DESCRIPTION OF CHAIRMAN’S MODIFICATION TO THE

“ECONOMIC RECOVERY AND ASSISTANCE FOR

AMERICAN WORKERS ACT OF 2001”

Scheduled for Markup

By the

SENATE COMMITTEE ON FINANCE

on November 8, 2001

Prepared by

the Staff of the

JOINT COMMITTEE ON TAXATION

November 8, 2001

JCX-78-01
i

CONTENTS

 Page

INTRODUCTION......................................................................................................................... 1

I. MODIFICATIONS TO THE CHAIRMAN’S MARK.......................................................... 2

A. Expansion of Work Opportunity Tax Credit Targeted Categories to Include Certain 

Employees in New York City..................................................................................................... 2

B. Andean Trade Preference Initiative .................................................................................... 2

C. State Fiscal Relief - Temporary Increase in Federal Medicaid Matching Rate .................. 2

D. Crop Disaster Assistance .................................................................................................... 2

E. Rural Development Loan and Grant Applications.............................................................. 2

1. Rural Community Advancement Program.......................................................................... 3

2. Rural telecommunications loans ......................................................................................... 3

3. Distance learning/telemedicine/broadband loans................................................................ 3

4. Environmental Quality Incentives Program (EQIP)........................................................... 3

5. Agricultural land protection................................................................................................ 3

F. Commodity Purchases......................................................................................................... 3

II. ADDITIONAL PROPOSALS................................................................................................. 4

A. Tax-Credit Bonds for the National Railroad Passenger Corporation ("Amtrak") .............. 4

B. Broadband Internet Access Tax Credit............................................................................... 8

C. Expansion of Period for Reinvestment of Converted Citrus Tree Property and Ratable 

Income Inclusion for Citrus Canker Tree Payments................................................................. 11

D. Provision of Form 1099 Electronically............................................................................. 12

E. Expand Exemption from Aviation Fuels Excise Taxes for Aerial Applicators................ 13

F. Recovery Period for Certain Wireless Telecommunications Equipment ......................... 14

G. Native American Breast and Cervical Cancer Prevention and Treatment Act Technical 

Amendment............................................................................................................................... 15

H. Emergency Spending ........................................................................................................ 16
1

INTRODUCTION

This document, 1 provides a description of the Chairman’s Modification to the “Economic 

Recovery and Assistance for American Workers Act of 2001,” scheduled for a markup on 

November 8, 2001, by the Senate Committee on Finance.

 

1

 This document may be cited as follows: Joint Committee on Taxation, Description of 

the Chairman’s Modification to the “Economic Recovery and Assistance for American Workers 

Act of 2001” (JCX-78-01), November 8, 2001.
2

I. MODIFICATIONS TO THE CHAIRMAN’S MARK

The following modifications would be made to the Chairman’s mark:

A. Expansion of Work Opportunity Tax Credit Targeted Categories

to Include Certain Employees in New York City

The modification clarifies that the limitation on the number of qualified employees for 

the new Work Opportunity Tax Credit targeted group (i.e., the number of each business’ 

employees in the New York Recovery Zone on September 11, 2001) only applies to qualified 

businesses that relocated in New York City due to the destruction or damage of their workplaces 

within the New York Recovery Zone. Other qualified businesses (e.g., businesses that operate in 

the New York Recovery Zone both on and after Sept. 11, 2001 and businesses that move into the 

New York Recovery Zone after September 11, 2001) would not be subject to that limitation. 

B. Andean Trade Preference Initiative

The proposal to extend the trade benefits available under the Andean Trade Preference 

Act would extend such benefits through June 4, 2002.

C. State Fiscal Relief - Temporary Increase in Federal Medicaid Matching Rate

The Chairman’s mark would provide temporary financial assistance to states to help them 

meet the temporary rise in Medicaid costs that will result from the recent economic downturn. 

States in which the federal Medicaid matching rate is falling in FY 2002 would be “held 

harmless” and retain their FY 2001 matching rate. States in which the rates are rising would 

shift to the FY 2002 rate. Under the modification, all states would receive a federal Medicaid 

matching rate increase of 1.5 percent, and states with higher than average unemployment rates 

over the past three months would receive an additional 1.5 percent increase – bringing their total 

matching rate increase to 3.0 percent. The modification represents a .5 percent increase in the 

rate paid to all states, and a .5 percent increase over the rate paid to states with high 

unemployment rates. In exchange for these increases, states would maintain current eligibility 

levels.

The proposal would be effective for FY 2002 only.

D. Crop Disaster Assistance

The modification to the Chairman’s mark authorizes the Secretary to establish a sugar 

beet disaster program of up to $25 million for marketing year 2001 for economic disasters not 

covered by the natural disaster program.

E. Rural Development Loan and Grant Applications

The following clarifications would be made to the Chairman’s mark, describing the 

particular programs on which the $3 billion of Rural Development expenditures would be made.
3

1. Rural Community Advancement Program

The modification to the Chairman’s mark clarifies that the bill would provide $1.273 

billion in funding to support additional loans and grants under the Rural Community 

Advancement Program. These funds would support approximately $1 billion in grants and $1.9 

billion in direct loans to establish, expand or modernize water treatment and waste disposal 

facilities. Funds will also support approximately $340 million in loans and grants to construct 

and improve community facilities, including health care, child care, fire and emergency services 

and other facilities.

2. Rural telecommunications loans

The modification to the Chairman’s mark clarifies that the bill would provide $40 million 

in funding to support $1.74 billion in additional loans to improve the telecommunications 

infrastructure in rural America.

3. Distance learning/telemedicine/broadband loans

The modification to the Chairman’s mark clarifies that the bill would provide $5 million 

in funding to support an additional $400 million in loans to finance installation of enhanced 

services, such as high speed modems, Internet access to rural communities and advanced 

telecommunications that provide educational and health care benefits to rural Americans.

4. Environmental Quality Incentives Program (EQIP)

The modification to the Chairman’s Mark clarifies that the bill provides $1.4 billion to 

the Environmental Quality Incentives Program (EQIP). The program has a backlog of 

approximately 200,000 applications covering 67 million acres nationally.

5. Agricultural land protection

The modification to the Chairman’s mark clarifies that the bill would provide $150 

million for the preservation of agricultural lands. Funds will support acquisition of conservation 

easements or other interest in order to limit the conversion of agricultural lands to 

nonagricultural uses. Benefits would include protection of prime, unique, or other productive 

soil and preservation of open spaces.

F. Commodity Purchases

The modification to the Chairman’s mark expands the commodities eligible for purchase 

under the commodity purchase program to include the following: apples, apricots, asparagus, 

bell peppers, bison meat, black beans, blackeyed peas, blueberries (wild and cultivated), 

cabbage, cantaloupe, cauliflower, chickpeas, cranberries, cucumbers, dried plums, dry peas, 

eggplants, lemons, lentils, melons, onions, peaches (including freestone), pears, potatoes 

(summer or fall), pumpkins, raisins, raspberries, red tart cherries, snap beans, spinach, 

strawberries, sweet corn, tomatoes, and watermelons.
4

II. ADDITIONAL PROPOSALS

A. Tax-Credit Bonds for the National Railroad Passenger Corporation ("Amtrak")

Present Law

Present law does not authorize the issuance by any private, for-profit corporation of 

bonds the interest on which is tax-exempt or eligible for an income tax credit. Tax-exempt 

bonds may be issued by States or local governments to finance their governmental activities or to 

finance certain capital expenditures of private businesses or loans to individuals. Additionally, 

States or local governments ma y issue tax-credit bonds to finance the operation of "qualified 

zone academies."

Tax-exempt bonds

Interest on bonds issued by States or local governments to finance direct activities of 

those governmental units is excluded from tax (sec. 103). In addition, interest on certain bonds 

("private activity bonds") issued by States or local governments acting as conduits to provide 

financing for private businesses or individuals is excluded from income if the purpose of the 

borrowing is specifically approved in the Code (sec. 141). Examples of approved private 

activities for which States or local governments may provide tax-exempt financing include 

transportation facilities (airports, ports, mass commuting facilities, and certain high speed 

intercity rail facilities); public works facilities such as water, sewer, and solid waste disposal; and 

certain social welfare programs such as low-income rental housing, student loans, and mortgage 

loans to certain first-time homebuyers. High speed intercity rail facilities eligible for tax-exempt 

financing include land, rail, and stations (but not rolling stock) for fixed guideway rail 

transportation of passengers and their baggage using vehicles that are reasonably expected to 

operate at speeds in excess of 150 miles per hour between scheduled stops. 

Issuance of most private activity bonds is subject to annual State volume limits of $62.50 

per resident ($187.5 million if greater). These volume limits are scheduled to increase to $75 per 

resident ($225 million if greater) in calendar year 2002; after 2002, the limits will be indexed 

annually for inflation. 

Investment earnings on all tax-exempt bonds, including earnings on invested sinking 

funds associated with such bonds is restricted by the Code to prevent the issuance of bonds 

earlier or in a greater amount than necessary for the purpose of the borrowing. In general, all 

profits on investment of such proceeds must be rebated to the Federal Government. Interest on 

bonds associated with invested sinking funds is taxable.

Tax-credit bonds for qualified zone academies

As an alternative to traditional tax-exempt bonds, certain States or local governments are 

given authority to issue "qualified zone academy bonds." A total of $400 million of qualified 

zone academy bonds is authorized to be issued in each year of 1998 through 2001. The $400 

million is allocated to States according to their respective populations of individuals below the 

poverty line.
5

Qualified zone academy bonds are taxable bonds with respect to which the investor 

receives an income tax credit equal to an assumed interest rate set by the Treasury Department to 

allow issuance of the bonds without discount and without interest cost to the issuer. The bonds 

may be used for renovating, providing equipment to, developing course materials for, or training 

teachers in eligible schools. Eligible schools are elementary and secondary schools with respect 

to which private entities make contributions equaling at least 10 percent of the bond proceeds.

Only financial institutions are eligible to claim the credits on qualified zone academy 

bonds. The amount of the credit is taken into income. The credit may be claimed against both 

regular income tax and AMT liability.

There are no arbitrage restrictions applicable to investment earnings on qualified zone 

academy bond proceeds.

Tax treatment of certain contributions to the capital of a corporation

Section 118(a) provides that gross income of a corporation does not include a 

contribution to its capital. In general, section 118(b) provides that a contribution to the capital of 

a corporation does not include any contribution in aid of construction or any other contribution 

as a customer or potential customer and, as such, is includible in gross income of the corporation.

Description of Proposal

Tax-credit bond authority

The provision would authorize the National Railroad Passenger Corporation ("Amtrak") 

to issue an aggregate amount of $7 billion of tax-credit bonds to finance its capital projects 

during calendar year 2002. In addition to this $7 billion for capital expenditures generally, $2 

billion of tax-credit bonds could be issued to finance construction of a new Hudson River rail 

tunnel. Unused bond authority could be carried forward for up to two years under rules similar to 

those that apply to carryforward of authority to issue qualified zone academy bonds.

Projects eligible for tax-credit bond financing would be defined as the acquisition or 

construction of equipment or rolling stock, and other capital improvements for (1) the northeast 

rail corridor between Washington, D.C. and Boston, Massachusetts; (2) high-speed rail corridors 

designated under section 104(d)(2) of Title 23 of the United States Code; and (3) non-designated 

high-speed rail corridors, including station rehabilitation or construction, track or signal 

improvements, or grade crossing elimination. Limits would be imposed on the portion of the $7 

billion in bond authority that could be issued to finance projects in any one State or on any one 

rail corridor. Additionally, 15 percent of that amount would be required to be set-aside for use in 

non-Federally designated high speed rail corridors.

As with qualified zone academy bonds, the interest rate on Amtrak tax-credit bonds 

would be set to allow issuance of the bonds at par, i.e., without any interest cost to Amtrak. In 

general, proceeds of Amtrak tax-credit bonds would have to be spent within 36 months after the 

bonds are issued. As of the date the bonds were issued, Amtrak would be required to certify that 

it reasonably expected –
6

(1) to incur a binding obligation with a third party to spend at least 10 percent of the 

bond proceeds within six months (or in the case of self-constructed property, to 

have commenced construction within six months);

(2) to spend the bond proceeds with due diligence; and

(3) to spend at least 95 percent of the proceeds for qualifying capital costs within 

three years. 

Failure to satisfy these requirements would trigger special rules at the conclusion of the 

three-year period.

Amtrak tax credit bonds may only be issued for projects that are approved by the 

Department of Transportation and with respect to which the issuing railroad had received 

matching contributions of at least 20 percent of the project cost from one or more States in which 

the projects would be located. This approval would be conditioned on Amtrak agreeing to spend 

certain amounts of the bond proceeds for other passenger rail carriers (including the Alaska 

Railroad). The State matching contributions, along with earnings on investment of the tax-credit 

bond proceeds would be required to be invested in a trust account (i.e., an sinking fund) and used 

along with earnings on the trust account for repayment of the principal amount of the bonds.

Amtrak tax-credit bonds could be owned (and income tax credits claimed) by any 

taxpayer. The amount of the credit would be included in the bondholder's income. 

The required State matching contribution could not be derived from Federal monies. Any 

Federal Highway Trust Fund monies transferred to the States would treated as Federal monies 

for this purpose. During the period when tax-credit bonds were authorized, Amtrak would not be 

allowed to receive any Highway Trust Fund monies other than those authorized (both amount 

and purpose) on the date of the provision’s enactment. Violation of this restriction (including 

pursuant to subsequently enacted legislation) would result in (1) termination of deposit to the 

Highway Trust Fund of all Federal highway excise tax revenues and (2) inability of Amtrak to 

issue additional tax-credit bonds (until such time as the Secretary of the Treasury and the 

Secretary of Transportation certified that Amtrak had repaid the amounts received from the 

Highway Trust Fund).

Amtrak would be required annually to submit a five-year capital plan to Congress, and to 

satisfy independent oversight requirements with respect to the management of tax-credit- bondfinanced projects. Finally, the Treasury Department would be required to certify annually that 

funds deposited in the escrow accounts for repayment of tax-credit bonds (with actual and 

projected earnings thereon) are sufficient to ensure full repayment of the bond principal.

Tax treatment of improvements to property owned by freight railroads

The proposal would provide that any contribution by Amtrak of personal or real property 

funded by the proceeds of Amtrak tax-credit bonds would be considered a contribution to the 

capital of a corporation. Thus, such contributions would not be taxable to the recipient. 

Contributed property would have a zero basis in the hands of the recipient.
7

Effective Date

The provision would be effective on the date of enactment.
8

B. Broadband Internet Access Tax Credit

Present Law

Present law does not provide a credit for investments in telecommunications 

infrastructure.

Description of Proposal

In general

The proposal would provide a 10 percent credit of the qualified expenditures incurred by 

the taxpayer with respect to qualified equipment with which the taxpayer offers “current 

generation” broadband services to potential subscribers in rural and underserved areas. In 

addition, the proposal would provide a 20 percent credit of the qualified expenditures incurred by 

the taxpayer with respect to qualified equipment with which the taxpayer offers “next

generation” broadband services to potential business subscribers in rural areas, underserved 

areas, and to any potential residential subscriber. The credit would be part of the general 

business credit and the taxpayer’s basis in qualified equipment would be reduced by any credit 

allowed. 

Definition of “current generation broadband” and “next generation broadband”

Current generation broadband services would be defined as the transmission of signals at 

a rate of at least one million bits per second to the subscriber and at a rate of at least 128,000 bits 

per second from the subscriber. Next generation broadband services would be defined as the 

transmission of signals at a rate of at least 22 million bits per second to the subscriber and at a 

rate of at least 5 million bits per second from the subscriber.

Qualifying expenditures and equipment

Qualified expenditures would be those amounts otherwise chargeable to the capital 

account with respect to the purchase and installation of qualified equipment for which

depreciation is allowable under section 168. Qualified expenditures would be those that are 

incurred by the taxpayer after December 31, 2001, and before January 1, 2003. The expenditures 

would be taken into account for purposes of claiming the credit in the taxable year in which the 

taxpayer places the qualifying equipment in service.2 In the case of a taxpayer who incurs 

expenditures for equipment capable of serving both subscribers in qualifying areas and other 

areas, qualifying expenditures are determined by multiplying otherwise qualifying expenditures 

by the ratio of the number of potential qualifying subscribers to all potential subscribers the 

qualifying equipment would be capable of serving.

 

2

 For this purpose property placed in service by a taxpayer and which is subsequently 

sold and leased back by the taxpayer within three months of the date on which the property was 

originally placed in service will be deemed to be placed in service not earlier than the date on 

which such property is used under the leaseback.
9

Not all equipment capable of providing current generation or next generation broadband 

service would qualify for the credit. Qualifying equipment must be capable of providing 

broadband services a majority of the time during periods of maximum demand to each subscriber 

who is utilizing such services and in a manner substantially the same as like services are 

provided by the service provider to subscribers utilizing equipment on which no credit is 

allowed. In addition, services provided utilizing otherwise qualifying equipment must be offered 

to potential subscribers at prices deemed comparable, under Treasury regulations, to similar 

services offered elsewhere by the service provider in order for the equipment to be qualifying 

equipment.

Additional restrictions apply to qualifying equipment depending upon the equipment’s 

place in the architecture of the broadband system. In the case of a telecommunications provider, 

qualifying equipment is only that equipment that extends from the last point of switching to the 

outside of the building in which the subscriber is located. In the case of a commercial mobile 

service carrier, qualifying equipment is only that equipment that extends from the customer side 

of a mobile telephone switching office to a transmission/reception antenna (including the 

antenna) of the subscriber. In the case of a cable operator or open video system operator, 

qualifying equipment is only that equipment that extends from the customer side of the headend 

to the outside of the building in which the subscriber is located. In the case of a satellite carrier 

or other wireless carrier (other than a telecommunications carrier), qualifying equipment is only 

that equipment that extends from a transmission/reception antenna (including the antenna) to a 

transmission/reception antenna on the outside of the building used by the subscriber. Any packet 

switching equipment deployed in connection with other qualifying equipment would be 

qualifying equipment, regardless of location, provided that it is the last such equipment in a 

series as part of transmission of a signal to a subscriber or the first in a series in the transmission 

of a signal from a subscriber. Multiplexing and demultiplexing equipment exploited in 

connection with other qualifying equipment would be qualifying equipment only to the extent 

such equipment is uniquely designed to perform the function of multiplexing and demultiplexing 

packets or cells of data and making associated application adaptions, but only if such equipment 

is located between the last in the series of packet switches (as described above) and a building in 

which a subscriber is located. 

Qualifying geographic areas

In general, qualifying expenditures must be for qualifying equipment placed in service in 

rural or underserved areas in the case of the credit for current generation broadband investments. 

In the case of the credit for next generation broadband investments, expenditures for qualifying 

equipment to serve potential residential subscribers, wherever located, would qualify. 3

A rural area would be any census tract which is not within 10 miles of any incorporated 

or census designated place with a population of more than 25,000 and which is not within a 

county with a population density of more than 500 people per square mile. An underserved area 

would be any census tract that is located in an empowerment zone, enterprise community, 

 

3

 Treasury regulations would provide for the allocation of credit in the case of qualifying 

equipment providing next generation broadband services to home offices.
10

renewal community, the District of Columbia Enterprise Zone, or any geographic area 

designated as a “low-income community” for purposes of the “new markets tax credit” (sec. 

45D(e)). However, if under regulation the Secretary determines that certain rural and 

underserved areas are “saturated markets,” taxpayers would not be permitted to claim the credit 

for current generation broadband investments related to expenditures for otherwise qualifying 

equipment placed in service in such areas. A saturated market would be a census tract in which 

one or more service providers offer current generation broadband service to 85 percent or more 

of individuals that reside within the census tract and that such service offered is available a 

majority of the time during periods of maximum demand to each subscriber who is utilizing such 

services and in a manner substantially the same as like services are provided by the service 

provider to subscribers utilizing equipment on which no credit is allowed.

Treasury regulations

The proposal directs the Secretary to designate and publish within 90 days of the date of 

enactment all areas that qualify as “rural,” “underserved,” and “saturated markets.” The proposal 

would direct the Secretary to prescribe regulations related to qualified expenditures such that 

competitive neutrality is maintained in the provision of broadband services and such that there 

are incentives for the purchase, installation, and connection of equipme nt and facilities offering 

expanded broadband access to the Internet for potential subscribers in rural and low income areas 

and to all potential residential customers. The proposal would further provide that, until the 

Secretary prescribes regulations, taxpayers may make a reasonable determination for purpose of 

claiming credit so long as the taxpayer’s determination is consistent with maintaining 

competitive neutrality in the provision of broadband services and increasing the purchase, 

installation, and connection of equipment and facilities offering expanded broadband access to 

the Internet for potential subscribers in rural and low income areas and to all potential residential 

subscribers.

Effective Date

The proposal would be effective for expenditures incurred after December 31, 2001.
11

C. Expansion of Period for Reinvestment of Converted Citrus Tree Property

and Ratable Income Inclusion for Citrus Canker Tree Payments

Present Law

Generally, a taxpayer recognizes gain to the extent the sales price (and any other 

consideration received) exceeds the seller’s basis in the property. The recognized gain is subject 

to current income tax unless the gain is deferred or not recognized under a special tax provision.

Under section 1033, gain realized by a taxpayer from an involuntary conversion of 

property is deferred to the extent the taxpayer purchases property similar or related in service or 

use to the converted property within the applicable period. The taxpayer’s basis in the 

replacement property generally is the same as the taxpayer’s basis in the converted property, 

decreased by the amount of any money or loss recognized on the conversion, and increased by 

the amount of any gain recognized on the conversion. The applicable period for the taxpayer to 

replace the converted property begins with the date of the disposition of the converted property 

(or the earliest date of the threat or imminence of requisition or condemnation of the converted 

property, whichever is earlier) and ends two years after the close of the first taxable year in 

which any part of the gain upon conversion is realized.

Description of Proposal

The proposal would permit a taxpayer to elect to treat any realized gain by reason of 

receiving a citrus canker tree payment ratably over a 10-year period beginning with the taxable 

year in which such payment is received or accrued by the taxpayer. The proposal would define a 

citrus canker tree payment as a payment made to an owner of a commercial citrus grove to 

recover income that was lost as a result of the removal of commercial citrus trees to control 

canker under the amendments to the citrus canker regulations made by the final rule published in 

the Federal Register by the Secretary of the Agriculture on June 18, 2001. An election under the 

proposal would be made by attaching a statement to that effect in the taxpayer’s return for the 

taxable year in which the payment is received or accrued in the manner as the Secretary shall 

prescribe. The election would be binding for that taxable year and all subsequent taxable years.

The proposal also would extend the applicable period under section 1033 for a taxpayer 

to replace commercial citrus trees which are involuntarily converted under a public order as a 

result of citrus tree canker to four years after the close of the taxable year in which a State or 

Federal plant health authority determines that the land on which such trees grew is free from the 

bacteria that causes citrus tree canker.

Effective Date

The proposal would be effective for taxable years beginning before, on, or after the date 

of enactment.
12

D. Provision of Form 1099 Electronically

Present Law 

Temporary regulations allow Form W-2 to be furnished electronically on a voluntary 

basis. Under Temp. Treas. Reg. Sec. 31.6051-1T(j), a recipient must have affirmatively 

consented to receive the statement electronically and must not have withdrawn that consent 

before the statement is furnished.

Description of Proposal

The proposal would allow IRS Form 1099 to be provided to taxpayers electronically, if 

they so consent. The authority would be granted for forms due for taxable years ending before 

January 1, 2003.

Effective Date

The proposal would be effective on date of enactment.
13

E. Expand Exemption from Aviation Fuels Excise Taxes for Aerial Applicators

Present Law

Excise taxes are imposed on aviation gasoline (19.4 cents per gallon) and jet fuel (21.9 

cents per gallon) (secs. 4081 and 4091). All but 0.1 cent per gallon of the revenues from these 

taxes are dedicated to the Airport and Airway Trust Fund. The remaining 0.1-cent-per-gallon 

rate is imposed for the Leaking Underground Storage Tank Trust Fund.

Fuel used on a farm for farming purposes is exempt from tax. Aerial applicators (crop 

dusters) are allowed to claim the exemption on behalf of farm owners and operators, e.g., in the 

case of aviation gasoline if the owners or operators give written consent to the aerial applicators. 

This exemption applies only to fuel consumed in the airplane while operating over the farm, i.e., 

fuel consumed traveling to and from the farm is not exempt.

A further exemption applies to fuel used in helicopters engaged in oil, gas, and hard 

mineral exploration and timber operations when the helicopters are not using the Federally 

funded airport and airway services.

Description of Proposal

Three modifications would be made to the exemptions for aviation fuel consumed by 

aerial applicators. First, the direct exemption beneficiary would be changed to the aerial 

applicator in all cases. Second, the exemption would be expanded to include fuels consumed 

when flying between the farm where chemicals are applied and the airport where the airplane 

takes off and lands. Third, the present exemption for helicopters engaged in timber operations 

would be expanded to include fixed-wing aircraft.

Effective Date

The proposal would be effective for fuels consumed during calendar year 2002.
14

F. Recovery Period for Certain Wireless Telecommunications Equipment

Present Law

Depreciation allowances for property used in a trade or business generally are determined 

under the modified Accelerated Cost Recovery System (“MACRS”) of section 168. Under 

MACRS, qualified technological equipment is depreciated for regular tax purposes over a 5-year 

recovery period using the 200-percent declining balance method. Qualified technological 

equipment includes any computer or peripheral equipment, any high technology station 

equipment installed on the customer’s premises, and any high technology medical equipment.

Description of Proposal

The proposal would define qualified technological equipment to include wireless 

telecommunications equipment for property placed in service after September 10, 2001, and 

before September 11, 2002. Wireless telecommunications equipment would be defined as 

equipment used in the transmission, reception, coordination, or switching of wireless 

telecommunications service. Wireless telecommunications equipment would not include towers, 

buildings, T-1 lines and other cabling connecting cell sites to mobile switching centers. For this 

purpose, wireless telecommunications service includes any commercial mobile radio service as 

defined in title 47 of the Code of Federal Regulations.

Effective Date

The proposal would apply to wireless telecommunications equipment placed in service 

after September 10, 2001, and before September 11, 2002.4

 

4

 No inference is intended as to the proper treatment of wireless telecommunication 

equipment under present law.
15

G. Native American Breast and Cervical Cancer Prevention

and Treatment Act Technical Amendment

Present Law

The “Breast and Cervical Cancer Prevention and Treatment Act of 2000" (Pub. L. 106-

354) gives states the option to extend coverage for the treatment of breast and cervical cancer 

through the Medicaid program to certain women who have been screened by programs operating 

under Title XV of the Public Health Service Act (the National Breast and Cervical Cancer Early 

Detection program) and who do not have “creditable coverage,” as defined by the Health 

Insurance Portability and Accountability Act of 1996 (“HIPAA”).

In referencing the HIPAA definition of “creditable coverage,” the bill language 

effectively precludes coverage to Native American women who have access to medical care 

under the Indian Health Service (“HIS”), which runs counter to all other Medicaid law that 

recognizes Native Americans as citizens of their individual states for the purpose of qualifying 

for Medicaid coverage.

Description of Proposal

The Chairman’s Modification would make a technical change to the “Breast and Cervical 

Cancer Prevention and Treatment Act” (Pub. L. 106-354) by clarifying that American Indian and 

Alaska Native women should not be excluded from receiving coverage through Medicaid for 

breast and cervical cancer treatment through the end of fiscal year 2002.

Effective Date

The proposal would be effective for fiscal year 2002 only.
16

H. Emergency Spending

This provision would designate much of the Chairman’s mark as an emergency.