I

106TH CONGRESS

2D SESSION H. R. 5662

To amend the Internal Revenue Code of 1986 to provide for community

revitalization and a 2-year extension of medical saving accounts, and

for other purposes.

IN THE HOUSE OF REPRESENTATIVES

DECEMBER 14, 2000

Mr. ARCHER (for himself and Mr. ARMEY) introduced the following bill; which

was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

for community revitalization and a 2-year extension of

medical saving accounts, and for other purposes.

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; AMENDMENT OF 1986 CODE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Community Renewal Tax Relief Act of 2000’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment

9 to, or repeal of, a section or other provision, the reference
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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986.

3 (c) TABLE OF CONTENTS.—The table of contents for

4 this Act is as follows:

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

TITLE I—COMMUNITY RENEWAL AND NEW MARKETS

Subtitle A—Tax Incentives for Renewal Communities

Sec. 101. Designation of and tax incentives for renewal communities.

Sec. 102. Work opportunity credit for hiring youth residing in renewal communities.

Subtitle B—Extension and Expansion of Empowerment Zone Incentives

Sec. 111. Authority to designate nine additional empowerment zones.

Sec. 112. Extension of empowerment zone treatment through 2009.

Sec. 113. Twenty percent employment credit for all empowerment zones.

Sec. 114. Increased expensing under section 179.

Sec. 115. Higher limits on tax-exempt empowerment zone facility bonds.

Sec. 116. Nonrecognition of gain on rollover of empowerment zone investments.

Sec. 117. Increased exclusion of gain on sale of empowerment zone stock.

Subtitle C—New Markets Tax Credit

Sec. 121. New markets tax credit.

Subtitle D—Improvements in Low-Income Housing Credit

Sec. 131. Modification of State ceiling on low-income housing credit.

Sec. 132. Modification of criteria for allocating housing credits among projects.

Sec. 133. Additional responsibilities of housing credit agencies.

Sec. 134. Modifications to rules relating to basis of building which is eligible

for credit.

Sec. 135. Other modifications.

Sec. 136. Carryforward rules.

Sec. 137. Effective date.

Subtitle E—Other Community Renewal and New Markets Assistance

PART I—PROVISIONS RELATING TO HOUSING AND SUBSTANCE ABUSE

PREVENTION AND TREATMENT

Sec. 141. Transfer of unoccupied and substandard HUD-held housing to local

governments and community development corporations.

Sec. 142. Transfer of HUD assets in revitalization areas.

Sec. 143. Risk-sharing demonstration.

Sec. 144. Prevention and treatment of substance abuse; services provided

through religious organizations.

PART II—ADVISORY COUNCIL ON COMMUNITY RENEWAL

Sec. 151. Short title.
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Sec. 152. Establishment.

Sec. 153. Duties of Advisory Council.

Sec. 154. Membership.

Sec. 155. Powers of Advisory Council.

Sec. 156. Reports.

Sec. 157. Termination.

Sec. 158. Applicability of Federal Advisory Committee Act.

Sec. 159. Resources.

Sec. 160. Effective date.

Subtitle F—Other Provisions

Sec. 161. Acceleration of phase-in of increase in volume cap on private activity

bonds.

Sec. 162. Modifications to expensing of environmental remediation costs.

Sec. 163. Extension of DC homebuyer tax credit.

Sec. 164. Extension of DC Zone through 2003.

Sec. 165. Extension of enhanced deduction for corporate donations of computer

technology.

Sec. 166. Treatment of Indian tribal governments under Federal Unemployment Tax Act.

TITLE II—TWO-YEAR EXTENSION OF AVAILABILITY OF MEDICAL

SAVINGS ACCOUNTS

Sec. 201. Two-year extension of availability of medical savings accounts.

Sec. 202. Medical savings accounts renamed as Archer MSAs.

TITLE III—ADMINISTRATIVE AND TECHNICAL PROVISIONS

Subtitle A—Administrative Provisions

Sec. 301. Exemption of certain reporting requirements.

Sec. 302. Extension of deadlines for IRS compliance with certain notice requirements.

Sec. 303. Extension of authority for undercover operations.

Sec. 304. Confidentiality of certain documents relating to closing and similar

agreements and to agreements with foreign governments.

Sec. 305. Increase in threshold for Joint Committee reports on refunds and

credits.

Sec. 306. Treatment of missing children with respect to certain tax benefits.

Sec. 307. Amendments to statutes referencing yield on 52-week Treasury bills.

Sec. 308. Adjustments for Consumer Price Index error.

Sec. 309. Prevention of duplication of loss through assumption of liabilities giving rise to a deduction.

Sec. 310. Disclosure of certain information to Congressional Budget Office.

Subtitle B—Technical Corrections

Sec. 311. Amendments related to Ticket to Work and Work Incentives Improvement Act of 1999.

Sec. 312. Amendments related to Tax and Trade Relief Extension Act of 1998.

Sec. 313. Amendments related to Internal Revenue Service Restructuring and

Reform Act of 1998.

Sec. 314. Amendments related to Taxpayer Relief Act of 1997.

Sec. 315. Amendments related to Balanced Budget Act of 1997.

Sec. 316. Amendments related to Small Business Job Protection Act of 1996.
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Sec. 317. Amendment related to Revenue Reconciliation Act of 1990.

Sec. 318. Other technical corrections.

Sec. 319. Clerical changes.

TITLE IV—TAX TREATMENT OF SECURITIES FUTURES

CONTRACTS

Sec. 401. Tax treatment of securities futures contracts.

1 TITLE I—COMMUNITY RENEWAL

2 AND NEW MARKETS

3 Subtitle A—Tax Incentives for

4 Renewal Communities

5 SEC. 101. DESIGNATION OF AND TAX INCENTIVES FOR RE6 NEWAL COMMUNITIES.

7 (a) IN GENERAL.—Chapter 1 is amended by adding

8 at the end the following new subchapter:

9 ‘‘Subchapter X—Renewal Communities

‘‘Part I. Designation.

‘‘Part II. Renewal community capital gain; renewal community

business.

‘‘Part III. Additional incentives.

10 ‘‘PART I—DESIGNATION

‘‘Sec. 1400E. Designation of renewal communities.

11 ‘‘SEC. 1400E. DESIGNATION OF RENEWAL COMMUNITIES.

12 ‘‘(a) DESIGNATION.—

13 ‘‘(1) DEFINITIONS.—For purposes of this title,

14 the term ‘renewal community’ means any area—

15 ‘‘(A) which is nominated by 1 or more

16 local governments and the State or States in

17 which it is located for designation as a renewal
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1 community (hereafter in this section referred to

2 as a ‘nominated area’), and

3 ‘‘(B) which the Secretary of Housing and

4 Urban Development designates as a renewal

5 community, after consultation with—

6 ‘‘(i) the Secretaries of Agriculture,

7 Commerce, Labor, and the Treasury; the

8 Director of the Office of Management and

9 Budget, and the Administrator of the

10 Small Business Administration, and

11 ‘‘(ii) in the case of an area on an In12 dian reservation, the Secretary of the Inte13 rior.

14 ‘‘(2) NUMBER OF DESIGNATIONS.—

15 ‘‘(A) IN GENERAL.—Not more than 40

16 nominated areas may be designated as renewal

17 communities.

18 ‘‘(B) MINIMUM DESIGNATION IN RURAL

19 AREAS.—Of the areas designated under para20 graph (1), at least 12 must be areas—

21 ‘‘(i) which are within a local govern22 ment jurisdiction or jurisdictions with a

23 population of less than 50,000,
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1 ‘‘(ii) which are outside of a metropoli2 tan statistical area (within the meaning of

3 section 143(k)(2)(B)), or

4 ‘‘(iii) which are determined by the

5 Secretary of Housing and Urban Develop6 ment, after consultation with the Secretary

7 of Commerce, to be rural areas.

8 ‘‘(3) AREAS DESIGNATED BASED ON DEGREE

9 OF POVERTY, ETC.—

10 ‘‘(A) IN GENERAL.—Except as otherwise

11 provided in this section, the nominated areas

12 designated as renewal communities under this

13 subsection shall be those nominated areas with

14 the highest average ranking with respect to the

15 criteria described in subparagraphs (B), (C),

16 and (D) of subsection (c)(3). For purposes of

17 the preceding sentence, an area shall be ranked

18 within each such criterion on the basis of the

19 amount by which the area exceeds such cri20 terion, with the area which exceeds such cri21 terion by the greatest amount given the highest

22 ranking.

23 ‘‘(B) EXCEPTION WHERE INADEQUATE

24 COURSE OF ACTION, ETC.—An area shall not be

25 designated under subparagraph (A) if the Sec-
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1 retary of Housing and Urban Development de2 termines that the course of action described in

3 subsection (d)(2) with respect to such area is

4 inadequate.

5 ‘‘(C) PREFERENCE FOR ENTERPRISE COM6 MUNITIES AND EMPOWERMENT ZONES.—With

7 respect to the first 20 designations made under

8 this section, a preference shall be provided to

9 those nominated areas which are enterprise

10 communities or empowerment zones (and are

11 otherwise eligible for designation under this sec12 tion).

13 ‘‘(4) LIMITATION ON DESIGNATIONS.—

14 ‘‘(A) PUBLICATION OF REGULATIONS.—

15 The Secretary of Housing and Urban Develop16 ment shall prescribe by regulation no later than

17 4 months after the date of the enactment of

18 this section, after consultation with the officials

19 described in paragraph (1)(B)—

20 ‘‘(i) the procedures for nominating an

21 area under paragraph (1)(A),

22 ‘‘(ii) the parameters relating to the

23 size and population characteristics of a re24 newal community, and
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1 ‘‘(iii) the manner in which nominated

2 areas will be evaluated based on the cri3 teria specified in subsection (d).

4 ‘‘(B) TIME LIMITATIONS.—The Secretary

5 of Housing and Urban Development may des6 ignate nominated areas as renewal communities

7 only during the period beginning on the first

8 day of the first month following the month in

9 which the regulations described in subpara10 graph (A) are prescribed and ending on Decem11 ber 31, 2001.

12 ‘‘(C) PROCEDURAL RULES.—The Secretary

13 of Housing and Urban Development shall not

14 make any designation of a nominated area as a

15 renewal community under paragraph (2)

16 unless—

17 ‘‘(i) the local governments and the

18 States in which the nominated area is lo19 cated have the authority—

20 ‘‘(I) to nominate such area for

21 designation as a renewal community,

22 ‘‘(II) to make the State and local

23 commitments described in subsection

24 (d), and
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1 ‘‘(III) to provide assurances sat2 isfactory to the Secretary of Housing

3 and Urban Development that such

4 commitments will be fulfilled,

5 ‘‘(ii) a nomination regarding such

6 area is submitted in such a manner and in

7 such form, and contains such information,

8 as the Secretary of Housing and Urban

9 Development shall by regulation prescribe,

10 and

11 ‘‘(iii) the Secretary of Housing and

12 Urban Development determines that any

13 information furnished is reasonably accu14 rate.

15 ‘‘(5) NOMINATION PROCESS FOR INDIAN RES16 ERVATIONS.—For purposes of this subchapter, in

17 the case of a nominated area on an Indian reserva18 tion, the reservation governing body (as determined

19 by the Secretary of the Interior) shall be treated as

20 being both the State and local governments with re21 spect to such area.

22 ‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF23 FECT.—

24 ‘‘(1) IN GENERAL.—Any designation of an area

25 as a renewal community shall remain in effect dur-
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1 ing the period beginning on January 1, 2002, and

2 ending on the earliest of—

3 ‘‘(A) December 31, 2009,

4 ‘‘(B) the termination date designated by

5 the State and local governments in their nomi6 nation, or

7 ‘‘(C) the date the Secretary of Housing

8 and Urban Development revokes such designa9 tion.

10 ‘‘(2) REVOCATION OF DESIGNATION.—The Sec11 retary of Housing and Urban Development may re12 voke the designation under this section of an area if

13 such Secretary determines that the local government

14 or the State in which the area is located—

15 ‘‘(A) has modified the boundaries of the

16 area, or

17 ‘‘(B) is not complying substantially with,

18 or fails to make progress in achieving, the State

19 or local commitments, respectively, described in

20 subsection (d).

21 ‘‘(3) EARLIER TERMINATION OF CERTAIN BEN22 EFITS IF EARLIER TERMINATION OF DESIGNA23 TION.—If the designation of an area as a renewal

24 community terminates before December 31, 2009,

25 the day after the date of such termination shall be
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1 substituted for ‘January 1, 2010’ each place it ap2 pears in sections 1400F and 1400J with respect to

3 such area.

4 ‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—

5 ‘‘(1) IN GENERAL.—The Secretary of Housing

6 and Urban Development may designate a nominated

7 area as a renewal community under subsection (a)

8 only if the area meets the requirements of para9 graphs (2) and (3) of this subsection.

10 ‘‘(2) AREA REQUIREMENTS.—A nominated area

11 meets the requirements of this paragraph if—

12 ‘‘(A) the area is within the jurisdiction of

13 one or more local governments,

14 ‘‘(B) the boundary of the area is contin15 uous, and

16 ‘‘(C) the area—

17 ‘‘(i) has a population of not more than

18 200,000 and at least—

19 ‘‘(I) 4,000 if any portion of such

20 area (other than a rural area de21 scribed in subsection (a)(2)(B)(i)) is

22 located within a metropolitan statis23 tical area (within the meaning of sec24 tion 143(k)(2)(B)) which has a popu25 lation of 50,000 or greater, or
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1 ‘‘(II) 1,000 in any other case, or

2 ‘‘(ii) is entirely within an Indian res3 ervation (as determined by the Secretary of

4 the Interior).

5 ‘‘(3) ELIGIBILITY REQUIREMENTS.—A nomi6 nated area meets the requirements of this paragraph

7 if the State and the local governments in which it

8 is located certify in writing (and the Secretary of

9 Housing and Urban Development, after such review

10 of supporting data as he deems appropriate, accepts

11 such certification) that—

12 ‘‘(A) the area is one of pervasive poverty,

13 unemployment, and general distress,

14 ‘‘(B) the unemployment rate in the area,

15 as determined by the most recent available

data, was at least 11 16 ⁄2 times the national unem17 ployment rate for the period to which such data

18 relate,

19 ‘‘(C) the poverty rate for each population

20 census tract within the nominated area is at

21 least 20 percent, and

22 ‘‘(D) in the case of an urban area, at least

23 70 percent of the households living in the area

24 have incomes below 80 percent of the median

25 income of households within the jurisdiction of
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1 the local government (determined in the same

2 manner as under section 119(b)(2) of the

3 Housing and Community Development Act of

4 1974).

5 ‘‘(4) CONSIDERATION OF OTHER FACTORS.—

6 The Secretary of Housing and Urban Development,

7 in selecting any nominated area for designation as

8 a renewal community under this section—

9 ‘‘(A) shall take into account—

10 ‘‘(i) the extent to which such area has

11 a high incidence of crime, or

12 ‘‘(ii) if such area has census tracts

13 identified in the May 12, 1998, report of

14 the General Accounting Office regarding

15 the identification of economically distressed

16 areas, and

17 ‘‘(B) with respect to 1 of the areas to be

18 designated under subsection (a)(2)(B), may, in

19 lieu of any criteria described in paragraph (3),

20 take into account the existence of outmigration

21 from the area.

22 ‘‘(d) REQUIRED STATE AND LOCAL COMMIT23 MENTS.—

24 ‘‘(1) IN GENERAL.—The Secretary of Housing

25 and Urban Development may designate any nomi-
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1 nated area as a renewal community under subsection

2 (a) only if—

3 ‘‘(A) the local government and the State in

4 which the area is located agree in writing that,

5 during any period during which the area is a

6 renewal community, such governments will fol7 low a specified course of action which meets the

8 requirements of paragraph (2) and is designed

9 to reduce the various burdens borne by employ10 ers or employees in such area, and

11 ‘‘(B) the economic growth promotion re12 quirements of paragraph (3) are met.

13 ‘‘(2) COURSE OF ACTION.—

14 ‘‘(A) IN GENERAL.—A course of action

15 meets the requirements of this paragraph if

16 such course of action is a written document,

17 signed by a State (or local government) and

18 neighborhood organizations, which evidences a

19 partnership between such State or government

20 and community-based organizations and which

21 commits each signatory to specific and measur22 able goals, actions, and timetables. Such course

23 of action shall include at least 4 of the fol24 lowing:
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1 ‘‘(i) A reduction of tax rates or fees

2 applying within the renewal community.

3 ‘‘(ii) An increase in the level of effi4 ciency of local services within the renewal

5 community.

6 ‘‘(iii) Crime reduction strategies, such

7 as crime prevention (including the provi8 sion of crime prevention services by non9 governmental entities).

10 ‘‘(iv) Actions to reduce, remove, sim11 plify, or streamline governmental require12 ments applying within the renewal commu13 nity.

14 ‘‘(v) Involvement in the program by

15 private entities, organizations, neighbor16 hood organizations, and community

17 groups, particularly those in the renewal

18 community, including a commitment from

19 such private entities to provide jobs and

20 job training for, and technical, financial, or

21 other assistance to, employers, employees,

22 and residents from the renewal community.

23 ‘‘(vi) The gift (or sale at below fair

24 market value) of surplus real property

25 (such as land, homes, and commercial or
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1 industrial structures) in the renewal com2 munity to neighborhood organizations,

3 community development corporations, or

4 private companies.

5 ‘‘(B) RECOGNITION OF PAST EFFORTS.—

6 For purposes of this section, in evaluating the

7 course of action agreed to by any State or local

8 government, the Secretary of Housing and

9 Urban Development shall take into account the

10 past efforts of such State or local government

11 in reducing the various burdens borne by em12 ployers and employees in the area involved.

13 ‘‘(3) ECONOMIC GROWTH PROMOTION REQUIRE14 MENTS.—The economic growth promotion require15 ments of this paragraph are met with respect to a

16 nominated area if the local government and the

17 State in which such area is located certify in writing

18 that such government and State (respectively) have

19 repealed or reduced, will not enforce, or will reduce

20 within the nominated area at least 4 of the fol21 lowing:

22 ‘‘(A) Licensing requirements for occupa23 tions that do not ordinarily require a profes24 sional degree.
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1 ‘‘(B) Zoning restrictions on home-based

2 businesses which do not create a public nui3 sance.

4 ‘‘(C) Permit requirements for street ven5 dors who do not create a public nuisance.

6 ‘‘(D) Zoning or other restrictions that im7 pede the formation of schools or child care cen8 ters.

9 ‘‘(E) Franchises or other restrictions on

10 competition for businesses providing public

11 services, including taxicabs, jitneys, cable tele12 vision, or trash hauling.

13 This paragraph shall not apply to the extent that

14 such regulation of businesses and occupations is nec15 essary for and well-tailored to the protection of

16 health and safety.

17 ‘‘(e) COORDINATION WITH TREATMENT OF EM18 POWERMENT ZONES AND ENTERPRISE COMMUNITIES.—

19 For purposes of this title, the designation under section

20 1391 of any area as an empowerment zone or enterprise

21 community shall cease to be in effect as of the date that

22 the designation of any portion of such area as a renewal

23 community takes effect.

24 ‘‘(f ) DEFINITIONS AND SPECIAL RULES.—For pur25 poses of this subchapter—
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1 ‘‘(1) GOVERNMENTS.—If more than one govern2 ment seeks to nominate an area as a renewal com3 munity, any reference to, or requirement of, this sec4 tion shall apply to all such governments.

5 ‘‘(2) LOCAL GOVERNMENT.—The term ‘local

6 government’ means—

7 ‘‘(A) any county, city, town, township, par8 ish, village, or other general purpose political

9 subdivision of a State, and

10 ‘‘(B) any combination of political subdivi11 sions described in subparagraph (A) recognized

12 by the Secretary of Housing and Urban Devel13 opment.

14 ‘‘(3) APPLICATION OF RULES RELATING TO

15 CENSUS TRACTS.—The rules of section 1392(b)(4)

16 shall apply.

17 ‘‘(4) CENSUS DATA.—Population and poverty

18 rate shall be determined by using 1990 census data.

19 ‘‘PART II—RENEWAL COMMUNITY CAPITAL GAIN;

20 RENEWAL COMMUNITY BUSINESS

‘‘Sec. 1400F. Renewal community capital gain.

‘‘Sec. 1400G. Renewal community business defined.

21 ‘‘SEC. 1400F. RENEWAL COMMUNITY CAPITAL GAIN.

22 ‘‘(a) GENERAL RULE.—Gross income does not in23 clude any qualified capital gain from the sale or exchange

24 of a qualified community asset held for more than 5 years.
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1 ‘‘(b) QUALIFIED COMMUNITY ASSET.—For purposes

2 of this section—

3 ‘‘(1) IN GENERAL.—The term ‘qualified com4 munity asset’ means—

5 ‘‘(A) any qualified community stock,

6 ‘‘(B) any qualified community partnership

7 interest, and

8 ‘‘(C) any qualified community business

9 property.

10 ‘‘(2) QUALIFIED COMMUNITY STOCK.—

11 ‘‘(A) IN GENERAL.—Except as provided in

12 subparagraph (B), the term ‘qualified commu13 nity stock’ means any stock in a domestic cor14 poration if—

15 ‘‘(i) such stock is acquired by the tax16 payer after December 31, 2001, and before

17 January 1, 2010, at its original issue (di18 rectly or through an underwriter) from the

19 corporation solely in exchange for cash,

20 ‘‘(ii) as of the time such stock was

21 issued, such corporation was a renewal

22 community business (or, in the case of a

23 new corporation, such corporation was

24 being organized for purposes of being a re25 newal community business), and
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1 ‘‘(iii) during substantially all of the

2 taxpayer’s holding period for such stock,

3 such corporation qualified as a renewal

4 community business.

5 ‘‘(B) REDEMPTIONS.—A rule similar to

6 the rule of section 1202(c)(3) shall apply for

7 purposes of this paragraph.

8 ‘‘(3) QUALIFIED COMMUNITY PARTNERSHIP IN9 TEREST.—The term ‘qualified community partner10 ship interest’ means any capital or profits interest in

11 a domestic partnership if—

12 ‘‘(A) such interest is acquired by the tax13 payer after December 31, 2001, and before

14 January 1, 2010, from the partnership solely in

15 exchange for cash,

16 ‘‘(B) as of the time such interest was ac17 quired, such partnership was a renewal commu18 nity business (or, in the case of a new partner19 ship, such partnership was being organized for

20 purposes of being a renewal community busi21 ness), and

22 ‘‘(C) during substantially all of the tax23 payer’s holding period for such interest, such

24 partnership qualified as a renewal community

25 business.
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1 A rule similar to the rule of paragraph (2)(B) shall

2 apply for purposes of this paragraph.

3 ‘‘(4) QUALIFIED COMMUNITY BUSINESS PROP4 ERTY.—

5 ‘‘(A) IN GENERAL.—The term ‘qualified

6 community business property’ means tangible

7 property if—

8 ‘‘(i) such property was acquired by

9 the taxpayer by purchase (as defined in

10 section 179(d)(2)) after December 31,

11 2001, and before January 1, 2010,

12 ‘‘(ii) the original use of such property

13 in the renewal community commences with

14 the taxpayer, and

15 ‘‘(iii) during substantially all of the

16 taxpayer’s holding period for such prop17 erty, substantially all of the use of such

18 property was in a renewal community busi19 ness of the taxpayer.

20 ‘‘(B) SPECIAL RULE FOR SUBSTANTIAL IM21 PROVEMENTS.—The requirements of clauses (i)

22 and (ii) of subparagraph (A) shall be treated as

23 satisfied with respect to—
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1 ‘‘(i) property which is substantially

2 improved by the taxpayer before January

3 1, 2010, and

4 ‘‘(ii) any land on which such property

5 is located.

6 The determination of whether a property is sub7 stantially improved shall be made under clause

8 (ii) of section 1400B(b)(4)(B), except that ‘De9 cember 31, 2001’ shall be substituted for ‘De10 cember 31, 1997’ in such clause.

11 ‘‘(c) QUALIFIED CAPITAL GAIN.—For purposes of

12 this section—

13 ‘‘(1) IN GENERAL.—Except as otherwise pro14 vided in this subsection, the term ‘qualified capital

15 gain’ means any gain recognized on the sale or ex16 change of—

17 ‘‘(A) a capital asset, or

18 ‘‘(B) property used in the trade or busi19 ness (as defined in section 1231(b)).

20 ‘‘(2) GAIN BEFORE 2002 OR AFTER 2014 NOT

21 QUALIFIED.—The term ‘qualified capital gain’ shall

22 not include any gain attributable to periods before

23 January 1, 2002, or after December 31, 2014.

24 ‘‘(3) CERTAIN RULES TO APPLY.—Rules similar

25 to the rules of paragraphs (3), (4), and (5) of sec-
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1 tion 1400B(e) shall apply for purposes of this sub2 section.

3 ‘‘(d) CERTAIN RULES TO APPLY.—For purposes of

4 this section, rules similar to the rules of paragraphs (5),

5 (6), and (7) of subsection (b), and subsections (f ) and

6 (g), of section 1400B shall apply; except that for such pur7 poses section 1400B(g)(2) shall be applied by substituting

8 ‘January 1, 2002’ for ‘January 1, 1998’ and ‘December

9 31, 2014’ for ‘December 31, 2008’.

10 ‘‘(e) REGULATIONS.—The Secretary shall prescribe

11 such regulations as may be appropriate to carry out the

12 purposes of this section, including regulations to prevent

13 the abuse of the purposes of this section.

14 ‘‘SEC. 1400G. RENEWAL COMMUNITY BUSINESS DEFINED.

15 ‘‘For purposes of this subchapter, the term ‘renewal

16 community business’ means any entity or proprietorship

17 which would be a qualified business entity or qualified pro18 prietorship under section 1397C if references to renewal

19 communities were substituted for references to empower20 ment zones in such section.

21 ‘‘PART III—ADDITIONAL INCENTIVES

‘‘Sec. 1400H. Renewal community employment credit.

‘‘Sec. 1400I. Commercial revitalization deduction.

‘‘Sec. 1400J. Increase in expensing under section 179.
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1 ‘‘SEC. 1400H. RENEWAL COMMUNITY EMPLOYMENT CREDIT.

2 ‘‘(a) IN GENERAL.—Subject to the modification in

3 subsection (b), a renewal community shall be treated as

4 an empowerment zone for purposes of section 1396 with

5 respect to wages paid or incurred after December 31,

6 2001.

7 ‘‘(b) MODIFICATION.—In applying section 1396 with

8 respect to renewal communities—

9 ‘‘(1) the applicable percentage shall be 15 per10 cent, and

11 ‘‘(2) subsection (c) thereof shall be applied by

12 substituting ‘$10,000’ for ‘$15,000’ each place it ap13 pears.

14 ‘‘SEC. 1400I. COMMERCIAL REVITALIZATION DEDUCTION.

15 ‘‘(a) GENERAL RULE.—At the election of the tax16 payer, either—

17 ‘‘(1) one-half of any qualified revitalization ex18 penditures chargeable to capital account with respect

19 to any qualified revitalization building shall be allow20 able as a deduction for the taxable year in which the

21 building is placed in service, or

22 ‘‘(2) a deduction for all such expenditures shall

23 be allowable ratably over the 120-month period be24 ginning with the month in which the building is

25 placed in service.
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1 ‘‘(b) QUALIFIED REVITALIZATION BUILDINGS AND

2 EXPENDITURES.—For purposes of this section—

3 ‘‘(1) QUALIFIED REVITALIZATION BUILDING.—

4 The term ‘qualified revitalization building’ means

5 any building (and its structural components) if—

6 ‘‘(A) the building is placed in service by

7 the taxpayer in a renewal community and the

8 original use of the building begins with the tax9 payer, or

10 ‘‘(B) in the case of such building not de11 scribed in subparagraph (A), such building—

12 ‘‘(i) is substantially rehabilitated

13 (within the meaning of section

14 47(c)(1)(C)) by the taxpayer, and

15 ‘‘(ii) is placed in service by the tax16 payer after the rehabilitation in a renewal

17 community.

18 ‘‘(2) QUALIFIED REVITALIZATION EXPENDI19 TURE.—

20 ‘‘(A) IN GENERAL.—The term ‘qualified

21 revitalization expenditure’ means any amount

22 properly chargeable to capital account for prop23 erty for which depreciation is allowable under

24 section 168 (without regard to this section) and

25 which is—
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1 ‘‘(i) nonresidential real property (as

2 defined in section 168(e)), or

3 ‘‘(ii) section 1250 property (as defined

4 in section 1250(c)) which is functionally

5 related and subordinate to property de6 scribed in clause (i).

7 ‘‘(B) CERTAIN EXPENDITURES NOT IN8 CLUDED.—

9 ‘‘(i) ACQUISITION COST.—In the case

10 of a building described in paragraph

11 (1)(B), the cost of acquiring the building

12 or interest therein shall be treated as a

13 qualified revitalization expenditure only to

14 the extent that such cost does not exceed

15 30 percent of the aggregate qualified revi16 talization expenditures (determined with17 out regard to such cost) with respect to

18 such building.

19 ‘‘(ii) CREDITS.—The term ‘qualified

20 revitalization expenditure’ does not include

21 any expenditure which the taxpayer may

22 take into account in computing any credit

23 allowable under this title unless the tax24 payer elects to take the expenditure into

25 account only for purposes of this section.
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1 ‘‘(c) DOLLAR LIMITATION.—The aggregate amount

2 which may be treated as qualified revitalization expendi3 tures with respect to any qualified revitalization building

4 shall not exceed the lesser of—

5 ‘‘(1) $10,000,000, or

6 ‘‘(2) the commercial revitalization expenditure

7 amount allocated to such building under this section

8 by the commercial revitalization agency for the State

9 in which the building is located.

10 ‘‘(d) COMMERCIAL REVITALIZATION EXPENDITURE

11 AMOUNT.—

12 ‘‘(1) IN GENERAL.—The aggregate commercial

13 revitalization expenditure amount which a commer14 cial revitalization agency may allocate for any cal15 endar year is the amount of the State commercial

16 revitalization expenditure ceiling determined under

17 this paragraph for such calendar year for such agen18 cy.

19 ‘‘(2) STATE COMMERCIAL REVITALIZATION EX20 PENDITURE CEILING.—The State commercial revi21 talization expenditure ceiling applicable to any

22 State—

23 ‘‘(A) for each calendar year after 2001 and

24 before 2010 is $12,000,000 for each renewal

25 community in the State, and
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1 ‘‘(B) for each calendar year thereafter is

2 zero.

3 ‘‘(3) COMMERCIAL REVITALIZATION AGENCY.—

4 For purposes of this section, the term ‘commercial

5 revitalization agency’ means any agency authorized

6 by a State to carry out this section.

7 ‘‘(4) TIME AND MANNER OF ALLOCATIONS.—

8 Allocations under this section shall be made at the

9 same time and in the same manner as under para10 graphs (1) and (7) of section 42(h).

11 ‘‘(e) RESPONSIBILITIES OF COMMERCIAL REVITAL12 IZATION AGENCIES.—

13 ‘‘(1) PLANS FOR ALLOCATION.—Notwith14 standing any other provision of this section, the

15 commercial revitalization expenditure amount with

16 respect to any building shall be zero unless—

17 ‘‘(A) such amount was allocated pursuant

18 to a qualified allocation plan of the commercial

19 revitalization agency which is approved (in ac20 cordance with rules similar to the rules of sec21 tion 147(f )(2) (other than subparagraph (B)(ii)

22 thereof )) by the governmental unit of which

23 such agency is a part, and

24 ‘‘(B) such agency notifies the chief execu25 tive officer (or its equivalent) of the local juris-
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1 diction within which the building is located of

2 such allocation and provides such individual a

3 reasonable opportunity to comment on the allo4 cation.

5 ‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur6 poses of this subsection, the term ‘qualified alloca7 tion plan’ means any plan—

8 ‘‘(A) which sets forth selection criteria to

9 be used to determine priorities of the commer10 cial revitalization agency which are appropriate

11 to local conditions,

12 ‘‘(B) which considers—

13 ‘‘(i) the degree to which a project con14 tributes to the implementation of a stra15 tegic plan that is devised for a renewal

16 community through a citizen participation

17 process,

18 ‘‘(ii) the amount of any increase in

19 permanent, full-time employment by reason

20 of any project, and

21 ‘‘(iii) the active involvement of resi22 dents and nonprofit groups within the re23 newal community, and
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1 ‘‘(C) which provides a procedure that the

2 agency (or its agent) will follow in monitoring

3 compliance with this section.

4 ‘‘(f ) SPECIAL RULES.—

5 ‘‘(1) DEDUCTION IN LIEU OF DEPRECIATION.—

6 The deduction provided by this section for qualified

7 revitalization expenditures shall—

8 ‘‘(A) with respect to the deduction deter9 mined under subsection (a)(1), be in lieu of any

10 depreciation deduction otherwise allowable on

11 account of one-half of such expenditures, and

12 ‘‘(B) with respect to the deduction deter13 mined under subsection (a)(2), be in lieu of any

14 depreciation deduction otherwise allowable on

15 account of all of such expenditures.

16 ‘‘(2) BASIS ADJUSTMENT, ETC.—For purposes

17 of sections 1016 and 1250, the deduction under this

18 section shall be treated in the same manner as a de19 preciation deduction. For purposes of section

20 1250(b)(5), the straight line method of adjustment

21 shall be determined without regard to this section.

22 ‘‘(3) SUBSTANTIAL REHABILITATIONS TREATED

23 AS SEPARATE BUILDINGS.—A substantial rehabilita24 tion (within the meaning of section 47(c)(1)(C)) of
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1 a building shall be treated as a separate building for

2 purposes of subsection (a).

3 ‘‘(4) CLARIFICATION OF ALLOWANCE OF DE4 DUCTION UNDER MINIMUM TAX.—Notwithstanding

5 section 56(a)(1), the deduction under this section

6 shall be allowed in determining alternative minimum

7 taxable income under section 55.

8 ‘‘(g) TERMINATION.—This section shall not apply to

9 any building placed in service after December 31, 2009.

10 ‘‘SEC. 1400J. INCREASE IN EXPENSING UNDER SECTION 179.

11 ‘‘(a) IN GENERAL.—For purposes of section

12 1397A—

13 ‘‘(1) a renewal community shall be treated as

14 an empowerment zone,

15 ‘‘(2) a renewal community business shall be

16 treated as an enterprise zone business, and

17 ‘‘(3) qualified renewal property shall be treated

18 as qualified zone property.

19 ‘‘(b) QUALIFIED RENEWAL PROPERTY.—For pur20 poses of this section—

21 ‘‘(1) IN GENERAL.—The term ‘qualified renewal

22 property’ means any property to which section 168

23 applies (or would apply but for section 179) if—

24 ‘‘(A) such property was acquired by the

25 taxpayer by purchase (as defined in section
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1 179(d)(2)) after December 31, 2001, and be2 fore January 1, 2010, and

3 ‘‘(B) such property would be qualified zone

4 property (as defined in section 1397D) if ref5 erences to renewal communities were sub6 stituted for references to empowerment zones in

7 section 1397D.

8 ‘‘(2) CERTAIN RULES TO APPLY.—The rules of

9 subsections (a)(2) and (b) of section 1397D shall

10 apply for purposes of this section.’’.

11 (b) EXCEPTION FOR COMMERCIAL REVITALIZATION

12 DEDUCTION FROM PASSIVE LOSS RULES.—

13 (1) Paragraph (3) of section 469(i) is amended

14 by redesignating subparagraphs (C), (D), and (E) as

15 subparagraphs (D), (E), and (F), respectively, and

16 by inserting after subparagraph (B) the following

17 new subparagraph:

18 ‘‘(C) EXCEPTION FOR COMMERCIAL REVI19 TALIZATION DEDUCTION.—Subparagraph (A)

20 shall not apply to any portion of the passive ac21 tivity loss for any taxable year which is attrib22 utable to the commercial revitalization deduc23 tion under section 1400I.’’.
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1 (2) Subparagraph (E) of section 469(i)(3), as

2 redesignated by subparagraph (A), is amended to

3 read as follows:

4 ‘‘(E) ORDERING RULES TO REFLECT EX5 CEPTIONS AND SEPARATE PHASE-OUTS.—If

6 subparagraph (B), (C), or (D) applies for a tax7 able year, paragraph (1) shall be applied—

8 ‘‘(i) first to the portion of the passive

9 activity loss to which subparagraph (C)

10 does not apply,

11 ‘‘(ii) second to the portion of the pas12 sive activity credit to which subparagraph

13 (B) or (D) does not apply,

14 ‘‘(iii) third to the portion of such

15 credit to which subparagraph (B) applies,

16 ‘‘(iv) fourth to the portion of such loss

17 to which subparagraph (C) applies, and

18 ‘‘(v) then to the portion of such credit

19 to which subparagraph (D) applies.’’.

20 (3)(A) Subparagraph (B) of section 469(i)(6) is

21 amended by striking ‘‘or’’ at the end of clause (i),

22 by striking the period at the end of clause (ii) and

23 inserting ‘‘, or’’, and by adding at the end the fol24 lowing new clause:
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1 ‘‘(iii) any deduction under section

2 1400I (relating to commercial revitaliza3 tion deduction).’’.

4 (B) The heading for such subparagraph (B) is

5 amended by striking ‘‘OR REHABILITATION CREDIT’’

6 and inserting ‘‘, REHABILITATION CREDIT, OR COM7 MERCIAL REVITALIZATION DEDUCTION’’.

8 (c) AUDIT AND REPORT.—Not later than January 31

9 of 2004, 2007, and 2010, the Comptroller General of the

10 United States shall, pursuant to an audit of the renewal

11 community program established under section 1400E of

12 the Internal Revenue Code of 1986 (as added by sub13 section (a)) and the empowerment zone and enterprise

14 community program under subchapter U of chapter 1 of

15 such Code, report to Congress on such program and its

16 effect on poverty, unemployment, and economic growth

17 within the designated renewal communities, empowerment

18 zones, and enterprise communities.

19 (d) CLERICAL AMENDMENT.—The table of sub20 chapters for chapter 1 is amended by adding at the end

21 the following new item:

‘‘Subchapter X. Renewal Communities.’’.

22 SEC. 102. WORK OPPORTUNITY CREDIT FOR HIRING YOUTH

23 RESIDING IN RENEWAL COMMUNITIES.

24 (a) HIGH-RISK YOUTH.—Subparagraphs (A)(ii) and

25 (B) of section 51(d)(5) are each amended by striking ‘‘em-
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1 powerment zone or enterprise community’’ and inserting

2 ‘‘empowerment zone, enterprise community, or renewal

3 community’’.

4 (b) QUALIFIED SUMMER YOUTH EMPLOYEE.—

5 Clause (iv) of section 51(d)(7)(A) is amended by striking

6 ‘‘empowerment zone or enterprise community’’ and insert7 ing ‘‘empowerment zone, enterprise community, or re8 newal community’’.

9 (c) HEADINGS.—Paragraphs (5)(B) and (7)(C) of

10 section 51(d) are each amended by inserting ‘‘OR COMMU11 NITY’’ in the heading after ‘‘ZONE’’.

12 (d) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to individuals who begin work for

14 the employer after December 31, 2001.

15 Subtitle B—Extension and Expan16 sion of Empowerment Zone In17 centives

18 SEC. 111. AUTHORITY TO DESIGNATE NINE ADDITIONAL

19 EMPOWERMENT ZONES.

20 Section 1391 is amended by adding at the end the

21 following new subsection:

22 ‘‘(h) ADDITIONAL DESIGNATIONS PERMITTED.—

23 ‘‘(1) IN GENERAL.—In addition to the areas

24 designated under subsections (a) and (g), the appro25 priate Secretaries may designate in the aggregate an
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1 additional 9 nominated areas as empowerment zones

2 under this section, subject to the availability of eligi3 ble nominated areas. Of that number, not more than

4 seven may be designated in urban areas and not

5 more than 2 may be designated in rural areas.

6 ‘‘(2) PERIOD DESIGNATIONS MAY BE MADE AND

7 TAKE EFFECT.—A designation may be made under

8 this subsection after the date of the enactment of

9 this subsection and before January 1, 2002. Subject

10 to subparagraphs (B) and (C) of subsection (d)(1),

11 such designations shall remain in effect during the

12 period beginning on January 1, 2002, and ending on

13 December 31, 2009.

14 ‘‘(3) MODIFICATIONS TO ELIGIBILITY CRITERIA,

15 ETC.—The rules of subsection (g)(3) shall apply to

16 designations under this subsection.

17 ‘‘(4) EMPOWERMENT ZONES WHICH BECOME

18 RENEWAL COMMUNITIES.—The number of areas

19 which may be designated as empowerment zones

20 under this subsection shall be increased by 1 for

21 each area which ceases to be an empowerment zone

22 by reason of section 1400E(e). Each additional area

23 designated by reason of the preceding sentence shall

24 have the same urban or rural character as the area

25 it is replacing.’’.
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1 SEC. 112. EXTENSION OF EMPOWERMENT ZONE TREAT2 MENT THROUGH 2009.

3 Subparagraph (A) of section 1391(d)(1) (relating to

4 period for which designation is in effect) is amended to

5 read as follows:

6 ‘‘(A)(i) in the case of an empowerment

7 zone, December 31, 2009, or

8 ‘‘(ii) in the case of an enterprise commu9 nity, the close of the 10th calendar year begin10 ning on or after such date of designation,’’.

11 SEC. 113. TWENTY PERCENT EMPLOYMENT CREDIT FOR

12 ALL EMPOWERMENT ZONES.

13 (a) 20 PERCENT CREDIT.—Subsection (b) of section

14 1396 (relating to empowerment zone employment credit)

15 is amended to read as follows:

16 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

17 this section, the applicable percentage is 20 percent.’’.

18 (b) ALL EMPOWERMENT ZONES ELIGIBLE FOR

19 CREDIT.—Section 1396 is amended by striking subsection

20 (e).

21 (c) CONFORMING AMENDMENT.—Subsection (d) of

22 section 1400 is amended to read as follows:

23 ‘‘(d) SPECIAL RULE FOR APPLICATION OF EMPLOY24 MENT CREDIT.—With respect to the DC Zone, section

25 1396(d)(1)(B) (relating to empowerment zone employ-
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1 ment credit) shall be applied by substituting ‘the District

2 of Columbia’ for ‘such empowerment zone’.’’.

3 (d) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to wages paid or incurred after

5 December 31, 2001.

6 SEC. 114. INCREASED EXPENSING UNDER SECTION 179.

7 (a) IN GENERAL.—Subparagraph (A) of section

8 1397A(a)(1) is amended by striking ‘‘$20,000’’ and in9 serting ‘‘$35,000’’.

10 (b) EXPENSING FOR PROPERTY USED IN DEVELOP11 ABLE SITES.—Section 1397A is amended by striking sub12 section (c).

13 (c) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to taxable years beginning after

15 December 31, 2001.

16 SEC. 115. HIGHER LIMITS ON TAX-EXEMPT EMPOWERMENT

17 ZONE FACILITY BONDS.

18 (a) IN GENERAL.—Paragraph (3) of section 1394(f )

19 (relating to bonds for empowerment zones designated

20 under section 1391(g)) is amended to read as follows:

21 ‘‘(3) EMPOWERMENT ZONE FACILITY BOND.—

22 For purposes of this subsection, the term ‘empower23 ment zone facility bond’ means any bond which

24 would be described in subsection (a) if—
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1 ‘‘(A) in the case of obligations issued be2 fore January 1, 2002, only empowerment zones

3 designated under section 1391(g) were taken

4 into account under sections 1397C and 1397D,

5 and

6 ‘‘(B) in the case of obligations issued after

7 December 31, 2001, all empowerment zones

8 (other than the District of Columbia Enterprise

9 Zone) were taken into account under sections

10 1397C and 1397D.’’.

11 (b) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to obligations issued after Decem13 ber 31, 2001.

14 SEC. 116. NONRECOGNITION OF GAIN ON ROLLOVER OF

15 EMPOWERMENT ZONE INVESTMENTS.

16 (a) IN GENERAL.—Part III of subchapter U of chap17 ter 1 is amended—

18 (1) by redesignating subpart C as subpart D,

19 (2) by redesignating sections 1397B and 1397C

20 as sections 1397C and 1397D, respectively, and

21 (3) by inserting after subpart B the following

22 new subpart:

23 ‘‘Subpart C—Nonrecognition of Gain on Rollover of

24 Empowerment Zone Investments

‘‘Sec. 1397B. Nonrecognition of gain on rollover of empowerment

zone investments.
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1 ‘‘SEC. 1397B. NONRECOGNITION OF GAIN ON ROLLOVER OF

2 EMPOWERMENT ZONE INVESTMENTS.

3 ‘‘(a) NONRECOGNITION OF GAIN.—In the case of any

4 sale of a qualified empowerment zone asset held by the

5 taxpayer for more than 1 year and with respect to which

6 such taxpayer elects the application of this section, gain

7 from such sale shall be recognized only to the extent that

8 the amount realized on such sale exceeds—

9 ‘‘(1) the cost of any qualified empowerment

10 zone asset (with respect to the same zone as the

11 asset sold) purchased by the taxpayer during the 60-

12 day period beginning on the date of such sale, re13 duced by

14 ‘‘(2) any portion of such cost previously taken

15 into account under this section.

16 ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur17 poses of this section—

18 ‘‘(1) QUALIFIED EMPOWERMENT ZONE

19 ASSET.—

20 ‘‘(A) IN GENERAL.—The term ‘qualified

21 empowerment zone asset’ means any property

22 which would be a qualified community asset (as

23 defined in section 1400F) if in section 1400F—

24 ‘‘(i) references to empowerment zones

25 were substituted for references to renewal

26 communities,
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1 ‘‘(ii) references to enterprise zone

2 businesses (as defined in section 1397C)

3 were substituted for references to renewal

4 community businesses, and

5 ‘‘(iii) the date of the enactment of this

6 paragraph were substituted for ‘December

7 31, 2001’ each place it appears.

8 ‘‘(B) TREATMENT OF DC ZONE.—The Dis9 trict of Columbia Enterprise Zone shall not be

10 treated as an empowerment zone for purposes

11 of this section.

12 ‘‘(2) CERTAIN GAIN NOT ELIGIBLE FOR ROLL13 OVER.—This section shall not apply to—

14 ‘‘(A) any gain which is treated as ordinary

15 income for purposes of this subtitle, and

16 ‘‘(B) any gain which is attributable to real

17 property, or an intangible asset, which is not an

18 integral part of an enterprise zone business.

19 ‘‘(3) PURCHASE.—A taxpayer shall be treated

20 as having purchased any property if, but for para21 graph (4), the unadjusted basis of such property in

22 the hands of the taxpayer would be its cost (within

23 the meaning of section 1012).

24 ‘‘(4) BASIS ADJUSTMENTS.—If gain from any

25 sale is not recognized by reason of subsection (a),
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1 such gain shall be applied to reduce (in the order ac2 quired) the basis for determining gain or loss of any

3 qualified empowerment zone asset which is pur4 chased by the taxpayer during the 60-day period de5 scribed in subsection (a). This paragraph shall not

6 apply for purposes of section 1202.

7 ‘‘(5) HOLDING PERIOD.—For purposes of deter8 mining whether the nonrecognition of gain under

9 subsection (a) applies to any qualified empowerment

10 zone asset which is sold—

11 ‘‘(A) the taxpayer’s holding period for such

12 asset and the asset referred to in subsection

13 (a)(1) shall be determined without regard to

14 section 1223, and

15 ‘‘(B) only the first year of the taxpayer’s

16 holding period for the asset referred to in sub17 section (a)(1) shall be taken into account for

18 purposes of paragraphs (2)(A)(iii), (3)(C), and

19 (4)(A)(iii) of section 1400F(b).’’.

20 (b) CONFORMING AMENDMENTS.—

21 (1) Paragraph (23) of section 1016(a) is

22 amended—

23 (A) by striking ‘‘or 1045’’ and inserting

24 ‘‘1045, or 1397B’’, and
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1 (B) by striking ‘‘or 1045(b)(4)’’ and in2 serting ‘‘1045(b)(4), or 1397B(b)(4)’’.

3 (2) Paragraph (15) of section 1223 is amended

4 to read as follows:

5 ‘‘(15) Except for purposes of sections

6 1202(a)(2), 1202(c)(2)(A), 1400B(b), and

7 1400F(b), in determining the period for which the

8 taxpayer has held property the acquisition of which

9 resulted under section 1045 or 1397B in the non10 recognition of any part of the gain realized on the

11 sale of other property, there shall be included the pe12 riod for which such other property has been held as

13 of the date of such sale.’’.

14 (3) Paragraph (2) of section 1394(b) is

15 amended—

16 (A) by striking ‘‘section 1397C’’ and in17 serting ‘‘section 1397D’’, and

18 (B) by striking ‘‘section 1397C(a)(2)’’ and

19 inserting ‘‘section 1397D(a)(2)’’.

20 (4) Paragraph (3) of section 1394(b) is

21 amended—

22 (A) by striking ‘‘section 1397B’’ each place

23 it appears and inserting ‘‘section 1397C’’, and

24 (B) by striking ‘‘section 1397B(d)’’ and in25 serting ‘‘section 1397C(d)’’.
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1 (5) Sections 1400(e) and 1400B(c) are each

2 amended by striking ‘‘section 1397B’’ each place it

3 appears and inserting ‘‘section 1397C’’.

4 (6) The table of subparts for part III of sub5 chapter U of chapter 1 is amended by striking the

6 last item and inserting the following new items:

‘‘Subpart C. Nonrecognition of gain on rollover of empowerment

zone investments.

‘‘Subpart D. General provisions.’’.

7 (7) The table of sections for subpart D of such

8 part III is amended to read as follows:

‘‘Sec. 1397C. Enterprise zone business defined.

‘‘Sec. 1397D. Qualified zone property defined.’’.

9 (c) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to qualified empowerment zone as11 sets acquired after the date of the enactment of this Act.

12 SEC. 117. INCREASED EXCLUSION OF GAIN ON SALE OF EM13 POWERMENT ZONE STOCK.

14 (a) IN GENERAL.—Subsection (a) of section 1202 is

15 amended to read as follows:

16 ‘‘(a) EXCLUSION.—

17 ‘‘(1) IN GENERAL.—In the case of a taxpayer

18 other than a corporation, gross income shall not in19 clude 50 percent of any gain from the sale or ex20 change of qualified small business stock held for

21 more than 5 years.

22 ‘‘(2) EMPOWERMENT ZONE BUSINESSES.—
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1 ‘‘(A) IN GENERAL.—In the case of quali2 fied small business stock acquired after the date

3 of the enactment of this paragraph in a cor4 poration which is a qualified business entity (as

5 defined in section 1397C(b)) during substan6 tially all of the taxpayer’s holding period for

7 such stock, paragraph (1) shall be applied by

8 substituting ‘60 percent’ for ‘50 percent’.

9 ‘‘(B) CERTAIN RULES TO APPLY.—Rules

10 similar to the rules of paragraphs (5) and (7)

11 of section 1400B(b) shall apply for purposes of

12 this paragraph.

13 ‘‘(C) GAIN AFTER 2014 NOT QUALIFIED.—

14 Subparagraph (A) shall not apply to gain at15 tributable to periods after December 31, 2014.

16 ‘‘(D) TREATMENT OF DC ZONE.—The Dis17 trict of Columbia Enterprise Zone shall not be

18 treated as an empowerment zone for purposes

19 of this paragraph.’’.

20 (b) CONFORMING AMENDMENTS.—

21 (1) Paragraph (8) of section 1(h) is amended

22 by striking ‘‘means’’ and all that follows and insert23 ing ‘‘means the excess of—

24 ‘‘(A) the gain which would be excluded

25 from gross income under section 1202 but for
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1 the percentage limitation in section 1202(a),

2 over

3 ‘‘(B) the gain excluded from gross income

4 under section 1202.’’.

5 (2) The section heading for section 1202 is

6 amended by striking ‘‘50-percent’’ and inserting

7 ‘‘partial’’.

8 (3) The table of sections for part I of sub9 chapter P of chapter 1 is amended by striking ‘‘50-

10 percent’’ and inserting ‘‘Partial’’.

11 (c) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to stock acquired after the date

13 of the enactment of this Act.

14 Subtitle C—New Markets Tax

15 Credit

16 SEC. 121. NEW MARKETS TAX CREDIT.

17 (a) IN GENERAL.—Subpart D of part IV of sub18 chapter A of chapter 1 (relating to business-related cred19 its) is amended by adding at the end the following new

20 section:

21 ‘‘SEC. 45D. NEW MARKETS TAX CREDIT.

22 ‘‘(a) ALLOWANCE OF CREDIT.—

23 ‘‘(1) IN GENERAL.—For purposes of section 38,

24 in the case of a taxpayer who holds a qualified eq25 uity investment on a credit allowance date of such
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1 investment which occurs during the taxable year, the

2 new markets tax credit determined under this sec3 tion for such taxable year is an amount equal to the

4 applicable percentage of the amount paid to the

5 qualified community development entity for such in6 vestment at its original issue.

7 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes

8 of paragraph (1), the applicable percentage is—

9 ‘‘(A) 5 percent with respect to the first 3

10 credit allowance dates, and

11 ‘‘(B) 6 percent with respect to the remain12 der of the credit allowance dates.

13 ‘‘(3) CREDIT ALLOWANCE DATE.—For purposes

14 of paragraph (1), the term ‘credit allowance date’

15 means, with respect to any qualified equity

16 investment—

17 ‘‘(A) the date on which such investment is

18 initially made, and

19 ‘‘(B) each of the 6 anniversary dates of

20 such date thereafter.

21 ‘‘(b) QUALIFIED EQUITY INVESTMENT.—For pur22 poses of this section—

23 ‘‘(1) IN GENERAL.—The term ‘qualified equity

24 investment’ means any equity investment in a quali25 fied community development entity if—
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1 ‘‘(A) such investment is acquired by the

2 taxpayer at its original issue (directly or

3 through an underwriter) solely in exchange for

4 cash,

5 ‘‘(B) substantially all of such cash is used

6 by the qualified community development entity

7 to make qualified low-income community invest8 ments, and

9 ‘‘(C) such investment is designated for

10 purposes of this section by the qualified com11 munity development entity.

12 Such term shall not include any equity investment

13 issued by a qualified community development entity

14 more than 5 years after the date that such entity re15 ceives an allocation under subsection (f ). Any alloca16 tion not used within such 5-year period may be re17 allocated by the Secretary under subsection (f ).

18 ‘‘(2) LIMITATION.—The maximum amount of

19 equity investments issued by a qualified community

20 development entity which may be designated under

21 paragraph (1)(C) by such entity shall not exceed the

22 portion of the limitation amount allocated under

23 subsection (f ) to such entity.

24 ‘‘(3) SAFE HARBOR FOR DETERMINING USE OF

25 CASH.—The requirement of paragraph (1)(B) shall
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1 be treated as met if at least 85 percent of the aggre2 gate gross assets of the qualified community devel3 opment entity are invested in qualified low-income

4 community investments.

5 ‘‘(4) TREATMENT OF SUBSEQUENT PUR6 CHASERS.—The term ‘qualified equity investment’

7 includes any equity investment which would (but for

8 paragraph (1)(A)) be a qualified equity investment

9 in the hands of the taxpayer if such investment was

10 a qualified equity investment in the hands of a prior

11 holder.

12 ‘‘(5) REDEMPTIONS.—A rule similar to the rule

13 of section 1202(c)(3) shall apply for purposes of this

14 subsection.

15 ‘‘(6) EQUITY INVESTMENT.—The term ‘equity

16 investment’ means—

17 ‘‘(A) any stock (other than nonqualified

18 preferred stock as defined in section 351(g)(2))

19 in an entity which is a corporation, and

20 ‘‘(B) any capital interest in an entity

21 which is a partnership.

22 ‘‘(c) QUALIFIED COMMUNITY DEVELOPMENT ENTI23 TY.—For purposes of this section—
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1 ‘‘(1) IN GENERAL.—The term ‘qualified com2 munity development entity’ means any domestic cor3 poration or partnership if—

4 ‘‘(A) the primary mission of the entity is

5 serving, or providing investment capital for,

6 low-income communities or low-income persons,

7 ‘‘(B) the entity maintains accountability to

8 residents of low-income communities through

9 their representation on any governing board of

10 the entity or on any advisory board to the enti11 ty, and

12 ‘‘(C) the entity is certified by the Secretary

13 for purposes of this section as being a qualified

14 community development entity.

15 ‘‘(2) SPECIAL RULES FOR CERTAIN ORGANIZA16 TIONS.—The requirements of paragraph (1) shall be

17 treated as met by—

18 ‘‘(A) any specialized small business invest19 ment company (as defined in section

20 1044(c)(3)), and

21 ‘‘(B) any community development financial

22 institution (as defined in section 103 of the

23 Community Development Banking and Finan24 cial Institutions Act of 1994 (12 U.S.C. 4702)).
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1 ‘‘(d) QUALIFIED LOW-INCOME COMMUNITY INVEST2 MENTS.—For purposes of this section—

3 ‘‘(1) IN GENERAL.—The term ‘qualified low-in4 come community investment’ means—

5 ‘‘(A) any capital or equity investment in,

6 or loan to, any qualified active low-income com7 munity business,

8 ‘‘(B) the purchase from another qualified

9 community development entity of any loan

10 made by such entity which is a qualified low-in11 come community investment,

12 ‘‘(C) financial counseling and other serv13 ices specified in regulations prescribed by the

14 Secretary to businesses located in, and resi15 dents of, low-income communities, and

16 ‘‘(D) any equity investment in, or loan to,

17 any qualified community development entity.

18 ‘‘(2) QUALIFIED ACTIVE LOW-INCOME COMMU19 NITY BUSINESS.—

20 ‘‘(A) IN GENERAL.—For purposes of para21 graph (1), the term ‘qualified active low-income

22 community business’ means, with respect to any

23 taxable year, any corporation (including a non24 profit corporation) or partnership if for such

25 year—
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1 ‘‘(i) at least 50 percent of the total

2 gross income of such entity is derived from

3 the active conduct of a qualified business

4 within any low-income community,

5 ‘‘(ii) a substantial portion of the use

6 of the tangible property of such entity

7 (whether owned or leased) is within any

8 low-income community,

9 ‘‘(iii) a substantial portion of the serv10 ices performed for such entity by its em11 ployees are performed in any low-income

12 community,

13 ‘‘(iv) less than 5 percent of the aver14 age of the aggregate unadjusted bases of

15 the property of such entity is attributable

16 to collectibles (as defined in section

17 408(m)(2)) other than collectibles that are

18 held primarily for sale to customers in the

19 ordinary course of such business, and

20 ‘‘(v) less than 5 percent of the aver21 age of the aggregate unadjusted bases of

22 the property of such entity is attributable

23 to nonqualified financial property (as de24 fined in section 1397C(e)).
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1 ‘‘(B) PROPRIETORSHIP.—Such term shall

2 include any business carried on by an individual

3 as a proprietor if such business would meet the

4 requirements of subparagraph (A) were it incor5 porated.

6 ‘‘(C) PORTIONS OF BUSINESS MAY BE

7 QUALIFIED ACTIVE LOW-INCOME COMMUNITY

8 BUSINESS.—The term ‘qualified active low-in9 come community business’ includes any trades

10 or businesses which would qualify as a qualified

11 active low-income community business if such

12 trades or businesses were separately incor13 porated.

14 ‘‘(3) QUALIFIED BUSINESS.—For purposes of

15 this subsection, the term ‘qualified business’ has the

16 meaning given to such term by section 1397C(d); ex17 cept that—

18 ‘‘(A) in lieu of applying paragraph (2)(B)

19 thereof, the rental to others of real property lo20 cated in any low-income community shall be

21 treated as a qualified business if there are sub22 stantial improvements located on such property,

23 and

24 ‘‘(B) paragraph (3) thereof shall not apply.
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1 ‘‘(e) LOW-INCOME COMMUNITY.—For purposes of

2 this section—

3 ‘‘(1) IN GENERAL.—The term ‘low-income com4 munity’ means any population census tract if—

5 ‘‘(A) the poverty rate for such tract is at

6 least 20 percent, or

7 ‘‘(B)(i) in the case of a tract not located

8 within a metropolitan area, the median family

9 income for such tract does not exceed 80 per10 cent of statewide median family income, or

11 ‘‘(ii) in the case of a tract located within

12 a metropolitan area, the median family income

13 for such tract does not exceed 80 percent of the

14 greater of statewide median family income or

15 the metropolitan area median family income.

16 Subparagraph (B) shall be applied using

17 possessionwide median family income in the case of

18 census tracts located within a possession of the

19 United States.

20 ‘‘(2) TARGETED AREAS.—The Secretary may

21 designate any area within any census tract as a low22 income community if—

23 ‘‘(A) the boundary of such area is contin24 uous,
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1 ‘‘(B) the area would satisfy the require2 ments of paragraph (1) if it were a census

3 tract, and

4 ‘‘(C) an inadequate access to investment

5 capital exists in such area.

6 ‘‘(3) AREAS NOT WITHIN CENSUS TRACTS.—In

7 the case of an area which is not tracted for popu8 lation census tracts, the equivalent county divisions

9 (as defined by the Bureau of the Census for pur10 poses of defining poverty areas) shall be used for

11 purposes of determining poverty rates and median

12 family income.

13 ‘‘(f ) NATIONAL LIMITATION ON AMOUNT OF INVEST14 MENTS DESIGNATED.—

15 ‘‘(1) IN GENERAL.—There is a new markets tax

16 credit limitation for each calendar year. Such limita17 tion is—

18 ‘‘(A) $1,000,000,000 for 2001,

19 ‘‘(B) $1,500,000,000 for 2002 and 2003,

20 ‘‘(C) $2,000,000,000 for 2004 and 2005,

21 and

22 ‘‘(D) $3,500,000,000 for 2006 and 2007.

23 ‘‘(2) ALLOCATION OF LIMITATION.—The limita24 tion under paragraph (1) shall be allocated by the

25 Secretary among qualified community development
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1 entities selected by the Secretary. In making alloca2 tions under the preceding sentence, the Secretary

3 shall give priority to any entity—

4 ‘‘(A) with a record of having successfully

5 provided capital or technical assistance to dis6 advantaged businesses or communities, or

7 ‘‘(B) which intends to satisfy the require8 ment under subsection (b)(1)(B) by making

9 qualified low-income community investments in

10 1 or more businesses in which persons unre11 lated to such entity (within the meaning of sec12 tion 267(b) or 707(b)(1)) hold the majority eq13 uity interest.

14 ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If

15 the new markets tax credit limitation for any cal16 endar year exceeds the aggregate amount allocated

17 under paragraph (2) for such year, such limitation

18 for the succeeding calendar year shall be increased

19 by the amount of such excess. No amount may be

20 carried under the preceding sentence to any calendar

21 year after 2014.

22 ‘‘(g) RECAPTURE OF CREDIT IN CERTAIN CASES.—

23 ‘‘(1) IN GENERAL.—If, at any time during the

24 7-year period beginning on the date of the original

25 issue of a qualified equity investment in a qualified
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1 community development entity, there is a recapture

2 event with respect to such investment, then the tax

3 imposed by this chapter for the taxable year in

4 which such event occurs shall be increased by the

5 credit recapture amount.

6 ‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur7 poses of paragraph (1), the credit recapture amount

8 is an amount equal to the sum of—

9 ‘‘(A) the aggregate decrease in the credits

10 allowed to the taxpayer under section 38 for all

11 prior taxable years which would have resulted if

12 no credit had been determined under this sec13 tion with respect to such investment, plus

14 ‘‘(B) interest at the underpayment rate es15 tablished under section 6621 on the amount de16 termined under subparagraph (A) for each

17 prior taxable year for the period beginning on

18 the due date for filing the return for the prior

19 taxable year involved.

20 No deduction shall be allowed under this chapter for

21 interest described in subparagraph (B).

22 ‘‘(3) RECAPTURE EVENT.—For purposes of

23 paragraph (1), there is a recapture event with re24 spect to an equity investment in a qualified commu25 nity development entity if—
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1 ‘‘(A) such entity ceases to be a qualified

2 community development entity,

3 ‘‘(B) the proceeds of the investment cease

4 to be used as required of subsection (b)(1)(B),

5 or

6 ‘‘(C) such investment is redeemed by such

7 entity.

8 ‘‘(4) SPECIAL RULES.—

9 ‘‘(A) TAX BENEFIT RULE.—The tax for

10 the taxable year shall be increased under para11 graph (1) only with respect to credits allowed

12 by reason of this section which were used to re13 duce tax liability. In the case of credits not so

14 used to reduce tax liability, the carryforwards

15 and carrybacks under section 39 shall be appro16 priately adjusted.

17 ‘‘(B) NO CREDITS AGAINST TAX.—Any in18 crease in tax under this subsection shall not be

19 treated as a tax imposed by this chapter for

20 purposes of determining the amount of any

21 credit under this chapter or for purposes of sec22 tion 55.

23 ‘‘(h) BASIS REDUCTION.—The basis of any qualified

24 equity investment shall be reduced by the amount of any

25 credit determined under this section with respect to such
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1 investment. This subsection shall not apply for purposes

2 of sections 1202, 1400B, and 1400F.

3 ‘‘(i) REGULATIONS.—The Secretary shall prescribe

4 such regulations as may be appropriate to carry out this

5 section, including regulations—

6 ‘‘(1) which limit the credit for investments

7 which are directly or indirectly subsidized by other

8 Federal tax benefits (including the credit under sec9 tion 42 and the exclusion from gross income under

10 section 103),

11 ‘‘(2) which prevent the abuse of the purposes of

12 this section,

13 ‘‘(3) which provide rules for determining wheth14 er the requirement of subsection (b)(1)(B) is treated

15 as met,

16 ‘‘(4) which impose appropriate reporting re17 quirements, and

18 ‘‘(5) which apply the provisions of this section

19 to newly formed entities.’’.

20 (b) CREDIT MADE PART OF GENERAL BUSINESS

21 CREDIT.—

22 (1) IN GENERAL.—Subsection (b) of section 38

23 is amended by striking ‘‘plus’’ at the end of para24 graph (11), by striking the period at the end of
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1 paragraph (12) and inserting ‘‘, plus’’, and by add2 ing at the end the following new paragraph:

3 ‘‘(13) the new markets tax credit determined

4 under section 45D(a).’’.

5 (2) LIMITATION ON CARRYBACK.—Subsection

6 (d) of section 39 is amended by adding at the end

7 the following new paragraph:

8 ‘‘(9) NO CARRYBACK OF NEW MARKETS TAX

9 CREDIT BEFORE JANUARY 1, 2001.—No portion of

10 the unused business credit for any taxable year

11 which is attributable to the credit under section 45D

12 may be carried back to a taxable year ending before

13 January 1, 2001.’’.

14 (c) DEDUCTION FOR UNUSED CREDIT.—Subsection

15 (c) of section 196 is amended by striking ‘‘and’’ at the

16 end of paragraph (7), by striking the period at the end

17 of paragraph (8) and inserting ‘‘, and’’, and by adding

18 at the end the following new paragraph:

19 ‘‘(9) the new markets tax credit determined

20 under section 45D(a).’’.

21 (d) CLERICAL AMENDMENT.—The table of sections

22 for subpart D of part IV of subchapter A of chapter 1

23 is amended by adding at the end the following new item:

‘‘Sec. 45D. New markets tax credit.’’.
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1 (e) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to investments made after Decem3 ber 31, 2000.

4 (f ) GUIDANCE ON ALLOCATION OF NATIONAL LIMI5 TATION.—Not later than 120 days after the date of the

6 enactment of this Act, the Secretary of the Treasury or

7 the Secretary’s delegate shall issue guidance which

8 specifies—

9 (1) how entities shall apply for an allocation

10 under section 45D(f )(2) of the Internal Revenue

11 Code of 1986, as added by this section;

12 (2) the competitive procedure through which

13 such allocations are made; and

14 (3) the actions that such Secretary or delegate

15 shall take to ensure that such allocations are prop16 erly made to appropriate entities.

17 (g) AUDIT AND REPORT.—Not later than January 31

18 of 2004, 2007, and 2010, the Comptroller General of the

19 United States shall, pursuant to an audit of the new mar20 kets tax credit program established under section 45D of

21 the Internal Revenue Code of 1986 (as added by sub22 section (a)), report to Congress on such program, includ23 ing all qualified community development entities that re24 ceive an allocation under the new markets credit under

25 such section.
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1 Subtitle D—Improvements in Low2 Income Housing Credit

3 SEC. 131. MODIFICATION OF STATE CEILING ON LOW-IN4 COME HOUSING CREDIT.

5 (a) IN GENERAL.—Clauses (i) and (ii) of section

6 42(h)(3)(C) (relating to State housing credit ceiling) are

7 amended to read as follows:

8 ‘‘(i) the unused State housing credit

9 ceiling (if any) of such State for the pre10 ceding calendar year,

11 ‘‘(ii) the greater of—

12 ‘‘(I) $1.75 ($1.50 for 2001) mul13 tiplied by the State population, or

14 ‘‘(II) $2,000,000,’’.

15 (b) ADJUSTMENT OF STATE CEILING FOR IN16 CREASES IN COST-OF-LIVING.—Paragraph (3) of section

17 42(h) (relating to housing credit dollar amount for agen18 cies) is amended by adding at the end the following new

19 subparagraph:

20 ‘‘(H) COST-OF-LIVING ADJUSTMENT.—

21 ‘‘(i) IN GENERAL.—In the case of a

22 calendar year after 2002, the $2,000,000

23 and $1.75 amounts in subparagraph (C)

24 shall each be increased by an amount equal

25 to—
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1 ‘‘(I) such dollar amount, multi2 plied by

3 ‘‘(II) the cost-of-living adjust4 ment determined under section

5 1(f )(3) for such calendar year by sub6 stituting ‘calendar year 2001’ for ‘cal7 endar year 1992’ in subparagraph (B)

8 thereof.

9 ‘‘(ii) ROUNDING.—

10 ‘‘(I) In the case of the

11 $2,000,000 amount, any increase

12 under clause (i) which is not a mul13 tiple of $5,000 shall be rounded to the

14 next lowest multiple of $5,000.

15 ‘‘(II) In the case of the $1.75

16 amount, any increase under clause (i)

17 which is not a multiple of 5 cents

18 shall be rounded to the next lowest

19 multiple of 5 cents.’’.

20 (c) CONFORMING AMENDMENTS.—

21 (1) Section 42(h)(3)(C), as amended by sub22 section (a), is amended—

23 (A) by striking ‘‘clause (ii)’’ in the matter

24 following clause (iv) and inserting ‘‘clause (i)’’;

25 and
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1 (B) by striking ‘‘clauses (i)’’ in the matter

2 following clause (iv) and inserting ‘‘clauses

3 (ii)’’.

4 (2) Section 42(h)(3)(D)(ii) is amended—

5 (A) by striking ‘‘subparagraph (C)(ii)’’ and

6 inserting ‘‘subparagraph (C)(i)’’; and

7 (B) by striking ‘‘clauses (i)’’ in subclause

8 (II) and inserting ‘‘clauses (ii)’’.

9 (d) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to calendar years after 2000.

11 SEC. 132. MODIFICATION OF CRITERIA FOR ALLOCATING

12 HOUSING CREDITS AMONG PROJECTS.

13 (a) SELECTION CRITERIA.—Subparagraph (C) of

14 section 42(m)(1) (relating to certain selection criteria

15 must be used) is amended—

16 (1) by inserting ‘‘, including whether the project

17 includes the use of existing housing as part of a

18 community revitalization plan’’ before the comma at

19 the end of clause (iii); and

20 (2) by striking clauses (v), (vi), and (vii) and

21 inserting the following new clauses:

22 ‘‘(v) tenant populations with special

23 housing needs,

24 ‘‘(vi) public housing waiting lists,
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1 ‘‘(vii) tenant populations of individ2 uals with children, and

3 ‘‘(viii) projects intended for eventual

4 tenant ownership.’’.

5 (b) PREFERENCE FOR COMMUNITY REVITALIZATION

6 PROJECTS LOCATED IN QUALIFIED CENSUS TRACTS.—

7 Clause (ii) of section 42(m)(1)(B) is amended by striking

8 ‘‘and’’ at the end of subclause (I), by adding ‘‘and’’ at

9 the end of subclause (II), and by inserting after subclause

10 (II) the following new subclause:

11 ‘‘(III) projects which are located

12 in qualified census tracts (as defined

13 in subsection (d)(5)(C)) and the devel14 opment of which contributes to a con15 certed community revitalization

16 plan,’’.

17 SEC. 133. ADDITIONAL RESPONSIBILITIES OF HOUSING

18 CREDIT AGENCIES.

19 (a) MARKET STUDY; PUBLIC DISCLOSURE OF RA20 TIONALE FOR NOT FOLLOWING CREDIT ALLOCATION

21 PRIORITIES.—Subparagraph (A) of section 42(m)(1) (re22 lating to responsibilities of housing credit agencies) is

23 amended by striking ‘‘and’’ at the end of clause (i), by

24 striking the period at the end of clause (ii) and inserting
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1 a comma, and by adding at the end the following new

2 clauses:

3 ‘‘(iii) a comprehensive market study

4 of the housing needs of low-income individ5 uals in the area to be served by the project

6 is conducted before the credit allocation is

7 made and at the developer’s expense by a

8 disinterested party who is approved by

9 such agency, and

10 ‘‘(iv) a written explanation is available

11 to the general public for any allocation of

12 a housing credit dollar amount which is

13 not made in accordance with established

14 priorities and selection criteria of the hous15 ing credit agency.’’.

16 (b) SITE VISITS.—Clause (iii) of section 42(m)(1)(B)

17 (relating to qualified allocation plan) is amended by insert18 ing before the period ‘‘and in monitoring for noncompli19 ance with habitability standards through regular site vis20 its’’.

21 SEC. 134. MODIFICATIONS TO RULES RELATING TO BASIS

22 OF BUILDING WHICH IS ELIGIBLE FOR CRED23 IT.

24 (a) ADJUSTED BASIS TO INCLUDE PORTION OF CER25 TAIN BUILDINGS USED BY LOW-INCOME INDIVIDUALS
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1 WHO ARE NOT TENANTS AND BY PROJECT EMPLOY2 EES.—Paragraph (4) of section 42(d) (relating to special

3 rules relating to determination of adjusted basis) is

4 amended—

5 (1) by striking ‘‘subparagraph (B)’’ in subpara6 graph (A) and inserting ‘‘subparagraphs (B) and

7 (C)’’;

8 (2) by redesignating subparagraph (C) as sub9 paragraph (D); and

10 (3) by inserting after subparagraph (B) the fol11 lowing new subparagraph:

12 ‘‘(C) INCLUSION OF BASIS OF PROPERTY

13 USED TO PROVIDE SERVICES FOR CERTAIN

14 NONTENANTS.—

15 ‘‘(i) IN GENERAL.—The adjusted

16 basis of any building located in a qualified

17 census tract (as defined in paragraph

18 (5)(C)) shall be determined by taking into

19 account the adjusted basis of property (of

20 a character subject to the allowance for de21 preciation and not otherwise taken into ac22 count) used throughout the taxable year in

23 providing any community service facility.

24 ‘‘(ii) LIMITATION.—The increase in

25 the adjusted basis of any building which is
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1 taken into account by reason of clause (i)

2 shall not exceed 10 percent of the eligible

3 basis of the qualified low-income housing

4 project of which it is a part. For purposes

5 of the preceding sentence, all community

6 service facilities which are part of the same

7 qualified low-income housing project shall

8 be treated as one facility.

9 ‘‘(iii) COMMUNITY SERVICE FACIL10 ITY.—For purposes of this subparagraph,

11 the term ‘community service facility’

12 means any facility designed to serve pri13 marily individuals whose income is 60 per14 cent or less of area median income (within

15 the meaning of subsection (g)(1)(B)).’’.

16 (b) CERTAIN NATIVE AMERICAN HOUSING ASSIST17 ANCE DISREGARDED IN DETERMINING WHETHER BUILD18 ING IS FEDERALLY SUBSIDIZED FOR PURPOSES OF THE

19 LOW-INCOME HOUSING CREDIT.—Subparagraph (E) of

20 section 42(i)(2) (relating to determination of whether

21 building is federally subsidized) is amended—

22 (1) in clause (i), by inserting ‘‘or the Native

23 American Housing Assistance and Self-Determina24 tion Act of 1996 (25 U.S.C. 4101 et seq.) (as in ef-
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1 fect on October 1, 1997)’’ after ‘‘this subpara2 graph)’’; and

3 (2) in the subparagraph heading, by inserting

4 ‘‘OR NATIVE AMERICAN HOUSING ASSISTANCE’’ after

5 ‘‘HOME ASSISTANCE’’.

6 SEC. 135. OTHER MODIFICATIONS.

7 (a) ALLOCATION OF CREDIT LIMIT TO CERTAIN

8 BUILDINGS.—

9 (1) The first sentence of section 42(h)(1)(E)(ii)

10 is amended by striking ‘‘(as of’’ the first place it ap11 pears and inserting ‘‘(as of the later of the date

12 which is 6 months after the date that the allocation

13 was made or’’.

14 (2) The last sentence of section 42(h)(3)(C) is

15 amended by striking ‘‘project which’’ and inserting

16 ‘‘project which fails to meet the 10 percent test

17 under paragraph (1)(E)(ii) on a date after the close

18 of the calendar year in which the allocation was

19 made or which’’.

20 (b) DETERMINATION OF WHETHER BUILDINGS ARE

21 LOCATED IN HIGH COST AREAS.—The first sentence of

22 section 42(d)(5)(C)(ii)(I) is amended—

23 (1) by inserting ‘‘either’’ before ‘‘in which 50

24 percent’’; and
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1 (2) by inserting before the period ‘‘or which has

2 a poverty rate of at least 25 percent’’.

3 SEC. 136. CARRYFORWARD RULES.

4 (a) IN GENERAL.—Clause (ii) of section 42(h)(3)(D)

5 (relating to unused housing credit carryovers allocated

6 among certain States) is amended by striking ‘‘the excess’’

7 and all that follows and inserting ‘‘the excess (if any) of—

8 ‘‘(I) the unused State housing

9 credit ceiling for the year preceding

10 such year, over

11 ‘‘(II) the aggregate housing cred12 it dollar amount allocated for such

13 year.’’.

14 (b) CONFORMING AMENDMENT.—The second sen15 tence of section 42(h)(3)(C) (relating to State housing

16 credit ceiling) is amended by striking ‘‘clauses (i) and

17 (iii)’’ and inserting ‘‘clauses (i) through (iv)’’.

18 SEC. 137. EFFECTIVE DATE.

19 Except as otherwise provided in this subtitle, the

20 amendments made by this subtitle shall apply to—

21 (1) housing credit dollar amounts allocated

22 after December 31, 2000; and

23 (2) buildings placed in service after such date

24 to the extent paragraph (1) of section 42(h) of the

25 Internal Revenue Code of 1986 does not apply to
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1 any building by reason of paragraph (4) thereof, but

2 only with respect to bonds issued after such date.

3 Subtitle E—Other Community Re4 newal and New Markets Assist5 ance

6 PART I—PROVISIONS RELATING TO HOUSING

7 AND SUBSTANCE ABUSE PREVENTION AND

8 TREATMENT

9 SEC. 141. TRANSFER OF UNOCCUPIED AND SUBSTANDARD

10 HUD-HELD HOUSING TO LOCAL GOVERN11 MENTS AND COMMUNITY DEVELOPMENT

12 CORPORATIONS.

13 Section 204 of the Departments of Veterans Affairs

14 and Housing and Urban Development, and Independent

15 Agencies Appropriations Act, 1997 (12 U.S.C. 1715z–

16 11a) is amended—

17 (1) by striking ‘‘FLEXIBLE AUTHORITY.—’’ and

18 inserting ‘‘DISPOSITION OF HUD-OWNED PROP19 ERTIES. (a) FLEXIBLE AUTHORITY FOR MULTI20 FAMILY PROJECTS.—’’; and

21 (2) by adding at the end the following new sub22 section:

23 ‘‘(b) TRANSFER OF UNOCCUPIED AND SUBSTANDARD

24 HOUSING TO LOCAL GOVERNMENTS AND COMMUNITY

25 DEVELOPMENT CORPORATIONS.—
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1 ‘‘(1) TRANSFER AUTHORITY.—Notwithstanding

2 the authority under subsection (a) and the last sen3 tence of section 204(g) of the National Housing Act

4 (12 U.S.C. 1710(g)), the Secretary of Housing and

5 Urban Development shall transfer ownership of any

6 qualified HUD property, subject to the requirements

7 of this section, to a unit of general local government

8 having jurisdiction for the area in which the prop9 erty is located or to a community development cor10 poration which operates within such a unit of gen11 eral local government in accordance with this sub12 section, but only to the extent that units of general

13 local government and community development cor14 porations consent to transfer and the Secretary de15 termines that such transfer is practicable.

16 ‘‘(2) QUALIFIED HUD PROPERTIES.—For pur17 poses of this subsection, the term ‘qualified HUD

18 property’ means any property for which, as of the

19 date that notification of the property is first made

20 under paragraph (3)(B), not less than 6 months

21 have elapsed since the later of the date that the

22 property was acquired by the Secretary or the date

23 that the property was determined to be unoccupied

24 or substandard, that is owned by the Secretary and

25 is—
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1 ‘‘(A) an unoccupied multifamily housing

2 project;

3 ‘‘(B) a substandard multifamily housing

4 project; or

5 ‘‘(C) an unoccupied single family property

6 that—

7 ‘‘(i) has been determined by the Sec8 retary not to be an eligible asset under sec9 tion 204(h) of the National Housing Act

10 (12 U.S.C. 1710(h)); or

11 ‘‘(ii) is an eligible asset under such

12 section 204(h), but—

13 ‘‘(I) is not subject to a specific

14 sale agreement under such section;

15 and

16 ‘‘(II) has been determined by the

17 Secretary to be inappropriate for con18 tinued inclusion in the program under

19 such section 204(h) pursuant to para20 graph (10) of such section.

21 ‘‘(3) TIMING.—The Secretary shall establish

22 procedures that provide for—

23 ‘‘(A) time deadlines for transfers under

24 this subsection;
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1 ‘‘(B) notification to units of general local

2 government and community development cor3 porations of qualified HUD properties in their

4 jurisdictions;

5 ‘‘(C) such units and corporations to ex6 press interest in the transfer under this sub7 section of such properties;

8 ‘‘(D) a right of first refusal for transfer of

9 qualified HUD properties to units of general

10 local government and community development

11 corporations, under which—

12 ‘‘(i) the Secretary shall establish a pe13 riod during which the Secretary may not

14 transfer such properties except to such

15 units and corporations;

16 ‘‘(ii) the Secretary shall offer qualified

17 HUD properties that are single family

18 properties for purchase by units of general

19 local government at a cost of $1 for each

20 property, but only to the extent that the

21 costs to the Federal Government of dis22 posal at such price do not exceed the costs

23 to the Federal Government of disposing of

24 property subject to the procedures for sin25 gle family property established by the Sec-
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1 retary pursuant to the authority under the

2 last sentence of section 204(g) of the Na3 tional Housing Act (12 U.S.C. 1710(g));

4 ‘‘(iii) the Secretary may accept an

5 offer to purchase a property made by a

6 community development corporation only if

7 the offer provides for purchase on a cost

8 recovery basis; and

9 ‘‘(iv) the Secretary shall accept an

10 offer to purchase such a property that is

11 made during such period by such a unit or

12 corporation and that complies with the re13 quirements of this paragraph; and

14 ‘‘(E) a written explanation, to any unit of

15 general local government or community develop16 ment corporation making an offer to purchase

17 a qualified HUD property under this subsection

18 that is not accepted, of the reason that such

19 offer was not acceptable.

20 ‘‘(4) OTHER DISPOSITION.—With respect to

21 any qualified HUD property, if the Secretary does

22 not receive an acceptable offer to purchase the prop23 erty pursuant to the procedure established under

24 paragraph (3), the Secretary shall dispose of the

25 property to the unit of general local government in
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1 which property is located or to community develop2 ment corporations located in such unit of general

3 local government on a negotiated, competitive bid, or

4 other basis, on such terms as the Secretary deems

5 appropriate.

6 ‘‘(5) SATISFACTION OF INDEBTEDNESS.—Be7 fore transferring ownership of any qualified HUD

8 property pursuant to this subsection, the Secretary

9 shall satisfy any indebtedness incurred in connection

10 with the property to be transferred, by canceling the

11 indebtedness.

12 ‘‘(6) DETERMINATION OF STATUS OF PROP13 ERTIES.—To ensure compliance with the require14 ments of this subsection, the Secretary shall take the

15 following actions:

16 ‘‘(A) UPON ENACTMENT.—Upon the enact17 ment of this subsection, the Secretary shall

18 promptly assess each residential property owned

19 by the Secretary to determine whether such

20 property is a qualified HUD property.

21 ‘‘(B) UPON ACQUISITION.—Upon acquiring

22 any residential property, the Secretary shall

23 promptly determine whether the property is a

24 qualified HUD property.
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1 ‘‘(C) UPDATES.—The Secretary shall peri2 odically reassess the residential properties

3 owned by the Secretary to determine whether

4 any such properties have become qualified

5 HUD properties.

6 ‘‘(7) TENANT LEASES.—This subsection shall

7 not affect the terms or the enforceability of any con8 tract or lease entered into with respect to any resi9 dential property before the date that such property

10 becomes a qualified HUD property.

11 ‘‘(8) USE OF PROPERTY.—Property transferred

12 under this subsection shall be used only for appro13 priate neighborhood revitalization efforts, including

14 homeownership, rental units, commercial space, and

15 parks, consistent with local zoning regulations, local

16 building codes, and subdivision regulations and re17 strictions of record.

18 ‘‘(9) INAPPLICABILITY TO PROPERTIES MADE

19 AVAILABLE FOR HOMELESS.—Notwithstanding any

20 other provision of this subsection, this subsection

21 shall not apply to any properties that the Secretary

22 determines are to be made available for use by the

23 homeless pursuant to subpart E of part 291 of title

24 24, Code of Federal Regulations, during the period

25 that the properties are so available.
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1 ‘‘(10) PROTECTION OF EXISTING CONTRACTS.—

2 This subsection may not be construed to alter, af3 fect, or annul any legally binding obligations entered

4 into with respect to a qualified HUD property before

5 the property becomes a qualified HUD property.

6 ‘‘(11) DEFINITIONS.—For purposes of this sub7 section, the following definitions shall apply:

8 ‘‘(A) COMMUNITY DEVELOPMENT COR9 PORATION.—The term ‘community development

10 corporation’ means a nonprofit organization

11 whose primary purpose is to promote commu12 nity development by providing housing opportu13 nities for low-income families.

14 ‘‘(B) COST RECOVERY BASIS.—The term

15 ‘cost recovery basis’ means, with respect to any

16 sale of a residential property by the Secretary,

17 that the purchase price paid by the purchaser

18 is equal to or greater than the sum of: (i) the

19 appraised value of the property, as determined

20 in accordance with such requirements as the

21 Secretary shall establish; and (ii) the costs in22 curred by the Secretary in connection with such

23 property during the period beginning on the

24 date on which the Secretary acquires title to the
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1 property and ending on the date on which the

2 sale is consummated.

3 ‘‘(C) MULTIFAMILY HOUSING PROJECT.—

4 The term ‘multifamily housing project’ has the

5 meaning given the term in section 203 of the

6 Housing and Community Development Amend7 ments of 1978.

8 ‘‘(D) RESIDENTIAL PROPERTY.—The term

9 ‘residential property’ means a property that is

10 a multifamily housing project or a single family

11 property.

12 ‘‘(E) SECRETARY.—The term ‘Secretary’

13 means the Secretary of Housing and Urban De14 velopment.

15 ‘‘(F) SEVERE PHYSICAL PROBLEMS.—The

16 term ‘severe physical problems’ means, with re17 spect to a dwelling unit, that the unit—

18 ‘‘(i) lacks hot or cold piped water, a

19 flush toilet, or both a bathtub and a show20 er in the unit, for the exclusive use of that

21 unit;

22 ‘‘(ii) on not less than three separate

23 occasions during the preceding winter

24 months, was uncomfortably cold for a pe25 riod of more than 6 consecutive hours due
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1 to a malfunction of the heating system for

2 the unit;

3 ‘‘(iii) has no functioning electrical

4 service, exposed wiring, any room in which

5 there is not a functioning electrical outlet,

6 or has experienced three or more blown

7 fuses or tripped circuit breakers during the

8 preceding 90-day period;

9 ‘‘(iv) is accessible through a public

10 hallway in which there are no working

11 light fixtures, loose or missing steps or

12 railings, and no elevator; or

13 ‘‘(v) has severe maintenance problems,

14 including water leaks involving the roof,

15 windows, doors, basement, or pipes or

16 plumbing fixtures, holes or open cracks in

17 walls or ceilings, severe paint peeling or

18 broken plaster, and signs of rodent infesta19 tion.

20 ‘‘(G) SINGLE FAMILY PROPERTY.—The

21 term ‘single family property’ means a 1- to 4-

22 family residence.

23 ‘‘(H) SUBSTANDARD.—The term ‘sub24 standard’ means, with respect to a multifamily

25 housing project, that 25 percent or more of the
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1 dwelling units in the project have severe phys2 ical problems.

3 ‘‘(I) UNIT OF GENERAL LOCAL GOVERN4 MENT.—The term ‘unit of general local govern5 ment’ has the meaning given such term in sec6 tion 102(a) of the Housing and Community De7 velopment Act of 1974.

8 ‘‘(J) UNOCCUPIED.—The term ‘unoccu9 pied’ means, with respect to a residential prop10 erty, that the unit of general local government

11 having jurisdiction over the area in which the

12 project is located has certified in writing that

13 the property is not inhabited.

14 ‘‘(12) REGULATIONS.—

15 ‘‘(A) INTERIM.—Not later than 30 days

16 after the date of the enactment of this sub17 section, the Secretary shall issue such interim

18 regulations as are necessary to carry out this

19 subsection.

20 ‘‘(B) FINAL.—Not later than 60 days after

21 the date of the enactment of this subsection,

22 the Secretary shall issue such final regulations

23 as are necessary to carry out this subsection.’’.
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1 SEC. 142. TRANSFER OF HUD ASSETS IN REVITALIZATION

2 AREAS.

3 In carrying out the program under section 204(h) of

4 the National Housing Act (12 U.S.C. 1710(h)), upon the

5 request of the chief executive officer of a county or the

6 government of appropriate jurisdiction and not later than

7 60 days after such request is made, the Secretary of Hous8 ing and Urban Development shall designate as a revital9 ization area all portions of such county that meet the cri10 teria for such designation under paragraph (3) of such

11 section.

12 SEC. 143. RISK-SHARING DEMONSTRATION.

13 Section 249 of the National Housing Act (12 U.S.C.

14 1715z–14) is amended—

15 (1) by striking the section heading and insert16 ing the following:

17 ‘‘RISK-SHARING DEMONSTRATION’’;

18 (2) by striking ‘‘reinsurance’’ each place such

19 term appears and insert ‘‘risk-sharing’’;

20 (3) in subsection (a)—

21 (A) in the first sentence, by inserting ‘‘and

22 with insured community development financial

23 institutions’’ after ‘‘private mortgage insurers’’;

24 (B) in the second sentence—

25 (i) by striking ‘‘two’’ and inserting

26 ‘‘four’’; and
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1 (ii) by striking ‘‘March 15, 1988’’ and

2 inserting ‘‘the expiration of the 5-year pe3 riod beginning on the date of the enact4 ment of the Community Renewal Tax Re5 lief Act of 2000’’; and

6 (C) in the third sentence—

7 (i) by striking ‘‘insured’’ and inserting

8 ‘‘for which risk of nonpayment is shared’’;

9 and

10 (ii) by striking ‘‘10 percent’’ and in11 serting ‘‘20 percent’’;

12 (4) in subsection (b)—

13 (A) in the first sentence—

14 (i) by striking ‘‘to provide’’ and in15 serting ‘‘, in providing’’;

16 (ii) by striking ‘‘through’’ and insert17 ing ‘‘, to enter into’’; and

18 (iii) by inserting ‘‘and with insured

19 community development financial institu20 tions’’ before the period at the end;

21 (B) in the second sentence, by inserting

22 ‘‘and insured community development financial

23 institutions’’ after ‘‘private mortgage insurance

24 companies’’;
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1 (C) by striking paragraph (1) and insert2 ing the following new paragraph:

3 ‘‘(1) assume a secondary percentage of loss on

4 any mortgage insured pursuant to section 203(b),

5 234, or 245 covering a one- to four-family dwelling,

6 which percentage of loss shall be set forth in the

7 risk-sharing contract, with the first percentage of

8 loss to be borne by the Secretary;’’; and

9 (D) in paragraph (2)—

10 (i) by striking ‘‘carry out (under ap11 propriate delegation) such’’ and inserting

12 ‘‘perform or delegate underwriting,’’;

13 (ii) by striking ‘‘function as the Sec14 retary pursuant to regulations,’’ and in15 serting ‘‘functions as the Secretary’’; and

16 (iii) by inserting before the period at

17 the end the following: ‘‘and shall set forth

18 in the risk-sharing contract’’;

19 (5) in subsection (c)—

20 (A) in the first sentence—

21 (i) by striking ‘‘of’’ the first place it

22 appears and inserting ‘‘for’’;

23 (ii) by inserting ‘‘received by the Sec24 retary with a private mortgage insurer or
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1 insured community development financial

2 institution’’ after ‘‘sharing of premiums’’;

3 (iii) by striking ‘‘insurance reserves’’

4 and inserting ‘‘loss reserves’’;

5 (iv) by striking ‘‘such insurance’’ and

6 inserting ‘‘such risk-sharing contract’’; and

7 (v) by striking ‘‘right’’ and inserting

8 ‘‘rights’’; and

9 (B) in the second sentence—

10 (i) by inserting ‘‘or insured commu11 nity development financial institution’’

12 after ‘‘private mortgage insurance com13 pany’’; and

14 (ii) by striking ‘‘for insurance’’ and

15 inserting ‘‘for risk-sharing’’;

16 (6) in subsection (d), by inserting ‘‘or insured

17 community development financial institution’’ after

18 ‘‘private mortgage insurance company’’; and

19 (7) by adding at the end the following new sub20 section:

21 ‘‘(e) INSURED COMMUNITY DEVELOPMENT FINAN22 CIAL INSTITUTION.—For purposes of this section, the

23 term ‘insured community development financial institu24 tion’ means a community development financial institu25 tion, as such term is defined in section 103 of Reigle Com-
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1 munity Development and Regulatory Improvement Act of

2 1994 (12 U.S.C. 4702) that is an insured depository insti3 tution (as such term is defined in section 3 of the Federal

4 Deposit Insurance Act (12 U.S.C. 1813)) or an insured

5 credit union (as such term is defined in section 101 of

6 the Federal Credit Union Act (12 U.S.C. 1752)).’’.

7 SEC. 144. PREVENTION AND TREATMENT OF SUBSTANCE

8 ABUSE; SERVICES PROVIDED THROUGH RELI9 GIOUS ORGANIZATIONS.

10 Title V of the Public Health Service Act (42 U.S.C.

11 290aa et seq.) is amended by adding at the end the fol12 lowing part:

13 ‘‘PART G—SERVICES PROVIDED THROUGH RELIGIOUS

14 ORGANIZATIONS

15 ‘‘SEC. 581. APPLICABILITY TO DESIGNATED PROGRAMS.

16 ‘‘(a) DESIGNATED PROGRAMS.—Subject to sub17 section (b), this part applies to discretionary and formula

18 grant programs administered by the Substance Abuse and

19 Mental Health Services Administration that make awards

20 of financial assistance to public or private entities for the

21 purpose of carrying out activities to prevent or treat sub22 stance abuse (in this part referred to as a ‘designated pro23 gram’). Designated programs include the program under

24 subpart II of part B of title XIX (relating to formula

25 grants to the States).
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1 ‘‘(b) LIMITATION.—This part does not apply to any

2 award of financial assistance under a designated program

3 for a purpose other than the purpose specified in sub4 section (a).

5 ‘‘(c) DEFINITIONS.—For purposes of this part (and

6 subject to subsection (b)):

7 ‘‘(1) The term ‘designated program’ has the

8 meaning given such term in subsection (a).

9 ‘‘(2) The term ‘financial assistance’ means a

10 grant, cooperative agreement, or contract.

11 ‘‘(3) The term ‘program beneficiary’ means an

12 individual who receives program services.

13 ‘‘(4) The term ‘program participant’ means a

14 public or private entity that has received financial

15 assistance under a designated program.

16 ‘‘(5) The term ‘program services’ means treat17 ment for substance abuse, or preventive services re18 garding such abuse, provided pursuant to an award

19 of financial assistance under a designated program.

20 ‘‘(6) The term ‘religious organization’ means a

21 nonprofit religious organization.
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1 ‘‘SEC. 582. RELIGIOUS ORGANIZATIONS AS PROGRAM PAR2 TICIPANTS.

3 ‘‘(a) IN GENERAL.—Notwithstanding any other pro4 vision of law, a religious organization, on the same basis

5 as any other nonprofit private provider—

6 ‘‘(1) may receive financial assistance under a

7 designated program; and

8 ‘‘(2) may be a provider of services under a des9 ignated program.

10 ‘‘(b) RELIGIOUS ORGANIZATIONS.—The purpose of

11 this section is to allow religious organizations to be pro12 gram participants on the same basis as any other non13 profit private provider without impairing the religious

14 character of such organizations, and without diminishing

15 the religious freedom of program beneficiaries.

16 ‘‘(c) NONDISCRIMINATION AGAINST RELIGIOUS OR17 GANIZATIONS.—

18 ‘‘(1) ELIGIBILITY AS PROGRAM PARTICI19 PANTS.—Religious organizations are eligible to be

20 program participants on the same basis as any other

21 nonprofit private organization as long as the pro22 grams are implemented consistent with the Estab23 lishment Clause and Free Exercise Clause of the

24 First Amendment to the United States Constitution.

25 Nothing in this Act shall be construed to restrict the

26 ability of the Federal Government, or a State or
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1 local government receiving funds under such pro2 grams, to apply to religious organizations the same

3 eligibility conditions in designated programs as are

4 applied to any other nonprofit private organization.

5 ‘‘(2) NONDISCRIMINATION.—Neither the Fed6 eral Government nor a State or local government re7 ceiving funds under designated programs shall dis8 criminate against an organization that is or applies

9 to be a program participant on the basis that the or10 ganization has a religious character.

11 ‘‘(d) RELIGIOUS CHARACTER AND FREEDOM.—

12 ‘‘(1) RELIGIOUS ORGANIZATIONS.—Except as

13 provided in this section, any religious organization

14 that is a program participant shall retain its inde15 pendence from Federal, State, and local government,

16 including such organization’s control over the defini17 tion, development, practice, and expression of its re18 ligious beliefs.

19 ‘‘(2) ADDITIONAL SAFEGUARDS.—Neither the

20 Federal Government nor a State shall require a reli21 gious organization to—

22 ‘‘(A) alter its form of internal governance;

23 or

24 ‘‘(B) remove religious art, icons, scripture,

25 or other symbols,
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1 in order to be a program participant.

2 ‘‘(e) EMPLOYMENT PRACTICES.—Nothing in this sec3 tion shall be construed to modify or affect the provisions

4 of any other Federal or State law or regulation that re5 lates to discrimination in employment. A religious organi6 zation’s exemption provided under section 702 of the Civil

7 Rights Act of 1964 regarding employment practices shall

8 not be affected by its participation in, or receipt of funds

9 from, a designated program.

10 ‘‘(f ) RIGHTS OF PROGRAM BENEFICIARIES.—

11 ‘‘(1) IN GENERAL.—If an individual who is a

12 program beneficiary or a prospective program bene13 ficiary objects to the religious character of a pro14 gram participant, within a reasonable period of time

15 after the date of such objection such program partic16 ipant shall refer such individual to, and the appro17 priate Federal, State, or local government that ad18 ministers a designated program or is a program par19 ticipant shall provide to such individual (if otherwise

20 eligible for such services), program services that—

21 ‘‘(A) are from an alternative provider that

22 is accessible to, and has the capacity to provide

23 such services to, such individual; and

24 ‘‘(B) have a value that is not less than the

25 value of the services that the individual would
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1 have received from the program participant to

2 which the individual had such objection.

3 Upon referring a program beneficiary to an alter4 native provider, the program participant shall notify

5 the appropriate Federal, State, or local government

6 agency that administers the program of such refer7 ral.

8 ‘‘(2) NOTICES.—Program participants, public

9 agencies that refer individuals to designated pro10 grams, and the appropriate Federal, State, or local

11 governments that administer designated programs or

12 are program participants shall ensure that notice is

13 provided to program beneficiaries or prospective pro14 gram beneficiaries of their rights under this section.

15 ‘‘(3) ADDITIONAL REQUIREMENTS.—A program

16 participant making a referral pursuant to paragraph

17 (1) shall—

18 ‘‘(A) prior to making such referral, con19 sider any list that the State or local government

20 makes available of entities in the geographic

21 area that provide program services; and

22 ‘‘(B) ensure that the individual makes con23 tact with the alternative provider to which the

24 individual is referred.
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1 ‘‘(4) NONDISCRIMINATION.—A religious organi2 zation that is a program participant shall not in pro3 viding program services or engaging in outreach ac4 tivities under designated programs discriminate

5 against a program beneficiary or prospective pro6 gram beneficiary on the basis of religion or religious

7 belief.

8 ‘‘(g) FISCAL ACCOUNTABILITY.—

9 ‘‘(1) IN GENERAL.—Except as provided in para10 graph (2), any religious organization that is a pro11 gram participant shall be subject to the same regula12 tions as other recipients of awards of Federal finan13 cial assistance to account, in accordance with gen14 erally accepted auditing principles, for the use of the

15 funds provided under such awards.

16 ‘‘(2) LIMITED AUDIT.—With respect to the

17 award involved, a religious organization that is a

18 program participant shall segregate Federal

19 amounts provided under award into a separate ac20 count from non-Federal funds. Only the award funds

21 shall be subject to audit by the government.

22 ‘‘(h) COMPLIANCE.—With respect to compliance with

23 this section by an agency, a religious organization may

24 obtain judicial review of agency action in accordance with

25 chapter 7 of title 5, United States Code.
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1 ‘‘SEC. 583. LIMITATIONS ON USE OF FUNDS FOR CERTAIN

2 PURPOSES.

3 ‘‘No funds provided under a designated program shall

4 be expended for sectarian worship, instruction, or pros5 elytization.

6 ‘‘SEC. 584. EDUCATIONAL REQUIREMENTS FOR PERSONNEL

7 IN DRUG TREATMENT PROGRAMS.

8 ‘‘(a) FINDINGS.—The Congress finds that—

9 ‘‘(1) establishing unduly rigid or uniform edu10 cational qualification for counselors and other per11 sonnel in drug treatment programs may undermine

12 the effectiveness of such programs; and

13 ‘‘(2) such educational requirements for coun14 selors and other personnel may hinder or prevent the

15 provision of needed drug treatment services.

16 ‘‘(b) NONDISCRIMINATION.—In determining whether

17 personnel of a program participant that has a record of

18 successful drug treatment for the preceding three years

19 have satisfied State or local requirements for education

20 and training, a State or local government shall not dis21 criminate against education and training provided to such

22 personnel by a religious organization, so long as such edu23 cation and training includes basic content substantially

24 equivalent to the content provided by nonreligious organi25 zations that the State or local government would credit
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1 for purposes of determining whether the relevant require2 ments have been satisfied.’’.

3 PART II—ADVISORY COUNCIL ON COMMUNITY

4 RENEWAL

5 SEC. 151. SHORT TITLE.

6 This part may be cited as the ‘‘Advisory Council on

7 Community Renewal Act’’.

8 SEC. 152. ESTABLISHMENT.

9 There is established an advisory council to be known

10 as the ‘‘Advisory Council on Community Renewal’’ (in this

11 part referred to as the ‘‘Advisory Council’’).

12 SEC. 153. DUTIES OF ADVISORY COUNCIL.

13 The Advisory Council shall advise the Secretary of

14 Housing and Urban Development (in this part referred to

15 as the ‘‘Secretary’’) on the designation of renewal commu16 nities pursuant to the amendment made by section 101

17 and on the exercise of any other authority granted to the

18 Secretary pursuant to the amendments made by this title.

19 SEC. 154. MEMBERSHIP.

20 (a) NUMBER AND APPOINTMENT.—The Advisory

21 Council shall be composed of 7 members appointed by the

22 Secretary.

23 (b) CHAIRPERSON.—The Chairperson of the Advisory

24 Council (in this part referred to as the ‘‘Chairperson’’)
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1 shall be designated by the Secretary at the time of the

2 appointment.

3 (c) TERMS.—Each member shall be appointed for the

4 life of the Advisory Council.

5 (d) BASIC PAY.—

6 (1) CHAIRPERSON.—The Chairperson shall be

7 paid at a rate equal to the daily rate of basic pay

8 for level III of the Executive Schedule for each day

9 (including travel time) during which the Chairperson

10 is engaged in the actual performance of duties vest11 ed in the Advisory Council.

12 (2) OTHER MEMBERS.—Members other than

13 the Chairperson shall each be paid at a rate equal

14 to the daily rate of basic pay for level IV of the Ex15 ecutive Schedule for each day (including travel time)

16 during which they are engaged in the actual per17 formance of duties vested in the Advisory Council.

18 (e) TRAVEL EXPENSES.—Each member shall receive

19 travel expenses, including per diem in lieu of subsistence,

20 in accordance with applicable provisions under subchapter

21 I of chapter 57 of title 5, United States Code.

22 (f ) QUORUM.—Four members of the Advisory Coun23 cil shall constitute a quorum but a lesser number may hold

24 hearings.
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1 (g) MEETINGS.—The Advisory Council shall meet at

2 the call of the Secretary or the Chairperson.

3 SEC. 155. POWERS OF ADVISORY COUNCIL.

4 (a) HEARINGS AND SESSIONS.—The Advisory Coun5 cil may, for the purpose of carrying out this part, hold

6 hearings, sit and act at times and places, take testimony,

7 and receive evidence as the Advisory Council considers ap8 propriate. The Advisory Council may administer oaths or

9 affirmations to witnesses appearing before it.

10 (b) POWERS OF MEMBERS AND AGENTS.—Any mem11 ber or agent of the Advisory Council may, if authorized

12 by the Advisory Council, take any action which the Advi13 sory Council is authorized to take by this section.

14 (c) OBTAINING OFFICIAL DATA.—The Advisory

15 Council may secure directly from any department or agen16 cy of the United States information necessary to enable

17 it to carry out this part. Upon request of the Chairperson

18 of the Advisory Council, the head of that department or

19 agency shall furnish that information to the Advisory

20 Council.

21 SEC. 156. REPORTS.

22 (a) ANNUAL REPORTS.—The Advisory Council shall

23 submit to the Secretary an annual report for each fiscal

24 year.
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1 (b) INTERIM REPORTS.—The Advisory Council may

2 submit to the Secretary such interim reports as the Advi3 sory Council considers appropriate.

4 (c) FINAL REPORT.—The Advisory Council shall

5 transmit a final report to the Secretary not later Sep6 tember 30, 2003. The final report shall contain a detailed

7 statement of the findings and conclusions of the Advisory

8 Council, together with any recommendations for legislative

9 or administrative action that the Advisory Council con10 siders appropriate.

11 SEC. 157. TERMINATION.

12 (a) IN GENERAL.—The Advisory Council shall termi13 nate 30 days after submitting its final report under sec14 tion 156(c).

15 (b) EXTENSION.—Notwithstanding subsection (a),

16 the Secretary may postpone the termination of the Advi17 sory Council for a period not to exceed 3 years after the

18 Advisory Council submits its final report under section

19 156(c).

20 SEC. 158. APPLICABILITY OF FEDERAL ADVISORY COM21 MITTEE ACT.

22 The Federal Advisory Committee Act (5 U.S.C. App.)

23 shall not apply to the Advisory Council.
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1 SEC. 159. RESOURCES.

2 The Secretary shall provide to the Advisory Council

3 appropriate resources so that the Advisory Council may

4 carry out its duties and fuctions under this part.

5 SEC. 160. EFFECTIVE DATE.

6 This part shall be effective 30 days after the date

7 of its enactment.

8 Subtitle F—Other Provisions

9 SEC. 161. ACCELERATION OF PHASE-IN OF INCREASE IN

10 VOLUME CAP ON PRIVATE ACTIVITY BONDS.

11 (a) IN GENERAL.—Paragraphs (1) and (2) of section

12 146(d) (relating to State ceiling) are amended to read as

13 follows:

14 ‘‘(1) IN GENERAL.—The State ceiling applicable

15 to any State for any calendar year shall be the

16 greater of—

17 ‘‘(A) an amount equal to $75 ($62.50 in

18 the case of calendar year 2001) multiplied by

19 the State population, or

20 ‘‘(B) $225,000,000 ($187,500,000 in the

21 case of calendar year 2001).

22 ‘‘(2) COST-OF-LIVING ADJUSTMENT.—In the

23 case of a calendar year after 2002, each of the dollar

24 amounts contained in paragraph (1) shall be in25 creased by an amount equal to—

26 ‘‘(A) such dollar amount, multiplied by
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1 ‘‘(B) the cost-of-living adjustment deter2 mined under section 1(f )(3) for such calendar

3 year by substituting ‘calendar year 2001’ for

4 ‘calendar year 1992’ in subparagraph (B)

5 thereof.

6 If any increase determined under the preceding sen7 tence is not a multiple of $5 ($5,000 in the case of

8 the dollar amount in paragraph (1)(B)), such in9 crease shall be rounded to the nearest multiple

10 thereof.’’.

11 (b) EFFECTIVE DATE.—The amendment made by

12 this section shall apply to calendar years after 2000.

13 SEC. 162. MODIFICATIONS TO EXPENSING OF ENVIRON14 MENTAL REMEDIATION COSTS.

15 (a) EXPENSING NOT LIMITED TO SITES IN TAR16 GETED AREAS.—Subsection (c) of section 198 is amended

17 to read as follows:

18 ‘‘(c) QUALIFIED CONTAMINATED SITE.—For pur19 poses of this section—

20 ‘‘(1) IN GENERAL.—The term ‘qualified con21 taminated site’ means any area—

22 ‘‘(A) which is held by the taxpayer for use

23 in a trade or business or for the production of

24 income, or which is property described in sec-
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1 tion 1221(a)(1) in the hands of the taxpayer,

2 and

3 ‘‘(B) at or on which there has been a re4 lease (or threat of release) or disposal of any

5 hazardous substance.

6 ‘‘(2) NATIONAL PRIORITIES LISTED SITES NOT

7 INCLUDED.—Such term shall not include any site

8 which is on, or proposed for, the national priorities

9 list under section 105(a)(8)(B) of the Comprehen10 sive Environmental Response, Compensation, and

11 Liability Act of 1980 (as in effect on the date of the

12 enactment of this section).

13 ‘‘(3) TAXPAYER MUST RECEIVE STATEMENT

14 FROM STATE ENVIRONMENTAL AGENCY.—An area

15 shall be treated as a qualified contaminated site with

16 respect to expenditures paid or incurred during any

17 taxable year only if the taxpayer receives a state18 ment from the appropriate agency of the State in

19 which such area is located that such area meets the

20 requirement of paragraph (1)(B).

21 ‘‘(4) APPROPRIATE STATE AGENCY.—For pur22 poses of paragraph (3), the chief executive officer of

23 each State may, in consultation with the Adminis24 trator of the Environmental Protection Agency, des25 ignate the appropriate State environmental agency
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1 within 60 days of the date of the enactment of this

2 section. If the chief executive officer of a State has

3 not designated an appropriate environmental agency

4 within such 60-day period, the appropriate environ5 mental agency for such State shall be designated by

6 the Administrator of the Environmental Protection

7 Agency.’’.

8 (b) EXTENSION OF TERMINATION DATE.—Sub9 section (h) of section 198 is amended by striking ‘‘2001’’

10 and inserting ‘‘2003’’.

11 (c) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to expenditures paid or incurred

13 after the date of the enactment of this Act.

14 SEC. 163. EXTENSION OF DC HOMEBUYER TAX CREDIT.

15 Section 1400C(i) (relating to application of section)

16 is amended by striking ‘‘2002’’ and inserting ‘‘2004’’.

17 SEC. 164. EXTENSION OF DC ZONE THROUGH 2003.

18 (a) IN GENERAL.—The following provisions are

19 amended by striking ‘‘2002’’ each place it appears and

20 inserting ‘‘2003’’:

21 (1) Section 1400(f ).

22 (2) Section 1400A(b).

23 (b) ZERO CAPITAL GAINS RATE.—Section 1400B

24 (relating to zero percent capital gains rate) is amended—
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1 (1) by striking ‘‘2003’’ each place it appears

2 and inserting ‘‘2004’’, and

3 (2) by striking ‘‘2007’’ each place it appears

4 and inserting ‘‘2008’’.

5 SEC. 165. EXTENSION OF ENHANCED DEDUCTION FOR COR6 PORATE DONATIONS OF COMPUTER TECH7 NOLOGY.

8 (a) EXPANSION OF COMPUTER TECHNOLOGY DONA9 TIONS TO PUBLIC LIBRARIES.—

10 (1) IN GENERAL.—Paragraph (6) of section

11 170(e) (relating to special rule for contributions of

12 computer technology and equipment for elementary

13 or secondary school purposes) is amended by strik14 ing ‘‘qualified elementary or secondary educational

15 contribution’’ each place it occurs in the headings

16 and text and inserting ‘‘qualified computer contribu17 tion’’.

18 (2) EXPANSION OF ELIGIBLE DONEES.—Clause

19 (i) of section 170(e)(6)(B) (relating to qualified ele20 mentary or secondary educational contribution) is

21 amended by striking ‘‘or’’ at the end of subclause

22 (I), by adding ‘‘or’’ at the end of subclause (II), and

23 by inserting after subclause (II) the following new

24 subclause:
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1 ‘‘(III) a public library (within the

2 meaning of section 213(2)(A) of the

3 Library Services and Technology Act

4 (20 U.S.C. 9122(2)(A)), as in effect

5 on the date of the enactment of the

6 Community Renewal Tax Relief Act of

7 2000, established and maintained by

8 an entity described in subsection

9 (c)(1),’’.

10 (3) EXTENSION OF DONATION PERIOD.—Clause

11 (ii) of section 170(e)(6)(B) is amended by striking

12 ‘‘2 years’’ and inserting ‘‘3 years’’.

13 (b) CONFORMING AMENDMENTS.—

14 (1) Section 170(e)(6)(B)(iv) is amended by

15 striking ‘‘in any grades of the K–12’’.

16 (2) The heading of paragraph (6) of section

17 170(e) is amended by striking ‘‘ELEMENTARY OR

18 SECONDARY SCHOOL PURPOSES’’ and inserting

19 ‘‘EDUCATIONAL PURPOSES’’.

20 (c) EXTENSION OF DEDUCTION.—Section

21 170(e)(6)(F) (relating to termination) is amended by

22 striking ‘‘December 31, 2000’’ and inserting ‘‘December

23 31, 2003’’.

24 (d) STANDARDS AS TO FUNCTIONALITY AND SUIT25 ABILITY.—Subparagraph (B) of section 170(e)(6) is
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1 amended by striking ‘‘and’’ at the end of clause (vi), by

2 striking the period at the end of clause (vii) and inserting

3 ‘‘, and’’, and by adding at the end the following new

4 clause:

5 ‘‘(viii) the property meets such stand6 ards, if any, as the Secretary may pre7 scribe by regulation to assure that the

8 property meets minimum functionality and

9 suitability standards for educational pur10 poses.’’.

11 (e) DONATIONS OF COMPUTERS REACQUIRED BY

12 MANUFACTURER.—Paragraph (6) of section 170(e) is fur13 ther amended by redesignating subparagraphs (D), (E),

14 and (F) as subparagraphs (E), (F), and (G), respectively,

15 and by inserting after subparagraph (C) the following new

16 subparagraph:

17 ‘‘(D) DONATIONS OF PROPERTY REAC18 QUIRED BY MANUFACTURER.—In the case of

19 property which is reacquired by the person who

20 constructed the property—

21 ‘‘(i) subparagraph (B)(ii) shall be ap22 plied to a contribution of such property by

23 such person by taking into account the

24 date that the original construction of the

25 property was substantially completed, and
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1 ‘‘(ii) subparagraph (B)(iii) shall not

2 apply to such contribution.’’.

3 (f ) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to contributions made after De5 cember 31, 2000.

6 SEC. 166. TREATMENT OF INDIAN TRIBAL GOVERNMENTS

7 UNDER FEDERAL UNEMPLOYMENT TAX ACT.

8 (a) IN GENERAL.—Section 3306(c)(7) (defining em9 ployment) is amended—

10 (1) by inserting ‘‘or in the employ of an Indian

11 tribe,’’ after ‘‘service performed in the employ of a

12 State, or any political subdivision thereof,’’; and

13 (2) by inserting ‘‘or Indian tribes’’ after ‘‘whol14 ly owned by one or more States or political subdivi15 sions’’.

16 (b) PAYMENTS IN LIEU OF CONTRIBUTIONS.—Sec17 tion 3309 (relating to State law coverage of services per18 formed for nonprofit organizations or governmental enti19 ties) is amended—

20 (1) in subsection (a)(2) by inserting ‘‘, includ21 ing an Indian tribe,’’ after ‘‘the State law shall pro22 vide that a governmental entity’’;

23 (2) in subsection (b)(3)(B) by inserting ‘‘, or of

24 an Indian tribe’’ after ‘‘of a State or political sub25 division thereof’’;
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1 (3) in subsection (b)(3)(E) by inserting ‘‘or

2 tribal’’ after ‘‘the State’’; and

3 (4) in subsection (b)(5) by inserting ‘‘or of an

4 Indian tribe’’ after ‘‘an agency of a State or political

5 subdivision thereof’’.

6 (c) STATE LAW COVERAGE.—Section 3309 (relating

7 to State law coverage of services performed for nonprofit

8 organizations or governmental entities) is amended by

9 adding at the end the following new subsection:

10 ‘‘(d) ELECTION BY INDIAN TRIBE.—The State law

11 shall provide that an Indian tribe may make contributions

12 for employment as if the employment is within the mean13 ing of section 3306 or make payments in lieu of contribu14 tions under this section, and shall provide that an Indian

15 tribe may make separate elections for itself and each sub16 division, subsidiary, or business enterprise wholly owned

17 by such Indian tribe. State law may require a tribe to post

18 a payment bond or take other reasonable measures to as19 sure the making of payments in lieu of contributions under

20 this section. Notwithstanding the requirements of section

21 3306(a)(6), if, within 90 days of having received a notice

22 of delinquency, a tribe fails to make contributions, pay23 ments in lieu of contributions, or payment of penalties or

24 interest (at amounts or rates comparable to those applied

25 to all other employers covered under the State law) as-
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1 sessed with respect to such failure, or if the tribe fails

2 to post a required payment bond, then service for the tribe

3 shall not be excepted from employment under section

4 3306(c)(7) until any such failure is corrected. This sub5 section shall apply to an Indian tribe within the meaning

6 of section 4(e) of the Indian Self-Determination and Edu7 cation Assistance Act (25 U.S.C. 450b(e)).’’.

8 (d) DEFINITIONS.—Section 3306 (relating to defini9 tions) is amended by adding at the end the following new

10 subsection:

11 ‘‘(u) INDIAN TRIBE.—For purposes of this chapter,

12 the term ‘Indian tribe’ has the meaning given to such term

13 by section 4(e) of the Indian Self-Determination and Edu14 cation Assistance Act (25 U.S.C. 450b(e)), and includes

15 any subdivision, subsidiary, or business enterprise wholly

16 owned by such an Indian tribe.’’.

17 (e) EFFECTIVE DATE; TRANSITION RULE.—

18 (1) EFFECTIVE DATE.—The amendments made

19 by this section shall apply to service performed on

20 or after the date of the enactment of this Act.

21 (2) TRANSITION RULE.—For purposes of the

22 Federal Unemployment Tax Act, service performed

23 in the employ of an Indian tribe (as defined in sec24 tion 3306(u) of the Internal Revenue Code of 1986

25 (as added by this section)) shall not be treated as
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1 employment (within the meaning of section 3306 of

2 such Code) if—

3 (A) it is service which is performed before

4 the date of the enactment of this Act and with

5 respect to which the tax imposed under the

6 Federal Unemployment Tax Act has not been

7 paid, and

8 (B) such Indian tribe reimburses a State

9 unemployment fund for unemployment benefits

10 paid for service attributable to such tribe for

11 such period.

12 TITLE II—TWO-YEAR EXTENSION

13 OF AVAILABILITY OF MED14 ICAL SAVINGS ACCOUNTS

15 SEC. 201. TWO-YEAR EXTENSION OF AVAILABILITY OF MED16 ICAL SAVINGS ACCOUNTS.

17 (a) IN GENERAL.—Paragraphs (2) and (3)(B) of sec18 tion 220(i) (defining cut-off year) are each amended by

19 striking ‘‘2000’’ each place it appears and inserting

20 ‘‘2002’’.

21 (b) CONFORMING AMENDMENTS.—

22 (1) Paragraph (2) of section 220( j) is

23 amended—
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1 (A) by striking ‘‘1998 or 1999’’ each place

2 it appears and inserting ‘‘1998, 1999, or

3 2001’’,

4 (B) by striking ‘‘600,000 (750,000 in the

5 case of 1999)’’ and inserting ‘‘750,000

6 (600,000 in the case of 1998)’’, and

7 (C) by inserting after subparagraph (B)

8 the following new subparagraph:

9 ‘‘(C) NO LIMITATION FOR 2000.—The nu10 merical limitation shall not apply for 2000.’’.

11 (2) Subparagraph (A) of section 220( j)(4) is

12 amended by striking ‘‘and 1999’’ and inserting

13 ‘‘1999, and 2001’’.

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall take effect on the date of the enactment

16 of this Act.

17 SEC. 202. MEDICAL SAVINGS ACCOUNTS RENAMED AS AR18 CHER MSAS.

19 (a) IN GENERAL.—The following provisions are

20 amended by striking ‘‘medical savings account’’ each place

21 it appears in the text and inserting ‘‘Archer MSA’’:

22 (1) Section 26(b)(2)(Q).

23 (2) Section 106(b).

24 (3) Section 138(b).

25 (4) Section 220.
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1 (5) Section 848(e)(1)(B)(iv).

2 (6) Subsections (a)(2) and (d) of section 4973.

3 (7) Subsections (c)(4) and (e)(1)(D) of section

4 4975.

5 (8) Subsections (a) and (d)(2)(B) of section

6 4980E.

7 (9) Section 6051(a)(11).

8 (b) OTHER AMENDMENTS.—

9 (1) Paragraph (16) of section 62(a) is amended

10 to read as follows:

11 ‘‘(16) ARCHER MSAS.—The deduction allowed

12 by section 220.’’.

13 (2) The following provisions are each amended

14 by striking ‘‘medical savings accounts’’ each place it

15 appears in the text and inserting ‘‘Archer MSAs’’:

16 (A) Paragraphs (4) and (7) of section

17 106(b).

18 (B) Subsections (c)(1)(D), (e)(2),

19 (f )(3)(A), (i)(4)(B), and ( j) of section 220.

20 (C) Section 4973(d).

21 (D) Subsections (b) and (d)(1) of section

22 4980E.

23 (E) Section 6693(a)(2)(B).
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1 (3) Paragraph (1) of section 220(d) is amended

2 by inserting ‘‘as a medical savings account’’ after

3 ‘‘United States’’.

4 (4) The heading for section 220(d) is amended

5 by striking ‘‘MEDICAL SAVINGS ACCOUNT’’ and in6 serting ‘‘ARCHER MSA’’.

7 (5) The headings for sections 220(d)(1) and

8 3231(e)(10) are each amended by striking ‘‘MED9 ICAL SAVINGS ACCOUNT’’ and inserting ‘‘ARCHER

10 MSA’’.

11 (6) The headings for sections 106(b), 138(f ),

12 220(i), and 4973(d) are each amended by striking

13 ‘‘MEDICAL SAVINGS ACCOUNTS’’ and inserting ‘‘AR14 CHER MSAS’’.

15 (7) The headings for section 220(c)(1)(C) and

16 4975(c)(4) are each amended by striking ‘‘MEDICAL

17 SAVINGS ACCOUNTS’’ and inserting ‘‘ARCHER MSAS’’.

18 (8) The section heading for section 220 is

19 amended to read as follows:

20 ‘‘SEC. 220. ARCHER MSAS.’’.

21 (9) The item relating to section 220 in the table

22 of sections for part VII of subchapter B of chapter

23 1 is amended to read as follows:

‘‘Sec. 220. Archer MSAs.’’.

24 (10) The provisions amended by the preceding

25 provisions of this section are further amended by
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1 striking ‘‘a Archer’’ each place it appears and insert2 ing ‘‘an Archer’’.

3 (11) Section 220(e)(1) is further amended by

4 striking ‘‘A Archer’’ and inserting ‘‘An Archer’’.

5 TITLE III—ADMINISTRATIVE

6 AND TECHNICAL PROVISIONS

7 Subtitle A—Administrative

8 Provisions

9 SEC. 301. EXEMPTION OF CERTAIN REPORTING REQUIRE10 MENTS.

11 Section 3003(a)(1) of the Federal Reports Elimi12 nation and Sunset Act of 1995 (31 U.S.C. 1113 note)

13 shall not apply to any report required to be submitted

14 under any of the following provisions of law:

15 (1) Section 13031(f ) of the Consolidated Omni16 bus Budget Reconciliation Act of 1985 (19 U.S.C.

17 58c(f )).

18 (2) Section 16(c) of the Foreign Trade Zones

19 Act (19 U.S.C. 81p(c)).

20 (3) The following provisions of the Tariff Act of

21 1930:

22 (A) Section 330(c)(1) (19 U.S.C.

23 1330(c)(1)).

24 (B) Section 607(c) (19 U.S.C. 1607(c)).
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1 (4) Section 5 of the International Coffee Agree2 ment Act of 1980 (19 U.S.C. 1356n).

3 (5) Section 351(a)(2) of the Trade Expansion

4 Act of 1962 (19 U.S.C. 1981(a)(2)).

5 (6) Section 502 of the Automotive Products

6 Trade Act of 1965 (19 U.S.C. 2032).

7 (7) Section 3131 of the Customs Enforcement

8 Act of 1986 (19 U.S.C. 2081).

9 (8) The following provisions of the Trade Act of

10 1974 (19 U.S.C. 2101 et seq.):

11 (A) Section 102(b)(4)(A)(ii)(I) (19 U.S.C.

12 2112(b)(4)(A)(ii)(I)).

13 (B) Section 102(e)(1) (19 U.S.C.

14 2112(e)(1)).

15 (C) Section 102(e)(2) (19 U.S.C.

16 2112(e)(2)).

17 (D) Section 104(d) (19 U.S.C. 2114(d)).

18 (E) Section 125(e) (19 U.S.C. 2135(e)).

19 (F) Section 135(e)(1) (19 U.S.C.

20 2155(e)(1)).

21 (G) Section 141(c) (19 U.S.C. 2171(c)).

22 (H) Section 162 (19 U.S.C. 2212).

23 (I) Section 163(b) (19 U.S.C. 2213(b)).

24 (J) Section 163(c) (19 U.S.C. 2213(c)).

25 (K) Section 203(b) (19 U.S.C. 2253(b)).
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1 (L) Section 302(b)(2)(C) (19 U.S.C.

2 2412(b)(2)(C)).

3 (M) Section 303 (19 U.S.C. 2413).

4 (N) Section 309 (19 U.S.C. 2419).

5 (O) Section 407(a) (19 U.S.C. 2437(a)).

6 (P) Section 502(f ) (19 U.S.C. 2462(f )).

7 (Q) Section 504 (19 U.S.C. 2464).

8 (9) The following provisions of the Trade

9 Agreements Act of 1979 (19 U.S.C. 2501 et seq.):

10 (A) Section 2(b) (19 U.S.C. 2503(b)).

11 (B) Section 3(c) (19 U.S.C. 2504(c)).

12 (C) Section 305(c) (19 U.S.C. 2515(c)).

13 (10) Section 303(g)(1) of the Convention on

14 Cultural Property Implementation Act (19 U.S.C.

15 2602(g)(1)).

16 (11) The following provisions of the Caribbean

17 Basin Economic Recovery Act (19 U.S.C. 2701 et

18 seq.):

19 (A) Section 212(a)(1)(A) (19 U.S.C.

20 2702(a)(1)(A)).

21 (B) Section 212(a)(2) (19 U.S.C.

22 2702(a)(2)).

23 (12) The following provisions of the Omnibus

24 Trade and Competitiveness Act of 1988 (19 U.S.C.

25 2901 et seq.):
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1 (A) Section 1102 (19 U.S.C. 2902).

2 (B) Section 1103 (19 U.S.C. 2903).

3 (C) Section 1206(b) (19 U.S.C. 3006(b)).

4 (13) Section 123(a) of the Customs and Trade

5 Act of 1990 (Public Law 101–382) (19 U.S.C.

6 2083).

7 (14) Section 243(b)(2) of the Caribbean Basin

8 Economic Recovery Expansion Act of 1990 (Public

9 Law 101–382).

10 (15) The following provisions of the Internal

11 Revenue Code of 1986:

12 (A) Section 6103(p)(5).

13 (B) Section 7608.

14 (C) Section 7802(f )(3).

15 (D) Section 8022(3).

16 (E) Section 9602(a).

17 (16) The following provisions relating to the

18 revenue laws of the United States:

19 (A) Section 1552(c) of the Tax Reform

20 Act of 1986 (100 Stat. 2753).

21 (B) Section 231 of the Deficit Reduction

22 Act of 1984 (26 U.S.C. 801 note).

23 (C) Section 208 of the Tax Treatment Ex24 tension Act of 1977 (26 U.S.C. 911 note).
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1 (D) Section 7105 of the Technical and

2 Miscellaneous Revenue Act of 1988 (45 U.S.C.

3 369).

4 (17) Section 4008 of the Employee Retirement

5 Income Security Act of 1974 (29 U.S.C. 1308).

6 (18) Section 426 of the Black Lung Benefits

7 Act (30 U.S.C. 936(b)).

8 (19) Section 7502(g) of title 31, United States

9 Code.

10 (20) The following provisions of the Social Se11 curity Act:

12 (A) Section 215(i)(2)(C)(i) (42 U.S.C.

13 415(i)(2)(C)(i)).

14 (B) Section 221(i)(2) (42 U.S.C.

15 421(i)(2)).

16 (C) Section 221(i)(3) (42 U.S.C.

17 421(i)(3)).

18 (D) Section 233(e)(1) (42 U.S.C.

19 433(e)(1)).

20 (E) Section 452(a)(10) (42 U.S.C.

21 652(a)(10)).

22 (F) Section 452(g)(3)(B) (42 U.S.C.

23 652(g)(3)(B)).

24 (G) Section 506(a)(1) (42 U.S.C. 706(a)).

25 (H) Section 908 (42 U.S.C. 1108).
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1 (I) Section 1114(f ) (42 U.S.C. 1314(f )).

2 (J) Section 1120 (42 U.S.C. 1320).

3 (K) Section 1161 (42 U.S.C. 1320c–10).

4 (L) Section 1875(b) (42 U.S.C. 1395ll(b)).

5 (M) Section 1881 (42 U.S.C. 1395rr).

6 (N) Section 1882 (42 U.S.C.

7 1395ss(f )(2)).

8 (21) Section 104(b) of the Social Security Inde9 pendence and Program Improvements Act of 1994

10 (42 USC 904 note).

11 (22) Section 10 of the Railroad Retirement Act

12 of 1937 (45 U.S.C. 231f ).

13 (23) The following provisions of the Railroad

14 Retirement Act of 1974:

15 (A) Section 22(a)(1) (45 U.S.C.

16 231u(a)(1)).

17 (B) Section 22(b)(1) (45 U.S.C.

18 231u(b)(1)).

19 (24) Section 502 of the Railroad Retirement

20 Solvency Act of 1983 (45 U.S.C. 231f-1).

21 (25) Section 47121(c) of title 49, United States

22 Code.

23 (26) The following provisions of the Omnibus

24 Budget Reconciliation Act of 1987 (Public Law

25 100–203; 101 Stat. 1330-182):
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1 (A) Section 4007(c)(4) (42 U.S.C. 1395ww

2 note).

3 (B) Section 4079 (42 U.S.C. 1395mm

4 note).

5 (C) Section 4205 (42 U.S.C. 1395i–3

6 note).

7 (D) Section 4215 (42 U.S.C. 1396r note).

8 (27) The following provisions of the Inspector

9 General Act of 1978 (Public Law 95–452):

10 (A) Section 5(b).

11 (B) Section 5(d).

12 (28) The following provisions of the Public

13 Health Service Act:

14 (A) In section 308(a) (42 U.S.C.

15 242m(a)), subparagraphs (A), (B), (C), and

16 (D) of paragraph (1).

17 (B) Section 403 (42 U.S.C. 283).

18 (29) Section 404 of the Health Services and

19 Centers Amendments of 1978 (42 U.S.C. 242p)

20 (Public Law 95–626).

21 (30) The following provisions of the Older

22 Americans Act of 1965:

23 (A) Section 206(d) (42 U.S.C. 3017(d)).

24 (B) Section 207 (42 U.S.C. 3018).
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1 (31) Section 308 of the Age Discrimination Act

2 of 1975 (42 U.S.C. 6106a(b)).

3 (32) Section 509(c)(3) of the Americans with

4 Disabilities Act 0f 1990 (42 U.S.C. 12209(c)(3)).

5 (33) Section 4207(f ) of the Omnibus Budget

6 Reconciliation Act of 1990 (42 U.S.C. 1395b–1

7 note).

8 SEC. 302. EXTENSION OF DEADLINES FOR IRS COMPLIANCE

9 WITH CERTAIN NOTICE REQUIREMENTS.

10 (a) ANNUAL INSTALLMENT AGREEMENT NOTICE.—

11 Section 3506 of the Internal Revenue Service Restruc12 turing and Reform Act of 1998 is amended by striking

13 ‘‘July 1, 2000’’ and inserting ‘‘September 1, 2001’’.

14 (b) NOTICE REQUIREMENTS RELATING TO COM15 PUTATION OF PENALTY.—Subsection (c) of section 3306

16 of the Internal Revenue Service Restructuring and Reform

17 Act of 1998 is amended—

18 (1) by striking ‘‘December 31, 2000’’ and in19 serting ‘‘June 30, 2001’’, and

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

21 case of any notice of penalty issued after June 30,

22 2001, and before July 1, 2003, the requirements of

23 section 6751(a) of the Internal Revenue Code of

24 1986 shall be treated as met if such notice contains

25 a telephone number at which the taxpayer can re-
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1 quest a copy of the taxpayer’s assessment and pay2 ment history with respect to such penalty.’’.

3 (c) NOTICE REQUIREMENTS RELATING TO INTEREST

4 IMPOSED.—Subsection (c) of section 3308 of the Internal

5 Revenue Service Restructuring and Reform Act of 1998

6 is amended—

7 (1) by striking ‘‘December 31, 2000’’ and in8 serting ‘‘June 30, 2001’’, and

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

10 case of any notice issued after June 30, 2001, and

11 before July 1, 2003, to which section 6631 of the

12 Internal Revenue Code of 1986 applies, the require13 ments of section 6631 of such Code shall be treated

14 as met if such notice contains a telephone number

15 at which the taxpayer can request a copy of the tax16 payer’s payment history relating to interest amounts

17 included in such notice.’’.

18 SEC. 303. EXTENSION OF AUTHORITY FOR UNDERCOVER

19 OPERATIONS.

20 Paragraph (6), and the last sentence, of section

21 7608(c) are each amended by striking ‘‘January 1, 2001’’

22 and inserting ‘‘January 1, 2006’’.
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1 SEC. 304. CONFIDENTIALITY OF CERTAIN DOCUMENTS RE2 LATING TO CLOSING AND SIMILAR AGREE3 MENTS AND TO AGREEMENTS WITH FOREIGN

4 GOVERNMENTS.

5 (a) CLOSING AND SIMILAR AGREEMENTS TREATED

6 AS RETURN INFORMATION.—Paragraph (2) of section

7 6103(b) (defining return information) is amended by

8 striking ‘‘and’’ at the end of subparagraph (B), by insert9 ing ‘‘and’’ at the end of subparagraph (C), and by insert10 ing after subparagraph (C) the following new subpara11 graph:

12 ‘‘(D) any agreement under section 7121,

13 and any similar agreement, and any back14 ground information related to such an agree15 ment or request for such an agreement,’’.

16 (b) AGREEMENTS WITH FOREIGN GOVERNMENTS.—

17 (1) IN GENERAL.—Subchapter B of chapter 61

18 (relating to miscellaneous provisions) is amended by

19 inserting after section 6104 the following new sec20 tion:

21 ‘‘SEC. 6105. CONFIDENTIALITY OF INFORMATION ARISING

22 UNDER TREATY OBLIGATIONS.

23 ‘‘(a) IN GENERAL.—Tax convention information shall

24 not be disclosed.

25 ‘‘(b) EXCEPTIONS.—Subsection (a) shall not apply—
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1 ‘‘(1) to the disclosure of tax convention infor2 mation to persons or authorities (including courts

3 and administrative bodies) which are entitled to such

4 disclosure pursuant to a tax convention,

5 ‘‘(2) to any generally applicable procedural

6 rules regarding applications for relief under a tax

7 convention, or

8 ‘‘(3) in any case not described in paragraphs

9 (1) or (2), to the disclosure of any tax convention

10 information not relating to a particular taxpayer if

11 the Secretary determines, after consultation with

12 each other party to the tax convention, that such

13 disclosure would not impair tax administration.

14 ‘‘(c) DEFINITIONS.—For purposes of this section—

15 ‘‘(1) TAX CONVENTION INFORMATION.—The

16 term ‘tax convention information’ means any—

17 ‘‘(A) agreement entered into with the com18 petent authority of one or more foreign govern19 ments pursuant to a tax convention,

20 ‘‘(B) application for relief under a tax con21 vention,

22 ‘‘(C) any background information related

23 to such agreement or application,

24 ‘‘(D) document implementing such agree25 ment, and
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1 ‘‘(E) any other information exchanged pur2 suant to a tax convention which is treated as

3 confidential or secret under the tax convention.

4 ‘‘(2) TAX CONVENTION.—The term ‘tax conven5 tion’ means—

6 ‘‘(A) any income tax or gift and estate tax

7 convention, or

8 ‘‘(B) any other convention or bilateral

9 agreement (including multilateral conventions

10 and agreements and any agreement with a pos11 session of the United States) providing for the

12 avoidance of double taxation, the prevention of

13 fiscal evasion, nondiscrimination with respect to

14 taxes, the exchange of tax relevant information

15 with the United States, or mutual assistance in

16 tax matters.

17 ‘‘(d) CROSS REFERENCES.—

‘‘For penalties for the unauthorized disclosure of

tax convention information which is return or return information, see sections 7213, 7213A, and

7431.’’.

18 (2) CLERICAL AMENDMENT.—The table of sec19 tions for subchapter B of chapter 61 is amended by

20 inserting after the item relating to section 6104 the

21 following new item:

‘‘Sec. 6105. Confidentiality of information arising under treaty

obligations.’’.
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1 (c) EXCEPTION FROM PUBLIC INSPECTION AS WRIT2 TEN DETERMINATION.—

3 (1) CLOSING AND SIMILAR AGREEMENTS.—

4 Paragraph (1) of section 6110(b) is amended to

5 read as follows:

6 ‘‘(1) WRITTEN DETERMINATION.—

7 ‘‘(A) IN GENERAL.—The term ‘written de8 termination’ means a ruling, determination let9 ter, technical advice memorandum, or Chief

10 Counsel advice.

11 ‘‘(B) EXCEPTIONS.—Such term shall not

12 include any matter referred to in subparagraph

13 (C) or (D) of section 6103(b)(2).’’.

14 (2) AGREEMENTS WITH FOREIGN GOVERN15 MENTS.—Paragraph (1) of section 6110(l) is amend16 ed by inserting ‘‘or 6105’’ after ‘‘6104’’.

17 (d) EFFECTIVE DATE.—The amendments made by

18 this section shall take effect on the date of the enactment

19 of this Act.

20 SEC. 305. INCREASE IN THRESHOLD FOR JOINT COM21 MITTEE REPORTS ON REFUNDS AND CRED22 ITS.

23 (a) GENERAL RULE.—Subsections (a) and (b) of sec24 tion 6405 are each amended by striking ‘‘$1,000,000’’ and

25 inserting ‘‘$2,000,000’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall take effect on the date of the enact3 ment of this Act, except that such amendment shall not

4 apply with respect to any refund or credit with respect

5 to a report that has been made before such date of the

6 enactment under section 6405 of the Internal Revenue

7 Code of 1986.

8 SEC. 306. TREATMENT OF MISSING CHILDREN WITH RE9 SPECT TO CERTAIN TAX BENEFITS.

10 (a) IN GENERAL.—Subsection (c) of section 151 (re11 lating to additional exemption for dependents) is amended

12 by adding at the end the following new paragraph:

13 ‘‘(6) TREATMENT OF MISSING CHILDREN.—

14 ‘‘(A) IN GENERAL.—Solely for the pur15 poses referred to in subparagraph (B), a child

16 of the taxpayer—

17 ‘‘(i) who is presumed by law enforce18 ment authorities to have been kidnapped

19 by someone who is not a member of the

20 family of such child or the taxpayer, and

21 ‘‘(ii) who was (without regard to this

22 paragraph) the dependent of the taxpayer

23 for the portion of the taxable year before

24 the date of the kidnapping,
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1 shall be treated as a dependent of the taxpayer

2 for all taxable years ending during the period

3 that the child is kidnapped.

4 ‘‘(B) PURPOSES.—Subparagraph (A) shall

5 apply solely for purposes of determining—

6 ‘‘(i) the deduction under this section,

7 ‘‘(ii) the credit under section 24 (re8 lating to child tax credit), and

9 ‘‘(iii) whether an individual is a sur10 viving spouse or a head of a household

11 (such terms are defined in section 2).

12 ‘‘(C) COMPARABLE TREATMENT FOR

13 EARNED INCOME CREDIT.—For purposes of sec14 tion 32, an individual—

15 ‘‘(i) who is presumed by law enforce16 ment authorities to have been kidnapped

17 by someone who is not a member of the

18 family of such individual or the taxpayer,

19 and

20 ‘‘(ii) who had, for the taxable year in

21 which the kidnapping occurred, the same

22 principal place of abode as the taxpayer for

23 more than one-half of the portion of such

24 year before the date of the kidnapping,
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1 shall be treated as meeting the requirement of

2 section 32(c)(3)(A)(ii) with respect to a tax3 payer for all taxable years ending during the

4 period that the individual is kidnapped.

5 ‘‘(D) TERMINATION OF TREATMENT.—

6 Subparagraphs (A) and (C) shall cease to apply

7 as of the first taxable year of the taxpayer be8 ginning after the calendar year in which there

9 is a determination that the child is dead (or, if

10 earlier, in which the child would have attained

11 age 18).’’.

12 (b) EFFECTIVE DATE.—The amendment made by

13 this section shall apply to taxable years ending after the

14 date of the enactment of this Act.

15 SEC. 307. AMENDMENTS TO STATUTES REFERENCING

16 YIELD ON 52-WEEK TREASURY BILLS.

17 (a) AMENDMENT TO THE ACT OF FEBRUARY 26,

18 1931.—Section 6 of the Act of February 26, 1931 (40

19 U.S.C. 258e–1) (relating to the interest rate on compensa20 tion owed for takings of property) is amended—

21 (1) in paragraph (1), by striking ‘‘the coupon

22 issue yield equivalent (as determined by the Sec23 retary of the Treasury) of the average accepted auc24 tion price for the last auction of 52 week United

25 States Treasury bills settled immediately before’’
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1 and inserting ‘‘the weekly average 1-year constant

2 maturity Treasury yield, as published by the Board

3 of Governors of the Federal Reserve System, for the

4 calendar week preceding’’; and

5 (2) in paragraph (2), by striking ‘‘the coupon

6 issue yield equivalent (as determined by the Sec7 retary of the Treasury) of the average accepted auc8 tion price for the last auction of 52 week United

9 States Treasury bills settled immediately before’’

10 and inserting ‘‘the weekly average 1-year constant

11 maturity Treasury yield, as published by the Board

12 of Governors of the Federal Reserve System, for the

13 calendar week preceding’’.

14 (b) AMENDMENT TO TITLE 18, UNITED STATES

15 CODE.—Section 3612(f )(2)(B) of title 18, United States

16 Code (relating to the interest rate on unpaid criminal fines

17 and penalties of more than $2,500) is amended by striking

18 ‘‘the coupon issue yield equivalent (as determined by the

19 Secretary of the Treasury) of the average accepted auction

20 price for the last auction of fifty-two week United States

21 Treasury bills settled before’’ and inserting ‘the weekly av22 erage 1-year constant maturity Treasury yield, as pub23 lished by the Board of Governors of the Federal Reserve

24 System, for the calendar week preceding.’’.
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1 (c) AMENDMENT TO THE INTERNAL REVENUE

2 CODE.—Section 995(f )(4) (relating to the interest rate on

3 tax-deferred liability of shareholders of domestic inter4 national sales corporations) is amended by striking ‘‘the

5 average investment yield of United States Treasury bills

6 with maturities of 52 weeks which were auctioned during

7 the 1-year period’’ and inserting ‘‘the average of the 1-

8 year constant maturity Treasury yields, as published by

9 the Board of Governors of the Federal Reserve System,

10 for the 1-year period’’.

11 (d) AMENDMENTS TO TITLE 28, UNITED STATES

12 CODE.—

13 (1) AMENDMENT TO SECTION 1961.—Section

14 1961(a) of title 28, United States Code (relating to

15 the interest rate on money judgments in civil cases

16 recovered in Federal district court) is amended by

17 striking ‘‘the coupon issue yield equivalent (as deter18 mined by the Secretary of the Treasury) of the aver19 age accepted auction price for the last auction of

20 fifty-two week United States Treasury bills settled

21 immediately prior to’’ and inserting ‘‘the weekly av22 erage 1-year constant maturity Treasury yield, as

23 published by the Board of Governors of the Federal

24 Reserve System, for the calendar week preceding.’’.
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1 (2) AMENDMENT TO SECTION 2516.—Section

2 2516(b) of title 28, United States Code (relating to

3 the interest rate on a judgment against the United

4 States affirmed by the Supreme Court after review

5 on petition of the United States) is amended by

6 striking ‘‘the coupon issue yield equivalent (as deter7 mined by the Secretary of the Treasury) of the aver8 age accepted auction price for the last auction of

9 fifty-two week United States Treasury bills settled

10 immediately before’’ and inserting ‘‘the weekly aver11 age 1-year constant maturity Treasury yield, as pub12 lished by the Board of Governors of the Federal Re13 serve System, for the calendar week preceding’’.

14 SEC. 308. ADJUSTMENTS FOR CONSUMER PRICE INDEX

15 ERROR.

16 (a) DETERMINATIONS BY OMB.—As soon as prac17 ticable after the date of the enactment of this Act, the

18 Director of the Office of Management and Budget shall

19 determine with respect to each applicable Federal benefit

20 program whether the CPI computation error for 1999 has

21 or will result in a shortfall in payments to beneficiaries

22 under such program (as compared to payments that would

23 have been made if the error had not occurred). As soon

24 as practicable after the date of the enactment of this Act,

25 but not later than 60 days after such date, the Director
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1 shall direct the head of the Federal agency which admin2 isters such program to make a payment or payments that,

3 insofar as the Director finds practicable and feasible—

4 (1) are targeted to the amount of the shortfall

5 experienced by individual beneficiaries, and

6 (2) compensate for the shortfall.

7 (b) COORDINATION WITH FEDERAL AGENCIES.—As

8 soon as practicable after the date of the enactment of this

9 Act, each Federal agency that administers an applicable

10 Federal benefit program shall, in accordance with such

11 guidelines as are issued by the Director pursuant to this

12 section, make an initial determination of whether, and the

13 extent to which, the CPI computation error for 1999 has

14 or will result in a shortfall in payments to beneficiaries

15 of an applicable Federal benefit program administered by

16 such agency. Not later than 30 days after such date, the

17 head of such agency shall submit a report to the Director

18 and to each House of the Congress of such determination,

19 together with a complete description of the nature of the

20 shortfall.

21 (c) IMPLEMENTATION PURSUANT TO AGENCY RE22 PORTS.—Upon receipt of the report submitted by a Fed23 eral agency pursuant to subsection (b), the Director shall

24 review the initial determination of the agency, the agency’s

25 description of the nature of the shortfall, and the com-
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1 pensation payments proposed by the agency. Prior to di2 recting payment of such payments pursuant to subsection

3 (a), the Director shall make appropriate adjustments (if

4 any) in the compensation payments proposed by the agen5 cy that the Director determines are necessary to comply

6 with the requirements of subsection (a) and transmit to

7 the agency a summary report of the review, indicating any

8 adjustments made by the Director. The agency shall make

9 the compensation payments as directed by the Director

10 pursuant to subsection (a) in accordance with the Direc11 tor’s summary report.

12 (d) INCOME DISREGARD UNDER FEDERAL MEANS13 TESTED BENEFIT PROGRAMS.—A payment made under

14 this section to compensate for a shortfall in benefits shall,

15 in accordance with guidelines issued by the Director pur16 suant to this section, be disregarded in determining in17 come under title VIII of the Social Security Act or any

18 applicable Federal benefit program that is means-tested.

19 (e) FUNDING.—Funds otherwise available under each

20 applicable Federal benefit program for making benefit

21 payments under such program are hereby made available

22 for making compensation payments under this section in

23 connection with such program.

24 (f ) NO JUDICIAL REVIEW.—No action taken pursu25 ant to this section shall be subject to judicial review.
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1 (g) DIRECTOR’S REPORT.—Not later than April 1,

2 2001, the Director shall submit to each House of the Con3 gress a report on the activities performed by the Director

4 pursuant to this section.

5 (h) DEFINITIONS.—For purposes of this section:

6 (1) APPLICABLE FEDERAL BENEFIT PRO7 GRAM.—The term ‘‘applicable Federal benefit pro8 gram’’ means any program of the Government of the

9 United States providing for regular or periodic pay10 ments or cash assistance paid directly to individual

11 beneficiaries, as determined by the Director of the

12 Office of Management and Budget.

13 (2) FEDERAL AGENCY.—The term ‘‘Federal

14 agency’’ means a department, agency, or instrumen15 tality of the Government of the United States.

16 (3) CPI COMPUTATION ERROR FOR 1999.—The

17 term ‘‘CPI computation error for 1999’’ means the

18 error in the computation of the Consumer Price

19 Index announced by the Bureau of Labor Statistics

20 on September 28, 2000.

21 (i) TAX PROVISIONS.—In the case of taxable years

22 (and other periods) beginning after December 31, 2000,

23 if any Consumer Price Index (as defined in section 1(f )(5)

24 of the Internal Revenue Code of 1986) reflects the CPI

25 computation error for 1999—
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1 (1) the correct amount of such Index shall (in

2 such manner and to such extent as the Secretary of

3 the Treasury determines to be appropriate) be taken

4 into account for purposes of such Code, and

5 (2) tables prescribed under section 1(f ) of such

6 Code to reflect such correct amount shall apply in

7 lieu of any tables that were prescribed based on the

8 erroneous amount.

9 SEC. 309. PREVENTION OF DUPLICATION OF LOSS

10 THROUGH ASSUMPTION OF LIABILITIES GIV11 ING RISE TO A DEDUCTION.

12 (a) IN GENERAL.—Section 358 (relating to basis to

13 distributees) is amended by adding at the end the fol14 lowing new subsection:

15 ‘‘(h) SPECIAL RULES FOR ASSUMPTION OF LIABIL16 ITIES TO WHICH SUBSECTION (d) DOES NOT APPLY.—

17 ‘‘(1) IN GENERAL.—If, after application of the

18 other provisions of this section to an exchange or se19 ries of exchanges, the basis of property to which

20 subsection (a)(1) applies exceeds the fair market

21 value of such property, then such basis shall be re22 duced (but not below such fair market value) by the

23 amount (determined as of the date of the exchange)

24 of any liability—
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1 ‘‘(A) which is assumed in exchange for

2 such property, and

3 ‘‘(B) with respect to which subsection

4 (d)(1) does not apply to the assumption.

5 ‘‘(2) EXCEPTIONS.—Except as provided by the

6 Secretary, paragraph (1) shall not apply to any li7 ability if—

8 ‘‘(A) the trade or business with which the

9 liability is associated is transferred to the per10 son assuming the liability as part of the ex11 change, or

12 ‘‘(B) substantially all of the assets with

13 which the liability is associated are transferred

14 to the person assuming the liability as part of

15 the exchange.

16 ‘‘(3) LIABILITY.—For purposes of this sub17 section, the term ‘liability’ shall include any fixed or

18 contingent obligation to make payment, without re19 gard to whether the obligation is otherwise taken

20 into account for purposes of this title.’’.

21 (b) DETERMINATION OF AMOUNT OF LIABILITY AS22 SUMED.—Section 357(d)(1) is amended by inserting ‘‘sec23 tion 358(h),’’ after ‘‘section 358(d),’’.
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1 (c) APPLICATION OF COMPARABLE RULES TO PART2 NERSHIPS AND S CORPORATIONS.—The Secretary of the

3 Treasury or his delegate—

4 (1) shall prescribe rules which provide appro5 priate adjustments under subchapter K of chapter 1

6 of the Internal Revenue Code of 1986 to prevent the

7 acceleration or duplication of losses through the as8 sumption of (or transfer of assets subject to) liabil9 ities described in section 358(h)(3) of such Code (as

10 added by subsection (a)) in transactions involving

11 partnerships, and

12 (2) may prescribe rules which provide appro13 priate adjustments under subchapter S of chapter 1

14 of such Code in transactions described in paragraph

15 (1) involving S corporations rather than partner16 ships.

17 (d) EFFECTIVE DATES.—

18 (1) IN GENERAL.—The amendments made by

19 this section shall apply to assumptions of liability

20 after October 18, 1999.

21 (2) RULES.—The rules prescribed under sub22 section (c) shall apply to assumptions of liability

23 after October 18, 1999, or such later date as may

24 be prescribed in such rules.
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1 SEC. 310. DISCLOSURE OF CERTAIN INFORMATION TO CON2 GRESSIONAL BUDGET OFFICE.

3 (a) DISCLOSURE OF CERTAIN TAX INFORMATION.—

4 (1) IN GENERAL.—Subsection ( j) of section

5 6103 (relating to statistical use) is amended by add6 ing at the end the following new paragraph:

7 ‘‘(6) CONGRESSIONAL BUDGET OFFICE.—Upon

8 written request by the Director of the Congressional

9 Budget Office, the Secretary shall furnish to officers

10 and employees of the Congressional Budget Office

11 return information for the purpose of, but only to

12 the extent necessary for, long-term models of the so13 cial security and medicare programs.’’.

14 (2) RECORDKEEPING SAFEGUARDS.—Section

15 6103(p) is amended—

16 (A) in paragraph (4)—

17 (i) in the matter preceding subpara18 graph (A), by inserting ‘‘the Congressional

19 Budget Office,’’ after ‘‘General Accounting

20 Office,’’,

21 (ii) in subparagraph (E), by striking

22 ‘‘commission or the General Accounting

23 Office’’ and inserting ‘‘commission, the

24 General Accounting Office, or the Congres25 sional Budget Office’’,
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1 (iii) in subparagraph (F)(ii), by strik2 ing ‘‘or the General Accounting Office,’’

3 and inserting ‘‘the General Accounting Of4 fice, or the Congressional Budget Office,’’,

5 and

6 (iv) in the matter following subpara7 graph (F), by inserting ‘‘or the Congres8 sional Budget Office’’ after ‘‘General Ac9 counting Office’’ both places it appears,

10 (B) in paragraph (5), by striking ‘‘commis11 sions and the General Accounting Office’’ and

12 inserting ‘‘commissions, the General Accounting

13 Office, and the Congressional Budget Office’’,

14 and

15 (C) in paragraph (6)(A), by inserting ‘‘and

16 the Congressional Budget Office’’ after ‘‘com17 missions’’.

18 (b) CONFIDENTIALITY OF RECORDS.—

19 (1) IN GENERAL.—Section 203 of the Congres20 sional Budget Act of 1974 (2 U.S.C. 603) is amend21 ed by adding at the end the following:

22 ‘‘(e) LEVEL OF CONFIDENTIALITY.—With respect to

23 information, data, estimates, and statistics obtained under

24 sections 201(d) and 201(e), the Director shall maintain

25 the same level of confidentiality as is required by law of
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1 the department, agency, establishment, or regulatory

2 agency or commission from which it is obtained. Officers

3 and employees of the Congressional Budget Office shall

4 be subject to the same statutory penalties for unauthor5 ized disclosure or use as officers or employees of the de6 partment, agency, establishment, or regulatory agency or

7 commission from which it is obtained.’’.

8 (2) CONFORMING AMENDMENT.—Subsection (a)

9 of section 203 of such Act is amended by striking

10 ‘‘subsections (c) and (d)’’ and inserting ‘‘subsections

11 (c), (d), and (e)’’.

12 Subtitle B—Technical Corrections

13 SEC. 311. AMENDMENTS RELATED TO TICKET TO WORK

14 AND WORK INCENTIVES IMPROVEMENT ACT

15 OF 1999.

16 (a) AMENDMENTS RELATED TO SECTION 502 OF

17 THE ACT.—

18 (1) Section 280C(c)(1) is amended by striking

19 ‘‘or credit’’ after ‘‘deduction’’ each place it appears.

20 (2) Section 30A is amended by redesignating

21 subsections (f ) and (g) as subsections (g) and (h),

22 respectively, and by inserting after subsection (e) the

23 following new subsection:

24 ‘‘(f ) DENIAL OF DOUBLE BENEFIT.—Any wages or

25 other expenses taken into account in determining the cred-
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1 it under this section may not be taken into account in de2 termining the credit under section 41.’’.

3 (b) AMENDMENT RELATED TO SECTION 545 OF THE

4 ACT.—Clause (ii) of section 857(b)(7)(B) is amended to

5 read as follows:

6 ‘‘(ii) EXCEPTION FOR CERTAIN

7 AMOUNTS.—Clause (i) shall not apply to

8 amounts received directly or indirectly by a

9 real estate investment trust—

10 ‘‘(I) for services furnished or ren11 dered by a taxable REIT subsidiary

12 that are described in paragraph

13 (1)(B) of section 856(d), or

14 ‘‘(II) from a taxable REIT sub15 sidiary that are described in para16 graph (7)(C)(ii) of such section.’’.

17 (c) CLARIFICATION RELATED TO SECTION 538 OF

18 THE ACT.—The reference to section 332(b)(1) of the In19 ternal Revenue Code of 1986 in Treasury Regulation sec20 tion 1.1502-34 shall be deemed to include a reference to

21 section 732(f ) of such Code.

22 (d) EFFECTIVE DATE.—Subsection (c) and the

23 amendments made by this section shall take effect as if

24 included in the provisions of the Ticket to Work and Work

25 Incentives Improvement Act of 1999 to which they relate.
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1 SEC. 312. AMENDMENTS RELATED TO TAX AND TRADE RE2 LIEF EXTENSION ACT OF 1998.

3 (a) AMENDMENT RELATED TO SECTION 1004(b) OF

4 THE ACT.—Subsection (d) of section 6104 is amended by

5 adding at the end the following new paragraph:

6 ‘‘(6) APPLICATION TO NONEXEMPT CHARI7 TABLE TRUSTS AND NONEXEMPT PRIVATE FOUNDA8 TIONS.—The organizations referred to in paragraphs

9 (1) and (2) of section 6033(d) shall comply with the

10 requirements of this subsection relating to annual

11 returns filed under section 6033 in the same manner

12 as the organizations referred to in paragraph (1).’’.

13 (b) AMENDMENT RELATED TO SECTION 4003 OF

14 THE ACT.—Subsection (b) of section 4003 of the Tax and

15 Trade Relief Extension Act of 1998 is amended by insert16 ing ‘‘(7)(A)(i)(II),’’ after ‘‘(5)(A)(ii)(I),’’.

17 (c) EFFECTIVE DATE.—The amendments made by

18 this section shall take effect as if included in the provisions

19 of the Tax and Trade Relief Extension Act of 1998 to

20 which they relate.

21 SEC. 313. AMENDMENTS RELATED TO INTERNAL REVENUE

22 SERVICE RESTRUCTURING AND REFORM ACT

23 OF 1998.

24 (a) AMENDMENTS RELATED TO INNOCENT SPOUSE

25 RELIEF.—
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1 (1) ELECTION MAY BE MADE ANY TIME AFTER

2 DEFICIENCY ASSERTED.—Subparagraph (B) of sec3 tion 6015(c)(3) is amended by striking ‘‘shall be

4 made’’ and inserting ‘‘may be made at any time

5 after a deficiency for such year is asserted but’’.

6 (2) CLARIFICATION REGARDING DISALLOWANCE

7 OF REFUNDS AND CREDITS UNDER SECTION

8 6015(c).—

9 (A) IN GENERAL.—Section 6015 is amend10 ed by redesignating subsection (g) as subsection

11 (h) and by inserting after subsection (f ) the fol12 lowing new subsection:

13 ‘‘(g) CREDITS AND REFUNDS.—

14 ‘‘(1) IN GENERAL.—Except as provided in para15 graphs (2) and (3), notwithstanding any other law

16 or rule of law (other than section 6511, 6512(b),

17 7121, or 7122), credit or refund shall be allowed or

18 made to the extent attributable to the application of

19 this section.

20 ‘‘(2) RES JUDICATA.—In the case of any elec21 tion under subsection (b) or (c), if a decision of a

22 court in any prior proceeding for the same taxable

23 year has become final, such decision shall be conclu24 sive except with respect to the qualification of the

25 individual for relief which was not an issue in such
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1 proceeding. The exception contained in the preceding

2 sentence shall not apply if the court determines that

3 the individual participated meaningfully in such

4 prior proceeding.

5 ‘‘(3) CREDIT AND REFUND NOT ALLOWED

6 UNDER SUBSECTION (c).—No credit or refund shall

7 be allowed as a result of an election under sub8 section (c).’’.

9 (B) CONFORMING AMENDMENT.—Para10 graph (3) of section 6015(e) is amended to read

11 as follows:

12 ‘‘(3) LIMITATION ON TAX COURT JURISDIC13 TION.—If a suit for refund is begun by either indi14 vidual filing the joint return pursuant to section

15 6532—

16 ‘‘(A) the Tax Court shall lose jurisdiction

17 of the individual’s action under this section to

18 whatever extent jurisdiction is acquired by the

19 district court or the United States Court of

20 Federal Claims over the taxable years that are

21 the subject of the suit for refund, and

22 ‘‘(B) the court acquiring jurisdiction shall

23 have jurisdiction over the petition filed under

24 this subsection.’’.
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1 (3) CLARIFICATIONS REGARDING REVIEW BY

2 TAX COURT.—

3 (A) Paragraph (1) of section 6015(e) is

4 amended in the matter preceding subparagraph

5 (A) by inserting after ‘‘individual’’ the fol6 lowing: ‘‘against whom a deficiency has been as7 serted and’’.

8 (B) Subparagraph (A) of section

9 6015(e)(1) is amended to read as follows:

10 ‘‘(A) IN GENERAL.—In addition to any

11 other remedy provided by law, the individual

12 may petition the Tax Court (and the Tax Court

13 shall have jurisdiction) to determine the appro14 priate relief available to the individual under

15 this section if such petition is filed—

16 ‘‘(i) at any time after the earlier of—

17 ‘‘(I) the date the Secretary mails,

18 by certified or registered mail to the

19 taxpayer’s last known address, notice

20 of the Secretary’s final determination

21 of relief available to the individual, or

22 ‘‘(II) the date which is 6 months

23 after the date such election is filed

24 with the Secretary, and
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1 ‘‘(ii) not later than the close of the

2 90th day after the date described in clause

3 (i)(I).’’.

4 (C) Subparagraph (B)(i) of section

5 6015(e)(1) is amended—

6 (i) by striking ‘‘until the expiration of

7 the 90-day period described in subpara8 graph (A)’’ and inserting ‘‘until the close

9 of the 90th day referred to in subpara10 graph (A)(ii)’’, and

11 (ii) by inserting ‘‘under subparagraph

12 (A)’’ after ‘‘filed with the Tax Court’’.

13 (D)(i) Subsection (e) of section 6015 is

14 amended by adding at the end the following

15 new paragraph:

16 ‘‘(5) WAIVER.—An individual who elects the ap17 plication of subsection (b) or (c) (and who agrees

18 with the Secretary’s determination of relief ) may

19 waive in writing at any time the restrictions in para20 graph (1)(B) with respect to collection of the out21 standing assessment (whether or not a notice of the

22 Secretary’s final determination of relief has been

23 mailed).’’.

24 (ii) Paragraph (2) of section 6015(e) is

25 amended to read as follows:
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1 ‘‘(2) SUSPENSION OF RUNNING OF PERIOD OF

2 LIMITATIONS.—The running of the period of limita3 tions in section 6502 on the collection of the assess4 ment to which the petition under paragraph (1)(A)

5 relates shall be suspended—

6 ‘‘(A) for the period during which the Sec7 retary is prohibited by paragraph (1)(B) from

8 collecting by levy or a proceeding in court and

9 for 60 days thereafter, and

10 ‘‘(B) if a waiver under paragraph (5) is

11 made, from the date the claim for relief was

12 filed until 60 days after the waiver is filed with

13 the Secretary.’’.

14 (b) AMENDMENTS RELATED TO PROCEDURE AND

15 ADMINISTRATION.—

16 (1) DISPUTES INVOLVING $50,000 OR LESS.—

17 Section 7463 is amended by adding at the end the

18 following new subsection:

19 ‘‘(f ) ADDITIONAL CASES IN WHICH PROCEEDINGS

20 MAY BE CONDUCTED UNDER THIS SECTION.—At the op21 tion of the taxpayer concurred in by the Tax Court or a

22 division thereof before the hearing of the case, proceedings

23 may be conducted under this section (in the same manner

24 as a case described in subsection (a)) in the case of—
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1 ‘‘(1) a petition to the Tax Court under section

2 6015(e) in which the amount of relief sought does

3 not exceed $50,000, and

4 ‘‘(2) an appeal under section 6330(d)(1)(A) to

5 the Tax Court of a determination in which the un6 paid tax does not exceed $50,000.’’.

7 (2) AUTHORITY TO ENJOIN COLLECTION AC8 TIONS.—

9 (A) Section 6330(e)(1) is amended by add10 ing at the end the following: ‘‘Notwithstanding

11 the provisions of section 7421(a), the beginning

12 of a levy or proceeding during the time the sus13 pension under this paragraph is in force may be

14 enjoined by a proceeding in the proper court,

15 including the Tax Court. The Tax Court shall

16 have no jurisdiction under this paragraph to en17 join any action or proceeding unless a timely

18 appeal has been filed under subsection (d)(1)

19 and then only in respect of the unpaid tax or

20 proposed levy to which the determination being

21 appealed relates.’’.

22 (B) Section 7421(a) is amended by insert23 ing ‘‘6330(e)(1),’’ after ‘‘6246(b),’’.
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1 (3) CLARIFICATION.—Paragraph (3) of section

2 6331(k) is amended by striking ‘‘(3), (4), and (5)’’

3 and inserting ‘‘(3) and (4)’’.

4 (c) AMENDMENT RELATED TO SECTION 1103 OF

5 THE ACT.—Paragraph (6) of section 6103(k) is

6 amended—

7 (1) by inserting ‘‘and an officer or employee of

8 the Office of Treasury Inspector General for Tax

9 Administration’’ after ‘‘internal revenue officer or

10 employee’’, and

11 (2) by striking ‘‘INTERNAL REVENUE’’ in the

12 heading and inserting ‘‘CERTAIN’’.

13 (d) AMENDMENT RELATED TO SECTION 3401 OF

14 THE ACT.—Section 6330(d)(1)(A) is amended by striking

15 ‘‘to hear’’ and inserting ‘‘with respect to’’.

16 (e) AMENDMENT RELATED TO SECTION 3509 OF

17 THE ACT.—Subparagraph (A) of section 6110(g)(5) is

18 amended by inserting ‘‘, any Chief Counsel advice,’’ after

19 ‘‘technical advice memorandum’’.

20 (f ) EFFECTIVE DATES.—The amendments made by

21 subsections (a) and (b) shall take effect on the date of

22 the enactment of this Act. The amendments made by sub23 sections (c), (d), and (e) shall take effect as if included

24 in the provisions of the Internal Revenue Service Restruc25 turing and Reform Act of 1998 to which they relate.
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1 SEC. 314. AMENDMENTS RELATED TO TAXPAYER RELIEF

2 ACT OF 1997.

3 (a) AMENDMENT RELATED TO SECTION 101 OF THE

4 ACT.—Paragraph (4) of section 6211(b) is amended by

5 striking ‘‘sections 32 and 34’’ and inserting ‘‘sections

6 24(d), 32, and 34’’.

7 (b) AMENDMENT RELATED TO SECTION 302 OF THE

8 ACT.—The last sentence of section 3405(e)(1)(B) is

9 amended by inserting ‘‘(other than a Roth IRA)’’ after

10 ‘‘individual retirement plan’’.

11 (c) AMENDMENT TO SECTION 311 OF THE ACT.—

12 Paragraph (3) of section 311(e) of the Taxpayer Relief

13 Act of 1997 (relating to election to recognize gain on as14 sets held on January 1, 2001) is amended by adding at

15 the end the following new sentence: ‘‘Such an election shall

16 not apply to any asset which is disposed of (in a trans17 action in which gain or loss is recognized in whole or in

18 part) before the close of the 1-year period beginning on

19 the date that the asset would have been treated as sold

20 under such election.’’.

21 (d) AMENDMENT RELATED TO SECTION 402 OF THE

22 ACT.—The flush sentence at the end of clause (ii) of sec23 tion 56(a)(1)(A) is amended by inserting before ‘‘or to any

24 other property’’ the following: ‘‘(and the straight line

25 method shall be used for such 1250 property)’’.
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1 (e) AMENDMENTS RELATED TO SECTION 1072 OF

2 THE ACT.—

3 (1) Clause (ii) of section 415(c)(3)(D) and sub4 paragraph (B) of section 403(b)(3) are each amend5 ed by striking ‘‘section 125 or’’ and inserting ‘‘sec6 tion 125, 132(f )(4), or’’.

7 (2) Paragraph (2) of section 414(s) is amended

8 by striking ‘‘section 125, 402(e)(3)’’ and inserting

9 ‘‘section 125, 132(f )(4), 402(e)(3)’’.

10 (f ) AMENDMENT RELATED TO SECTION 1454 OF

11 THE ACT.—Subsection (a) of section 7436 is amended by

12 inserting before the period at the end of the first sentence

13 ‘‘and the proper amount of employment tax under such

14 determination’’.

15 (g) EFFECTIVE DATE.—The amendments made by

16 this section shall take effect as if included in the provisions

17 of the Taxpayer Relief of 1997 to which they relate.

18 SEC. 315. AMENDMENTS RELATED TO BALANCED BUDGET

19 ACT OF 1997.

20 (a) AMENDMENTS RELATED TO SECTION 9302 OF

21 THE ACT.—

22 (1) Paragraph (1) of section 9302( j) of the

23 Balanced Budget Act of 1997 is amended by strik24 ing ‘‘tobacco products and cigarette papers and

25 tubes’’ and inserting ‘‘cigarettes’’.
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1 (2)(A) Subsection (h) of section 5702 is amend2 ed to read as follows:

3 ‘‘(h) MANUFACTURER OF CIGARETTE PAPERS AND

4 TUBES.—‘Manufacturer of cigarette papers and tubes’

5 means any person who manufactures cigarette paper, or

6 makes up cigarette paper into tubes, except for his own

7 personal use or consumption.’’.

8 (B) Section 5702, as amended by subparagraph

9 (A), is amended by striking subsection (f ) and by

10 redesignating subsections (g) through (p) as sub11 sections (f ) through (o), respectively.

12 (3) Subsection (c) of section 5761 is amended

13 by adding at the end the following: ‘‘This subsection

14 and section 5754 shall not apply to any person who

15 relands or receives tobacco products in the quantity

16 allowed entry free of tax and duty under chapter 98

17 of the Harmonized Tariff Schedule of the United

18 States, and such person may voluntarily relinquish

19 to the Secretary at the time of entry any excess of

20 such quantity without incurring the penalty under

21 this subsection. No quantity of tobacco products

22 other than the quantity referred to in the preceding

23 sentence may be relanded or received as a personal

24 use quantity.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect as if included in section 9302

3 of the Balanced Budget Act of 1997.

4 SEC. 316. AMENDMENTS RELATED TO SMALL BUSINESS JOB

5 PROTECTION ACT OF 1996.

6 (a) AMENDMENT RELATED TO SECTION 1201 OF

7 THE ACT.—Subparagraph (B) of section 51(d)(2) is

8 amended—

9 (1) by striking ‘‘plan approved’’ and inserting

10 ‘‘program funded’’, and

11 (2) by striking ‘‘(relating to assistance for

12 needy families with minor children)’’.

13 (b) AMENDMENT RELATED TO SECTION 1302 OF

14 THE ACT.—Clause (i) of section 1361(e)(1)(A) is amended

15 by striking ‘‘or’’ before ‘‘(III)’’ and by adding at the end

16 the following: ‘‘or (IV) an organization described in section

17 170(c)(1) which holds a contingent interest in such trust

18 and is not a potential current beneficiary,’’.

19 (c) AMENDMENT RELATED TO SECTION 1401 OF

20 THE ACT.—Clause (ii) of section 401(k)(10)(B) is amend21 ed by adding at the end the following new sentence: ‘‘Such

22 term includes a distribution of an annuity contract from—

23 ‘‘(I) a trust which forms a part

24 of a plan described in section 401(a)
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1 and which is exempt from tax under

2 section 501(a), or

3 ‘‘(II) an annuity plan described

4 in section 403(a).’’.

5 (d) AMENDMENT RELATED TO SECTION 1427 OF

6 THE ACT.—Clause (ii) of section 219(c)(1)(B) is amended

7 by striking ‘‘and’’ at the end of subclause (I), by redesig8 nating subclause (II) as subclause (III), and by inserting

9 after subclause (I) the following new subclause:

10 ‘‘(II) the amount of any des11 ignated nondeductible contribution (as

12 defined in section 408(o)) on behalf of

13 such spouse for such taxable year,

14 and’’.

15 (e) EFFECTIVE DATE.—The amendments made by

16 this section shall take effect as if included in the provisions

17 of the Small Business Job Protection Act of 1996 to which

18 they relate.

19 SEC. 317. AMENDMENT RELATED TO REVENUE RECONCILI20 ATION ACT OF 1990.

21 (a) AMENDMENT RELATED TO SECTION 11511 OF

22 THE ACT.—Subparagraph (C) of section 43(c)(1) is

23 amended—

24 (1) by inserting ‘‘(as defined in section

25 193(b))’’ after ‘‘expenses’’, and
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1 (2) by striking ‘‘under section 193’’.

2 (b) EFFECTIVE DATE.—The amendment made by

3 this section shall take effect as if included in section

4 11511 of the Revenue Reconciliation Act of 1990.

5 SEC. 318. OTHER TECHNICAL CORRECTIONS.

6 (a) MODIFIED ENDOWMENT CONTRACTS.—

7 (1) Paragraph (2) of section 7702A(a) is

8 amended by inserting ‘‘or this paragraph’’ before the

9 period.

10 (2) Clause (ii) of section 7702A(c)(3)(A) is

11 amended by striking ‘‘under the contract’’ and in12 serting ‘‘under the old contract’’.

13 (3) The amendments made by this subsection

14 shall take effect as if included in the amendments

15 made by section 5012 of the Technical and Miscella16 neous Revenue Act of 1988.

17 (b) AFFILIATED CORPORATIONS IN CONTEXT OF

18 WORTHLESS SECURITIES.—

19 (1) Subparagraph (A) of section 165(g)(3) is

20 amended to read as follows:

21 ‘‘(A) the taxpayer owns directly stock in

22 such corporation meeting the requirements of

23 section 1504(a)(2), and’’.

24 (2) Paragraph (3) of section 165(g) is amended

25 by striking the last sentence.
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1 (3) The amendments made by this subsection

2 shall apply to taxable years beginning after Decem3 ber 31, 1984.

4 (c) CERTAIN ANNUITIES ISSUED BY TAX-EXEMPT

5 ORGANIZATIONS NOT TREATED AS DEBT INSTRUMENTS

6 UNDER ORIGINAL ISSUE DISCOUNT RULES.—

7 (1) Clause (ii) of section 1275(a)(1)(B) is

8 amended by striking ‘‘subchapter L’’ and inserting

9 ‘‘subchapter L (or by an entity described in section

10 501(c) and exempt from tax under section 501(a)

11 which would be subject to tax under subchapter L

12 were it not so exempt)’’.

13 (2) The amendment made by this subsection

14 shall take effect as if included in the amendments

15 made by section 41 of the Tax Reform Act of 1984.

16 (d) TENTATIVE CARRYBACK ADJUSTMENTS OF

17 LOSSES FROM SECTION 1256 CONTRACTS.—

18 (1) Subsection (a) of section 6411 is amended

19 by striking ‘‘section 1212(a)(1)’’ and inserting ‘‘sub20 section (a)(1) or (c) of section 1212’’.

21 (2) The amendment made by paragraph (1)

22 shall take effect as if included in the amendments

23 made by section 504 of the Economic Recovery Tax

24 Act of 1981.
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1 (e) CORRECTION OF CALCULATION OF AMOUNTS TO

2 BE DEPOSITED IN HIGHWAY TRUST FUND.—

3 (1) Subsection (b) of section 9503 is amended

4 by striking paragraph (5) and redesignating para5 graph (6) as paragraph (5).

6 (2) The amendment made by paragraph (1)

7 shall apply with respect to taxes received in the

8 Treasury after the date of the enactment of this Act.

9 (f ) EXPENDITURES FROM VACCINE INJURY COM10 PENSATION TRUST FUND.—Section 9510(c)(1)(A) is

11 amended by striking ‘‘December 31, 1999’’ and inserting

12 ‘‘October 18, 2000’’.

13 SEC. 319. CLERICAL CHANGES.

14 (1) Clause (i) of section 45(d)(7)(A) is amended

15 by striking ‘‘paragraph (3)(A)’’ and inserting ‘‘sub16 section (c)(3)(A)’’.

17 (2) Subsection (f ) of section 67 is amended by

18 striking ‘‘the last sentence’’ and inserting ‘‘the sec19 ond sentence’’.

20 (3) The heading for paragraph (5) of section

21 408(d) is amended to read as follows:

22 ‘‘(5) DISTRIBUTIONS OF EXCESS CONTRIBU23 TIONS AFTER DUE DATE FOR TAXABLE YEAR AND

24 CERTAIN EXCESS ROLLOVER CONTRIBUTIONS.—’’.
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1 (4) Paragraph (3) of section 475(g) is amended

2 by striking ‘‘267(b) of’’ and inserting ‘‘267(b) or’’.

3 (5) The heading for subparagraph (B) of sec4 tion 529(e)(3) is amended by striking ‘‘UNDER

5 GUARANTEED PLANS’’.

6 (6) Clause (iii) of section 530(d)(4)(B) is

7 amended by striking ‘‘; or’’ at the end and inserting

8 ‘‘, or’’.

9 (7) Paragraphs (1)(C) and (2)(C) of section

10 664(d) are each amended by striking the period

11 after ‘‘subsection (g))’’.

12 (8)(A) Subsection (e) of section 678 is amended

13 by striking ‘‘an electing small business corporation’’

14 and inserting ‘‘an S corporation’’.

15 (B) Clause (v) of section 6103(e)(1)(D) is

16 amended to read as follows:

17 ‘‘(v) if the corporation was an S cor18 poration, any person who was a share19 holder during any part of the period cov20 ered by such return during which an elec21 tion under section 1362(a) was in effect,

22 or’’.

23 (9) Paragraph (7) of section 856(c) is amended

24 by striking ‘‘paragraph (4)(B)(ii)(III)’’ and inserting

25 ‘‘paragraph (4)(B)(iii)(III)’’
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1 (10) Subparagraph (A) of section 856(l)(4) is

2 amended by striking ‘‘paragraph (9)(D)(ii)’’ and in3 serting ‘‘subsection (d)(9)(D)(ii)’’.

4 (11) Subparagraph (B) of section 871(f )(2) is

5 amended by striking ‘‘19 U.S.C.’’ and inserting ‘‘(19

6 U.S.C.’’.

7 (12) Subparagraph (B) of section 995(b)(3) is

8 amended by striking ‘‘the Military Security Act of

9 1954 (22 U.S.C. 1934)’’ and inserting ‘‘section 38

10 of the International Security Assistance and Arms

11 Export Control Act of 1976 (22 U.S.C. 2778)’’.

12 (13) Section 1391(g)(3)(C) is amended by

13 striking ‘‘paragraph (1)(B)’’ and inserting ‘‘para14 graph (1)’’.

15 (14)(A) Paragraph (2) of section 2035(c) is

16 amended by striking ‘‘paragraph (1)’’ and inserting

17 ‘‘subsection (a)’’.

18 (B) Subsection (d) of section 2035 is amended

19 by inserting ‘‘and paragraph (1) of subsection (c)’’

20 after ‘‘Subsection (a)’’.

21 (15) Paragraph (5) of section 3121(a) is

22 amended by striking the semicolon at the end of

23 subparagraph (G) and inserting a comma.

24 (16) Subparagraph (B) of section 4946(c)(3) is

25 amended by striking ‘‘the lowest rate of compensa-
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1 tion prescribed for GS–16 of the General Schedule

2 under section 5332’’ and inserting ‘‘the lowest rate

3 of basic pay for the Senior Executive Service under

4 section 5382’’.

5 (17) Subsection (p) of section 6103 is

6 amended—

7 (A) in paragraph (4), in the matter pre8 ceding subparagraph (A)—

9 (i) by striking the second comma after

10 ‘‘(13)’’, and

11 (ii) by striking ‘‘(7)’’ and all that fol12 lows through ‘‘shall, as a condition’’ and

13 inserting ‘‘(7), (8), (9), (12), (15), or (16)

14 or any other person described in subsection

15 (l)(16) shall, as a condition’’, and

16 (B) in paragraph (4)(F)(ii), by striking the

17 second comma after ‘‘(14)’’.

18 (18) Paragraph (5) of section 6166(k) is

19 amended by striking ‘‘2035(d)(4)’’ and inserting

20 ‘‘2035(c)(2)’’.

21 (19) Subsection (a) of section 6512 is amended

22 by striking ‘‘; and’’ at the end of paragraphs (1),

23 (2), and (5) and inserting ‘‘, and’’.

24 (20) Paragraph (1) of section 6611(g) is

25 amended by striking the comma after ‘‘(b)(3)’’.
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1 (21) Subparagraphs (A) and (B) of section

2 6655(e)(5) are amended by striking ‘‘subsections

3 (d)(5) and (l)(3)(B)’’ and inserting ‘‘subsection

4 (d)(5)’’.

5 (22) The subchapter heading for subchapter D

6 of chapter 67 is amended by capitalizing the first

7 letter of the second word.

8 (23)(A) Section 6724(d)(1)(B) is amended by

9 striking clauses (xiv) through (xvii) and inserting

10 the following:

11 ‘‘(xiv) subparagraph (A) or (C) of

12 subsection (c)(4) of section 4093 (relating

13 to information reporting with respect to

14 tax on diesel and aviation fuels),

15 ‘‘(xv) section 4101(d) (relating to in16 formation reporting with respect to fuels

17 taxes),

18 ‘‘(xvi) subparagraph (C) of section

19 338(h)(10) (relating to information re20 quired to be furnished to the Secretary in

21 case of elective recognition of gain or loss),

22 or

23 ‘‘(xvii) section 264(f )(5)(A)(iv) (relat24 ing to reporting with respect to certain life

25 insurance and annuity contracts), and’’.
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1 (B) Section 6010(o)(4)(C) of the Internal Rev2 enue Service Restructuring and Reform Act of 1998

3 is amended by striking ‘‘inserting ‘or’, and by add4 ing at the end’’ and inserting ‘‘inserting ‘, or’, and

5 by adding after subparagraph (Z)’’.

6 (24) Subsection (a) of section 7421 is amended

7 by striking ‘‘6672(b)’’ and inserting ‘‘6672(c)’’.

8 (25) Paragraph (3) of section 7430(c) is

9 amended—

10 (A) in the paragraph heading, by striking

11 ‘‘ATTORNEYS’’ and inserting ‘‘ATTORNEYS’ ’’,

12 and

13 (B) in subparagraph (B), by striking ‘‘at14 torneys fees’’ each place it appears and insert15 ing ‘‘attorneys’ fees’’.

16 (26) Paragraph (2) of section 7603(b) is

17 amended by striking the semicolon at the end of

18 subparagraphs (A), (B), (C), (D), (E), (F), and (G)

19 and inserting a comma.

20 (27) Clause (ii) of section 7802(b)(2)(B) is

21 amended by striking ‘‘; and’’ at the end and insert22 ing ‘‘, and’’.

23 (28) Paragraph (3) of section 7811(a) is

24 amended by striking ‘‘taxpayer assistance order’’

25 and inserting ‘‘Taxpayer Assistance Order’’.
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1 (29) Paragraph (1) of section 7811(d) is

2 amended by striking ‘‘Ombudsman’s’’ and inserting

3 ‘‘National Taxpayer Advocate’s’’.

4 (30) Paragraph (3) of section 7872(f ) is

5 amended by striking ‘‘foregoing’’ and inserting

6 ‘‘forgoing’’.

7 TITLE IV—TAX TREATMENT OF

8 SECURITIES FUTURES CON9 TRACTS

10 SEC. 401. TAX TREATMENT OF SECURITIES FUTURES CON11 TRACTS.

12 (a) IN GENERAL.—Subpart IV of subchapter P of

13 chapter 1 (relating to special rules for determining gains

14 and losses) is amended by inserting after section 1234A

15 the following new section:

16 ‘‘SEC. 1234B. GAINS OR LOSSES FROM SECURITIES FU17 TURES CONTRACTS.

18 ‘‘(a) TREATMENT OF GAIN OR LOSS.—

19 ‘‘(1) IN GENERAL.—Gain or loss attributable to

20 the sale or exchange of a securities futures contract

21 shall be considered gain or loss from the sale or ex22 change of property which has the same character as

23 the property to which the contract relates has in the

24 hands of the taxpayer (or would have in the hands

25 of the taxpayer if acquired by the taxpayer).
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1 ‘‘(2) NONAPPLICATION OF SUBSECTION.—This

2 subsection shall not apply to—

3 ‘‘(A) a contract which constitutes property

4 described in paragraph (1) or (7) of section

5 1221(a), and

6 ‘‘(B) any income derived in connection

7 with a contract which, without regard to this

8 subsection, is treated as other than gain from

9 the sale or exchange of a capital asset.

10 ‘‘(b) SHORT-TERM GAINS AND LOSSES.—Except as

11 provided in the regulations under section 1092(b) or this

12 section, if gain or loss on the sale or exchange of a securi13 ties futures contract to sell property is considered as gain

14 or loss from the sale or exchange of a capital asset, such

15 gain or loss shall be treated as short-term capital gain or

16 loss.

17 ‘‘(c) SECURITIES FUTURES CONTRACT.—For pur18 poses of this section, the term ‘securities futures contract’

19 means any security future (as defined in section

20 3(a)(55)(A) of the Securities Exchange Act of 1934, as

21 in effect on the date of the enactment of this section).

22 ‘‘(d) CONTRACTS NOT TREATED AS COMMODITY FU23 TURES CONTRACTS.—For purposes of this title, a securi24 ties futures contract shall not be treated as a commodity

25 futures contract.
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1 ‘‘(e) REGULATIONS.—The Secretary shall prescribe

2 such regulations as may be appropriate to provide for the

3 proper treatment of securities futures contracts under this

4 title.’’.

5 (b) TERMINATIONS, ETC.—Section 1234A is

6 amended—

7 (1) by inserting ‘‘(other than a securities fu8 tures contract, as defined in section 1234B)’’ after

9 ‘‘right or obligation’’ in paragraph (1),

10 (2) by striking ‘‘or’’ at the end of paragraph

11 (1),

12 (3) by adding ‘‘or’’ at the end of paragraph (2),

13 and

14 (4) by inserting after paragraph (2) the fol15 lowing new paragraph:

16 ‘‘(3) a securities futures contract (as so de17 fined) which is a capital asset in the hands of the

18 taxpayer,’’.

19 (c) NONRECOGNITION UNDER SECTION 1032.—The

20 second sentence of section 1032(a) is amended by insert21 ing ‘‘, or with respect to a securities futures contract (as

22 defined in section 1234B),’’ after ‘‘an option’’.

23 (d) TREATMENT UNDER WASH SALES RULES.—Sec24 tion 1091 is amended by adding at the end the following

25 new subsection:
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1 ‘‘(f ) CASH SETTLEMENT.—This section shall not fail

2 to apply to a contract or option to acquire or sell stock

3 or securities solely by reason of the fact that the contract

4 or option settles in (or could be settled in) cash or property

5 other than such stock or securities.’’.

6 (e) TREATMENT UNDER STRADDLE RULES.—Clause

7 (i) of section 1092(d)(3)(B) is amended by striking ‘‘or’’

8 at the end of subclause (I), by redesignating subclause (II)

9 as subclause (III), and by inserting after subclause (I) the

10 following new subclause:

11 ‘‘(II) a securities futures contract

12 (as defined in section 1234B) with re13 spect to such stock or substantially

14 identical stock or securities, or’’.

15 (f ) TREATMENT UNDER SHORT SALES RULES.—

16 Paragraph (2) of section 1233(e) is amended by striking

17 ‘‘and’’ at the end of subparagraph (B), by striking the

18 period at the end of subparagraph (C) and inserting ‘‘;

19 and’’, and by adding at the end the following:

20 ‘‘(D) a securities futures contract (as de21 fined in section 1234B) to acquire substantially

22 identical property shall be treated as substan23 tially identical property.’’.

24 (g) TREATMENT UNDER SECTION 1256.—
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1 (1)(A) Subsection (b) of section 1256 is amend2 ed by striking ‘‘and’’ at the end of paragraph (3),

3 by striking the period at the end of paragraph (4)

4 and inserting ‘‘, and’’, and by adding at the end the

5 following:

6 ‘‘(5) any dealer securities futures contract.

7 The term ‘section 1256 contract’ shall not include any se8 curities futures contract or option on such a contract un9 less such contract or option is a dealer securities futures

10 contract.’’.

11 (B) Subsection (g) of section 1256 is amended

12 by adding at the end the following new paragraph:

13 ‘‘(9) DEALER SECURITIES FUTURES CON14 TRACT.—

15 ‘‘(A) IN GENERAL.—The term ‘dealer secu16 rities futures contract’ means, with respect to

17 any dealer, any securities futures contract, and

18 any option on such a contract, which—

19 ‘‘(i) is entered into by such dealer (or,

20 in the case of an option, is purchased or

21 granted by such dealer) in the normal

22 course of his activity of dealing in such

23 contracts or options, as the case may be,

24 and
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1 ‘‘(ii) is traded on a qualified board or

2 exchange.

3 ‘‘(B) DEALER.—For purposes of subpara4 graph (A), a person shall be treated as a dealer

5 in securities futures contracts or options on

6 such contracts if the Secretary determines that

7 such person performs, with respect to such con8 tracts or options, as the case may be, functions

9 similar to the functions performed by persons

10 described in paragraph (8)(A). Such determina11 tion shall be made to the extent appropriate to

12 carry out the purposes of this section.

13 ‘‘(C) SECURITIES FUTURES CONTRACT.—

14 The term ‘securities futures contract’ has the

15 meaning given to such term by section

16 1234B.’’.

17 (2) Paragraph (4) of section 1256(f ) is

18 amended—

19 (A) by inserting ‘‘, or dealer securities fu20 tures contracts,’’ after ‘‘dealer equity options’’

21 in the text, and

22 (B) by inserting ‘‘AND DEALER SECURI23 TIES FUTURES CONTRACTS’’ after ‘‘DEALER EQ24 UITY OPTIONS’’ in the heading.
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1 (3) Paragraph (6) of section 1256(g) is amend2 ed to read as follows:

3 ‘‘(6) EQUITY OPTION.—The term ‘equity op4 tion’ means any option—

5 ‘‘(A) to buy or sell stock, or

6 ‘‘(B) the value of which is determined di7 rectly or indirectly by reference to any stock or

8 any narrow-based security index (as defined in

9 section 3(a)(55) of the Securities Exchange Act

10 of 1934, as in effect on the date of the enact11 ment of this paragraph).

12 The term ‘equity option’ includes such an option on

13 a group of stocks only if such group meets the re14 quirements for a narrow-based security index (as so

15 defined).’’.

16 (4) The Secretary of the Treasury or his dele17 gate shall make the determinations under section

18 1256(g)(9)(B) of the Internal Revenue Code of

19 1986, as added by this Act, not later than July 1,

20 2001.

21 (h) CONFORMING AMENDMENTS.—

22 (1) Section 1223 is amended by redesignating

23 paragraph (16) as paragraph (17) and by inserting

24 after paragraph (15) the following new paragraph:
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1 ‘‘(16) If the security to which a securities fu2 tures contract (as defined in section 1234B) relates

3 (other than a contract to which section 1256 ap4 plies) is acquired in satisfaction of such contract, in

5 determining the period for which the taxpayer has

6 held such security, there shall be included the period

7 for which the taxpayer held such contract if such

8 contract was a capital asset in the hands of the tax9 payer.’’.

10 (2) The table of sections for subpart IV of sub11 chapter P of chapter 1 is amended by inserting after

12 the item relating to section 1234A the following new

13 item:

‘‘Sec. 1234B. Securities futures contracts.’’.

14 (i) DESIGNATION OF CONTRACT MARKETS.—Section

15 7701 is amended by redesignating subsection (m) as sub16 section (n) and by inserting after subsection (l) the fol17 lowing new subsection:

18 ‘‘(m) DESIGNATION OF CONTRACT MARKETS.—Any

19 designation by the Commodity Futures Trading Commis20 sion of a contract market which could not have been made

21 under the law in effect on the day before the date of the

22 enactment of the Commodity Futures Modernization Act

23 of 2000 shall apply for purposes of this title except to the

24 extent provided in regulations prescribed by the Sec25 retary.’’.
170

•HR 5662 IH

1 ( j) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on the date of the enactment

3 of this Act.

Æ