


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business if substantially all of the activities of such S 

corporation are performed in connection with such 

partnership, and 

‘‘(ii) any other S corporation which is engaged in a 

professional service business if the principal asset of 

such business is the reputation and skill of 3 or fewer 

employees. 

‘‘(2) PARTNERS.—In the case of any partnership which is engaged in a professional service business, subsection (a)(13) 

shall not apply to any partner who provides substantial services with respect to such professional service business. 

‘‘(3) PROFESSIONAL SERVICE BUSINESS.—For purposes of this 

subsection, the term ‘professional service business’ means any 

trade or business if substantially all of the activities of such 

trade or business involve providing services in the fields of 

health, law, lobbying, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, investment advice or management, or brokerage services. 

‘‘(4) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the 

purposes of this subsection, including regulations which prevent the avoidance of the purposes of this subsection through 

tiered entities or otherwise. 

‘‘(5) CROSS REFERENCE.—For employment tax treatment of 

wages paid to shareholders of S corporations, see subtitle C.’’. 

(b) CONFORMING AMENDMENT.—Section 211 of the Social Security 

Act is amended by adding at the end the following new subsection: 

‘‘(l) SPECIAL RULES FOR PROFESSIONAL SERVICE BUSINESSES.— 

‘‘(1) SHAREHOLDERS PROVIDING SERVICES TO DISQUALIFIED S

CORPORATIONS.— 

‘‘(A) IN GENERAL.—In the case of any disqualified S corporation, each shareholder of such disqualified S corporation who provides substantial services with respect to the 

professional service business referred to in subparagraph 

(C) shall take into account such shareholder’s pro rata 

share of all items of income or loss described in section 

1366 of the Internal Revenue Code of 1986 which are attributable to such business in determining the shareholder’s net earnings from self-employment. 

‘‘(B) TREATMENT OF FAMILY MEMBERS.—Except as otherwise provided by the Secretary of the Treasury, the shareholder’s pro rata share of items referred to in subparagraph (A) shall be increased by the pro rata share of such 

items of each member of such shareholder’s family (within 

the meaning of section 318(a)(1) of the Internal Revenue 

Code of 1986) who does not provide substantial services 

with respect to such professional service business. 

‘‘(C) DISQUALIFIED S CORPORATION.—For purposes of this 

subsection, the term ‘disqualified S corporation’ means— 

‘‘(i) any S corporation which is a partner in a partnership which is engaged in a professional service 

business if substantially all of the activities of such S 

corporation are performed in connection with such 

partnership, and 


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‘‘(ii) any other S corporation which is engaged in a 

professional service business if the principal asset of 

such business is the reputation and skill of 3 or fewer 

employees. 

‘‘(2) PARTNERS.—In the case of any partnership which is engaged in a professional service business, subsection (a)(12) 

shall not apply to any partner who provides substantial services with respect to such professional service business. 

‘‘(3) PROFESSIONAL SERVICE BUSINESS.—For purposes of this 

subsection, the term ‘professional service business’ means any 

trade or business if substantially all of the activities of such 

trade or business involve providing services in the fields of 

health, law, lobbying, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, investment advice or management, or brokerage services.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to taxable years beginning after December 31, 2010. 

Subtitle C—Corporate Provisions 

SEC. 421. TREATMENT OF SECURITIES OF A CONTROLLED CORPORATION EXCHANGED FOR ASSETS IN CERTAIN REORGANIZATIONS. 

(a) IN GENERAL.—Section 361 (relating to nonrecognition of gain 

or loss to corporations; treatment of distributions) is amended by 

adding at the end the following new subsection: 

‘‘(d) SPECIAL RULES FOR TRANSACTIONS INVOLVING SECTION 355 

DISTRIBUTIONS.—In the case of a reorganization described in section 368(a)(1)(D) with respect to which stock or securities of the 

corporation to which the assets are transferred are distributed in 

a transaction which qualifies under section 355— 

‘‘(1) this section shall be applied by substituting ‘stock other 

than nonqualified preferred stock (as defined in section 

351(g)(2))’ for ‘stock or securities’ in subsections (a) and (b)(1), 

and 

‘‘(2) the first sentence of subsection (b)(3) shall apply only to 

the extent that the sum of the money and the fair market 

value of the other property transferred to such creditors does 

not exceed the adjusted bases of such assets transferred (reduced by the amount of the liabilities assumed (within the 

meaning of section 357(c))).’’. 

(b) CONFORMING AMENDMENT.—Paragraph (3) of section 361(b) is 

amended by striking the last sentence. 

(c) EFFECTIVE DATE.— 

(1) IN GENERAL.—Except as provided in paragraph (2), the 

amendments made by this section shall apply to exchanges 

after the date of the enactment of this Act. 

(2) TRANSITION RULE.—The amendments made by this section shall not apply to any exchange pursuant to a transaction 

which is— 

(A) made pursuant to a written agreement which was 

binding on March 15, 2010, and at all times thereafter; 

(B) described in a ruling request submitted to the Internal Revenue Service on or before such date; or 


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(C) described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission. 

SEC. 422. TAXATION OF BOOT RECEIVED IN REORGANIZATIONS. 

(a) IN GENERAL.—Paragraph (2) of section 356(a) is amended— 

(1) by striking ‘‘If an exchange’’ and inserting ‘‘Except as otherwise provided by the Secretary— 

‘‘(A) IN GENERAL.—If an exchange’’, 

(2) by striking ‘‘then there shall be’’ and all that follows 

through ‘‘February 28, 1913’’ and inserting ‘‘then the amount 

of other property or money shall be treated as a dividend to 

the extent of the earnings and profits of the corporation’’, and 

(3) by adding at the end the following new subparagraph: 

‘‘(B) CERTAIN REORGANIZATIONS.—In the case of a reorganization described in section 368(a)(1)(D) to which section 

354(b)(1) applies, in applying subparagraph (A)— 

‘‘(i) the earnings and profits of each corporation 

which is a party to the reorganization shall be taken 

into account, and 

‘‘(ii) the amount which is a dividend (and source 

thereof) shall be determined under rules similar to the 

rules of paragraphs (2) and (5) of section 304(b).’’. 

(b) EARNINGS AND PROFITS.—Paragraph (7) of section 312(n) is 

amended by adding at the end the following: ‘‘A similar rule shall 

apply to an exchange to which section 356(a)(1) applies.’’. 

(c) CONFORMING AMENDMENT.—Paragraph (1) of section 356(a) is 

amended by striking ‘‘then the gain’’ and inserting ‘‘then (except as 

provided in paragraph (2)) the gain’’. 

(d) EFFECTIVE DATE.— 

(1) IN GENERAL.—Except as provided in paragraph (2), the 

amendments made by this section shall apply to exchanges 

after the date of the enactment of this Act. 

(2) TRANSITION RULE.—The amendments made by this section shall not apply to any exchange between unrelated persons pursuant to a transaction which is— 

(A) made pursuant to a written agreement which was 

binding on May 20, 2010, and at all times thereafter, 

(B) described in a ruling request submitted to the Internal Revenue Service on or before such date, or 

(C) described in a public announcement or filing with 

the Securities and Exchange Commission on or before such 

date. 

(3) RELATED PERSONS.—For purposes of this subsection, a 

person shall be treated as related to another person if the relationship between such persons is described in section 267 or 

707(b) of the Internal Revenue Code of 1986. 

Subtitle D—Other Provisions 

SEC. 431. MODIFICATIONS WITH RESPECT TO OIL SPILL LIABILITY 

TRUST FUND. 

(a) EXTENSION OF APPLICATION OF OIL SPILL LIABILITY TRUST

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ed by striking ‘‘December 31, 2017’’ and inserting ‘‘December 31, 

2020’’. 

(b) INCREASE IN OIL SPILL LIABILITY TRUST FUND FINANCING

RATE.—Subparagraph (B) of section 4611(c)(2) is amended to read 

as follows: 

‘‘(B) the Oil Spill Liability Trust Fund financing rate is 

32 cents a barrel.’’. 

(c) INCREASE IN PER INCIDENT LIMITATIONS ON EXPENDITURES.— Subparagraph (A) of section 9509(c)(2) is amended— (1) by striking ‘‘$1,000,000,000’’ in clause (i) and inserting ‘‘$5,000,000,000’’, 

(2) by striking ‘‘$500,000,000’’ in clause (ii) and inserting ‘‘$2,500,000,000’’, and 

(3) by striking ‘‘$1,000,000,000 PER INCIDENT, ETC’’ in the 

heading and inserting ‘‘PER INCIDENT LIMITATIONS’’. 

(d) EFFECTIVE DATE.— (1) EXTENSION OF FINANCING RATE.—Except as provided in 

paragraph (2), the amendments made by this section shall take 

effect on the date of the enactment of this Act. 

(2) INCREASE IN FINANCING RATE.—The amendment made by 

subsection (b) shall apply to crude oil received and petroleum 

products entered during calendar quarters beginning more 

than 60 days after the date of the enactment of this Act. 

SEC. 432. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES. 

The percentage under paragraph (2) of section 561 of the Hiring 

Incentives to Restore Employment Act in effect on the date of the 

enactment of this Act is increased by 30.5 percentage points. 

TITLE V—UNEMPLOYMENT, HEALTH, 

AND OTHER ASSISTANCE 

Subtitle A—Unemployment Insurance and 

Other Assistance 

SEC. 501. EXTENSION OF UNEMPLOYMENT INSURANCE PROVISIONS. 

(a) IN GENERAL.—(1) Section 4007 of the Supplemental Appropriations Act, 2008 (Public Law 110–252; 26 U.S.C. 3304 note) is 

amended— 

(A) by striking ‘‘June 2, 2010’’ each place it appears and inserting ‘‘December 31, 2010’’; 

(B) in the heading for subsection (b)(2), by striking ‘‘JUNE 2, 

2010’’ and inserting ‘‘DECEMBER 31, 2010’’; and 

(C) in subsection (b)(3), by striking ‘‘November 6, 2010’’ and 

inserting ‘‘May 31, 2011’’. 

(2) Section 2002(e) of the Assistance for Unemployed Workers 

and Struggling Families Act, as contained in Public Law 111–5 (26 

U.S.C. 3304 note; 123 Stat. 438), is amended— 

(A) in paragraph (1)(B), by striking ‘‘June 2, 2010’’ and inserting ‘‘December 31, 2010’’; 

(B) in the heading for paragraph (2), by striking ‘‘JUNE 2, 

2010’’ and inserting ‘‘DECEMBER 31, 2010’’; and 

(C) in paragraph (3), by striking ‘‘December 7, 2010’’ and inserting ‘‘June 30, 2011’’. 


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(3) Section 2005 of the Assistance for Unemployed Workers and 

Struggling Families Act, as contained in Public Law 111–5 (26 

U.S.C. 3304 note; 123 Stat. 444), is amended— 

(A) by striking ‘‘June 2, 2010’’ each place it appears and inserting ‘‘January 1, 2011’’; and 

(B) in subsection (c), by striking ‘‘November 6, 2010’’ and inserting ‘‘June 1, 2011’’. 

(4) Section 5 of the Unemployment Compensation Extension Act 

of 2008 (Public Law 110–449; 26 U.S.C. 3304 note) is amended by 

striking ‘‘November 6, 2010’’ and inserting ‘‘May 31, 2011’’. 

(b) FUNDING.—Section 4004(e)(1) of the Supplemental Appropriations Act, 2008 (Public Law 110–252; 26 U.S.C. 3304 note) is 

amended— 

(1) in subparagraph (D), by striking ‘‘and’’ at the end; and 

(2) by inserting after subparagraph (E) the following: 

‘‘(F) the amendments made by section 501(a)(1) of the 

American Jobs and Closing Tax Loopholes Act of 2010; 

and’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall take effect as if included in the enactment of the Continuing 

Extension Act of 2010 (Public Law 111–157). 

SEC. 502. COORDINATION OF EMERGENCY UNEMPLOYMENT COMPENSATION WITH REGULAR COMPENSATION. 

(a) CERTAIN INDIVIDUALS NOT INELIGIBLE BY REASON OF NEW

ENTITLEMENT TO REGULAR BENEFITS.—Section 4002 of the Supplemental Appropriations Act, 2008 (Public Law 110–252; 26 U.S.C. 

3304 note) is amended by adding at the end the following: 

‘‘(g) COORDINATION OF EMERGENCY UNEMPLOYMENT COMPENSATION WITH REGULAR COMPENSATION.— 

‘‘(1) If— 

‘‘(A) an individual has been determined to be entitled to 

emergency unemployment compensation with respect to a 

benefit year, 

‘‘(B) that benefit year has expired, 

‘‘(C) that individual has remaining entitlement to emergency unemployment compensation with respect to that 

benefit year, and 

‘‘(D) that individual would qualify for a new benefit year 

in which the weekly benefit amount of regular compensation is at least either $100 or 25 percent less than the individual’s weekly benefit amount in the benefit year referred 

to in subparagraph (A), 

then the State shall determine eligibility for compensation as 

provided in paragraph (2). 

‘‘(2) For individuals described in paragraph (1), the State 

shall determine whether the individual is to be paid emergency 

unemployment compensation or regular compensation for a 

week of unemployment using one of the following methods: 

‘‘(A) The State shall, if permitted by State law, establish 

a new benefit year, but defer the payment of regular compensation with respect to that new benefit year until exhaustion of all emergency unemployment compensation 

payable with respect to the benefit year referred to in 

paragraph (1)(A); 


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‘‘(B) The State shall, if permitted by State law, defer the 

establishment of a new benefit year (which uses all the 

wages and employment which would have been used to establish a benefit year but for the application of this paragraph), until exhaustion of all emergency unemployment 

compensation payable with respect to the benefit year referred to in paragraph(1)(A); 

‘‘(C) The State shall pay, if permitted by State law— 

‘‘(i) regular compensation equal to the weekly benefit amount established under the new benefit year, 

and 

‘‘(ii) emergency unemployment compensation equal 

to the difference between that weekly benefit amount 

and the weekly benefit amount for the expired benefit 

year; or 

‘‘(D) The State shall determine rights to emergency unemployment compensation without regard to any rights to 

regular compensation if the individual elects to not file a 

claim for regular compensation under the new benefit 

year.’’. 

(b) EFFECTIVE DATE.—The amendment made by this section shall 

apply to individuals whose benefit years, as described in section 

4002(g)(1)(B) the Supplemental Appropriations Act, 2008 (Public 

Law 110–252; 26 U.S.C. 3304 note), as amended by this section, expire after the date of enactment of this Act. 

SEC. 503. EXTENSION OF THE EMERGENCY CONTINGENCY FUND. 

(a) IN GENERAL.—Section 403(c) of the Social Security Act (42 

U.S.C. 603(c)) is amended— 

(1) in paragraph (2)(A), by inserting ‘‘, and for fiscal year 2011, $2,500,000,000’’ before ‘‘for payment’’; 

(2) by striking paragraph (2)(B) and inserting the following: 

‘‘(B) AVAILABILITY AND USE OF FUNDS.— ‘‘(i) FISCAL YEARS 2009 AND 2010.—The amounts appropriated to the Emergency Fund under subparagraph (A) for fiscal year 2009 shall remain available 

through fiscal year 2010 and shall be used to make 

grants to States in each of fiscal years 2009 and 2010 

in accordance with paragraph (3), except that the 

amounts shall remain available through fiscal year 

2011 to make grants and payments to States in accordance with paragraph (3)(C) to cover expenditures 

to subsidize employment positions held by individuals 

placed in the positions before fiscal year 2011. 

‘‘(ii) FISCAL YEAR 2011.—Subject to clause (iii), the 

amounts appropriated to the Emergency Fund under 

subparagraph (A) for fiscal year 2011 shall remain 

available through fiscal year 2012 and shall be used to 

make grants to States based on expenditures in fiscal 

year 2011 for benefits and services provided in fiscal 

year 2011 in accordance with the requirements of 

paragraph (3). 

‘‘(iii) RESERVATION OF FUNDS.—Of the amounts appropriated to the Emergency Fund under subparagraph (A) for fiscal year 2011, $500,000 shall be placed 

in reserve for use in fiscal year 2012, and shall be 


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used to award grants for any expenditures described 

in this subsection incurred by States after September 

30, 2011.’’; 

(3) in paragraph (2)(C), by striking ‘‘2010’’ and inserting 

‘‘2012’’; 

(4) in paragraph (3)— 

(A) in clause (i) of each of subparagraphs (A), (B), and 

(C)— 

(i) by striking ‘‘year 2009 or 2010’’ and inserting 

‘‘years 2009 through 2011’’; 

(ii) by striking ‘‘and’’ at the end of subclause (I); 

(iii) by striking the period at the end of subclause 

(II) and inserting ‘‘; and’’; and 

(iv) by adding at the end the following: 

‘‘(III) if the quarter is in fiscal year 2011, has 

provided the Secretary with such information as 

the Secretary may find necessary in order to make 

the determinations, or take any other action, described in paragraph (5)(C).’’; and 

(B) in subparagraph (C), by adding at the end the following: 

‘‘(iv) LIMITATION ON EXPENDITURES FOR SUBSIDIZED

EMPLOYMENT.—An expenditure for subsidized employment shall be taken into account under clause (ii) only 

if the expenditure is used to subsidize employment 

for— 

‘‘(I) a member of a needy family (without regard 

to whether the family is receiving assistance 

under the State program funded under this part); 

or 

‘‘(II) an individual who has exhausted (or, within 60 days, will exhaust) all rights to receive unemployment compensation under Federal and 

State law, and who is a member of a needy household.’’; 

(5) by striking paragraph (5) and inserting the following: 

‘‘(5) LIMITATIONS ON PAYMENTS; ADJUSTMENT AUTHORITY.— ‘‘(A) FISCAL YEARS 2009 AND 2010.—The total amount payable to a single State under subsection (b) and this subsection for fiscal years 2009 and 2010 combined shall not 

exceed 50 percent of the annual State family assistance 

grant. 

‘‘(B) FISCAL YEAR 2011.—Subject to subparagraph (C), the 

total amount payable to a single State under subsection (b) 

and this subsection for fiscal year 2011 shall not exceed 30 

percent of the annual State family assistance grant. 

‘‘(C) ADJUSTMENT AUTHORITY.—If the Secretary determines that the Emergency Fund is at risk of being depleted before September 30, 2011, or that funds are available to accommodate additional State requests under this 

subsection, the Secretary may, through program instructions issued without regard to the requirements of section 

553 of title 5, United States Code— 

‘‘(i) specify priority criteria for awarding grants to 

States during fiscal year 2011; and 


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‘‘(ii) adjust the percentage limitation applicable 

under subparagraph (B) with respect to the total 

amount payable to a single State for fiscal year 2011.’’; 

and 

(6) in paragraph (6), by inserting ‘‘or for expenditures described in paragraph (3)(C)(iv)’’ before the period. 

(b) CONFORMING AMENDMENTS.—Section 2101 of division B of the 

American Recovery and Reinvestment Act of 2009 (Public Law 

111–5) is amended— 

(1) in subsection (a)(2)— 

(A) by striking ‘‘2010’’ and inserting ‘‘2011’’; and 

(B) by striking all that follows ‘‘repealed’’ and inserting 

a period; and 

(2) in subsection (d)(1), by striking ‘‘2010’’ and inserting 

‘‘2011’’. 

(c) PROGRAM GUIDANCE.—The Secretary of Health and Human 

Services shall issue program guidance, without regard to the requirements of section 553 of title 5, United States Code, which ensures that the funds provided under the amendments made by this 

section to a jurisdiction for subsidized employment do not support 

any subsidized employment position the annual salary of which is 

greater than, at State option— 

(1) 200 percent of the poverty line (within the meaning of 

section 673(2) of the Omnibus Budget Reconciliation Act of 

1981, including any revision required by such section 673(2)) 

for a family of 4; or 

(2) the median wage in the jurisdiction. 

Subtitle B—Health Provisions 

SEC. 511. EXTENSION OF PREMIUM ASSISTANCE FOR COBRA BENEFITS. 

(a) IN GENERAL.—Subsection (a)(3)(A) of section 3001 of division 

B of the American Recovery and Reinvestment Act of 2009 (Public 

Law 111–5), as amended by section 3(a) of the Continuing Extension Act of 2010 (Public Law 111–157), is amended by striking 

‘‘May 31, 2010’’ and inserting ‘‘December 31, 2010’’. 

(b) RULES RELATING TO 2010 EXTENSION.—Subsection (a) of section 3001 of division B of the American Recovery and Reinvestment 

Act of 2009 (Public Law 111–5), as amended by section 3(b) of the 

Continuing Extension Act of 2010 (Public Law 111–157), is amended by adding at the end the following: 

‘‘(19) ADDITIONAL RULES RELATED TO 2010 EXTENSION.—In the 

case of an individual who, with regard to coverage described in 

paragraph (10)(B), experiences a qualifying event related to a 

termination of employment on or after June 1, 2010, and prior 

to the date of the enactment of this paragraph, rules similar 

to those in paragraphs (4)(A) and (7)(C) shall apply with respect to all continuation coverage, including State continuation 

coverage programs.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall take effect as if included in the provisions of section 3001 of 

division B of the American Recovery and Reinvestment Act of 2009. 


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SEC. 512. EXTENSION OF SECTION 508 RECLASSIFICATIONS. 

(a) IN GENERAL.—Section 106(a) of division B of the Tax Relief 

and Health Care Act of 2006 (42 U.S.C. 1395 note), as amended by 

section 117 of the Medicare, Medicaid, and SCHIP Extension Act 

of 2007 (Public Law 110–173), section 124 of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110– 

275), and sections 3137(a) and 10317 of Public Law 111–148, is 

amended by striking ‘‘September 30, 2010’’ and inserting ‘‘September 30, 2011’’. 

(b) APPLICATION.—For fiscal year 2011, the Secretary of Health 

and Human Services may implement the amendment made by subsection (a) by posting on the Internet website of the Centers for 

Medicare & Medicaid Services a list of the areas and the hospitals 

whose reclassifications will be extended pursuant to such amendment. Hospitals located in or reclassified to labor market areas 

that are affected by such extension may terminate or withdraw 

their reclassifications by following the procedures included in section 412.273 of title 42, Code of Federal Regulations, except that 

any request for such termination or withdrawal must be received 

by the Medicare Geographic Classification Review Board not later 

than the date that is 5 business days after the day of such posting 

on the Internet website of the Centers for Medicare & Medicaid 

Services or June 18, 2010, whichever date is later. 

(c) CONFORMING AMENDMENT.—Section 117(a)(3) of the Medicare, 

Medicaid, and SCHIP Extension Act of 2007 (Public Law 110– 

173)), is amended by inserting ‘‘in fiscal years 2008 and 2009’’ after 

‘‘For purposes of implementation of this subsection’’. 

SEC. 513. REPEAL OF DELAY OF RUG-IV. 

Effective as if included in the enactment of Public Law 111–148, 

section 10325 of such Act is repealed. 

SEC. 514. LIMITATION ON REASONABLE COSTS PAYMENTS FOR CERTAIN CLINICAL DIAGNOSTIC LABORATORY TESTS FURNISHED TO HOSPITAL PATIENTS IN CERTAIN RURAL 

AREAS. 

Section 3122 of Public Law 111–148 is repealed and the provision 

of law amended by such section is restored as if such section had 

not been enacted. 

SEC. 515. FUNDING FOR CLAIMS REPROCESSING. 

For purposes of carrying out the provisions of, and amendments 

made by, this Act that relate to title XVIII of the Social Security 

Act, and other provisions of such title that involve reprocessing of 

claims, there are appropriated to the Secretary of Health and 

Human Services for the Centers for Medicare & Medicaid Services 

Program Management Account, from amounts in the general fund 

of the Treasury not otherwise appropriated, $175,000,000. Amounts 

appropriated under the preceding sentence shall remain available 

until expended. 

SEC. 516. EXTENSION OF ARRA INCREASE IN FMAP. 

(a) IN GENERAL.—Section 5001 of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5) is amended— 

(1) in subsection (a)(3), by striking ‘‘first calendar quarter’’ 

and inserting ‘‘first 3 calendar quarters’’; 

(2) in subsection (c)— 


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(A) in paragraph (2)(B), by striking ‘‘July 1, 2010’’ and 

inserting ‘‘January 1, 2011’’; 

(B) in paragraph (3)(B)(i), by striking ‘‘July 1, 2010’’ and 

inserting ‘‘January 1, 2011’’ each place it appears; and 

(C) in paragraph (4)(C)(ii), by striking ‘‘the 3-consecutive-month period beginning with January 2010’’ and inserting ‘‘any 3-consecutive-month period that begins after 

December 2009 and ends before January 2011’’; 

(3) in subsection (e), by adding at the end the following: 

‘‘Notwithstanding paragraph (5), the increases in the FMAP for a 

State under this section shall apply to payments under title XIX 

of such Act that are attributable to expenditures for medical assistance provided to nonpregnant childless adults made eligible under 

a State plan under such title (including under any waiver under 

such title or under section 1115 of such Act (42 U.S.C. 1315)) who 

would have been eligible for child health assistance or other health 

benefits under eligibility standards in effect as of December 31, 

2009, of a waiver of the State child health plan under the title XXI 

of such Act.’’; 

(4) in subsection (g)— 

(A) in paragraph (1), by striking ‘‘September 30, 2011’’ 

and inserting ‘‘March 31, 2012’’; 

(B) in paragraph (2)— 

(i) by inserting ‘‘of such Act’’ after ‘‘1923’’; and 

(ii) by adding at the end the following new sentence: 

‘‘Voluntary contributions by a political subdivision to 

the non-Federal share of expenditures under the State 

Medicaid plan or to the non-Federal share of payments 

under section 1923 of the Social Security Act shall not 

be considered to be required contributions for purposes 

of this section.’’; and 

(C) by adding at the end the following: 

‘‘(3) CERTIFICATION BY CHIEF EXECUTIVE OFFICER.—No 

additional Federal funds shall be paid to a State as a result of this section with respect to a calendar quarter occurring during the period beginning on January 1, 2011, 

and ending on June 30, 2011, unless, not later than 45 

days after the date of enactment of this paragraph, the 

chief executive officer of the State certifies that the State 

will request and use such additional Federal funds.’’; and 

(5) in subsection (h)(3), by striking ‘‘December 31, 2010’’ and 

inserting ‘‘June 30, 2011’’. 

(b) CONFORMING AMENDMENT.—Section 1905(cc) of the Social Security Act (42 U.S.C. 1396d(cc)) is amended by striking the last 

sentence (relating to the treatment of voluntary contributions). 

SEC. 517. MEDICAID AND CHIP TECHNICAL CORRECTIONS. 

(a) REPEAL OF EXCLUSION OF CERTAIN INDIVIDUALS AND ENTITIES

FROM MEDICAID.—Section 6502 of Public Law 111–148 is repealed 

and the provisions of law amended by such section are restored as 

if such section had never been enacted. Nothing in the previous 

sentence shall affect the execution or placement of the insertion 

made by section 6503 of such Act. 

(b) INCOME LEVEL FOR CERTAIN CHILDREN UNDER MEDICAID.— 

Effective as if included in the enactment of Public Law 111–148, 

section 2001(a)(5)(B) of such Act is amended by striking all that folVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00119 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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lows ‘‘is amended’’ and inserting the following: ‘‘by inserting after 

‘100 percent’ the following: ‘(or, beginning January 1, 2014, 133 

percent)’.’’. 

(c) CALCULATION AND PUBLICATION OF PAYMENT ERROR RATE

MEASUREMENT FOR CERTAIN YEARS.—Section 601(b) of the Children’s Health Insurance Program Reauthorization Act of 2009 

(Public Law 111–3) is amended by adding at the end the following: 

‘‘The Secretary is not required under this subsection to calculate or 

publish a national or a State-specific error rate for fiscal year 2009 

or fiscal year 2010.’’. 

(d) CORRECTIONS TO EXCEPTIONS TO EXCLUSION OF CHILDREN OF

CERTAIN EMPLOYEES.—Section 2110(b)(6) of the Social Security Act 

(42 U.S.C. 1397jj(b)(6)) is amended— 

(1) in subparagraph (B)— 

(A) by striking ‘‘PER PERSON’’ in the heading; and 

(B) by striking ‘‘each employee’’ and inserting ‘‘employees’’; and 

(2) in subparagraph (C), by striking ‘‘, on a case-by-case 

basis,’’. 

(e) ELECTRONIC HEALTH RECORDS.—Effective as if included in 

the enactment of section 4201(a)(2) of the American Recovery and 

Reinvestment Act of 2009 (Public Law 111–5), section 1903(t) of the 

Social Security Act (42 U.S.C. 1396b(t)) is amended— 

(1) in paragraph (3)(E), by striking ‘‘reduced by any payment 

that is made to such Medicaid provider from any other source 

(other than under this subsection or by a State or local government)’’ and inserting ‘‘reduced by the average payment the Secretary estimates will be made to such Medicaid providers (determined on a percentage or other basis for such classes or 

types of providers as the Secretary may specify) from other 

sources (other than under this subsection, or by the Federal 

government or a State or local government)’’; and 

(2) in paragraph (6)(B), by inserting before the period the following: ‘‘and shall be determined to have met such responsibility to the extent that the payment to the Medicaid provider 

is not in excess of 85 percent of the net average allowable 

cost’’. 

(f) CORRECTIONS OF DESIGNATIONS.— 

(1) Section 1902 of the Social Security Act (42 U.S.C. 1396a) 

is amended— 

(A) in subsection (a)(10), in the matter following subparagraph (G), by striking ‘‘and’’ before ‘‘(XVI) the medical’’ 

and by striking ‘‘(XVI) if’’ and inserting ‘‘(XVII) if’’; and 

(B) in subsection (ii)(2), by striking ‘‘(XV)’’ and inserting 

‘‘(XVI)’’. 

(2) Section 2107(e)(1) of the Social Security Act (42 U.S.C. 

1397gg(e)(1)) is amended by redesignating the subparagraph 

(N) of that section added by 2101(e) of Public Law 111–148 as 

subparagraph (O). 

SEC. 518. ADDITION OF INPATIENT DRUG DISCOUNT PROGRAM TO 

340B DRUG DISCOUNT PROGRAM. 

(a) ADDITION OF INPATIENT DRUG DISCOUNT.—Title III of the 

Public Health Service Act is amended by inserting after section 

340B (42 U.S.C. 256b) the following: 


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‘‘SEC. 340B–1. DISCOUNT INPATIENT DRUGS FOR INDIVIDUALS WITHOUT PRESCRIPTION DRUG COVERAGE. 

‘‘(a) REQUIREMENTS FOR AGREEMENTS WITH THE SECRETARY.— 

‘‘(1) IN GENERAL.— 

‘‘(A) AGREEMENT.—The Secretary shall enter into an 

agreement with each manufacturer of covered inpatient 

drugs under which the amount required to be paid (taking 

into account any rebate or discount, as provided by the 

Secretary) to the manufacturer for covered inpatient drugs 

(other than drugs described in paragraph (3)) purchased by 

a covered entity on or after January 1, 2011, does not exceed an amount equal to the average manufacturer price 

for the drug under title XIX of the Social Security Act in 

the preceding calendar quarter, reduced by the rebate percentage described in paragraph (2). For a covered inpatient 

drug that also is a covered outpatient drug under section 

340B, the amount required to be paid under the preceding 

sentence shall be equal to the amount required to be paid 

under section 340B(a)(1) for such drug. The agreement 

with a manufacturer under this subparagraph may, at the 

discretion of the Secretary, be included in the agreement 

with the same manufacturer under section 340B. 

‘‘(B) CEILING PRICE.—Each such agreement shall require 

that the manufacturer furnish the Secretary with reports, 

on a quarterly basis, of the price for each covered inpatient 

drug subject to the agreement that, according to the manufacturer, represents the maximum price that covered entities may permissibly be required to pay for the drug (referred to in this section as the ‘ceiling price’), and shall require that the manufacturer offer each covered entity covered inpatient drugs for purchase at or below the applicable ceiling price if such drug is made available to any other 

purchaser at any price. 

‘‘(C) ALLOCATION METHOD.—Each such agreement shall 

require that, if the supply of a covered inpatient drug is 

insufficient to meet demand, then the manufacturer may 

use an allocation method that is reported in writing to, 

and approved by, the Secretary and does not discriminate 

on the basis of the price paid by covered entities or on any 

other basis related to the participation of an entity in the 

program under this section. 

‘‘(2) REBATE PERCENTAGE DEFINED.— ‘‘(A) IN GENERAL.—For a covered inpatient drug purchased in a calendar quarter, the ‘rebate percentage’ is the 

amount (expressed as a percentage) equal to— 

‘‘(i) the average total rebate required under section 

1927(c) of the Social Security Act (or the average total 

rebate that would be required if the drug were a covered outpatient drug under such section) with respect 

to the drug (for a unit of the dosage form and strength 

involved) during the preceding calendar quarter; divided by 

‘‘(ii) the average manufacturer price for such a unit 

of the drug during such quarter. 

‘‘(B) OVER THE COUNTER DRUGS.— 


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‘‘(i) IN GENERAL.—For purposes of subparagraph (A), 

in the case of over the counter drugs, the ‘rebate percentage’ shall be determined as if the rebate required 

under section 1927(c) of the Social Security Act is 

based on the applicable percentage provided under 

section 1927(c)(3) of such Act. 

‘‘(ii) DEFINITION.—The term ‘over the counter drug’ 

means a drug that may be sold without a prescription 

and which is prescribed by a physician (or other persons authorized to prescribe such drug under State 

law). 

‘‘(3) DRUGS PROVIDED UNDER STATE MEDICAID PLANS.—Drugs 

described in this paragraph are drugs purchased by the entity 

for which payment is made by the State under the State plan 

for medical assistance under title XIX of the Social Security 

Act. 

‘‘(4) REQUIREMENTS FOR COVERED ENTITIES.— 

‘‘(A) PROHIBITING DUPLICATE DISCOUNTS OR REBATES.— 

‘‘(i) IN GENERAL.—A covered entity shall not request 

payment under title XIX of the Social Security Act for 

medical assistance described in section 1905(a)(12) of 

such Act with respect to a drug that is subject to an 

agreement under this section if the drug is subject to 

the payment of a rebate to the State under section 

1927 of such Act. 

‘‘(ii) ESTABLISHMENT OF MECHANISM.—The Secretary 

shall establish a mechanism to ensure that covered 

entities comply with clause (i). If the Secretary does 

not establish a mechanism under the previous sentence within 12 months of the enactment of this section, the requirements of section 1927(a)(5)(C) of the 

Social Security Act shall apply. 

‘‘(iii) PROHIBITING DISCLOSURE TO GROUP PURCHASING ORGANIZATIONS.—In the event that a covered 

entity is a member of a group purchasing organization, such entity shall not disclose the price or any 

other information pertaining to any purchases under 

this section directly or indirectly to such group purchasing organization. 

‘‘(B) PROHIBITING RESALE, DISPENSING, OR ADMINISTRATION OF DRUGS EXCEPT TO CERTAIN PATIENTS.—With respect to any covered inpatient drug that is subject to an 

agreement under this subsection, a covered entity shall not 

dispense, administer, resell, or otherwise transfer the covered inpatient drug to a person unless— 

‘‘(i) such person is a patient of the entity; and 

‘‘(ii) such person does not have health plan coverage 

(as defined in subsection (c)(3)) that provides prescription drug coverage in the inpatient setting with respect to such covered inpatient drug. 

For purposes of clause (ii), a person shall be treated as 

having health plan coverage (as defined in subsection 

(c)(3)) with respect to a covered inpatient drug if benefits 

are not payable under such coverage with respect to such 


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drug for reasons such as the application of a deductible or 

cost sharing or the use of utilization management. 

‘‘(C) AUDITING.—A covered entity shall permit the Secretary and the manufacturer of a covered inpatient drug 

that is subject to an agreement under this subsection with 

the entity (acting in accordance with procedures established by the Secretary relating to the number, duration, 

and scope of audits) to audit at the Secretary’s or the manufacturer’s expense the records of the entity that directly 

pertain to the entity’s compliance with the requirements 

described in subparagraph (A) or (B) with respect to drugs 

of the manufacturer. The use or disclosure of information 

for performance of such an audit shall be treated as a use 

or disclosure required by law for purposes of section 

164.512(a) of title 45, Code of Federal Regulations. 

‘‘(D) ADDITIONAL SANCTION FOR NONCOMPLIANCE.—If the 

Secretary finds, after notice and hearing, that a covered 

entity is in violation of a requirement described in subparagraph (A) or (B), the covered entity shall be liable to 

the manufacturer of the covered inpatient drug that is the 

subject of the violation in an amount equal to the reduction in the price of the drug (as described in subparagraph 

(A)) provided under the agreement between the Secretary 

and the manufacturer under this subsection. 

‘‘(E) MAINTENANCE OF RECORDS.— ‘‘(i) IN GENERAL.—A covered entity shall establish 

and maintain an effective recordkeeping system to 

comply with this section and shall certify to the Secretary that such entity is in compliance with subparagraphs (A) and (B). The Secretary shall require that 

hospitals that purchase covered inpatient drugs for inpatient dispensing or administration under this subsection appropriately segregate inventory of such covered inpatient drugs, either physically or electronically, from drugs for outpatient use, as well as from 

drugs for inpatient dispensing or administration to individuals who have (for purposes of subparagraph (B)) 

health plan coverage described in clause (ii) of such 

subparagraph. 

‘‘(ii) CERTIFICATION OF NO THIRD-PARTY PAYER.—A 

covered entity shall maintain records that contain certification by the covered entity that no third party 

payment was received for any covered inpatient drug 

that is subject to an agreement under this subsection 

and that was dispensed to an inpatient. 

‘‘(5) TREATMENT OF DISTINCT UNITS OF HOSPITALS.—In the 

case of a covered entity that is a distinct part of a hospital, the 

distinct part of the hospital shall not be considered a covered 

entity under this subsection unless the hospital is otherwise a 

covered entity under this subsection. 

‘‘(6) NOTICE TO MANUFACTURERS.—The Secretary shall notify 

manufacturers of covered inpatient drugs and single State 

agencies under section 1902(a)(5) of the Social Security Act of 

the identities of covered entities under this subsection, and of 

entities that no longer meet the requirements of paragraph (4), 


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by means of timely updates of the Internet website supported 

by the Department of Health and Human Services relating to 

this section. 

‘‘(7) NO PROHIBITION ON LARGER DISCOUNT.—Nothing in this 

subsection shall prohibit a manufacturer from charging a price 

for a drug that is lower than the maximum price that may be 

charged under paragraph (1). 

‘‘(b) COVERED ENTITY DEFINED.—In this section, the term ‘covered entity’ means an entity that meets the requirements described 

in subsection (a)(4) and is one of the following: 

‘‘(1) A subsection (d) hospital (as defined in section 

1886(d)(1)(B) of the Social Security Act) that— 

‘‘(A) is owned or operated by a unit of State or local government, is a public or private non-profit corporation 

which is formally granted governmental powers by a unit 

of State or local government, or is a private nonprofit hospital which has a contract with a State or local government to provide health care services to low income individuals who are not entitled to benefits under title XVIII of 

the Social Security Act or eligible for assistance under the 

State plan for medical assistance under title XIX of such 

Act; and 

‘‘(B) for the most recent cost reporting period that ended 

before the calendar quarter involved, had a disproportionate share adjustment percentage (as determined using 

the methodology under section 1886(d)(5)(F) of the Social 

Security Act as in effect on the date of enactment of this 

section) greater than 20.20 percent or was described in section 1886(d)(5)(F)(i)(II) of such Act (as so in effect on the 

date of enactment of this section). 

‘‘(2) A children’s hospital excluded from the Medicare prospective payment system pursuant to section 1886(d)(1)(B)(iii) 

of the Social Security Act that would meet the requirements of 

paragraph (1), including the disproportionate share adjustment 

percentage requirement under subparagraph (B) of such paragraph, if the hospital were a subsection (d) hospital as defined 

by section 1886(d)(1)(B) of the Social Security Act. 

‘‘(3) A free-standing cancer hospital excluded from the Medicare prospective payment system pursuant to section 

1886(d)(1)(B)(v) of the Social Security Act that would meet the 

requirements of paragraph (1), including the disproportionate 

share adjustment percentage requirement under subparagraph 

(B) of such paragraph, if the hospital were a subsection (d) hospital as defined by section 1886(d)(1)(B) of the Social Security 

Act. 

‘‘(4) An entity that is a critical access hospital (as determined 

under section 1820(c)(2) of the Social Security Act), and that 

meets the requirements of paragraph (1)(A). 

‘‘(5) An entity that is a rural referral center, as defined by 

section 1886(d)(5)(C)(i) of the Social Security Act, or a sole 

community hospital, as defined by section 1886(d)(5)(C)(iii) of 

such Act, and that both meets the requirements of paragraph 

(1)(A) and has a disproportionate share adjustment percentage 

equal to or greater than 8 percent. 

‘‘(c) OTHER DEFINITIONS.—In this section: 


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‘‘(1) AVERAGE MANUFACTURER PRICE.— ‘‘(A) IN GENERAL.—The term ‘average manufacturer 

price’— 

‘‘(i) has the meaning given such term in section 

1927(k) of the Social Security Act, except that such 

term shall be applied under this section with respect 

to covered inpatient drugs in the same manner (as applicable) as such term is applied under such section 

1927(k) with respect to covered outpatient drugs (as 

defined in such section); and 

‘‘(ii) with respect to a covered inpatient drug for 

which there is no average manufacturer price (as defined in clause (i)), shall be the amount determined 

under regulations promulgated by the Secretary under 

subparagraph (B). 

‘‘(B) RULEMAKING.—The Secretary shall by regulation, in 

consultation with the Administrator of the Centers for 

Medicare & Medicaid Services, establish a method for determining the average manufacturer price for covered inpatient drugs for which there is no average manufacturer 

price (as defined in subparagraph (A)(i)). Regulations promulgated with respect to covered inpatient drugs under 

the preceding sentence shall provide for the application of 

methods for determining the average manufacturer price 

that are the same as the methods used to determine such 

price in calculating rebates required for such drugs under 

an agreement between a manufacturer and a State that 

satisfies the requirements of section 1927(b) of the Social 

Security Act, as applicable. 

‘‘(2) COVERED INPATIENT DRUG.—The term ‘covered inpatient 

drug’ means a drug— 

‘‘(A) that is described in section 1927(k)(2) of the Social 

Security Act; 

‘‘(B) that, notwithstanding paragraph (3)(A) of section 

1927(k) of such Act, is used in connection with an inpatient service provided by a covered entity that is enrolled 

to participate in the drug discount program under this section; and 

‘‘(C) that is not purchased by the covered entity through 

or under contract with a group purchasing organization. 

‘‘(3) HEALTH PLAN COVERAGE.—The term ‘health plan coverage’ means— 

‘‘(A) health insurance coverage (as defined in section 

2791, and including coverage under a State health benefits 

risk pool); 

‘‘(B) coverage under a group health plan (as defined in 

such section, and including coverage under a church plan, 

a governmental plan, or a collectively bargained plan); 

‘‘(C) coverage under a Federal health care program (as 

defined by section 1128B(f) of the Social Security Act); or 

‘‘(D) such other health benefits coverage as the Secretary 

recognizes for purposes of this section. 

‘‘(4) MANUFACTURER.—The term ‘manufacturer’ has the 

meaning given such term in section 1927(k) of the Social Security Act. 


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‘‘(d) PROGRAM INTEGRITY.— ‘‘(1) MANUFACTURER COMPLIANCE.— ‘‘(A) IN GENERAL.—From amounts appropriated under 

subsection (f), the Secretary shall provide for improvements in compliance by manufacturers with the requirements of this section in order to prevent overcharges and 

other violations of the discounted pricing requirements 

specified in this section. 

‘‘(B) IMPROVEMENTS.—The improvements described in 

subparagraph (A) shall include the following: 

‘‘(i) The establishment of a process to enable the Secretary to verify the accuracy of ceiling prices calculated by manufacturers under subsection (a)(1) and 

charged to covered entities, which shall include the 

following: 

‘‘(I) Developing and publishing through an appropriate policy or regulatory issuance, precisely 

defined standards and methodology for the calculation of ceiling prices under such subsection. 

‘‘(II) Comparing regularly the ceiling prices calculated by the Secretary with the quarterly pricing data that is reported by manufacturers to the 

Secretary. 

‘‘(III) Conducting periodic monitoring of sales 

transactions by covered entities. 

‘‘(IV) Inquiring into any discrepancies between 

ceiling prices and manufacturer pricing data that 

may be identified and taking, or requiring manufacturers to take, corrective action in response to 

such discrepancies, including the issuance of refunds pursuant to the procedures set forth in 

clause (ii). 

‘‘(ii) The establishment of procedures for manufacturers to issue refunds to covered entities in the event 

that there is an overcharge by the manufacturers, including the following: 

‘‘(I) Providing the Secretary with an explanation 

of why and how the overcharge occurred, how the 

refunds will be calculated, and to whom the refunds will be issued. 

‘‘(II) Oversight by the Secretary to ensure that 

the refunds are issued accurately and within a 

reasonable period of time. 

‘‘(iii) The provision of access through the Internet 

website supported by the Department of Health and 

Human Services to the applicable ceiling prices for 

covered inpatient drugs as calculated and verified by 

the Secretary in accordance with this section, in a 

manner (such as through the use of password protection) that limits such access to covered entities and 

adequately assures security and protection of privileged pricing data from unauthorized re-disclosure. 

‘‘(iv) The development of a mechanism by which— 

‘‘(I) rebates, discounts, or other price concessions 

provided by manufacturers to other purchasers 


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subsequent to the sale of covered inpatient drugs 

to covered entities are reported to the Secretary; 

and 

‘‘(II) appropriate credits and refunds are issued 

to covered entities if such discounts, rebates, or 

other price concessions have the effect of lowering 

the applicable ceiling price for the relevant quarter for the drugs involved. 

‘‘(v) Selective auditing of manufacturers and wholesalers to ensure the integrity of the drug discount program under this section. 

‘‘(vi) The establishment of a requirement that manufacturers and wholesalers use the identification system developed by the Secretary for purposes of facilitating the ordering, purchasing, and delivery of covered inpatient drugs under this section, including the 

processing of chargebacks for such drugs. 

‘‘(vii) The imposition of sanctions in the form of civil 

monetary penalties, which— 

‘‘(I) shall be assessed according to standards and 

procedures established in regulations to be promulgated by the Secretary not later than January 

1, 2011; 

‘‘(II) shall not exceed $10,000 per single dosage 

form of a covered inpatient drug purchased by a 

covered entity where a manufacturer knowingly 

charges such covered entity a price for such drug 

that exceeds the ceiling price under subsection 

(a)(1); and 

‘‘(III) shall not exceed $100,000 for each instance where a manufacturer withholds or provides materially false information to the Secretary 

or to covered entities under this section or knowingly violates any provision of this section (other 

than subsection (a)(1)). 

‘‘(2) COVERED ENTITY COMPLIANCE.— ‘‘(A) IN GENERAL.—From amounts appropriated under 

subsection (f), the Secretary shall provide for improvements in compliance by covered entities with the requirements of this section in order to prevent diversion and violations of the duplicate discount provision and other requirements specified under subsection (a)(4). 

‘‘(B) IMPROVEMENTS.—The improvements described in 

subparagraph (A) shall include the following: 

‘‘(i) The development of procedures to enable and require covered entities to update at least annually the 

information on the Internet website supported by the 

Department of Health and Human Services relating to 

this section. 

‘‘(ii) The development of procedures for the Secretary 

to verify the accuracy of information regarding covered 

entities that is listed on the website described in 

clause (i). 

‘‘(iii) The development of more detailed guidance describing methodologies and options available to covVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00127 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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ered entities for billing covered inpatient drugs to 

State Medicaid agencies in a manner that avoids duplicate discounts pursuant to subsection (a)(4)(A). 

‘‘(iv) The establishment of a single, universal, and 

standardized identification system by which each covered entity site and each covered entity’s purchasing 

status under sections 340B and this section can be 

identified by manufacturers, distributors, covered entities, and the Secretary for purposes of facilitating the 

ordering, purchasing, and delivery of covered inpatient 

drugs under this section, including the processing of 

chargebacks for such drugs. 

‘‘(v) The imposition of sanctions in the form of civil 

monetary penalties, which— 

‘‘(I) shall be assessed according to standards and 

procedures established in regulations promulgated 

by the Secretary; and ‘‘(II) shall not exceed $10,000 for each instance 

where a covered entity knowingly violates subsection (a)(4)(B) or knowingly violates any other 

provision of this section. 

‘‘(vi) The termination of a covered entity’s participation in the program under this section, for a period of 

time to be determined by the Secretary, in cases in 

which the Secretary determines, in accordance with 

standards and procedures established by regulation, 

that— 

‘‘(I) the violation by a covered entity of a requirement of this section was repeated and knowing; and 

‘‘(II) imposition of a monetary penalty would be 

insufficient to reasonably ensure compliance with 

the requirements of this section. 

‘‘(vii) The referral of matters, as appropriate, to the 

Food and Drug Administration, the Office of the Inspector General of the Department of Health and 

Human Services, or other Federal or State agencies. 

‘‘(3) ADMINISTRATIVE DISPUTE RESOLUTION PROCESS.—From 

amounts appropriated under subsection (f), the Secretary may 

establish and implement an administrative process for the resolution of the following: 

‘‘(A) Claims by covered entities that manufacturers have 

violated the terms of their agreement with the Secretary 

under subsection (a)(1). 

‘‘(B) Claims by manufacturers that covered entities have 

violated subsection (a)(4)(A) or (a)(4)(B). 

‘‘(e) AUDIT AND SANCTIONS.— 

‘‘(1) AUDIT.—From amounts appropriated under subsection 

(f), the Inspector General of the Department of Health and 

Human Services (referred to in this subsection as the ‘Inspector General’) shall audit covered entities under this section to 

verify compliance with criteria for eligibility and participation 

under this section, including the antidiversion prohibitions 

under subsection (a)(4)(B), and take enforcement action or provide information to the Secretary who shall take action to enVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00128 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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sure program compliance, as appropriate. A covered entity 

shall provide to the Inspector General, upon request, records 

relevant to such audits. 

‘‘(2) REPORT.—For each audit conducted under paragraph (1), 

the Inspector General shall prepare and publish in a timely 

manner a report which shall include findings and recommendations regarding— 

‘‘(A) the appropriateness of covered entity eligibility determinations and, as applicable, certifications; 

‘‘(B) the effectiveness of antidiversion prohibitions; and 

‘‘(C) the effectiveness of restrictions on inpatient dispensing and administration. 

‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There are authorized 

to be appropriated to carry out this section such sums as may be 

necessary for fiscal year 2011 and each succeeding fiscal year.’’. 

(b) RULEMAKING.—Not later than January 1, 2011, the Secretary 

shall promulgate regulations implementing section 340B–1 of the 

Public Health Service Act (as added by subsection (a)). 

(c) CONFORMING AMENDMENT TO SECTION 340B.—Paragraph (1) 

of section 340B(a) of the Public Health Service Act (42 U.S.C. 

256b(a)) is amended by adding at the end the following: ‘‘Such 

agreement shall further require that, if the supply of a covered outpatient drug is insufficient to meet demand, then the manufacturer 

may use an allocation method that is reported in writing to, and 

approved by, the Secretary and does not discriminate on the basis 

of the price paid by covered entities or on any other basis related 

to the participation of an entity in the program under this section. 

The agreement with a manufacturer under this paragraph may, at 

the discretion of the Secretary, be included in the agreement with 

the same manufacturer under section 340B–1.’’. 

(d) CONFORMING AMENDMENTS TO MEDICAID.—Section 1927 of 

the Social Security Act (42 U.S.C. 1396r–8) is amended— 

(1) in subsection (a)— 

(A) in paragraph (1), in the first sentence, by striking 

‘‘and paragraph (6)’’ and inserting ‘‘, paragraph (6), and 

paragraph (8)’’; and 

(B) by adding at the end the following new paragraph: 

‘‘(8) LIMITATION ON PRICES OF DRUGS PURCHASED BY 340B–1- 

COVERED ENTITIES.— 

‘‘(A) AGREEMENT WITH SECRETARY.—A manufacturer 

meets the requirements of this paragraph if the manufacturer has entered into an agreement with the Secretary 

that meets the requirements of section 340B–1 of the Public Health Service Act with respect to covered inpatient 

drugs (as defined in such section) purchased by a 340B– 

1-covered entity on or after January 1, 2011. 

‘‘(B) 340B–1-COVERED ENTITY DEFINED.—In this subsection, the term ‘340B–1-covered entity’ means an entity 

described in section 340B–1(b) of the Public Health Service 

Act.’’; and 

(2) in subsection (c)(1)(C)(i)(I)— 

(A) by striking ‘‘or’’ before ‘‘a covered entity’’; and 

(B) by inserting before the semicolon the following: ‘‘, or 

a covered entity for a covered inpatient drug (as such 


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terms are defined in section 340B–1of the Public Health 

Service Act)’’. 

SEC. 519. CONTINUED INCLUSION OF ORPHAN DRUGS IN DEFINITION 

OF COVERED OUTPATIENT DRUGS WITH RESPECT TO 

CHILDREN’S HOSPITALS UNDER THE 340B DRUG DISCOUNT PROGRAM. 

(a) DEFINITION OF COVERED OUTPATIENT DRUG.— (1) AMENDMENT.—Subsection (e) of section 340B of the Public Health Service Act (42 U.S.C. 256b) is amended by striking 

‘‘covered entities described in subparagraph (M)’’and inserting 

‘‘covered entities described in subparagraph (M) (other than a 

children’s hospital described in subparagraph (M))’’. 

(2) EFFECTIVE DATE.—The amendment made by paragraph 

(1) shall take effect as if included in the enactment of section 

2302 of the Health Care and Education Reconciliation Act of 

2010 (Public Law 111–152). 

(b) TECHNICAL AMENDMENT.—Subparagraph (B) of section 

1927(a)(5) of the Social Security Act (42 U.S.C. 1396r–8(a)(5)) is 

amended by striking ‘‘and a children’s hospital’’ and all that follows 

through the end of the subparagraph and inserting a period. 

SEC. 520. CONFORMING AMENDMENT RELATED TO WAIVER OF COINSURANCE FOR PREVENTIVE SERVICES. 

Effective as if included in section 10501(i)(2)(A) of Public Law 

111–148, section 1833(a)(3)(A) of the Social Security Act (42 U.S.C. 

1395l(a)(3)(A)) is amended by striking ‘‘section 1861(s)(10)(A)’’ and 

inserting ‘‘section 1861(ddd)(3)’’. 

SEC. 521. ESTABLISH A CMS–IRS DATA MATCH TO IDENTIFY FRAUDULENT PROVIDERS. 

(a) AUTHORITY TO DISCLOSE RETURN INFORMATION CONCERNING

OUTSTANDING TAX DEBTS FOR PURPOSES OF ENHANCING MEDICARE

PROGRAM INTEGRITY.— 

(1) IN GENERAL.—Section 6103(l) of the Internal Revenue 

Code of 1986 is amended by adding at the end the following 

new paragraph: 

‘‘(22) DISCLOSURE OF RETURN INFORMATION TO DEPARTMENT

OF HEALTH AND HUMAN SERVICES FOR PURPOSES OF ENHANCING

MEDICARE PROGRAM INTEGRITY.— 

‘‘(A) IN GENERAL.—The Secretary shall, upon written request from the Secretary of Health and Human Services, 

disclose to officers and employees of the Department of 

Health and Human Services return information with respect to a taxpayer who has applied to enroll, or reenroll, 

as a provider of services or supplier under the Medicare 

program under title XVIII of the Social Security Act. Such 

return information shall be limited to— 

‘‘(i) the taxpayer identity information with respect to 

such taxpayer; 

‘‘(ii) the amount of the delinquent tax debt owed by 

that taxpayer; and 

‘‘(iii) the taxable year to which the delinquent tax 

debt pertains. 

‘‘(B) RESTRICTION ON DISCLOSURE.—Return information 

disclosed under subparagraph (A) may be used by officers 

and employees of the Department of Health and Human 

Services for the purposes of, and to the extent necessary 


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in, establishing the taxpayer’s eligibility for enrollment or 

reenrollment in the Medicare program, or in any administrative or judicial proceeding relating to, or arising from, 

a denial of such enrollment or reenrollment, or in determining the level of enhanced oversight to be applied with 

respect to such taxpayer pursuant to section 1866(j)(3) of 

the Social Security Act. 

‘‘(C) DELINQUENT TAX DEBT.—For purposes of this paragraph, the term ‘delinquent tax debt’ means an outstanding debt under this title for which a notice of lien has 

been filed pursuant to section 6323, but the term does not 

include a debt that is being paid in a timely manner pursuant to an agreement under section 6159 or 7122, or a 

debt with respect to which a collection due process hearing 

under section 6330 is requested, pending, or completed and 

no payment is required.’’. 

(2) CONFORMING AMENDMENTS.—Section 6103(p)(4) of such 

Code, as amended by sections 1414 and 3308 of Public Law 

111–148, in the matter preceding subparagraph (A) and in subparagraph (F)(ii), is amended by striking ‘‘or (17)’’ and inserting ‘‘(17), or (22)’’ each place it appears. 

(b) SECRETARY’S AUTHORITY TO USE INFORMATION FROM THE DEPARTMENT OF TREASURY IN MEDICARE ENROLLMENTS AND REENROLLMENTS.—Section 1866(j)(2) of the Social Security Act (42 

U.S.C. 1395cc(j)), as inserted by section 6401(a) of Public Law 111– 

148, is further amended— 

(1) by redesignating subparagraph (E) as subparagraph (F); 

and 

(2) by inserting after subparagraph (D) the following new 

subparagraph: 

‘‘(E) USE OF INFORMATION FROM THE DEPARTMENT OF

TREASURY CONCERNING TAX DEBTS.—In reviewing the application of a provider of services or supplier to enroll or 

reenroll under the program under this title, the Secretary 

shall take into account the information supplied by the 

Secretary of the Treasury pursuant to section 6103(l)(22) 

of the Internal Revenue Code of 1986, in determining 

whether to deny such application or to apply enhanced 

oversight to such provider of services or supplier pursuant 

to paragraph (3) if the Secretary determines such provider 

of services or supplier owes such a debt.’’. 

(c) AUTHORITY TO ADJUST PAYMENTS OF PROVIDERS OF SERVICES

AND SUPPLIERS WITH THE SAME TAX IDENTIFICATION NUMBER FOR

MEDICARE OBLIGATIONS.—Section 1866(j)(5) of the Social Security 

Act (42 U.S.C. 1395cc(j)(5)), as inserted by section 6401(a) of Public 

Law 111–148, is amended— 

(1) in the paragraph heading, by striking ‘‘PAST-DUE’’ and inserting ‘‘MEDICARE’’; 

(2) in subparagraph (A), by striking ‘‘past-due obligations described in subparagraph (B)(ii) of an’’ and inserting ‘‘amount 

described in subparagraph (B)(ii) due from such’’; and 

(3) in subparagraph (B)(ii), by striking ‘‘a past-due obligation’’ and inserting ‘‘an amount that is more than the amount 

required to be paid’’. 


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SEC. 522. CLARIFICATION OF EFFECTIVE DATE OF PART B SPECIAL 

ENROLLMENT PERIOD FOR DISABLED TRICARE BENEFICIARIES. 

Effective as if included in the enactment of Public Law 111–148, 

section 3110(a)(2) of such Act is amended to read as follows: 

‘‘(2) EFFECTIVE DATE.—The amendment made by paragraph 

(1) shall apply to elections made after the date of the enactment of this Act.’’. 

SEC. 523. MEDICARE SUSTAINABLE GROWTH RATE REFORM. 

(a) TRANSITIONAL UPDATE FOR THE SECOND PORTION OF 2010 

AND 2011.—Subsection (d) of section 1848 of the Social Security Act 

(42 U.S.C. 1395w–4) is amended— 

(1) in the heading of paragraph (10), by striking ‘‘PORTION’’ 

and inserting ‘‘THE FIRST PORTION ’’; and 

(2) by adding at the end the following new paragraphs: 

‘‘(11) UPDATE FOR THE SECOND PORTION OF 2010.—In lieu of 

the update to the single conversion factor established in paragraph (1)(C) that would otherwise apply for 2010 for the period 

beginning on June 1, 2010, and ending on December 31, 2010, 

the update to the single conversion factor shall be 1.3 percent. 

‘‘(12) UPDATE FOR 2011.—In lieu of the update to the single 

conversion factor established in paragraph (1)(C) that would 

otherwise apply for 2011, the update to the single conversion 

factor shall be 1.0 percent.’’. 

(b) REBASING SGR USING 2010 AND LIMITATION ON CUMULATIVE

ADJUSTMENT PERIOD DURING SGR REFORM PERIOD.— 

(1) IN GENERAL.—Subsection (d)(4) of such section is amended— 

(A) in subparagraph (B), by striking ‘‘subparagraph (D)’’ 

and inserting ‘‘subparagraphs (D) and (G)’’; and 

(B) by adding at the end the following new subparagraph: 

‘‘(G) REBASING USING 2010 FOR UPDATE ADJUSTMENTS

DURING SGR REFORM PERIOD.—In determining the update 

adjustment factor under subparagraph (B) for years during 

the SGR reform period— 

‘‘(i) the allowed expenditures for 2010 shall be equal 

to the amount of the actual expenditures for physicians’ services during 2010; and 

‘‘(ii) the reference in subparagraph (B)(ii)(I) to ‘April 

1, 1996’ shall be treated as a reference to ‘January 1, 

2010 (or, if later, the first day of the fifth year before 

the year involved)’.’’. 

(2) SGR REFORM PERIOD DEFINED.—Subsection (j) of such section, as amended by subsection (d)(1), is amended by adding at 

the end the following new paragraph: 

‘‘(6) SGR REFORM PERIOD.—The term ‘SGR reform period’ 

means the period beginning January 1, 2012, and ending on 

December 31, 2013.’’. 

(c) LIMITATION ON PHYSICIANS’ SERVICES INCLUDED IN TARGET

GROWTH RATE COMPUTATION TO SERVICES COVERED UNDER PHYSICIAN FEE SCHEDULE DURING THE SGR REFORM PERIOD.—Subsection (f)(4)(A) of such section is amended to read as follows: 

‘‘(A) SERVICES INCLUDED IN PHYSICIANS’ SERVICES.— 


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‘‘(i) IN GENERAL.—Except as provided in clause (ii), 

the term ‘physicians’ services’ includes other items and 

services (such as clinical diagnostic laboratory tests 

and radiology services), specified by the Secretary, 

that are commonly performed or furnished by a physician or in a physician’s office, but does not include 

services furnished to a Medicare Advantage plan enrollee. 

‘‘(ii) DURING SGR REFORM PERIOD.—Effective for 

services furnished on or after January 1, 2010, with 

respect to the application of this subsection during the 

SGR reform period, the term ‘physicians’ services’ includes— 

‘‘(I) other items and services for which payment 

under this part is made under the fee schedule 

under this section; 

‘‘(II) services of practitioners described in section 1842(b)(18)(C) for which payment is made on 

a basis related to such fee schedule; and 

‘‘(III) services described in section 1861(p) (other 

than such services when furnished in the facility 

of a provider of services) for which payment is 

made on a basis related to such fee schedule; 

but does not include services furnished to a Medicare 

Advantage plan enrollee.’’. 

(d) ESTABLISHMENT OF SEPARATE TARGET GROWTH RATES FOR

CATEGORIES OF SERVICES.— 

(1) ESTABLISHMENT OF SERVICE CATEGORIES.—Subsection (j) 

of such section is amended by adding after paragraph (4) the 

following new paragraph: 

‘‘(5) SERVICE CATEGORIES.—For services furnished on or after 

January 1, 2010, each of the following categories of physicians’ 

services (as defined in paragraph (3)) shall be treated as a separate ‘service category’: 

‘‘(A) Evaluation and management services and preventive services that are procedure codes (for services covered 

under this title) for— 

‘‘(i) services in the category designated Evaluation 

and Management in the Health Care Common Procedure Coding System (established by the Secretary 

under subsection (c)(5) as of December 31, 2009, and 

as subsequently modified by the Secretary); and 

‘‘(ii) preventive services (as defined in section 

1861(ddd)(3)) for which payment is made under this 

section. 

‘‘(B) All other services not described in subparagraph 

(A). 

Service categories established under this paragraph shall apply 

without regard to the specialty of the physician furnishing the 

service.’’. 

(2) ESTABLISHMENT OF SEPARATE CONVERSION FACTORS FOR

EACH SERVICE CATEGORY DURING SGR REFORM PERIOD.—Subsection (d)(1) of such section is amended— 

(A) in subparagraph (A)— 


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(i) by designating the sentence beginning ‘‘The conversion factor’’ as clause (i) with the heading ‘‘APPLICATION OF SINGLE CONVERSION FACTOR.—’’ and with 

appropriate indentation; 

(ii) by striking ‘‘The conversion factor’’ and inserting 

‘‘Subject to clause (ii), the conversion factor’’; and 

(iii) by adding at the end the following new clause: 

‘‘(ii) APPLICATION OF MULTIPLE CONVERSION FACTORS

DURING SGR REFORM PERIOD.— 

‘‘(I) IN GENERAL.—In applying clause (i) for 

years during the SGR reform period, separate conversion factors shall be established for each service category of physicians’ services (as defined in 

subsection (j)(5)) and any reference in this section 

to a conversion factor for such years shall be 

deemed to be a reference to the conversion factor 

for each of such categories. 

‘‘(II) INITIAL CONVERSION FACTORS.—Such factors for 2012 shall be based upon the single conversion factor as in effect on December 31, 2011, 

updated in accordance with paragraph (13) for 

such category for 2012. 

‘‘(III) UPDATING OF CONVERSION FACTORS.—Such 

factor for a service category for a subsequent year 

during the SGR reform period shall be based upon 

the conversion factor for such category for the previous year updated in accordance with paragraph 

(13) for such category for the year involved.’’; and 

(B) in subparagraph (D), by adding at the end the following: ‘‘For purposes of applying the previous sentence to 

a year during the SGR reform period, the reference to 

‘other physicians’ services’ is deemed a reference to ‘physicians’ services described in the service category described 

in subsection (j)(5)(B)’.’’. 

(3) ESTABLISHING UPDATES FOR CONVERSION FACTORS FOR

SERVICE CATEGORIES DURING SGR REFORM PERIOD.—Subsection 

(d) of such section, as amended by subsection (a), is amended— 

(A) in paragraph (4)(C)(iii), by striking ‘‘The allowed’’ 

and inserting ‘‘Subject to paragraph (13)(B), the allowed’’; 

and 

(B) by adding at the end the following new paragraph: 

‘‘(13) UPDATES FOR SERVICE CATEGORIES BEGINNING WITH 2012

DURING SGR REFORM PERIOD.—The following rules apply during 

the SGR reform period: 

‘‘(A) IN GENERAL.—In applying paragraph (4) for a year 

beginning with 2012, the following rules apply: 

‘‘(i) APPLICATION OF SEPARATE UPDATE ADJUSTMENTS

FOR EACH SERVICE CATEGORY.—Pursuant to paragraph 

(1)(A)(ii)(I), the update shall be made to the conversion 

factor for each service category (as defined in subsection (j)(5)) based upon an update adjustment factor 

for the respective category and year and such update 

adjustment factor shall be computed, for a year, separately for each service category. 


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‘‘(ii) COMPUTATION OF ALLOWED AND ACTUAL EXPEND- ITURES BASED ON SERVICE CATEGORIES.—In computing 

the prior year adjustment component and the cumulative adjustment component under clauses (i) and (ii) 

of paragraph (4)(B) for a service category, the following rules apply: 

‘‘(I) APPLICATION BASED ON SERVICE CAT- EGORIES.—The allowed expenditures and actual 

expenditures shall be the allowed and actual expenditures for the service category, as determined 

under subparagraph (B). 

‘‘(II) APPLICATION OF CATEGORY SPECIFIC TARGET

GROWTH RATE.—The growth rate applied under 

clause (ii)(II) of such paragraph shall be the target 

growth rate for the service category involved 

under subsection (f)(5). 

‘‘(iii) NO NEGATIVE UPDATE.—In no case shall the update to any conversion factor be less than 0. 

‘‘(iv) MODIFICATION OF RESTRICTION ON UPDATE RE- STRICTION FACTOR.—In applying paragraph (4)(D), ‘¥0.04’ shall be substituted for ‘¥0.07’. 

‘‘(B) DETERMINATION OF ALLOWED EXPENDITURES.—In applying paragraph (4) for a year beginning with 2011, notwithstanding subparagraph (C)(iii) of such paragraph, the 

allowed expenditures for a service category for a year is an 

amount computed by the Secretary as follows: 

‘‘(i) FOR 2011.—For 2011: 

‘‘(I) TOTAL 2010 ACTUAL EXPENDITURES FOR ALL

SERVICES INCLUDED IN SGR COMPUTATION FOR

EACH SERVICE CATEGORY.—Compute total actual 

expenditures for physicians’ services (as defined in 

subsection (f)(4)(A)(ii)) for 2010 for each service 

category. 

‘‘(II) INCREASE BY GROWTH RATE TO OBTAIN 2011

ALLOWED EXPENDITURES FOR SERVICE CATEGORY.— Compute allowed expenditures for the service category for 2011 by increasing the allowed expenditures for the service category for 2010 computed 

under subclause (I) by the target growth rate for 

such service category under subsection (f) for 

2011. 

‘‘(ii) FOR 2012 AND SUBSEQUENT YEARS DURING SGR

REFORM PERIOD.—For 2012 and any subsequent year 

during the SGR reform period, take the amount of allowed expenditures for such category for the preceding 

year (under clause (i) or this clause) and increase it by 

the target growth rate determined under subsection (f) 

for such category and year.’’. 

(4) APPLICATION OF SEPARATE TARGET GROWTH RATES FOR

EACH CATEGORY DURING SGR REFORM PERIOD.— (A) IN GENERAL.—Subsection (f) of such section is 

amended by adding at the end the following new paragraph: 

‘‘(5) APPLICATION DURING SGR REFORM PERIOD OF SEPARATE

TARGET GROWTH RATES FOR EACH SERVICE CATEGORY.—With reVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00135 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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spect to the application of this section during the SGR reform 

period, the target growth rate for a year beginning with 2011 

shall be computed and applied separately under this subsection 

for each service category (as defined in subsection (j)(5)) and 

shall be computed using the same method for computing the 

growth rate under paragraph (2) except that the factor described in paragraph (2)(C) for— 

‘‘(A) the service category described in subsection (j)(5)(A) 

shall be increased by 0.02; and 

‘‘(B) the service category described in subsection (j)(5)(B) 

shall be increased by 0.01.’’. 

(B) USE OF TARGET GROWTH RATES DURING SGR REFORM

PERIOD.—Such section is further amended— 

(i) in subsection (d)— 

(I) in paragraph (1)(E)(ii), by inserting ‘‘(and the 

target growth rate with respect to years during 

the SGR reform period)’’ after ‘‘sustainable growth 

rate’’; and 

(II) in paragraph (4)(B)(ii)(II), by inserting ‘‘(or 

the target growth rate with respect to years during the SGR reform period)’’ after ‘‘sustainable 

growth rate’’; 

(ii) in the heading of subsection (f), by inserting ‘‘AND TARGET GROWTH RATE’’ after ‘‘SUSTAINABLE

GROWTH RATE’’; and 

(iii) in subsection (f)(1)— 

(I) by striking ‘‘and’’ at the end of subparagraph 

(A); 

(II) in subparagraph (B), by striking the period 

at the end and inserting ‘‘; and’’; and 

(III) by adding at the end the following new subparagraph: 

‘‘(C) November 1, 2010, the target growth rate for 2011, 

and November 1 of each succeeding year (before the last 

year of the SGR reform period) the target growth rate for 

such succeeding year and each of the 2 preceding years.’’. 

(e) NO EFFECT OF SGR REFORM PERIOD ON COMPUTATION OF

CONVERSION FACTOR AFTER SGR REFORM PERIOD.—Such section is 

further amended— 

(1) in subsection (d), as amended by subsections (a) and 

(d)(3)(B) of this section, by adding at the end the following new 

paragraph: 

‘‘(14) NO EFFECT OF 2010 THROUGH 2013 CHANGES ON COMPUTATION OF CONVERSION FACTOR FOR 2014 AND SUBSEQUENT

YEARS.—The conversion factor under this subsection shall be 

computed under paragraph (1)(A) for 2014 and subsequent 

years as if the amendments made by subsections (a) through 

(d) of section 523 of the American Jobs and Closing Tax Loopholes Act of 2010 had never applied.’’; and 

(2) by adding at the end of subsection (f), as amended by 

subsection (d)(4) of this section, the following new paragraph: 

‘‘(6) TEMPORARY ADJUSTMENT.—In determining the growth 

rate under paragraph (2) for 2015, the Secretary’s estimate of 

the percentage change otherwise determined under paragraph 

(2)(D) shall be reduced by 4.0 percentage points.’’. 


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(f) APPLICATION TO SHARED SAVINGS PROGRAM DURING THE SGR 

REFORM PERIOD.—Subsection (f) of such section, as amended by 

subsections (d)(4)(A) and (e)(2) of this section, is further amended 

by adding at the end the following new paragraph: 

‘‘(7) APPLICATION TO SHARED SAVINGS PROGRAM DURING THE

SGR REFORM PERIOD.— 

‘‘(A) IN GENERAL.—In applying this subsection and subsection (d) to services furnished in a year during the SGR 

reform period by an ACO professional (as defined in section 1899(h)(1) and including a physician as defined in section 1866A(a)(3)(A) for purposes of applying section 

1899(k))) to individuals who are assigned to an accountable care organization under the shared savings program 

under section 1899 (including subsection (k) of such section), the Secretary shall develop, not later than January 

1, 2012, and in accordance with this paragraph a method 

that— 

‘‘(i) allows each such organization to choose (for all 

years in the SGR reform period during its agreement 

period under section 1899) to have its own expenditure 

target and update for such professionals for such year, 

with respect to individuals who are assigned to that 

organization, that are consistent with subsection 

(d)(13)(A)(iii) and the methodologies described in this 

subsection and under such program, including— 

‘‘(I) the same scope of items and services as are 

included in physicians’ services under paragraph 

(4)(A)(ii); and 

‘‘(II) the application of the same factors under 

paragraph (2) to the computation of the target 

growth rate for such program, except that the enrollment growth factor described in paragraph 

(2)(B) shall be determined by the Secretary on the 

basis of the annual increase in individuals assigned to the organization; and 

‘‘(ii) provides that the target growth rates and conversion factors applicable to other physicians shall not 

apply to such professionals to the extent that the physicians’ services are furnished to individuals assigned 

to the organization. 

‘‘(B) APPLICATION.—In applying subparagraph (A), the 

Secretary may limit the application of such subparagraph 

based on factors such as the number of individuals assigned to the organization involved and such other factors 

as the Secretary determines appropriate and may apply 

the difference in the update under clause (i) of such subparagraph on a claim-by-claim or lump sum basis. 

‘‘(C) NO APPLICATION AFTER SGR REFORM PERIOD.—Subparagraph (A) shall not apply to years after the end of the 

SGR reform period.’’. 

SEC. 524. ADJUSTMENT TO MEDICARE PAYMENT LOCALITIES. 

(a) IN GENERAL.—Section 1848(e) of the Social Security Act (42 

U.S.C.1395w–4(e)) is amended by adding at the end the following 

new paragraph: 


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‘‘(6) TRANSITION TO USE OF MSAS AS FEE SCHEDULE AREAS IN

CALIFORNIA.— 

‘‘(A) IN GENERAL.— 

‘‘(i) REVISION.—Subject to clause (ii) and notwithstanding the previous provisions of this subsection, for 

services furnished on or after January 1, 2012, the 

Secretary shall revise the fee schedule areas used for 

payment under this section applicable to the State of 

California using the Metropolitan Statistical Area 

(MSA) iterative Geographic Adjustment Factor methodology as follows: 

‘‘(I) The Secretary shall configure the physician 

fee schedule areas using the Metropolitan Statistical Areas (each in this paragraph referred to as 

an ‘MSA’), as defined by the Director of the Office 

of Management and Budget as of the date of the 

enactment of this paragraph, as the basis for the 

fee schedule areas. 

‘‘(II) For purposes of this clause, the Secretary 

shall treat all areas not included in an MSA as a 

single rest-of-State MSA and any reference in this 

paragraph to an MSA shall be deemed to include 

a reference to such rest-of-State MSA. 

‘‘(III) The Secretary shall list all MSAs within 

the State by Geographic Adjustment Factor described in paragraph (2) (in this paragraph referred to as a ‘GAF’) in descending order. 

‘‘(IV) In the first iteration, the Secretary shall 

compare the GAF of the highest cost MSA in the 

State to the weighted-average GAF of all the remaining MSAs in the State. If the ratio of the 

GAF of the highest cost MSA to the weighted-average of the GAF of remaining lower cost MSAs is 

1.05 or greater, the highest cost MSA shall be a 

separate fee schedule area. 

‘‘(V) In the next iteration, the Secretary shall 

compare the GAF of the MSA with the secondhighest GAF to the weighted-average GAF of the 

all the remaining MSAs (excluding MSAs that become separate fee schedule areas). If the ratio of 

the second-highest MSA’s GAF to the weightedaverage of the remaining lower cost MSAs is 1.05 

or greater, the second-highest MSA shall be a separate fee schedule area. 

‘‘(VI) The iterative process shall continue until 

the ratio of the GAF of the MSA with highest remaining GAF to the weighted-average of the remaining MSAs with lower GAFs is less than 1.05, 

and the remaining group of MSAs with lower 

GAFs shall be treated as a single rest-of-State fee 

schedule area. 

‘‘(VII) For purposes of the iterative process described in this clause, if two MSAs have identical 

GAFs, they shall be combined. 


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‘‘(ii) TRANSITION.—For services furnished on or after 

January 1, 2012, and before January 1, 2017, in the 

State of California, after calculating the work, practice 

expense, and malpractice geographic indices that 

would otherwise be determined under clauses (i), (ii), 

and (iii) of paragraph (1)(A) for a fee schedule area determined under clause (i), if the index for a county 

within a fee schedule area is less than the index that 

would otherwise be in effect for such county, the Secretary shall instead apply the index that would otherwise be in effect for such county. 

‘‘(B) SUBSEQUENT REVISIONS.—After the transition described in subparagraph (A)(ii), not less than every 3 years 

the Secretary shall review and update the fee schedule 

areas using the methodology described in subparagraph 

(A)(i) and any updated MSAs as defined by the Director of 

the Office of Management and Budget. The Secretary shall 

review and make any changes pursuant to such reviews 

concurrent with the application of the periodic review of 

the adjustment factors required under paragraph (1)(C) for 

California. 

‘‘(C) REFERENCES TO FEE SCHEDULE AREAS.—Effective for 

services furnished on or after January 1, 2012, for the 

State of California, any reference in this section to a fee 

schedule area shall be deemed a reference to a fee schedule area established in accordance with this paragraph.’’. 

(b) CONFORMING AMENDMENT TO DEFINITION OF FEE SCHEDULE

AREA.—Section 1848(j)(2) of the Social Security Act (42 U.S.C. 

1395w(j)(2)) is amended by striking ‘‘The term’’ and inserting ‘‘Except as provided in subsection (e)(6)(C), the term’’. 

SEC. 525. CLARIFICATION OF 3-DAY PAYMENT WINDOW. 

(a) IN GENERAL.—Section 1886 of the Social Security Act (42 

U.S.C. 1395ww) is amended— 

(1) by adding at the end of subsection (a)(4) the following 

new sentence: ‘‘In applying the first sentence of this paragraph, 

the term ‘other services related to the admission’ includes all 

services that are not diagnostic services (other than ambulance 

and maintenance renal dialysis services) for which payment 

may be made under this title that are provided by a hospital 

(or an entity wholly owned or operated by the hospital) to a patient— 

‘‘(A) on the date of the patient’s inpatient admission; or 

‘‘(B) during the 3 days (or, in the case of a hospital that 

is not a subsection (d) hospital, during the 1 day) immediately preceding the date of such admission unless the 

hospital demonstrates (in a form and manner, and at a 

time, specified by the Secretary) that such services are not 

related (as determined by the Secretary) to such admission.’’; and 

(2) in subsection (d)(7)— 

(A) in subparagraph (A), by striking ‘‘and’’ at the end; 

(B) in subparagraph (B), by striking the period and inserting ‘‘, and’’ ; and 

(C) by adding at the end the following new subparagraph: 


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‘‘(C) the determination of whether services provided 

prior to a patient’s inpatient admission are related to the 

admission (as described in subsection (a)(4)).’’. 

(b) EFFECTIVE DATE.—The amendments made by subsection (a) 

shall apply to services furnished on or after the date of the enactment of this Act. 

(c) NO REOPENING OF PREVIOUSLY BUNDLED CLAIMS.— 

(1) IN GENERAL.—The Secretary of Health and Human Services may not reopen a claim, adjust a claim, or make a payment pursuant to any request for payment under title XVIII of 

the Social Security Act, submitted by an entity (including a 

hospital or an entity wholly owned or operated by the hospital) 

for services described in paragraph (2) for purposes of treating, 

as unrelated to a patient’s inpatient admission, services provided during the 3 days (or, in the case of a hospital that is 

not a subsection (d) hospital, during the 1 day) immediately 

preceding the date of the patient’s inpatient admission. 

(2) SERVICES DESCRIBED.—For purposes of paragraph (1), the 

services described in this paragraph are other services related 

to the admission (as described in section 1886(a)(4) of the Social Security Act (42 U.S.C. 1395ww(a)(4)), as amended by subsection (a)) which were previously included on a claim or request for payment submitted under part A of title XVIII of 

such Act for which a reopening, adjustment, or request for payment under part B of such title, was not submitted prior to the 

date of the enactment of this Act. 

(d) IMPLEMENTATION.—Notwithstanding any other provision of 

law, the Secretary of Health and Human Services may implement 

the provisions of this section (and amendments made by this section) by program instruction or otherwise. 

(e) RULE OF CONSTRUCTION.—Nothing in the amendments made 

by this section shall be construed as changing the policy described 

in section 1886(a)(4) of the Social Security Act (42 U.S.C. 

1395ww(a)(4)), as applied by the Secretary of Health and Human 

Services before the date of the enactment of this Act, with respect 

to diagnostic services. 

(f) REVISIONS TO THE MEDICARE IMPROVEMENT FUND.—Section 

1898(b)(1) of the Social Security Act (42 U.S.C. 1395iii(b)(1)) is 

amended by amending subparagraph (A) to read as follows: 

‘‘(A) fiscal year 2014, $3,950,000,000;’’. 

TITLE VI—OTHER PROVISIONS 

SEC. 601. EXTENSION OF NATIONAL FLOOD INSURANCE PROGRAM. 

(a) EXTENSION.—Section 129 of the Continuing Appropriations 

Resolution, 2010 (Public Law 111-68), as amended by section 7(a) 

of Public Law 111-157, is amended by striking ‘‘by substituting’’ 

and all that follows through the period at the end, and inserting 

‘‘by substituting December 31, 2010, for the date specified in each 

such section.’’. 

(b) EFFECTIVE DATE.—The amendments made by subsection (a) 

shall be considered to have taken effect on May 31, 2010. 


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SEC. 602. ALLOCATION OF GEOTHERMAL RECEIPTS. 

Notwithstanding any other provision of law, for fiscal year 2010 

only, all funds received from sales, bonuses, royalties, and rentals 

under the Geothermal Steam Act of 1970 (30 U.S.C. 1001 et seq.) 

shall be deposited in the Treasury, of which— 

(1) 50 percent shall be used by the Secretary of the Treasury 

to make payments to States within the boundaries of which the 

leased land and geothermal resources are located; 

(2) 25 percent shall be used by the Secretary of the Treasury 

to make payments to the counties within the boundaries of 

which the leased land or geothermal resources are located; and 

(3) 25 percent shall be deposited in miscellaneous receipts. 

SEC. 603. SMALL BUSINESS LOAN GUARANTEE ENHANCEMENT EXTENSIONS. 

(a) APPROPRIATION.—There is appropriated, out of any funds in 

the Treasury not otherwise appropriated, for an additional amount 

for ‘‘Small Business Administration—Business Loans Program Account’’, $505,000,000, to remain available through December 31, 

2010, for the cost of— 

(1) fee reductions and eliminations under section 501 of division A of the American Recovery and Reinvestment Act of 2009 

(Public Law 111–5; 123 Stat. 151), as amended by this section; 

and 

(2) loan guarantees under section 502 of division A of the 

American Recovery and Reinvestment Act of 2009 (Public Law 

111–5; 123 Stat. 152), as amended by this section. 

Such costs, including the cost of modifying such loans, shall be as 

defined in section 502 of the Congressional Budget Act of 1974. 

(b) EXTENSION OF PROGRAMS.— 

(1) FEES.—Section 501 of division A of the American Recovery and Reinvestment Act of 2009 (Public Law 111–5; 123 Stat. 

151) is amended by striking ‘‘September 30, 2010’’ each place 

it appears and inserting ‘‘December 31, 2010’’. 

(2) LOAN GUARANTEES.—Section 502(f) of division A of the 

American Recovery and Reinvestment Act of 2009 (Public Law 

111–5; 123 Stat. 153) is amended by striking ‘‘May 31, 2010’’ 

and inserting ‘‘December 31, 2010’’. 

(c) APPROPRIATION.—There is appropriated for an additional 

amount, out of any funds in the Treasury not otherwise appropriated, for administrative expenses to carry out sections 501 and 

502 of division A of the American Recovery and Reinvestment Act 

of 2009 (Public Law 111–5), $5,000,000, to remain available until 

expended, which may be transferred and merged with the appropriation for ‘‘Small Business Administration—Salaries and Expenses’’. 

SEC. 604. EMERGENCY AGRICULTURAL DISASTER ASSISTANCE. 

(a) DEFINITIONS.—Except as otherwise provided in this section, 

in this section: 

(1) DISASTER COUNTY.— 

(A) IN GENERAL.—The term ‘‘disaster county’’ means a 

county included in the geographic area covered by a qualifying natural disaster declaration for the 2009 crop year. 

(B) EXCLUSION.—The term ‘‘disaster county’’ does not include a contiguous county. 


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(2) ELIGIBLE AQUACULTURE PRODUCER.—The term ‘‘eligible 

aquaculture producer’’ means an aquaculture producer that 

during the 2009 calendar year, as determined by the Secretary— 

(A) produced an aquaculture species for which feed costs 

represented a substantial percentage of the input costs of 

the aquaculture operation; and 

(B) experienced a substantial price increase of feed costs 

above the previous 5-year average. 

(3) ELIGIBLE PRODUCER.—The term ‘‘eligible producer’’ means 

an agricultural producer in a disaster county. 

(4) ELIGIBLE SPECIALTY CROP PRODUCER.—The term ‘‘eligible 

specialty crop producer’’ means an agricultural producer that, 

for the 2009 crop year, as determined by the Secretary— 

(A) produced, or was prevented from planting, a specialty crop; and 

(B) experienced specialty crop losses in a disaster county 

due to drought, excessive rainfall, or a related condition. 

(5) QUALIFYING NATURAL DISASTER DECLARATION.—The term 

‘‘qualifying natural disaster declaration’’ means a natural disaster declared by the Secretary for production losses under section 321(a) of the Consolidated Farm and Rural Development 

Act (7 U.S.C. 1961(a)). 

(6) SECRETARY.—The term ‘‘Secretary’’ means the Secretary 

of Agriculture. 

(7) SPECIALTY CROP.—The term ‘‘specialty crop’’ has the 

meaning given the term in section 3 of the Specialty Crops 

Competitiveness Act of 2004 (Public Law 108–465; 7 U.S.C. 

1621 note). 

(b) SUPPLEMENTAL DIRECT PAYMENT.— 

(1) IN GENERAL.—Of the funds of the Commodity Credit Corporation, the Secretary shall use such sums as are necessary 

to make supplemental payments under sections 1103 and 1303 

of the Food, Conservation, and Energy Act of 2008 (7 U.S.C. 

8713, 8753) to eligible producers on farms located in disaster 

counties that had at least 1 crop of economic significance (other 

than specialty crops or crops intended for grazing) suffer at 

least a 5-percent crop loss on a farm due to a natural disaster, 

including quality losses, as determined by the Secretary, in an 

amount equal to 90 percent of the direct payment the eligible 

producers received for the 2009 crop year on the farm. 

(2) ACRE PROGRAM.—Eligible producers that received direct 

payments under section 1105 of the Food, Conservation, and 

Energy Act of 2008 (7 U.S.C. 8715) for the 2009 crop year and 

that otherwise meet the requirements of paragraph (1) shall be 

eligible to receive supplemental payments under that paragraph in an amount equal to 112.5 percent of the reduced direct payment the eligible producers received for the 2009 crop 

year under section 1103 or 1303 of the Food, Conservation, and 

Energy Act of 2008 (7 U.S.C. 8713, 8753). 

(3) RELATIONSHIP TO OTHER LAW.—Assistance received under 

this subsection shall be included in the calculation of farm revenue for the 2009 crop year under section 531(b)(4)(A) of the 

Federal Crop Insurance Act (7 U.S.C. 1531(b)(4)(A)) and secVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00142 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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tion 901(b)(4)(A) of the Trade Act of 1974 (19 U.S.C. 

2497(b)(4)(A)). 

(c) SPECIALTY CROP ASSISTANCE.— (1) IN GENERAL.—Of the funds of the Commodity Credit Cor- poration, the Secretary shall use not more than $300,000,000, 

to remain available until September 30, 2011, to carry out a 

program of grants to States to assist eligible specialty crop producers for losses due to a natural disaster affecting the 2009 

crops, of which not more than— (A) $150,000,000 shall be used to assist eligible specialty 

crop producers in counties that have been declared a disaster as the result of drought; and (B) $150,000,000 shall be used to assist eligible specialty 

crop producers in counties that have been declared a disaster as the result of excessive rainfall or a related condition. 

(2) NOTIFICATION.—Not later than 45 days after the date of 

enactment of this Act, the Secretary shall notify the State department of agriculture (or similar entity) in each State of the 

availability of funds to assist eligible specialty crop producers, 

including such terms as are determined by the Secretary to be 

necessary for the equitable treatment of eligible specialty crop 

producers. 

(3) PROVISION OF GRANTS.— (A) IN GENERAL.—The Secretary shall make grants to 

States for disaster counties on a pro rata basis based on 

the value of specialty crop losses in those counties during 

the 2009 calendar year, as determined by the Secretary. 

(B) TIMING.—Not later than 90 days after the date of enactment of this Act, the Secretary shall make grants to 

States to provide assistance under this subsection. 

(C) MAXIMUM GRANT.—The maximum amount of a grant 

made to a State for counties described in paragraph (1)(B) 

may not exceed $40,000,000. 

(4) REQUIREMENTS.—The Secretary shall make grants under 

this subsection only to States that demonstrate to the satisfaction of the Secretary that the State will— 

(A) use grant funds to issue payments to eligible specialty crop producers; 

(B) provide assistance to eligible specialty crop producers 

not later than 60 days after the date on which the State 

receives grant funds; and 

(C) not later than 30 days after the date on which the 

State provides assistance to eligible specialty crop producers, submit to the Secretary a report that describes— 

(i) the manner in which the State provided assistance; 

(ii) the amounts of assistance provided by type of 

specialty crop; and 

(iii) the process by which the State determined the 

levels of assistance to eligible specialty crop producers. 

(D) RELATION TO OTHER LAW.—Assistance received under 

this subsection shall be included in the calculation of farm 

revenue for the 2009 crop year under section 531(b)(4)(A) 

of the Federal Crop Insurance Act (7 U.S.C. 1531(b)(4)(A)) 


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and section 901(b)(4)(A) of the Trade Act of 1974 (19 

U.S.C. 2497(b)(4)(A)). 

(d) COTTONSEED ASSISTANCE.— (1) IN GENERAL.—Of the funds of the Commodity Credit Cor- poration, the Secretary shall use not more than $42,000,000 to 

provide supplemental assistance to eligible producers and firsthandlers of the 2009 crop of cottonseed in a disaster county. 

(2) GENERAL TERMS.—Except as otherwise provided in this 

subsection, the Secretary shall provide disaster assistance 

under this subsection under the same terms and conditions as 

assistance provided under section 3015 of the Emergency Agricultural Disaster Assistance Act of 2006 (title III of Public Law 

109–234; 120 Stat. 477). 

(3) DISTRIBUTION OF ASSISTANCE.—The Secretary shall distribute assistance to first handlers for the benefit of eligible 

producers in a disaster county in an amount equal to the product obtained by multiplying— 

(A) the payment rate, as determined under paragraph 

(4); and 

(B) the county-eligible production, as determined under 

paragraph (5). 

(4) PAYMENT RATE.—The payment rate shall be equal to the 

quotient obtained by dividing— 

(A) the total funds made available to carry out this subsection; by 

(B) the sum of the county-eligible production, as determined under paragraph (5). 

(5) COUNTY-ELIGIBLE PRODUCTION.—The county-eligible production shall be equal to the product obtained by multiplying— 

(A) the number of acres planted to cotton in the disaster 

county, as reported to the Secretary by first handlers; 

(B) the expected cotton lint yield for the disaster county, 

as determined by the Secretary based on the best available 

information; and 

(C) the national average seed-to-lint ratio, as determined 

by the Secretary based on the best available information 

for the 5 crop years immediately preceding the 2009 crop, 

excluding the year in which the average ratio was the 

highest and the year in which the average ratio was the 

lowest in such period. 

(e) AQUACULTURE ASSISTANCE.— 

(1) IN GENERAL.—Of the funds of the Commodity Credit Corporation, the Secretary shall use not more than $25,000,000, to 

remain available until September 30, 2011, to carry out a program of grants to States to assist eligible aquaculture producers for losses associated with high feed input costs during 

the 2009 calendar year. 

(2) NOTIFICATION.—Not later than 45 days after the date of 

enactment of this Act, the Secretary shall notify the State department of agriculture (or similar entity) in each State of the 

availability of funds to assist eligible aquaculture producers, 

including such terms as are determined by the Secretary to be 

necessary for the equitable treatment of eligible aquaculture 

producers. 

(3) PROVISION OF GRANTS.— 


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(A) IN GENERAL.—The Secretary shall make grants to 

States under this subsection on a pro rata basis based on 

the amount of aquaculture feed used in each State during 

the 2009 calendar year, as determined by the Secretary. 

(B) TIMING.—Not later than 90 days after the date of enactment of this Act, the Secretary shall make grants to 

States to provide assistance under this subsection. 

(4) REQUIREMENTS.—The Secretary shall make grants under 

this subsection only to States that demonstrate to the satisfaction of the Secretary that the State will— 

(A) use grant funds to assist eligible aquaculture producers; 

(B) provide assistance to eligible aquaculture producers 

not later than 60 days after the date on which the State 

receives grant funds; and 

(C) not later than 30 days after the date on which the 

State provides assistance to eligible aquaculture producers, 

submit to the Secretary a report that describes— 

(i) the manner in which the State provided assistance; 

(ii) the amounts of assistance provided per species of 

aquaculture; and 

(iii) the process by which the State determined the 

levels of assistance to eligible aquaculture producers. 

(5) REDUCTION IN PAYMENTS.—An eligible aquaculture producer that receives assistance under this subsection shall not 

be eligible to receive any other assistance under the supplemental agricultural disaster assistance program established 

under section 531 of the Federal Crop Insurance Act (7 U.S.C. 

1531) and section 901 of the Trade Act of 1974 (19 U.S.C. 

2497) for any losses in 2009 relating to the same species of 

aquaculture. 

(6) REPORT TO CONGRESS.—Not later than 240 days after the 

date of enactment of this Act, the Secretary shall submit to the 

appropriate committees of Congress a report that— 

(A) describes in detail the manner in which this subsection has been carried out; and 

(B) includes the information reported to the Secretary 

under paragraph (4)(C). 

(f) HAWAII TRANSPORTATION COOPERATIVE.—Notwithstanding any 

other provision of law, the Secretary shall use $21,000,000 of funds 

of the Commodity Credit Corporation to make a payment to an agricultural transportation cooperative in the State of Hawaii, the 

members of which are eligible to participate in the commodity loan 

program of the Farm Service Agency, for assistance to maintain 

and develop employment. 

(g) LIVESTOCK FORAGE DISASTER PROGRAM.— 

(1) DEFINITION OF DISASTER COUNTY.—In this subsection: 

(A) IN GENERAL.—The term ‘‘disaster county’’ means a 

county included in the geographic area covered by a qualifying natural disaster declaration announced by the Secretary in calendar year 2009. 

(B) INCLUSION.—The term ‘‘disaster county’’ includes a 

contiguous county. 


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(2) PAYMENTS.—Of the funds of the Commodity Credit Cor- poration, the Secretary shall use not more than $50,000,000 to 

carry out a program to make payments to eligible producers 

that had grazing losses in disaster counties in calendar year 

2009. 

(3) CRITERIA.— (A) IN GENERAL.—Except as provided in subparagraph 

(B), assistance under this subsection shall be determined 

under the same criteria as are used to carry out the programs under section 531(d) of the Federal Crop Insurance 

Act (7 U.S.C. 1531(d)) and section 901(d) of the Trade Act 

of 1974 (19 U.S.C. 2497(d)). 

(B) DROUGHT INTENSITY.—For purposes of this subsection, an eligible producer shall not be required to meet 

the drought intensity requirements of section 

531(d)(3)(D)(ii) of the Federal Crop Insurance Act (7 U.S.C. 

1531(d)(3)(D)(ii)) and section 901(d)(3)(D)(ii) of the Trade 

Act of 1974 (19 U.S.C. 2497(d)(3)(D)(ii)). 

(4) AMOUNT.—Assistance under this subsection shall be in an 

amount equal to 1 monthly payment using the monthly payment rate under section 531(d)(3)(B) of the Federal Crop Insurance Act (7 U.S.C. 1531(d)(3)(B)) and section 901(d)(3)(B) of the 

Trade Act of 1974 (19 U.S.C. 2497(d)(3)(B)). 

(5) RELATION TO OTHER LAW.—An eligible producer that receives assistance under this subsection shall be ineligible to receive assistance for 2009 grazing losses under the program carried out under section 531(d) of the Federal Crop Insurance 

Act (7 U.S.C. 1531(d)) and section 901(d) of the Trade Act of 

1974 (19 U.S.C. 2497(d)). 

(h) EMERGENCY LOANS FOR POULTRY PRODUCERS.— (1) DEFINITIONS.—In this subsection: 

(A) ANNOUNCEMENT DATE.—The term ‘‘announcement 

date’’ means the date on which the Secretary announces 

the emergency loan program under this subsection. 

(B) POULTRY INTEGRATOR.—The term ‘‘poultry integrator’’ means a poultry integrator that filed proceedings 

under chapter 11 of title 11, United States Code, in United 

States Bankruptcy Court during the 30-day period beginning on December 1, 2008. 

(2) LOAN PROGRAM.— 

(A) IN GENERAL.—Of the funds of the Commodity Credit 

Corporation, the Secretary shall use not more than 

$75,000,000, to remain available until expended, for the 

cost of making no-interest emergency loans available to 

poultry producers that meet the requirements of this subsection. 

(B) TERMS AND CONDITIONS.—Except as otherwise provided in this subsection, emergency loans under this subsection shall be subject to such terms and conditions as are 

determined by the Secretary. 

(3) LOANS.— 

(A) IN GENERAL.—An emergency loan made to a poultry 

producer under this subsection shall be for the purpose of 

providing financing to the poultry producer in response to 

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renewal of any contract between the poultry producer and 

a poultry integrator. 

(B) ELIGIBILITY.— 

(i) IN GENERAL.—To be eligible for an emergency 

loan under this subsection, not later than 90 days 

after the announcement date, a poultry producer shall 

submit to the Secretary evidence that— 

(I) the contract of the poultry producer described in subparagraph (A) was not continued; 

and 

(II) no similar contract has been awarded subsequently to the poultry producer. 

(ii) REQUIREMENT TO OFFER LOANS.—Notwithstanding any other provision of law, if a poultry producer meets the eligibility requirements described in 

clause (i), subject to the availability of funds under 

paragraph (2)(A), the Secretary shall offer to make a 

loan under this subsection to the poultry producer 

with a minimum term of 2 years. 

(4) ADDITIONAL REQUIREMENTS.— 

(A) IN GENERAL.—A poultry producer that receives an 

emergency loan under this subsection may use the emergency loan proceeds only to repay the amount that the 

poultry producer owes to any lender for the purchase, improvement, or operation of the poultry farm. 

(B) CONVERSION OF THE LOAN.—A poultry producer that 

receives an emergency loan under this subsection shall be 

eligible to have the balance of the emergency loan converted, but not refinanced, to a loan that has the same 

terms and conditions as an operating loan under subtitle 

B of the Consolidated Farm and Rural Development Act (7 

U.S.C. 1941 et seq.). 

(i) STATE AND LOCAL GOVERNMENTS.—Section 1001(f)(6)(A) of the 

Food Security Act of 1985 (7 U.S.C. 1308(f)(6)(A)) is amended by inserting ‘‘(other than the conservation reserve program established 

under subchapter B of chapter 1 of subtitle D of title XII of this 

Act)’’ before the period at the end. 

(j) ADMINISTRATION.— 

(1) REGULATIONS.— 

(A) IN GENERAL.—As soon as practicable after the date 

of enactment of this Act, the Secretary shall promulgate 

such regulations as are necessary to implement this section and the amendment made by this section. 

(B) PROCEDURE.—The promulgation of the regulations 

and administration of this section and the amendment 

made by this section shall be made without regard to— 

(i) the notice and comment provisions of section 553 

of title 5, United States Code; 

(ii) the Statement of Policy of the Secretary of Agriculture effective July 24, 1971 (36 Fed. Reg. 13804), 

relating to notices of proposed rulemaking and public 

participation in rulemaking; and 

(iii) chapter 35 of title 44, United States Code (commonly known as the ‘‘Paperwork Reduction Act’’). 


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(C) CONGRESSIONAL REVIEW OF AGENCY RULEMAKING.— 

In carrying out this paragraph, the Secretary shall use the 

authority provided under section 808 of title 5, United 

States Code. 

(2) ADMINISTRATIVE COSTS.—Of the funds of the Commodity 

Credit Corporation, the Secretary may use up to $10,000,000 

to pay administrative costs incurred by the Secretary that are 

directly related to carrying out this Act. 

(3) PROHIBITION.—None of the funds of the Agricultural Disaster Relief Trust Fund established under section 902 of the 

Trade Act of 1974 (19 U.S.C. 2497a) may be used to carry out 

this Act. 

SEC. 605. SUMMER EMPLOYMENT FOR YOUTH. 

There is appropriated, out of any funds in the Treasury not otherwise appropriated, for an additional amount for ‘‘Department of 

Labor—Employment and Training Administration—Training and 

Employment Services’’ for activities under the Workforce Investment Act of 1998 (‘‘WIA’’), $1,000,000,000 shall be available for obligation on the date of enactment of this Act for grants to States 

for youth activities, including summer employment for youth: Provided, That no portion of such funds shall be reserved to carry out 

section 127(b)(1)(A) of the WIA: Provided further, That for purposes 

of section 127(b)(1)(C)(iv) of the WIA, funds available for youth activities shall be allotted as if the total amount available for youth 

activities in the fiscal year does not exceed $1,000,000,000: Provided further, That with respect to the youth activities provided 

with such funds, section 101(13)(A) of the WIA shall be applied by 

substituting ‘‘age 24’’ for ‘‘age 21’’: Provided further, That the work 

readiness performance indicator described in section 

136(b)(2)(A)(ii)(I) of the WIA shall be the only measure of performance used to assess the effectiveness of summer employment for 

youth provided with such funds: Provided further, That an amount 

that is not more than 1 percent of such amount may be used for 

the administration, management, and oversight of the programs, 

activities, and grants carried out with such funds, including the 

evaluation of the use of such funds: Provided further, That funds 

available under the preceding proviso, together with funds described in section 801(a) of division A of the American Recovery 

and reinvestment Act of 2009 (Public Law 111–5), and funds provided in such Act under the heading ‘‘Department of Labor–Departmental Management–Salaries and Expenses’’, shall remain available for obligation through September 30, 2011. 

SEC. 606. HOUSING TRUST FUND. 

(a) FUNDING.—There is hereby appropriated for the Housing 

Trust Fund established pursuant to section 1338 of the Federal 

Housing Enterprises Financial Safety and Soundness Act of 1992 

(12 U.S.C. 4568), $1,065,000,000, for use under such section: Provided, That of the total amount provided under this heading, 

$65,000,000 shall be available to the Secretary of Housing and 

Urban Development only for incremental project-based voucher assistance to be allocated to States to be used solely in conjunction 

with grant funds awarded under such section 1338, pursuant to the 

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ferent per unit subsidy needs among states, as determined by the 

Secretary. 

(b) AMENDMENTS.—Section 1338 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4568) 

is amended— 

(1) in subsection (c)— 

(A) in paragraph (4)(A) by inserting after the period at 

the end the following: ‘‘Notwithstanding any other provision of law, for the fiscal year following enactment of this 

sentence and thereafter, the Secretary may make such notice available only on the Internet at the appropriate government website or websites or through other electronic 

media, as determined by the Secretary.’’; 

(B) in paragraph (5)(C), by striking ‘‘(8)’’ and inserting 

‘‘(9)’’; and 

(C) in paragraph (7)(A)— 

(i) by striking ‘‘section 1335(a)(2)(B)’’ and inserting 

‘‘section 1335(a)(1)(B)’’; and 

(ii) by inserting ‘‘the units funded under’’ after ‘‘75 

percent of’’; and 

(2) by adding at the end the following new subsection: 

‘‘(k) ENVIRONMENTAL REVIEW.—For the purpose of environmental 

compliance review, funds awarded under this section shall be subject to section 288 of the HOME Investment Partnerships Act (12 

U.S.C. 12838) and shall be treated as funds under the program established by such Act.’’. 

SEC. 607. THE INDIVIDUAL INDIAN MONEY ACCOUNT LITIGATION SETTLEMENT ACT OF 2010. 

(a) SHORT TITLE.—This section may be cited as the ‘‘Individual 

Indian Money Account Litigation Settlement Act of 2010’’. 

(b) DEFINITIONS.—In this section: 

(1) AMENDED COMPLAINT.—The term ‘‘Amended Complaint’’ 

means the Amended Complaint attached to the Settlement. 

(2) LAND CONSOLIDATION PROGRAM.—The term ‘‘Land Consolidation Program’’ means a program conducted in accordance 

with the Settlement and the Indian Land Consolidation Act (25 

U.S.C. 2201 et seq.) under which the Secretary may purchase 

fractional interests in trust or restricted land. 

(3) LITIGATION.—The term ‘‘Litigation’’ means the case entitled Elouise Cobell et al. v. Ken Salazar et al., United States 

District Court, District of Columbia, Civil Action No. 96-1285 

(JR). 

(4) PLAINTIFF.—The term ‘‘Plaintiff’’ means a member of any 

class certified in the Litigation. 

(5) SECRETARY.—The term ‘‘Secretary’’ means the Secretary 

of the Interior. 

(6) SETTLEMENT.—The term ‘‘Settlement’’ means the Class 

Action Settlement Agreement dated December 7, 2009, in the 

Litigation, as modified by the parties to the Litigation. 

(7) TRUST ADMINISTRATION CLASS.—The term ‘‘Trust Administration Class’’ means the Trust Administration Class as defined in the Settlement. 

(c) PURPOSE.—The purpose of this section is to authorize the Settlement. 


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(d) AUTHORIZATION.—The Settlement is authorized, ratified, and 

confirmed. 

(e) JURISDICTIONAL PROVISIONS.— (1) IN GENERAL.—Notwithstanding the limitation of jurisdiction of district courts contained in section 1346(a)(2) of title 28, 

United States Code, the United States District Court for the 

District of Columbia shall have jurisdiction over the claims asserted in the Amended Complaint for purposes of the Settlement. 

(2) CERTIFICATION OF TRUST ADMINISTRATION CLASS.— (A) IN GENERAL.—Notwithstanding the requirements of 

the Federal Rules of Civil Procedure, the court overseeing 

the Litigation may certify the Trust Administration Class. 

(B) TREATMENT.—On certification under subparagraph 

(A), the Trust Administration Class shall be treated as a 

class under Federal Rule of Civil Procedure 23(b)(3) for 

purposes of the Settlement. 

(f) TRUST LAND CONSOLIDATION.— (1) TRUST LAND CONSOLIDATION FUND.— (A) ESTABLISHMENT.—On final approval (as defined in 

the Settlement) of the Settlement, there shall be established in the Treasury of the United States a fund, to be 

known as the ‘‘Trust Land Consolidation Fund’’. 

(B) AVAILABILITY OF AMOUNTS.—Amounts in the Trust 

Land Consolidation Fund shall be made available to the 

Secretary during the 10-year period beginning on the date 

of final approval of the Settlement— 

(i) to conduct the Land Consolidation Program; and 

(ii) for other costs specified in the Settlement. 

(C) DEPOSITS.— (i) IN GENERAL.—On final approval (as defined in 

the Settlement) of the Settlement, the Secretary of the 

Treasury shall deposit in the Trust Land Consolidation Fund $2,000,000,000 of the amounts appropriated 

by section 1304 of title 31, United States Code. 

(ii) CONDITIONS MET.—The conditions described in 

section 1304 of title 31, United States Code, shall be 

considered to be met for purposes of clause (i). 

(D) TRANSFERS.—In a manner designed to encourage 

participation in the Land Consolidation Program, the Secretary may transfer, at the discretion of the Secretary, not 

more than $60,000,000 of amounts in the Trust Land Consolidation Fund to the Indian Education Scholarship Holding Fund established under paragraph 2. 

(2) INDIAN EDUCATION SCHOLARSHIP HOLDING FUND.— 

(A) ESTABLISHMENT.—On the final approval (as defined 

in the Settlement) of the Settlement, there shall be established in the Treasury of the United States a fund, to be 

known as the ‘‘Indian Education Scholarship Holding 

Fund’’. 

(B) AVAILABILITY.—Notwithstanding any other provision 

of law governing competition, public notification, or Federal procurement or assistance, amounts in the Indian 

Education Scholarship Holding Fund shall be made available, without further appropriation, to the Secretary to 


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contribute to an Indian Education Scholarship Fund, as 

described in the Settlement, to provide scholarships for 

Native Americans. 

(3) ACQUISITION OF TRUST OR RESTRICTED LAND.—The Secretary may acquire, at the discretion of the Secretary and in 

accordance with the Land Consolidation Program, any fractional interest in trust or restricted land. 

(4) TREATMENT OF UNLOCATABLE PLAINTIFFS.—A Plaintiff the 

whereabouts of whom are unknown and who, after reasonable 

efforts by the Secretary, cannot be located during the 5 year 

period beginning on the date of final approval (as defined in 

the Settlement) of the Settlement shall be considered to have 

accepted an offer made pursuant to the Land Consolidation 

Program. 

(g) TAXATION AND OTHER BENEFITS.— (1) INTERNAL REVENUE CODE.—For purposes of the Internal 

Revenue Code of 1986, amounts received by an individual Indian as a lump sum or a periodic payment pursuant to the Settlement— 

(A) shall not be included in gross income; and 

(B) shall not be taken into consideration for purposes of 

applying any provision of the Internal Revenue Code of 

1986 that takes into account excludible income in computing adjusted gross income or modified adjusted gross 

income, including section 86 of that Code (relating to Social Security and tier 1 railroad retirement benefits). 

(2) OTHER BENEFITS.—Notwithstanding any other provision 

of law, for purposes of determining initial eligibility, ongoing 

eligibility, or level of benefits under any Federal or federally 

assisted program, amounts received by an individual Indian as 

a lump sum or a periodic payment pursuant to the Settlement 

shall not be treated for any household member, during the 1- 

year period beginning on the date of receipt— 

(A) as income for the month during which the amounts 

were received; or 

(B) as a resource. 

SEC. 608. APPROPRIATION OF FUNDS FOR FINAL SETTLEMENT OF 

CLAIMS FROM IN RE BLACK FARMERS DISCRIMINATION 

LITIGATION. 

(a) DEFINITIONS.—In this section: 

(1) SETTLEMENT AGREEMENT.—The term ‘‘Settlement Agreement’’ means the settlement agreement dated February 18, 

2010, between certain plaintiffs, by and through their counsel, 

and the Secretary of Agriculture to resolve, fully and forever, 

the claims raised or that could have been raised in the cases 

consolidated in In re Black Farmers Discrimination Litigation, 

No. 08–511 (D.D.C.), including Pigford claims asserted under 

section 14012 of the Food, Conservation, and Energy Act of 

2008 (Public Law 110–246; 122 Stat. 2209). 

(2) PIGFORD CLAIM.—The term ‘‘Pigford claim’’ has the meaning given that term in section 14012(a)(3) of the Food, Conservation, and Energy Act of 2008 (Public Law 110–246; 122 

Stat. 2210). 

(b) APPROPRIATION OF FUNDS.—There is hereby appropriated to 

the Secretary of Agriculture $1,150,000,000, to remain available 


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until expended, to carry out the terms of the Settlement Agreement 

if the Settlement Agreement is approved by a court order that is 

or becomes final and nonappealable. The funds appropriated by 

this subsection are in addition to the $100,000,000 of funds of the 

Commodity Credit Corporation made available by section 14012(i) 

of the Food, Conservation, and Energy Act of 2008 (Public Law 

110–246; 122 Stat. 2212) and shall be available for obligation only 

after those Commodity Credit Corporation funds are fully obligated. If the Settlement Agreement is not approved as provided in 

this subsection, the $100,000,000 of funds of the Commodity Credit 

Corporation made available by section 14012(i) of the Food, Conservation, and Energy Act of 2008 shall be the sole funding available for Pigford claims. 

(c) USE OF FUNDS.—The use of the funds appropriated by subsection (b) shall be subject to the express terms of the Settlement 

Agreement. 

(d) TREATMENT OF REMAINING FUNDS.—If any of the funds appropriated by subsection (b) are not obligated and expended to carry 

out the Settlement Agreement, the Secretary of Agriculture shall 

return the unused funds to the Treasury and may not make the 

unused funds available for any purpose related to section 14012 of 

the Food, Conservation, and Energy Act of 2008, for any other settlement agreement executed in In re Black Farmers Discrimination 

Litigation, No. 08–511 (D.D.C.), or for any other purpose. 

(e) RULES OF CONSTRUCTION.—Nothing in this section shall be 

construed as requiring the United States, any of its officers or 

agencies, or any other party to enter into the Settlement Agreement or any other settlement agreement. Nothing in this section 

shall be construed as creating the basis for a Pigford claim. 

(f) CONFORMING AMENDMENTS.—Section 14012 of the Food, Conservation, and Energy Act of 2008 (Public Law 110–246; 122 Stat. 

2209) is amended— 

(1) in subsection (c)(1)— 

(A) by striking ‘‘subsection (h)’’ and inserting ‘‘subsection 

(g)’’; and 

(B) by striking ‘‘subsection (i)’’ and inserting ‘‘subsection 

(h)’’; 

(2) by striking subsection (e); 

(3) in subsection (g), by striking ‘‘subsection (f)’’ and inserting 

‘‘subsection (e)’’; 

(4) in subsection (i)— 

(A) by striking ‘‘(1) IN GENERAL.—Of the funds’’ and inserting ‘‘Of the funds’’; and 

(B) by striking paragraph (2); 

(5) by striking subsection (j); and 

(6) by redesignating subsections (f), (g), (h), (i), and (k) as 

subsections (e), (f), (g), (h), and (i), respectively. 

SEC. 609. EXPANSION OF ELIGIBILITY FOR CONCURRENT RECEIPT OF 

MILITARY RETIRED PAY AND VETERANS’ DISABILITY 

COMPENSATION TO INCLUDE ALL CHAPTER 61 DISABILITY RETIREES REGARDLESS OF DISABILITY RATING 

PERCENTAGE OR YEARS OF SERVICE. 

(a) PHASED EXPANSION CONCURRENT RECEIPT.—Subsection (a) of 

section 1414 of title 10, United States Code, is amended to read as 

follows: 


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‘‘(a) PAYMENT OF BOTH RETIRED PAY AND DISABILITY COMPENSA- TION.— 

‘‘(1) PAYMENT OF BOTH REQUIRED.— ‘‘(A) IN GENERAL.—Subject to subsection (b), a member 

or former member of the uniformed services who is entitled for any month to retired pay and who is also entitled 

for that month to veterans’ disability compensation for a 

qualifying service-connected disability (in this section referred to as a ‘qualified retiree’) is entitled to be paid both 

for that month without regard to sections 5304 and 5305 

of title 38. 

‘‘(B) APPLICABILITY OF FULL CONCURRENT RECEIPT PHASE- IN REQUIREMENT.—During the period beginning on January 1, 2004, and ending on December 31, 2013, payment 

of retired pay to a qualified retiree is subject to subsection 

(c). 

‘‘(C) PHASE-IN EXCEPTION FOR 100 PERCENT DISABLED RE- TIREES.—The payment of retired pay is subject to subsection (c) only during the period beginning on January 1, 

2004, and ending on December 31, 2004, in the case of the 

following qualified retirees: 

‘‘(i) A qualified retiree receiving veterans’ disability 

compensation for a disability rated as 100 percent. 

‘‘(ii) A qualified retiree receiving veterans’ disability 

compensation at the rate payable for a 100 percent 

disability by reason of a determination of individual 

unemployability. 

‘‘(D) TEMPORARY PHASE-IN EXCEPTION FOR CERTAIN CHAP- TER 61 DISABILITY RETIREES; TERMINATION.—Subject to subsection (b), during the period beginning on January 1, 

2011, and ending on September 30, 2012, subsection (c) 

shall not apply to a qualified retiree described in subparagraph (B) or (C) of paragraph (2). 

‘‘(2) QUALIFYING SERVICE-CONNECTED DISABILITY DEFINED.— 

In this section: 

‘‘(A) 50 PERCENT RATING THRESHOLD.—In the case of a 

member or former member receiving retired pay under any 

provision of law other than chapter 61 of this title, or 

under chapter 61 with 20 years or more of service otherwise creditable under section 1405 or computed under section 12732 of this title, the term ‘qualifying service-connected disability’ means a service-connected disability or 

combination of service-connected disabilities that is rated 

as not less than 50 percent disabling by the Secretary of 

Veterans Affairs. However, during the period specified in 

paragraph (1)(D), members or former members receiving 

retired pay under chapter 61 with 20 years or more of 

creditable service computed under section 12732 of this 

title, but not otherwise entitled to retired pay under any 

other provision of this title, shall qualify in accordance 

with subparagraphs (B) and (C). 

‘‘(B) INCLUSION OF MEMBERS NOT OTHERWISE ENTITLED

TO RETIRED PAY.—In the case of a member or former member receiving retired pay under chapter 61 of this title, but 

who is not otherwise entitled to retired pay under any 


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other provision of this title, the term ‘qualifying serviceconnected disability’ means a service-connected disability 

or combination of service-connected disabilities that is 

rated by the Secretary of Veterans Affairs at the disabling 

level specified in one of the following clauses (which, subject to paragraph (3), is effective on or after the date specified in the applicable clause): 

‘‘(i) January 1, 2011, rated 100 percent, or a rate 

payable at 100 percent by reason of individual 

unemployability or rated 90 percent. 

‘‘(ii) January 1, 2012, rated 80 percent or 70 percent. 

‘‘(iii) January 1, 2013, rated 60 percent or 50 percent. 

‘‘(C) ELIMINATION OF RATING THRESHOLD.—In the case of 

a member or former member receiving retired pay under 

chapter 61 regardless of being otherwise eligible for retirement, the term ‘qualifying service-connected disability’ 

means a service-connected disability or combination of 

service-connected disabilities that is rated by the Secretary 

of Veterans Affairs at the disabling level specified in one 

of the following clauses (which, subject to paragraph (3), is 

effective on or after the date specified in the applicable 

clause): 

‘‘(i) January 1, 2014, rated 40 percent or 30 percent. 

‘‘(ii) January 1, 2015, any rating. 

‘‘(3) LIMITED DURATION.—Notwithstanding the effective date 

specified in each clause of subparagraphs (B) and (C) of paragraph (2), the clause— 

‘‘(A) shall apply only if the termination date specified in 

paragraph (1)(D) would occur during or after the calendar 

year specified in the clause; and 

‘‘(B) shall not apply beyond the termination date specified in paragraph (1)(D).’’. 

(b) CONFORMING AMENDMENT TO SPECIAL RULES FOR CHAPTER 61 

DISABILITY RETIREES.—Subsection (b) of such section is amended to 

read as follows: 

‘‘(b) SPECIAL RULES FOR CHAPTER 61 DISABILITY RETIREES WHEN

ELIGIBILITY HAS BEEN ESTABLISHED FOR SUCH RETIREES.— ‘‘(1) GENERAL REDUCTION RULE.—The retired pay of a member retired under chapter 61 of this title is subject to reduction 

under sections 5304 and 5305 of title 38, but only to the extent 

that the amount of the members retired pay under chapter 61 

of this title exceeds the amount of retired pay to which the 

member would have been entitled under any other provision of 

law based upon the member’s service in the uniformed services 

if the member had not been retired under chapter 61 of this 

title. 

‘‘(2) CHAPTER 61 RETIREES NOT OTHERWISE ENTITLED TO RETIRED PAY.— ‘‘(A) BEFORE TERMINATION DATE.—If a member with a 

qualifying service-connected disability (as defined in subsection (a)(2)) is retired under chapter 61 of this title, but 

is not otherwise entitled to retired pay under any other 

provision of this title, and the termination date specified 

in subsection (a)(1)(D) has not occurred, the retired pay of 


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the member is subject to reduction under sections 5304 

and 5305 of title 38, but only to the extent that the 

amount of the member’s retired pay under chapter 61 of 

this title exceeds the amount equal to 21⁄2 percent of the 

member’s years of creditable service multiplied by the 

member’s retired pay base under section 1406(b)(1) or 1407 

of this title, whichever is applicable to the member. 

‘‘(B) AFTER TERMINATION DATE.—Subsection (a) does not 

apply to a member described in subparagraph (A) if the 

termination date specified in subsection (a)(1)(D) has occurred.’’. 

(c) CONFORMING AMENDMENT TO FULL CONCURRENT RECEIPT

PHASE-IN.—Subsection (c) of such section is amended by striking 

‘‘the second sentence of’’. 

(d) CLERICAL AMENDMENTS.— 

(1) SECTION HEADING.—The heading of such section is 

amended to read as follows: 

‘‘§ 1414. Concurrent receipt of retired pay and veterans’ disability compensation’’. 

(2) TABLE OF SECTIONS.—The table of sections at the beginning of chapter 71 of such title is amended by striking the item 

related to section 1414 and inserting the following new item: 

‘‘1414. Concurrent receipt of retired pay and veterans’ disability compensation.’’. 

(e) EFFECTIVE DATE.—The amendments made by this section 

shall take effect on January 1, 2011. 

SEC. 610. EXTENSION OF USE OF 2009 POVERTY GUIDELINES. 

Section 1012 of the Department of Defense Appropriations Act, 

2010 (Public Law 111–118), as amended by section 6 of the Continuing Extension Act of 2010 (Public Law 111–157), is amended— 

(1) by striking ‘‘before May 31, 2010’’; and 

(2) by inserting ‘‘for 2011’’ after ‘‘until updated poverty guidelines’’. 

SEC. 611. REFUNDS DISREGARDED IN THE ADMINISTRATION OF FEDERAL PROGRAMS AND FEDERALLY ASSISTED PROGRAMS. 

(a) IN GENERAL.—Subchapter A of chapter 65 of the Internal 

Revenue Code of 1986 is amended by adding at the end the following new section: 

‘‘SEC. 6409. REFUNDS DISREGARDED IN THE ADMINISTRATION OF 

FEDERAL PROGRAMS AND FEDERALLY ASSISTED PROGRAMS. 

‘‘(a) IN GENERAL.—Notwithstanding any other provision of law, 

any refund (or advance payment with respect to a refundable credit) made to any individual under this title shall not be taken into 

account as income, and shall not be taken into account as resources 

for a period of 12 months from receipt, for purposes of determining 

the eligibility of such individual (or any other individual) for benefits or assistance (or the amount or extent of benefits or assistance) 

under any Federal program or under any State or local program financed in whole or in part with Federal funds. 

‘‘(b) TERMINATION.—Subsection (a) shall not apply to any amount 

received after December 31, 2010.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for such subchapter is amended by adding at the end the following new item: 


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‘‘Sec. 6409. Refunds disregarded in the administration of Federal programs and 

federally assisted programs.’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall apply to amounts received after December 31, 2009. 

SEC. 612. STATE COURT IMPROVEMENT PROGRAM. 

Section 438 of the Social Security Act (42 U.S.C. 629h) is amended— 

(1) in subsection (c)(2)(A), by striking ‘‘2010’’ and inserting 

‘‘2011’’; and 

(2) in subsection (e), by striking ‘‘2010’’ and inserting ‘‘2011’’. 

SEC. 613. QUALIFYING TIMBER CONTRACT OPTIONS. 

(a) DEFINITIONS.—In this section: 

(1) QUALIFYING CONTRACT.—The term ‘‘qualifying contract’’ 

means a contract that has not been terminated by the Bureau 

of Land Management for the sale of timber on lands administered by the Bureau of Land Management that meets all of the 

following criteria: 

(A) The contract was awarded during the period beginning on January 1, 2005, and ending on December 31, 

2008. 

(B) There is unharvested volume remaining for the contract. 

(C) The contract is not a salvage sale. 

(D) The Secretary determined there is not an urgent 

need to harvest under the contract due to deteriorating 

timber conditions that developed after the award of the 

contract. 

(2) SECRETARY.—The term ‘‘Secretary’’ means the Secretary 

of the Interior, acting through the Director of Bureau of Land 

Management. 

(3) TIMBER PURCHASER.—The term ‘‘timber purchaser’’ means 

the party to the qualifying contract for the sale of timber from 

lands administered by the Bureau of Land Management. 

(b) MARKET-RELATED CONTRACT EXTENSION OPTION.—Upon a 

timber purchaser’s written request, the Secretary may make a onetime modification to the qualifying contract to add 3 years to the 

contract expiration date if the written request— 

(1) is received by the Secretary not later than 90 days after 

the date of enactment of this Act; and 

(2) contains a provision releasing the United States from all 

liability, including further consideration or compensation, resulting from the modification under this subsection of the term 

of a qualifying contract. 

(c) REPORTING.—Not later than 6 months after the date of the enactment of this Act, the Secretary shall submit to Congress a report detailing a plan and timeline to promulgate new regulations 

authorizing the Bureau of Land Management to extend timber contracts due to changes in market conditions. 

(d) REGULATIONS.—Not later than 2 years after the date of the 

enactment of this Act, the Secretary shall promulgate new regulations authorizing the Bureau of Land Management to extend timber contracts due to changes in market conditions. 

(e) NO SURRENDER OF CLAIMS.—This section shall not have the 

effect of surrendering any claim by the United States against any 


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timber purchaser that arose under a timber sale contract, including 

a qualifying contract, before the date on which the Secretary adjusts the contract term under subsection (b). 

SEC. 614. EXTENSION AND FLEXIBILITY FOR CERTAIN ALLOCATED 

SURFACE TRANSPORTATION PROGRAMS. 

(a) MODIFICATION OF ALLOCATION RULES.—Section 411(d) of the 

Surface Transportation Extension Act of 2010 (Public Law 111– 

147; 124 Stat. 80) is amended— 

(1) in paragraph (1)— 

(A) in the matter preceding subparagraph (A)— 

(i) by striking ‘‘1301, 1302,’’; and 

(ii) by striking ‘‘1198, 1204,’’; and 

(B) in subparagraph (A)— 

(i) in the matter preceding clause (i) by striking ‘‘apportioned under sections 104(b) and 144 of title 23, 

United States Code,’’ and inserting ‘‘specified in section 105(a)(2) of title 23, United States Code (except 

the high priority projects program),’’; and 

(ii) in clause (ii) by striking ‘‘apportioned under such 

sections of such Code’’ and inserting ‘‘specified in such 

section 105(a)(2) (except the high priority projects program)’’; 

(2) in paragraph (2)— 

(A) in the matter preceding subparagraph (A)— 

(i) by striking ‘‘1301, 1302,’’; and 

(ii) by striking ‘‘1198, 1204,’’; and 

(B) in subparagraph (A)— 

(i) in the matter preceding clause (i) by striking ‘‘apportioned under sections 104(b) and 144 of title 23, 

United States Code,’’ and inserting ‘‘specified in section 105(a)(2) of title 23, United States Code (except 

the high priority projects program),’’; and 

(ii) in clause (ii) by striking ‘‘apportioned under such 

sections of such Code’’ and inserting ‘‘specified in such 

section 105(a)(2) (except the high priority projects program)’’; and 

(3) by adding at the end the following: 

‘‘(5) PROJECTS OF NATIONAL AND REGIONAL SIGNIFICANCE AND

NATIONAL CORRIDOR INFRASTRUCTURE IMPROVEMENT PROGRAMS.— 

‘‘(A) REDISTRIBUTION AMONG STATES.—Notwithstanding 

sections 1301(m) and 1302(e) of SAFETEA–LU (119 Stat. 

1202 and 1205), the Secretary shall apportion funds authorized to be appropriated under subsection (b) for the 

projects of national and regional significance program and 

the national corridor infrastructure improvement program 

among all States such that each State’s share of the funds 

so apportioned is equal to the State’s share for fiscal year 

2009 of funds apportioned or allocated for the programs 

specified in section 105(a)(2) of title 23, United States 

Code. 

‘‘(B) DISTRIBUTION AMONG PROGRAMS.—Funds apportioned to a State pursuant to subparagraph (A) shall be— 

‘‘(i) made available to the State for the programs 

specified in section 105(a)(2) of title 23, United States 


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Code (except the high priority projects program), and 

in the same proportion for each such program that— 

‘‘(I) the amount apportioned to the State for that 

program for fiscal year 2009; bears to 

‘‘(II) the amount apportioned to the State for fiscal year 2009 for all such programs; and 

‘‘(ii) administered in the same manner and with the 

same period of availability as funding is administered 

under programs identified in clause (i).’’. 

(b) EXPENDITURE AUTHORITY FROM HIGHWAY TRUST FUND.— 

Paragraph (1) of section 9503(c) of the Internal Revenue Code of 

1986 is amended by striking ‘‘Surface Transportation Extension Act 

of 2010’’ and inserting ‘‘American Jobs and Closing Tax Loopholes 

Act of 2010’’. 

(c) EFFECTIVE DATE.—The amendments made by this section 

shall take effect upon the date of enactment of the Surface Transportation Extension Act of 2010 (Public Law 111–147; 124 Stat. 78 

et seq.) and shall be treated as being included in that Act at the 

time of the enactment of that Act. 

SEC. 615. COMMUNITY COLLEGE AND CAREER TRAINING GRANT PROGRAM. 

(a) IN GENERAL.—Section 278(a) of the Trade Act of 1974 (19 

U.S.C. 2372(a)) is amended by adding at the end the following: 

‘‘(3) RULE OF CONSTRUCTION.—For purposes of this section, 

any reference to ‘workers’, ‘workers eligible for training under 

section 236’, or any other reference to workers under this section shall be deemed to include individuals who are, or are 

likely to become, eligible for unemployment compensation as 

defined in section 85(b) of the Internal Revenue Code of 1986, 

or who remain unemployed after exhausting all rights to such 

compensation.’’. 

(b) DEFINITION OF ELIGIBLE INSTITUTION.—Section 278(b)(1) of 

the Trade Act of 1974 (19 U.S.C. 2372(b)(1)) is amended— 

(1) by striking ‘‘section 102’’ and inserting ‘‘section 101(a)’’; 

and 

(2) by striking ‘‘1002’’ and inserting ‘‘1001(a)’’. 

(c) AUTHORIZATION OF APPROPRIATIONS.—Section 279 of the 

Trade Act of 1974 (19 U.S.C. 2372a) is amended— 

(1) in subsection (a), by striking the last sentence; and 

(2) by adding at the end the following: 

‘‘(c) ADMINISTRATIVE AND RELATED COSTS.—The Secretary may 

retain not more than 5 percent of the funds appropriated under 

subsection (b) for each fiscal year to administer, evaluate, and establish reporting systems for the Community College and Career 

Training Grant program under section 278. 

‘‘(d) SUPPLEMENT NOT SUPPLANT.—Funds appropriated under 

subsection (b) shall be used to supplement and not supplant other 

Federal, State, and local public funds expended to support community college and career training programs. 

‘‘(e) AVAILABILITY.—Funds appropriated under subsection (b) 

shall remain available for the fiscal year for which the funds are 

appropriated and the subsequent fiscal year.’’. 


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SEC. 616. EXTENSIONS OF DUTY SUSPENSIONS ON COTTON SHIRTING 

FABRICS AND RELATED PROVISIONS. 

(a) EXTENSIONS.—Each of the following headings of the Harmonized Tariff Schedule of the United States is amended by striking the date in the effective date column and inserting ‘‘12/31/ 

2013’’: 

(1) Heading 9902.52.08 (relating to woven fabrics of cotton). 

(2) Heading 9902.52.09 (relating to woven fabrics of cotton). 

(3) Heading 9902.52.10 (relating to woven fabrics of cotton). 

(4) Heading 9902.52.11 (relating to woven fabrics of cotton). 

(5) Heading 9902.52.12 (relating to woven fabrics of cotton). 

(6) Heading 9902.52.13 (relating to woven fabrics of cotton). 

(7) Heading 9902.52.14 (relating to woven fabrics of cotton). 

(8) Heading 9902.52.15 (relating to woven fabrics of cotton). 

(9) Heading 9902.52.16 (relating to woven fabrics of cotton). 

(10) Heading 9902.52.17 (relating to woven fabrics of cotton). 

(11) Heading 9902.52.18 (relating to woven fabrics of cotton). 

(12) Heading 9902.52.19 (relating to woven fabrics of cotton). 

(13) Heading 9902.52.20 (relating to woven fabrics of cotton). 

(14) Heading 9902.52.21 (relating to woven fabrics of cotton). 

(15) Heading 9902.52.22 (relating to woven fabrics of cotton). 

(16) Heading 9902.52.23 (relating to woven fabrics of cotton). 

(17) Heading 9902.52.24 (relating to woven fabrics of cotton). 

(18) Heading 9902.52.25 (relating to woven fabrics of cotton). 

(19) Heading 9902.52.26 (relating to woven fabrics of cotton). 

(20) Heading 9902.52.27 (relating to woven fabrics of cotton). 

(21) Heading 9902.52.28 (relating to woven fabrics of cotton). 

(22) Heading 9902.52.29 (relating to woven fabrics of cotton). 

(23) Heading 9902.52.30 (relating to woven fabrics of cotton). 

(24) Heading 9902.52.31 (relating to woven fabrics of cotton). 

(b) EXTENSION OF DUTY REFUNDS AND PIMA COTTON TRUST

FUND; MODIFICATION OF AFFIDAVIT REQUIREMENTS.—Section 407 of 

title IV of division C of the Tax Relief and Health Care Act of 2006 

(Public Law 109–432; 120 Stat. 3060) is amended— 

(1) in subsection (b)— 

(A) in paragraph (1), by striking ‘‘amounts determined 

by the Secretary’’ and all that follows through ‘‘5208.59.80’’ 

and inserting ‘‘amounts received in the general fund that 

are attributable to duties received since January 1, 2004, 

on articles classified under heading 5208’’; and 

(B) in paragraph (2), by striking ‘‘October 1, 2008’’ and 

inserting ‘‘December 31, 2013’’; 

(2) in subsection (d)— 

(A) in the matter preceding paragraph (1), by inserting 

‘‘annually’’ after ‘‘provided’’; and 

(B) in paragraph (1), by inserting ‘‘during the year in 

which the affidavit is filed and’’ after ‘‘imported cotton fabric’’; and 

(3) in subsection (f)— 

(A) in the matter preceding paragraph (1), by inserting 

‘‘annually’’ after ‘‘provided’’; and 

(B) in paragraph (1), by inserting ‘‘during the year in 

which the affidavit is filed and’’ after ‘‘United States’’. 


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(c) EFFECTIVE DATE.—The amendments made by this section 

shall take effect on the date of the enactment of this Act and apply 

with respect to affidavits filed on or after such date of enactment. 

SEC. 617. MODIFICATION OF WOOL APPAREL MANUFACTURERS TRUST 

FUND. 

(a) IN GENERAL.—Section 4002(c)(2)(A) of the Miscellaneous 

Trade and Technical Corrections Act of 2004 (Public Law 108–429; 

118 Stat. 2600) is amended by striking ‘‘chapter 51’’ and inserting 

‘‘chapter 62’’. 

(b) FULL RESTORATION OF PAYMENT LEVELS IN FISCAL YEAR

2010.— 

(1) TRANSFER OF AMOUNTS.— 

(A) IN GENERAL.—Not later than 30 days after the date 

of the enactment of this Act, the Secretary of the Treasury 

shall transfer to the Wool Apparel Manufacturers Trust 

Fund, out of the general fund of the Treasury of the 

United States, amounts determined by the Secretary of the 

Treasury to be equivalent to amounts received in the general fund that are attributable to the duty received on articles classified under chapter 62 of the Harmonized Tariff 

Schedule of the United States, subject to the limitation in 

subparagraph (B). 

(B) LIMITATION.—The Secretary of the Treasury shall 

not transfer more than the amount determined by the Secretary to be necessary for— 

(i) U.S. Customs and Border Protection to make payments to eligible manufacturers under section 

4002(c)(3) of the Miscellaneous Trade and Technical 

Corrections Act of 2004 so that the amount of such 

payments, when added to any other payments made to 

eligible manufacturers under section 4002(c)(3) of such 

Act for calendar year 2010, equal the total amount of 

payments authorized to be provided to eligible manufacturers under section 4002(c)(3) of such Act for calendar year 2010; and 

(ii) the Secretary of Commerce to provide grants to 

eligible manufacturers under section 4002(c)(6) of the 

Miscellaneous Trade and Technical Corrections Act of 

2004 so that the amounts of such grants, when added 

to any other grants made to eligible manufacturers 

under section 4002(c)(6) of such Act for calendar year 

2010, equal the total amount of grants authorized to 

be provided to eligible manufacturers under section 

4002(c)(6) of such Act for calendar year 2010. 

(2) PAYMENT OF AMOUNTS.—U.S. Customs and Border Protection shall make payments described in paragraph (1) to eligible manufacturers not later than 30 days after such transfer 

of amounts from the general fund of the Treasury of the 

United States to the Wool Apparel Manufacturers Trust Fund. 

The Secretary of Commerce shall promptly provide grants described in paragraph (1) to eligible manufacturers after such 

transfer of amounts from the general fund of the Treasury of 

the United States to the Wool Apparel Manufacturers Trust 

Fund. 


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(c) RULE OF CONSTRUCTION.—The amendment made by subsection (a) shall not be construed to affect the availability of 

amounts transferred to the Wool Apparel Manufacturers Trust 

Fund before the date of the enactment of this Act. 

SEC. 618. DEPARTMENT OF COMMERCE STUDY. 

Not later than 180 days after the date of enactment of this Act, 

the Secretary of Commerce shall report to Congress detailing— 

(1) the pattern of job loss in the New England, Mid-Atlantic, 

and Midwest States over the past 20 years; 

(2) the role of the off-shoring of manufacturing jobs in overall 

job loss in the regions; and 

(3) recommendations to attract industries and bring jobs to 

the region. 

SEC. 619. ARRA PLANNING AND REPORTING. 

Section 1512 of the American Recovery and Reinvestment Act of 

2009 (Public Law 111–5; 123 Stat. 287) is amended— 

(1) in subsection (d)— 

(A) in the subsection heading, by inserting ‘‘PLANS AND’’ 

after ‘‘AGENCY’’; 

(B) by striking ‘‘Not later than’’ and inserting the following: 

‘‘(1) DEFINITION.—In this subsection, the term ‘covered program’ means a program for which funds are appropriated 

under this division— 

‘‘(A) in an amount that is— 

‘‘(i) more than $2,000,000,000; and 

‘‘(ii) more than 150 percent of the funds appropriated for the program for fiscal year 2008; or 

‘‘(B) that did not exist before the date of enactment of 

this Act. 

‘‘(2) PLANS.—Not later than July 1, 2010, the head of each 

agency that distributes recovery funds shall submit to Congress and make available on the website of the agency a plan 

for each covered program, which shall, at a minimum, contain— 

‘‘(A) a description of the goals for the covered program 

using recovery funds; 

‘‘(B) a discussion of how the goals described in subparagraph (A) relate to the goals for ongoing activities of the 

covered program, if applicable; 

‘‘(C) a description of the activities that the agency will 

undertake to achieve the goals described in subparagraph 

(A); 

‘‘(D) a description of the total recovery funding for the 

covered program and the recovery funding for each activity 

under the covered program, including identifying whether 

the activity will be carried out using grants, contracts, or 

other types of funding mechanisms; 

‘‘(E) a schedule of milestones for major phases of the activities under the covered program, with planned delivery 

dates; 

‘‘(F) performance measures the agency will use to track 

the progress of each of the activities under the covered 

program in meeting the goals described in subparagraph 


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(A), including performance targets, the frequency of measurement, and a description of the methodology for each 

measure; 

‘‘(G) a description of the process of the agency for the 

periodic review of the progress of the covered program towards meeting the goals described in subparagraph (A); 

and 

‘‘(H) a description of how the agency will hold program 

managers accountable for achieving the goals described in 

subparagraph (A). 

‘‘(3) REPORTS.— 

‘‘(A) IN GENERAL.—Not later than’’; and 

(C) by adding at the end the following: 

‘‘(B) REPORTS ON PLANS.—Not later than 30 days after 

the end of the calendar quarter ending September 30, 

2010, and every calendar quarter thereafter during which 

the agency obligates or expends recovery funds, the head 

of each agency that developed a plan for a covered program under paragraph (2) shall submit to Congress and 

make available on a website of the agency a report for 

each covered program that— 

‘‘(i) discusses the progress of the agency in implementing the plan; 

‘‘(ii) describes the progress towards achieving the 

goals described in paragraph (2)(A) for the covered 

program; 

‘‘(iii) discusses the status of each activity carried out 

under the covered program, including whether the activity is completed; 

‘‘(iv) details the unobligated and unexpired balances 

and total obligations and outlays under the covered 

program; 

‘‘(v) discusses— 

‘‘(I) whether the covered program has met the 

milestones for the covered program described in 

paragraph (2)(E); 

‘‘(II) if the covered program has failed to meet 

the milestones, the reasons why; and 

‘‘(III) any changes in the milestones for the covered program, including the reasons for the 

change; 

‘‘(vi) discusses the performance of the covered program, including— 

‘‘(I) whether the covered program has met the 

performance measures for the covered program 

described in paragraph (2)(F); 

‘‘(II) if the covered program has failed to meet 

the performance measures, the reasons why; and 

‘‘(III) any trends in information relating to the 

performance of the covered program; and 

‘‘(vii) evaluates the ability of the covered program to 

meet the goals of the covered program given the performance of the covered program.’’; 

(2) in subsection (f)— 


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(A) by striking ‘‘Within 180 days’’ and inserting the following: 

‘‘(1) IN GENERAL.—Within 180 days’’; and 

(B) by adding at the end the following: 

‘‘(2) PENALTIES.— ‘‘(A) IN GENERAL.—Subject to subparagraphs (B), (C), 

and (D), the Attorney General may bring a civil action in 

an appropriate United States district court against a recipient of recovery funds from an agency that does not provide the information required under subsection (c) or 

knowingly provides information under subsection (c) that 

contains a material omission or misstatement. In a civil 

action under this paragraph, the court may impose a civil 

penalty on a recipient of recovery funds in an amount not 

more than $250,000. Any amounts received from a civil 

penalty under this paragraph shall be deposited in the 

general fund of the Treasury. 

‘‘(B) NOTIFICATION.— ‘‘(i) IN GENERAL.—The head of an agency shall provide a written notification to a recipient of recovery 

funds from the agency that fails to provide the information required under subsection (c). A notification 

under this subparagraph shall provide the recipient 

with information on how to comply with the necessary 

reporting requirements and notice of the penalties for 

failing to do so. 

‘‘(ii) LIMITATION.—A court may not impose a civil 

penalty under subparagraph (A) relating to the failure 

to provide information required under subsection (c) if, 

not later than 31 days after the date of the notification 

under clause (i), the recipient of the recovery funds 

provides the information. 

‘‘(C) CONSIDERATIONS.—In determining the amount of a 

penalty under this paragraph for a recipient of recovery 

funds, a court shall consider— 

‘‘(i) the number of times the recipient has failed to 

provide the information required under subsection (c); 

‘‘(ii) the amount of recovery funds provided to the recipient; 

‘‘(iii) whether the recipient is a government, nonprofit entity, or educational institution; and 

‘‘(iv) whether the recipient is a small business concern (as defined under section 3 of the Small Business 

Act (15 U.S.C. 632)), with particular consideration 

given to businesses with not more than 50 employees. 

‘‘(D) APPLICABILITY.—This paragraph shall apply to any 

report required to be submitted on or after the date of enactment of this paragraph. 

‘‘(E) NONEXCLUSIVITY.—The imposition of a civil penalty 

under this subsection shall not preclude any other criminal, civil, or administrative remedy available to the United 

States or any other person under Federal or State law. 

‘‘(3) TECHNICAL ASSISTANCE.—Each agency distributing recovery funds shall provide technical assistance, as necessary, 

to assist recipients of recovery funds in complying with the reVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00163 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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quirements to provide information under subsection (c), which 

shall include providing recipients with a reminder regarding 

each reporting requirement. 

‘‘(4) PUBLIC LISTING.— 

‘‘(A) IN GENERAL.—Not later than 45 days after the end 

of each calendar quarter, and subject to the notification requirements under paragraph (2)(B), the Board shall make 

available on the website established under section 1526 a 

list of all recipients of recovery funds that did not provide 

the information required under subsection (c) for the calendar quarter. 

‘‘(B) CONTENTS.—A list made available under subparagraph (A) shall, for each recipient of recovery funds on the 

list, include the name and address of the recipient, the 

identification number for the award, the amount of recovery funds awarded to the recipient, a description of the activity for which the recovery funds were provided, and, to 

the extent known by the Board, the reason for noncompliance. 

‘‘(5) REGULATIONS AND REPORTING.— 

‘‘(A) REGULATIONS.—Not later than 90 days after the 

date of enactment of this paragraph, the Attorney General, 

in consultation with the Director of the Office of Management and Budget and the Chairperson, shall promulgate 

regulations regarding implementation of this section. 

‘‘(B) REPORTING.— 

‘‘(i) IN GENERAL.—Not later than July 1, 2010, and 

every 3 months thereafter, the Director of the Office of 

Management and Budget, in consultation with the 

Chairperson, shall submit to Congress a report on the 

extent of noncompliance by recipients of recovery 

funds with the reporting requirements under this section. 

‘‘(ii) CONTENTS.—Each report submitted under 

clause (i) shall include— 

‘‘(I) information, for the quarter and in total, regarding the number and amount of civil penalties 

imposed and collected under this subsection, sorted by agency and program; 

‘‘(II) information on the steps taken by the Federal Government to reduce the level of noncompliance; and 

‘‘(III) any other information determined appropriate by the Director.’’; and 

(3) by adding at the end the following: 

‘‘(i) TERMINATION.—The reporting requirements under this section shall terminate on September 30, 2013.’’. 

TITLE VII—BUDGETARY PROVISIONS 

SEC. 701. BUDGETARY PROVISIONS. 

(a) STATUTORY PAYGO.—The budgetary effects of this Act, for the 

purpose of complying with the Statutory Pay-As-You-Go-Act of 

2010, shall be determined by reference to the latest statement tiVerDate Mar 15 2010 08:12 May 27, 2010 Jkt 089008 PO 00000 Frm 00164 Fmt 6659 Sfmt 6602 E:\HR\OC\HR497.XXX HR497

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tled ‘Budgetary Effects of PAYGO Legislation’ for this Act, jointly 

submitted for printing in the Congressional Record by the Chairmen of the House and Senate Budget Committees, provided that 

such statement has been submitted prior to the vote on passage in 

the House acting first on this conference report or amendment between the Houses. 

(b) EMERGENCY DESIGNATIONS.—Sections 501, 511, and 516— 

(1) are designated as an emergency requirement pursuant to 

section 4(g) of the Statutory Pay-As-You-Go Act of 2010 (Public 

Law 111-139; 2 U.S.C. 933(g)), 

(2) in the House of Representatives, are designated as an 

emergency for purposes of pay-as-you-go principles, and 

(3) in the Senate, are designated as an emergency requirement pursuant to section 403(a) of S. Con. Res. 13 (111th Congress), the concurrent resolution on the budget for fiscal year 

2010. 

Amend the title of the bill so as to read: ‘‘A bill to promote American jobs through increased investment in infrastructure and other 

job creating activities, to close tax loopholes, to eliminate tax incentives for offshoring of jobs, and for other purposes.’’. 

PART B—TEXT OF AMENDMENT TO BE CONSIDERED AS ADOPTED

Page 25, strike line 22 and all that follows through line 15 on 

page 26, and insert the following: 

(1) IN GENERAL.—Clause (i) of section 451(i)(4)(B) is amended 

to read as follows: 

‘‘(i) who the Federal Energy Regulatory Commission 

determines in its authorization of the transaction 

under section 203 of the Federal Power Act (16 U.S.C. 

824b) or by declaratory order— 

‘‘(I) is not itself a market participant as determined by the Commission, and also is not controlled by any such market participant, or 

‘‘(II) to be independent from market participants 

or to be an independent transmission company 

within the meaning of such Commission’s rules 

applicable to independent transmission providers, 

and’’. 

Page 31, after line 11, insert the following: 

(c) TEMPORARY COORDINATION WITH HOPE AND LIFETIME LEARN- ING CREDITS.—In the case of any taxpayer for any taxable year beginning in 2010, no deduction shall be allowed under section 222 

of the Internal Revenue Code of 1986 if— 

(1) the taxpayer’s net Federal income tax reduction which 

would be attributable to such deduction for such taxable year, 

is less than 

(2) the credit which would be allowed to the taxpayer for 

such taxable year under section 25A of such Code (determined 

without regard to sections 25A(e) and 26 of such Code). 

Page 82, strike line 10 and all that follows through line 7 on 

page 83 and insert the following: 

‘‘(VI) EXCEPTION FOR CERTAIN REDEMPTIONS.— 

The following shall not be taken into account 

under subclause (I): 


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‘‘(aa) Redemptions of securities which, at 

the time of redemption, are not listed on an 

established securities market and— 

‘‘(AA) are made pursuant to a pension 

plan that is qualified under section 401 of 

the Internal Revenue Code of 1986 or a 

shareholder-approved program, or 

‘‘(BB) are made on account of an employee’s termination of employment with 

the plan sponsor, or the death or disability of a shareholder. 

‘‘(bb) Redemptions of securities which are 

not, immediately after issuance, listed on an 

established securities market and are, or had 

previously been— 

‘‘(AA) held, directly or indirectly, by, or 

for the benefit of, the Federal Government or a Federal reserve bank, or 

‘‘(BB) held by a national government (or 

a government-related entity of such a 

government) or an employee benefit plan 

if such shares are substantially identical 

to shares described in subitem (AA). 

Page 107, strike line 16 and all that follows through line 12 on 

page 108 and insert the following: 

‘‘(VI) EXCEPTION FOR CERTAIN REDEMPTIONS.— 

The following shall not be taken into account 

under subclause (I): 

‘‘(aa) Redemptions of securities which, at 

the time of redemption, are not listed on an 

established securities market and— 

‘‘(AA) are made pursuant to a pension 

plan that is qualified under section 401 or 

a shareholder-approved program, or 

‘‘(BB) are made on account of an employee’s termination of employment with 

the plan sponsor, or the death or disability of a shareholder. 

‘‘(bb) Redemptions of securities which are 

not, immediately after issuance, listed on an 

established securities market and are, or had 

previously been— 

‘‘(AA) held, directly or indirectly, by, or 

for the benefit of, the Federal Government or a Federal reserve bank, or 

‘‘(BB) held by a national government (or 

a government-related entity of such a 

government) or an employee benefit plan 

if such shares are substantially identical 

to shares described in subitem (AA). 

Page 124, line 4, strike ‘‘40’’ and insert ‘‘20’’. 

Page 175, line 13, insert before the period the following: ‘‘or the 

plan’s allocable share of such costs for the preceding year’’. 

Page 189, line 10, strike ‘‘plan’’. 


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Page 190, line 22, strike ‘‘subparagraph (C)(v)(III)’’ and insert 

‘‘subparagraph (C)(vi)(III)’’. 

Page 207, line 15, insert before the period the following: ‘‘or the 

plan’s allocable share of such costs for the preceding year’’. 

Page 221, line 4, strike ‘‘plan’’. 

Page 222, line 18, strike ‘‘subparagraph (A)(v)(III)’’ and insert 

‘‘subparagraph (A)(vi)(III)’’. 

Page 228, insert after line 24 the following: 

(c) SPECIAL RULE FOR COMPLIANCE WITH SUBTITLE.—Until 12 

months after final regulations are issued by the Secretary of Labor 

pursuant to the amendments made by this subtitle, a service provider or plan administrator shall be treated as having complied 

with such amendments if such service provider or plan administrator complies with a reasonable good faith interpretation of such 

amendments. 

Page 249, line 19, strike ‘‘with’’ and insert ‘‘within’’. 

Page 274, line 3, insert ‘‘be’’ after ‘‘may’’. 

Page 289, line 21, insert ‘‘or any other reorganization specified by 

the Secretary’’ before ‘‘, in applying’’. 

Page 291, line 23, strike ‘‘32’’ and insert ‘‘34’’. 

Page 293, line 2, strike ‘‘30.5’’ and insert ‘‘36’’. 

Page 293, line 14, strike ‘‘December 31, 2010’’ and insert ‘‘November 30, 2010’’. 

Page 293, strike lines 15 through 17 and insert the following: 

(B) in the heading for subsection (b)(2), by striking ‘‘JUNE 2, 

2010’’ and inserting ‘‘NOVEMBER 30, 2010’’; and 

Page 293, line 19, strike ‘‘May 31, 2011’’ and insert ‘‘April 30, 

2011’’. 

Page 293, line 25, strike ‘‘December 31, 2010’’ and insert ‘‘November 30, 2010’’. 

Page 294, strike lines 1 through 3 and insert the following: 

(B) in the heading for paragraph (2), by striking ‘‘JUNE 2, 

2010’’ and inserting ‘‘NOVEMBER 30, 2010’’; and 

Page 294, line 5, strike ‘‘June 30, 2011’’ and insert ‘‘May 31, 

2011’’. 

Page 294, line 11, strike ‘‘January 1, 2011’’ and insert ‘‘December 

1, 2010’’. 

Page 294, line 13, strike ‘‘June 1, 2011’’ and insert ‘‘May 1, 

2011’’. 

Page 294, line 17, strike ‘‘May 31, 2011’’ and insert ‘‘April 30, 

2011’’. 

Page 295, after line 3, insert the following: 

(c) CONDITIONS FOR RECEIVING EMERGENCY UNEMPLOYMENT

COMPENSATION.—Section 4001(d)(2) of the Supplemental Appropriations Act, 2008 (Public Law 110–252; 26 U.S.C. 3304 note) is 

amended, in the matter preceding subparagraph (A), by inserting 

before ‘‘shall apply’’ the following: ‘‘(including terms and conditions 

relating to availability for work, active search for work, and refusal 

to accept work)’’. 

Page 295, line 4, strike ‘‘(c)’’ and insert ‘‘(d)’’. 


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Page 301, line 12, strike ‘‘household’’ and insert ‘‘family’’. 

Page 304, line 9, strike ‘‘December 31, 2010’’ and insert ‘‘November 30, 2010’’. 

Page 307, line 8, strike ‘‘(a) IN GENERAL.—’’. 

Page 308, strike line 18 and all that follows through page 309, 

line 4, and insert the following: 

(B) in paragraph (2), by inserting ‘‘of such Act’’ after 

‘‘1923’’; and 

Page 309, strike lines 18 through 21. 

Page 343, strike line 19 and all that follows through line 24 on 

page 359, and insert the following: 

SEC. 523. PHYSICIAN PAYMENT UPDATE. 

Section 1848(d) of the Social Security Act (42 U.S.C. 1395w–4(d)) 

is amended— 

(1) in paragraph (10), in the heading, by striking ‘‘PORTION’’ 

and inserting ‘‘THE FIRST 5 MONTHS ’’; and 

(2) by adding at the end the following new paragraphs: 

‘‘(11) UPDATE FOR THE LAST 7 MONTHS OF 2010.— 

‘‘(A) IN GENERAL.—Subject to paragraphs (7)(B), (8)(B), 

(9)(B), and (10)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that would 

otherwise apply for 2010 for the period beginning on June 

1, 2010, and ending on December 31, 2010, the update to 

the single conversion factor shall be 2.2 percent. 

‘‘(B) NO EFFECT ON COMPUTATION OF CONVERSION FACTOR FOR 2011 AND SUBSEQUENT YEARS.—The conversion factor under this subsection shall be computed under paragraph (1)(A) for 2011 and subsequent years as if subparagraph (A) had never applied. 

‘‘(12) UPDATE FOR 2011.— 

‘‘(A) IN GENERAL.—Subject to paragraphs (7)(B), (8)(B), 

(9)(B), (10)(B), and (11)(B), in lieu of the update to the single conversion factor established in paragraph (1)(C) that 

would otherwise apply for 2011, the update to the single 

conversion factor shall be 1.0 percent. 

‘‘(B) NO EFFECT ON COMPUTATION OF CONVERSION FACTOR FOR 2012 AND SUBSEQUENT YEARS.—The conversion factor under this subsection shall be computed under paragraph (1)(A) for 2012 and subsequent years as if subparagraph (A) had never applied.’’. 

Page 367, strike lines 16 through 20. 

Page 374, strike line 19 and all that follows through line 8 on 

page 375 (all of paragraph (3)), and insert the following: 

(3) PROVISION OF GRANTS.— 

(A) IN GENERAL.—The Secretary shall make grants to 

States for disaster counties on a pro rata basis based on 

the value of specialty crop losses in those counties during 

the 2009 calendar year, as determined by the Secretary. 

(B) ADMINISTRATIVE COSTS.—State Secretary of Agriculture may not use more than five percent of the funds 

provided for costs associated with the administration of 

the grants provided in paragraph (1). 


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(C) ADMINISTRATION OF GRANTS.—State Secretary of Agriculture may enter into a contract with the Department 

of Agriculture to administer the grants provided in paragraph (1). 

(D) TIMING.—Not later than 90 days after the date of enactment of this Act, the Secretary shall make grants to 

States to provide assistance under this subsection. 

(E) MAXIMUM GRANT.—The maximum amount of a grant 

made to a State for counties described in paragraph (1)(B) 

may not exceed $40,000,000. 

Page 396, line 25, strike ‘‘2010,’’ and insert ‘‘2010 (including any 

modifications agreed to by the parties and approved by the court 

under that agreement)’’. 

Page 414, after line 16, insert the following: 

(d) SAVINGS CLAUSE.— 

(1) IN GENERAL.—For fiscal year 2010 and for the period beginning on October 1, 2010, and ending on December 31, 2010, 

the amount of funds apportioned to each State under section 

411(d) of the Surface Transportation Extension Act of 2010 

(Public Law 111–147) that is determined by the amount that 

the State received or was authorized to receive for fiscal year 

2009 to carry out the projects of national and regional significance program and national corridor infrastructure improvement program shall be the greater of— 

(A) the amount that the State was authorized to receive 

under section 411(d) of the Surface Transportation Extension Act of 2010 with respect to each such program according to the provisions of that Act, as in effect on the day 

before the date of enactment of this Act; or 

(B) the amount that the State is authorized to receive 

under section 411(d) of the Surface Transportation Extension Act of 2010 with respect to each such program pursuant to the provisions of that Act, as amended by the 

amendments made by this section. 

(2) OBLIGATION AUTHORITY.—For fiscal year 2010, the 

amount of obligation authority distributed to each State shall 

be the greater of— 

(A) the amount that the State was authorized to receive 

pursuant to section 120(a)(4)(A) (as it pertains to the Appalachian Development Highway System program) of title 

I of division A of the Consolidated Appropriations Act, 

2010 (Public Law 111–117) and sections 120(a)(4)(B) and 

120(a)(6) of such title, as of the day before the date of enactment of this Act; or 

(B) the amount that the State is authorized to receive 

pursuant to section 120(a)(4)(A) (as it pertains to the Appalachian Development Highway System program) of title 

I of division A of the Consolidated Appropriations Act, 

2010 (Public Law 111–117) and sections 120(a)(4)(B) and 

120(a)(6) of such title, as of the date of enactment of this 

Act. 

(3) AUTHORIZATION OF APPROPRIATIONS.—There is authorized 

to be appropriated out of the Highway Trust Fund (other than 


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the Mass Transit Account) such sums as may be necessary to 

carry out this subsection. 

(4) INCREASE IN OBLIGATION LIMITATION.—The limitation 

under the heading ‘‘Federal-aid Highways (Limitation on Obligations) (Highway Trust Fund)’’ in Public Law 111–117 is increased by such sums as may be necessary to carry out this 

subsection. 

(5) CONTRACT AUTHORITY.—Funds made available to carry 

out this subsection shall be available for obligation and administered in the same manner as if such funds were apportioned 

under chapter 1 of title 23, United States Code. 

(6) AMOUNTS.—The dollar amount specified in section 

105(d)(1) of title 23, United States Code, the dollar amount 

specified in section 120(a)(4)(B) of title I of division A of the 

Consolidated Appropriations Act, 2010 (Public Law 111–117), 

and the dollar amount specified in section 120(b)(10) of such 

title shall each be increased as necessary to carry out this subsection. 

Page 433, strike the amendment to the title of the bill. 

Æ 


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