II 

109TH CONGRESS 

2D SESSION S. 2485 

To amend the Internal Revenue Code of 1986 to provide a source for payments to States and counties under the Secure Rural Schools and Community Self-Determination Act of 2000. 

IN THE SENATE OF THE UNITED STATES 

MARCH 30, 2006 

Mr. BAUCUS (for himself and Mr. WYDEN) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a source for payments to States and counties under 

the Secure Rural Schools and Community Self-Determination Act of 2000. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Secure Rural Schools 

5 and Communities Funding Act of 2006’’. 


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1 SEC. 2. FUNDING SOURCE FOR RURAL SCHOOLS AND COM2 MUNITIES PAYMENTS. 

3 (a) RURAL SCHOOLS AND COMMUNITIES TRUST

4 FUND.— 

5 (1) IN GENERAL.—Subchapter A of chapter 98 

6 of the Internal Revenue Code of 1986 is amended by 

7 adding at the end the following new section: 

8 ‘‘SEC. 9511. RURAL SCHOOLS AND COMMUNITIES TRUST 

9 FUND. 

10 ‘‘(a) CREATION OF TRUST FUND.—There is estab11 lished in the Treasury of the United States a trust fund 

12 to be known as the ‘Rural Schools and Communities Trust 

13 Fund’, consisting of such amounts as may be appropriated 

14 or credited to such Trust Fund as provided in this section 

15 or section 9602(b). 

16 ‘‘(b) TRANSFERS TO TRUST FUND.—There are here17 by appropriated to the Rural Schools and Communities 

18 Trust Fund amounts equivalent to the amounts estimated 

19 by the Secretary by which Federal revenues are increased, 

20 before October 1, 2016, as a result of the provisions of 

21 section 3402(t). 

22 ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts 

23 in the Rural Schools and Communities Trust Fund shall 

24 be available only for— 


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1 ‘‘(1) payments to eligible States under section 

2 102(a)(2) of the Secure Rural Schools and Commu3 nity Self-Determination Act of 2000; and 

4 ‘‘(2) payments to eligible counties under section 

5 103(a)(2) of the Secure Rural Schools and Commu6 nity Self-Determination Act of 2000.’’. 

7 (2) CONFORMING AMENDMENTS.— 

8 (A) PAYMENTS TO STATES.—Paragraph 

9 (3) of section 102(b) of the Secure Rural 

10 Schools and Community Self-Determination Act 

11 of 2000 (Public Law 106–393; 16 U.S.C. 500 

12 note) is amended by striking ‘‘out of any funds 

13 in the Treasury not otherwise appropriated’’ 

14 and inserting ‘‘out of the Rural Schools and 

15 Communities Trust Fund under section 9511 of 

16 the Internal Revenue Code of 1986’’. 

17 (B) PAYMENTS TO COUNTIES.—Paragraph 

18 (2) of section 103(b) of the Secure Rural 

19 Schools and Community Self-Determination Act 

20 of 2000 (Public Law 106–393; 16 U.S.C. 500 

21 note) is amended by striking ‘‘out of any funds 

22 in the Treasury not otherwise appropriated’’ 

23 and inserting ‘‘out of the Rural Schools and 

24 Communities Trust Fund under section 9511 of 

25 the Internal Revenue Code of 1986’’. 


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1 (3) CLERICAL AMENDMENT.—The table of sec2 tions for subchapter A of chapter 98 of the Internal 

3 Revenue Code of 1986 is amended by adding at the 

4 end the following new item: 

‘‘Sec. 9511. Rural Schools and Communities Trust Fund.’’. 

5 (b) IMPOSITION OF WITHHOLDING ON CERTAIN PAY6 MENTS MADE BY GOVERNMENT ENTITIES.—Section 3402 

7 of the Internal Revenue Code of 1986 is amended by add8 ing at the end the following new subsection: 

9 ‘‘(t) EXTENSION OF WITHHOLDING TO CERTAIN

10 PAYMENTS MADE BY GOVERNMENT ENTITIES.— 

11 ‘‘(1) GENERAL RULE.—The Government of the 

12 United States shall deduct and withhold from any 

13 payment for goods and services which is subject to 

14 withholding a tax in an amount equal to 3 percent 

15 of such payment. 

16 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 

17 apply to any payment— 

18 ‘‘(A) except as provided in subparagraph 

19 (B), which is subject to withholding under any 

20 other provision of this chapter or chapter 3, 

21 ‘‘(B) which is subject to withholding under 

22 section 3406 and from which amounts are being 

23 withheld under such section, 

24 ‘‘(C) of interest, 

25 ‘‘(D) for real property, 


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1 ‘‘(E) to any tax-exempt entity, foreign gov2 ernment, or other entity subject to the require3 ments of paragraph (1), and 

4 ‘‘(F) made pursuant to a classified or con5 fidential contract (as defined in section 

6 6050M(e)(3)). 

7 ‘‘(3) COORDINATION WITH OTHER SECTIONS.— 

8 For purposes of sections 3403 and 3404 and for 

9 purposes of so much of subtitle F (except section 

10 7205) as relates to this chapter, payments to any 

11 person of any payment for goods and services which 

12 is subject to withholding shall be treated as if such 

13 payments were wages paid by an employer to an em14 ployee.’’. 

15 (c) EFFECTIVE DATES.— 

16 (1) SUBSECTION (a).—The amendments made 

17 by subsection (a) shall take effect on October 1, 

18 2006. 

19 (2) SUBSECTION (b).—The amendment made 

20 by subsection (b) shall apply to payments made after 

21 September 30, 2006. 

Æ 


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