COMPARISON OF H.R. 3090,

THE ECONOMIC SECURITY AND RECOVERY ACT OF 2001

(AS PASSED BY THE HOUSE OF REPRESENTATIVES) AND

THE ECONOMIC RECOVERY AND HOMELAND DEFENSE ACT OF 2001

(AMENDMENT NO. 2125 BY SENATOR BAUCUS TO H.R. 3090)

Prepared by the Staff

of the

JOINT COMMITTEE ON TAXATION

December 5, 2001

JCX-84-01
1

INTRODUCTION

This document, 1 prepared by the staff of the Joint Committee on Taxation, contains a comparison of H.R. 3090, the Economic 

Security and Recovery Act of 2001(as passed by the House of Representatives) and the Economic Recovery and Homeland Defense 

Act of 2001 (Amendment No. 2125 by Senator Baucus to H.R. 3090).

 

1

 This document may be cited as follows: Joint Committee on Taxation, Comparison of H.R. 3090, the Economic Security 

and Recovery Act of 2001(as Passed by the House of Representatives) and the Economic Recovery and Homeland Defense Act of 2001 

(Amendment No. 2125 by Senator Baucus to H.R. 3090) (JCX-84-01), December 5, 2001.
2

COMPARISON OF H.R. 3090, THE ECONOMIC SECURITY AND RECOVERY ACT OF 2001 

(AS PASSED BY THE HOUSE OF REPRESENTATIVES) AND 

THE ECONOMIC RECOVERY AND HOMELAND DEFENSE ACT OF 2001 

(AMENDMENT NO. 2125 BY SENATOR BAUCUS TO H.R. 3090) 2

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

A. Individual Income Tax 

Provisions

1. Supplemental rebate (sec. 401 of 

the House bill and sec. 101 of the 

Senate amendment)

Provides rebate to individuals who 

did not qualify for full previous rebate

Same as House bill, except that rebate 

also applies to possessions and 

technical correction included relating 

to stacking of credits

2. Individual rates (sec. 201(a) of the 

House bill)

Accelerates the 25-percent rate 

bracket to 2002

No provision

3. Alternative minimum tax 

exemption for individuals (sec. 201(b) 

of the House bill)

Increases $49,000 AMT exemption 

amount by $3,200 in 2002 and 2003 

and by $1,700 in 2004, and increases 

other AMT exemption amounts by 

$1,600 in 2002 and 2003 and by $850 

in 2004

No provision

4. Simplify capital gains rates (sec. 

202 of the House bill)

Reduces 10- and 20-percent capital 

gains rates to 8- and 18- percent and 

eliminates 5-year holding period; 

repeals mark-to-market election

No provision

5. Increase deduction of capital 

losses of individuals (sec. 203 of the 

House bill)

Increases amount of capital losses that 

can offset ordinary income from 

$3,000 to $4,000 in 2001 and $5,000 

in 2002

No provision

 

2

 This amendment includes victims relief provisions; however, they are not described in this document because they are included in separate 

bills: H.R. 2884, the “Victims of Terrorism Relief Act of 2001,” as passed by the House on September 13, 2001, and H.R. 2884, the “Victims of 

Terrorism Tax Relief Act of 2001,” as passed by the Senate on November 16, 2001.
3

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

6. Expand exception from early 

withdrawal tax for health insurance 

expenses of unemployed individuals 

(sec. 204 of the House bill)

In the case of individuals unemployed 

after September 10, 2001, and before 

January 1, 2003, expands present-law 

exception to IRA early withdrawal tax 

for unemployed individuals to apply 

to withdrawals from all qualified 

plans by individuals who have 

received unemployment 

compensation for four weeks

No provision

B. Economic Stimulus Provisions

1. Special depreciation allowance for 

certain property (sec. 101 of the 

House bill and sec. 201 of the Senate 

amendment)

30-percent bonus depreciation 

deduction; available through 2004, 

applicable to

(1) 20-year property,

(2) water utility property, or

(3) computer software

10-percent bonus depreciation; 

available through 2002, applicable to 

(1) 20-year property,

(2) water utility property,

(3) computer software,

(4) qualified leasehold improvement 

property, and

(5) motion picture films, sound 

recordings

2. Temporary increase in section 179 

expensing (sec. 102 of the House bill 

and sec. 202 of the Senate 

amendment)

Increases section 179 expensing to 

$35,000 and beginning point of 

phasedown to $325,000 for 2002 and 

2003

Same as House bill, but limited to 

2002

3. Repeal corporate alternative 

minimum tax (sec. 103 of the House 

bill)

Repeals the corporate alternative 

minimum tax; makes AMT credits for 

corporations refundable; effective in 

2001

No provision

4. Temporary extension of the net 

operating loss carryback period (sec. 

104 of the House bill and sec. 203 of 

the Senate amendment)

Extends net operating loss carryback 

period from 2 to 5 years for taxable 

years ending after September 10, 

2001, and before January 1, 2004

Same as House bill, but limited to 

taxable years ending in 2001

5. Treatment of leasehold 

improvements (sec. 105 of the House 

bill)

Shortens the depreciation recovery 

period for leasehold improvements to 

15 years

No provision, but leasehold 

improvements eligible for bonus 

depreciation
4

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

C. Tax Incentives for New York 

City and Distressed Areas

1. Expansion of Work Opportunity 

Tax Credit targeted categories to 

include certain employees in New 

York City (sec. 301 of the Senate 

amendment)

No provision Creates a new targeted group of 

employees made of individuals 

employed by businesses in the New 

York Recovery Zone or who are 

employed elsewhere within New 

York City due to destruction or 

damage to workplaces within the New 

York Recovery Zone; maximum 

credit is $4,800 (40% of first $12,000 

of wages); available with respect to 

wages paid after September 10, 2001, 

and through December 31, 2002

2. Authorize issuance of tax-exempt 

private activity bonds for rebuilding 

the portion of New York City 

damaged in the September 11, 2001 

terrorist attack (sec. 302 of the Senate 

amendment)

No provision Authorizes issuance during 2002 of 

$15 billion of tax-exempt private 

activity bonds to finance the 

construction and rehabilitation of 

commercial and residential rental real 

property in the New York Recovery 

Zone; if the $15 billion cannot be 

used in the New York Recovery 

Zone, up to $7 billion can be used 

outside the New York Recovery Zone

3. Incentive for reinvestment in New 

York City (sec. 303 of the Senate 

amendment)

No provision Taxpayers can elect not to take into 

account insurance proceeds in 

determining gain or loss with respect 

to property damaged or destroyed in 

the New York Recovery Zone; 

qualified replacement property must 

be purchased by December 31, 2006

4. Reenact exceptions for qualified 

mortgage bond financed loans to 

victims of Presidentially declared 

disasters (sec. 304 of the Senate 

amendment)

No provision Reenacts exception for qualified 

mortgage bond-financed loans made 

during two-year period following a 

Presidential disaster declaration; size 

limit for home improvement loans 

increased from $15,000 to $25,000; 

available during 2002
5

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

5. One-year expansion of authority 

for Indian tribes to issue tax-exempt 

private activity bonds (sec. 305 of the 

Senate amendment)

No provision Permits qualified Indian tribal 

governments to issue up to $10 

million of tax-exempt private activity 

bonds during 2002 for (1) residential 

rental projects, (2) qualified mortgage 

bonds, and (3) businesses that would 

qualify as enterprise zone businesses

D. Extension of Expiring Tax 

Provisions

1. Alternative minimum tax relief for 

individuals (sec. 301 of the House bill 

and sec. 401 of the Senate 

amendment)

Extends for 2002 and 2003 Extends for 2002

2. Work Opportunity Tax Credit (sec. 

304 of the House bill and sec. 402 of 

the Senate amendment)

Extends for 2002 and 2003 Extends for 2002

3. Welfare to Work Tax Credit (sec. 

305 of the House bill and sec. 403 of 

the Senate amendment)

Extends for 2002 and 2003 Extends for 2002

4. Section 45 credit for production of 

electricity from wind, closed loop 

biomass, and poultry litter (sec. 303 

of the House bill and sec. 404 of the 

Senate amendment)

Extends for 2002 and 2003 Extends for 2002

5. Taxable income limit on 

percentage depletion for marginal 

production (sec. 307 of the House bill 

and sec. 405 of the Senate 

amendment)

Extends for 2002 and 2003 Extends for 2002

6. Authority to issue qualified zone 

academy bonds (sec. 308 of the 

House bill and sec. 406 of the Senate 

amendment)

Extends for 2002 and 2003 Extends for 2002

7. Exceptions under Subpart F for 

active financing income (sec. 331 of 

the House bill and sec. 407 of the 

Senate amendment)

Permanent extension with 

clarification of rules relating to 

insurance reserves

Extends for 2002
6

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

8. Increased coverover payments to 

Puerto Rico and the Virgin Islands 

(sec. 309 of the House bill and sec. 

408 of the Senate amendment)

Extends for 2002 and 2003 Extends for 2002

9. Delay in effective date of 

requirement for approved diesel or 

kerosene terminal (sec. 311 of the 

House bill and sec. 409 of the Senate 

amendment)

Extends for 2002 and 2003 Extends for 2002

10. Deduction for qualified cleanfuel vehicle property and qualified 

clean-fuel vehicle refueling property 

(sec. 306 of the House bill and sec. 

410 of the Senate amendment)

Extends for 2002 and 2003 Extends for 2002

11. Credit for purchase of electric 

vehicles (sec. 302 of the House bill 

and sec. 411 of the Senate 

amendment)

Extends for 2002 and 2003 Extends for 2002

12. Tax on failure to comply with 

mental health parity requirements 

(sec. 310 of the House bill and sec. 

412 of the Senate amendment)

Extends from January 1, 2002, 

through September 30, 2003

Extends from January 1, 2002, 

through September 30, 2002

13. Combined employment tax 

reporting. (sec. 413 of the Senate 

amendment)

No provision Extends for 2002

14. Archer medical savings accounts 

(sec. 321 of the House bill)

Extends for 2003 No provision

E. Other Tax Provisions

1. Discharge of indebtedness of an S 

corporation (sec. 341 of the House 

bill)

Reverses the decision in Gitlitz v. 

Commissioner, effective for 

discharges of indebtedness after 

October 11, 2001

No provision

2. Limitation on use of non-accrual 

experience method of accounting 

(sec. 342 of the House bill)

Non-accrual experience method of 

accounting is available only for 

amounts to be received for the 

performance of qualified services and 

for services provided by certain small 

businesses; effective for taxable years 

ending after the date of enactment

No provision
7

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

3. Tax-credit bonds for the National 

Railroad Passenger Corporation 

(“Amtrak”) (sec. 901 of the Senate 

amendment)

No provision Authorizes Amtrak to issue an 

aggregate amount of $7 billion of taxcredit bonds to finance its capital 

projects during calendar year 2002; in 

addition, $2 billion of tax-credit 

bonds may be issued to finance 

construction of a new Hudson River 

rail tunnel

4. Broadband internet access tax 

credit (sec. 902 of the Senate 

amendment)

No provision Provides a 10% credit for qualified 

equipment for current generation 

broadband services offered to 

potential subscribers in rural and 

underserved areas; 20% credit for 

qualified equipment for next 

generation broadband services offered 

to potential residential subscribers 

and subscribers in rural and 

underserved areas; available for 

expenditures during 2002

5. Expansion of period for 

reinvestment of converted citrus tree 

property and ratable income inclusion 

for citrus canker tree payments (sec. 

903 of the Senate amendment)

No provision Permits taxpayers to recognize any 

realized gain by reason of receiving a 

citrus canker tree payment ratably 

over a 10-year period; effective for 

taxable years beginning before, on, or 

after the date of enactment

6. Allowance of electronic forms 

1099 (sec. 904 of the Senate 

amendment)

No provision Allows IRS Form 1099 to be 

provided to taxpayers electronically 

for forms due for taxable years before 

2003

7. Expand exemption from aviation 

fuels excise taxes for aerial 

applicators (sec. 905 of the Senate 

amendment)

No provision Modifies exemptions for aviation 

fuels consumed by aerial applicators 

to (1) make aerial applicator the direct 

exemption beneficiary in all cases, (2) 

expand exemption to include fuels 

consumed between farm and airport, 

and (3) expand exemption for 

helicopters engaged in timber 

operations to include fixed-wing 

aircraft; effective for 2002
8

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

8. Recovery period for certain 

wireless telecommunications 

equipment (sec. 906 of the Senate 

amendment)

No provision Defines qualified technological 

equipment eligible for 5-year 

recovery period for depreciation to 

include wireless communications 

equipment for property placed in 

service after September 10, 2001, and 

before September 11, 2002

9. Suspend sections 809/815 for one 

year (sec. 907 of the Senate 

amendment)

No provision Suspend application to life insurance 

companies of section 809 for 2001 

and 815 for 2002

F. Extension of Certain Expiring 

Trade Provisions

1. Generalized System of Preferences 

(sec. 501 of the Senate amendment)

No provision Extends through 2002

2. Andean trade preference (sec. 502 

of the Senate amendment)

No provision Extends through June 4, 2002

3. Trade adjustment assistance 

program (sec. 503 of the Senate 

amendment)

No provision Extends through 2002

G. Health Care Assistance for the 

Unemployed

1. Block grant funding (sec. 501 of 

the House bill)

Increases funding for the Social 

Services Block Grant program by $3 

billion in fiscal year 2002; funding to 

be available to States to assist in 

providing health care coverage for 

unemployed workers and their 

families

No provision

2. COBRA coverage for displaced 

workers (sec. 601 of the Senate 

amendment)

No provision Provides a temporary 75% premium 

subsidy for COBRA coverage for 

displaced workers losing jobs after 

September 11, 2001; coverage would 

be available for 12 months and 

benefits end no later than December 

31, 2002; program to be administered 

by direct payment arrangements with 

group health plans, employers, and/or 

state unemployment insurance offices
9

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

3. Medicaid coverage for displaced 

workers (secs. 602 and 603 of the 

Senate amendment)

No provision Creates a temporary state option to 

provide Medicaid coverage to 

workers who were laid off after 

September 11, 2001 and who are not 

eligible for COBRA; coverage would 

be available for 12 months and 

benefits end no later than December 

31, 2002; also creates a temporary 

state option to subsidize the 

remainder of the premium for lowincome individuals eligible for the 

75% COBRA premium subsidy

4. Temporary increase in Federal 

Medicaid matching rate (sec. 604 of 

the Senate amendment)

No provision Provides temporary financial 

assistance for fiscal year 2002 to 

states to help them meet temporary 

increases in Medicaid costs

5. Additional Medicaid provisions 

(secs.611-614 of the Senate 

amendment)

No provision Adds the following: (1) upper 

payment limit (UPL) change, (2) 

disproportionate share hospitals 

(DSH), (3) transitional medical 

assistance (TMA), and (4) breast and 

cervical cancer provision

H. Unemployment insurance (sec. 

402 of the House bill and secs. 701-

708 of the Senate amendment)

1. Reed Act transfers/financing Repeals $100 million limit on 

transfers to States from excess 

Federal funds available at the end of 

fiscal year 2001; transfers $9.2 billion 

of excess Federal unemployment trust 

fund balances as of the close of fiscal 

year 2001 to States operating 

programs meeting Federal 

requirements

Provides an additional $500 million 

accelerated “Reed Act” distribution of 

funds from the Federal 

unemployment insurance account to 

States; uses funds in Federal accounts 

to pay for increased benefits

2. Extended benefits No provision Provides, through cooperative 

agreements with States, 13 weeks of 

extended benefits in all States; 

effective through December 31, 2002
10

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

3. Part-time workers No provision Makes certain individuals seeking 

part-time work eligible for 

unemployment benefits through 

December 31, 2002

4. Alternative base period No provision Requires State to redetermine 

eligibility for unemployment benefits 

using the most recently completed 

quarter of earnings data if the data has 

been reported to the States; effective 

through December 31, 2002

5. Supplemental benefits No provision Provides a temporary Federal 

supplement to unemployment benefits 

of 15% or $25 per week; through 

December 31, 2002

I. Emergency Agriculture 

Assistance

1. Income assistance for agricultural 

producers (sec. 801 of the Senate 

amendment)

No provision Provides $1.8 billion of funds of the 

Commodity Credit Corporation for an 

income assistance program on terms 

identical to fiscal year 2001 law

2. Livestock disaster assistance (sec. 

802 of the Senate amendment)

No provision Provides $500 million of funds of the 

Commodity Credit Corporation for 

the Livestock Assistance Program on 

terms identical to fiscal year 2001 law

3. Commodity purchases (sec. 803 of 

the Senate amendment)

No provision Provides $220 million of funds of the 

Commodity Credit Corporation to 

purchase agricultural commodities, 

especially commodities that have 

experienced low prices during the 

2001 crop year

4. Financing/administration (secs. 

811-813 of the Senate amendment)

No provision Authorizes $50,400,000 for salaries 

and expenses of the Department of 

Agriculture

J. Budget Provisions

1. Impact on Social Security trust 

funds (sec. 908 of the Senate 

amendment)

No provision Ensures that balances in the Social 

Security Trust Fund are not 

negatively affected by the bill
11

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

2. Emergency designation (sec. 909 

of the Senate amendment)

No provision Designates any revenue loss, new 

budget authority, and new outlays 

under the bill in excess of the fiscal 

year 2002 budget resolution as 

emergency requirements

K. Homeland Defense Provisions 

(Title X of the Senate amendment)

No provision Appropriates amounts for homeland 

defense