II 

Calendar No. 327 

112TH CONGRESS 

2D SESSION S. 2132 

[Report No. 112–152] 

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

of highway-related taxes and trust fund expenditures, to provide revenues 

for highway programs, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 27, 2012 

Mr. BAUCUS, from the Committee on Finance, reported the following original 

bill; which was read twice and placed on the calendar 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for the extension of highway-related taxes and trust fund 

expenditures, to provide revenues for highway programs, 

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; TABLE OF CONTENTS. 

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

5 ‘‘Highway Investment, Job Creation, and Economic 

6 Growth Act of 2012’’. 


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1 (b) TABLE OF CONTENTS.—The table of contents for 

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—EXTENSION OF HIGHWAY TRUST FUND EXPENDITURE 

AUTHORITY AND RELATED TAXES 

Sec. 101. Extension of trust fund expenditure authority. 

Sec. 102. Extension of highway-related taxes. 

TITLE II—OTHER PROVISIONS 

Sec. 201. Temporary increase in small issuer exception to tax-exempt interest 

expense allocation rules for financial institutions. 

Sec. 202. Temporary modification of alternative minimum tax limitations on 

tax- exempt bonds. 

Sec. 203. Issuance of TRIP bonds by State infrastructure banks. 

Sec. 204. Extension of parity for exclusion from income for employer-provided 

mass transit and parking benefits. 

Sec. 205. Exempt-facility bonds for sewage and water supply facilities. 

TITLE III—REVENUE PROVISIONS 

Sec. 301. Transfer from Leaking Underground Storage Tank Trust Fund to 

Highway Trust Fund. 

Sec. 302. Portion of Leaking Underground Storage Tank Trust Fund financing 

rate transferred to Highway Trust Fund. 

Sec. 303. Elimination of unintended application of cellulosic biofuel producer 

credit. 

Sec. 304. Transfer of gas guzzler taxes to Highway Trust Fund. 

Sec. 305. Revocation or denial of passport in case of certain unpaid taxes. 

Sec. 306. 100 percent continuous levy on payments to Medicare providers and 

suppliers. 

Sec. 307. Transfer of amounts attributable to certain duties on imported vehicles into the Highway Trust Fund. 

Sec. 308. Treatment of securities of a controlled corporation exchanged for assets in certain reorganizations. 

Sec. 309. Internal Revenue Service levies and Thrift Savings Plan Accounts. 

Sec. 310. Modifications of required distribution rules for pension plans. 

Sec. 311. Depreciation and amortization rules for highway and related property 

subject to long-term leases. 

Sec. 312. Extension for transfers of excess pension assets to retiree health accounts. 

Sec. 313. Transfer of excess pension assets to retiree group term life insurance 

accounts. 


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1 TITLE I—EXTENSION OF HIGH2 WAY TRUST FUND EXPENDI3 TURE AUTHORITY AND RE4 LATED TAXES 

5 SEC. 101. EXTENSION OF TRUST FUND EXPENDITURE AU6 THORITY. 

7 (a) HIGHWAY TRUST FUND.—Section 9503 of the 

8 Internal Revenue Code of 1986 is amended— 

9 (1) by striking ‘‘April 1, 2012’’ in subsections 

10 (b)(6)(B), (c)(1), and (e)(3) and inserting ‘‘October 

11 1, 2013’’; and 

12 (2) by striking ‘‘Surface Transportation Exten13 sion Act of 2011, Part II’’ in subsections (c)(1) and 

14 (e)(3) and inserting ‘‘Moving Ahead for Progress in 

15 the 21st Century Act’’. 

16 (b) SPORT FISH RESTORATION AND BOATING TRUST

17 FUND.—Section 9504 of the Internal Revenue Code of 

18 1986 is amended— 

19 (1) by striking ‘‘Surface Transportation Exten20 sion Act of 2011, Part II’’ each place it appears in 

21 subsection (b)(2) and inserting ‘‘Moving Ahead for 

22 Progress in the 21st Century Act’’; and 

23 (2) by striking ‘‘April 1, 2012’’ in subsection 

24 (d)(2) and inserting ‘‘October 1, 2013’’. 


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1 (c) LEAKING UNDERGROUND STORAGE TANK TRUST

2 FUND.—Paragraph (2) of section 9508(e) of the Internal 

3 Revenue Code of 1986 is amended by striking ‘‘April 1, 

4 2012’’ and inserting ‘‘October 1, 2013’’. 

5 (d) ESTABLISHMENT OF SOLVENCY ACCOUNT.—Sec6 tion 9503 of the Internal Revenue Code of 1986 is amend7 ed by adding at the end the following new subsection: 

8 ‘‘(g) ESTABLISHMENT OF SOLVENCY ACCOUNT.— 

9 ‘‘(1) CREATION OF ACCOUNT.—There is estab10 lished in the Highway Trust Fund a separate ac11 count to be known as the ‘Solvency Account’ con12 sisting of such amounts as may be transferred or 

13 credited to the Solvency Account as provided in this 

14 section or section 9602(b). 

15 ‘‘(2) TRANSFERS TO SOLVENCY ACCOUNT.— 

16 The Secretary of the Treasury shall transfer to the 

17 Solvency Account the excess of— 

18 ‘‘(A) any amount appropriated to the 

19 Highway Trust Fund before October 1, 2013, 

20 by reason of the provisions of, and amendments 

21 made by, the Highway Investment, Job Cre22 ation, and Economic Growth Act of 2012, over 

23 ‘‘(B) the amount necessary to meet the re24 quired expenditures from the Highway Trust 


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1 Fund under subsection (c) for the period ending 

2 before October 1, 2013. 

3 ‘‘(3) EXPENDITURES FROM ACCOUNT.— 

4 Amounts in the Solvency Account shall be available 

5 for transfers to the Highway Account (as defined in 

6 subsection (e)(5)(B)) and the Mass Transit Account 

7 in such amounts as determined necessary by the 

8 Secretary to ensure that each account has a surplus 

9 balance of $2,800,000,000 on September 30, 2013. 

10 ‘‘(4) TERMINATION OF ACCOUNT.—The Sol11 vency Account shall terminate on September 30, 

12 2013, and the Secretary shall transfer any remain13 ing balance in the Account on such date to the 

14 Highway Trust Fund.’’. 

15 (e) EFFECTIVE DATE.—The amendments made by 

16 this section shall take effect on April 1, 2012. 

17 SEC. 102. EXTENSION OF HIGHWAY-RELATED TAXES. 

18 (a) IN GENERAL.— 

19 (1) Each of the following provisions of the In20 ternal Revenue Code of 1986 is amended by striking 

21 ‘‘March 31, 2012’’ and inserting ‘‘September 30, 

22 2015’’: 

23 (A) Section 4041(a)(1)(C)(iii)(I). 

24 (B) Section 4041(m)(1)(B). 

25 (C) Section 4081(d)(1). 


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1 (2) Each of the following provisions of such 

2 Code is amended by striking ‘‘April 1, 2012’’ and in3 serting ‘‘October 1, 2015’’: 

4 (A) Section 4041(m)(1)(A). 

5 (B) Section 4051(c). 

6 (C) Section 4071(d). 

7 (D) Section 4081(d)(3). 

8 (b) EXTENSION OF TAX, ETC., ON USE OF CERTAIN

9 HEAVY VEHICLES.—Each of the following provisions of 

10 the Internal Revenue Code of 1986 is amended by striking 

11 ‘‘2012’’ and inserting ‘‘2015’’: 

12 (1) Section 4481(f). 

13 (2) Subsections (c)(4) and (d) of section 4482. 

14 (c) FLOOR STOCKS REFUNDS.—Section 6412(a)(1) 

15 of the Internal Revenue Code of 1986 is amended— 

16 (1) by striking ‘‘April 1, 2012’’ each place it 

17 appears and inserting ‘‘October 1, 2015’’; 

18 (2) by striking ‘‘September 30, 2012’’ each 

19 place it appears and inserting ‘‘March 31, 2016’’; 

20 and 

21 (3) by striking ‘‘July 1, 2012’’ and inserting 

22 ‘‘January 1, 2016’’. 

23 (d) EXTENSION OF CERTAIN EXEMPTIONS.—Sec24 tions 4221(a) and 4483(i) of the Internal Revenue Code 


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1 of 1986 are each amended by striking ‘‘April 1, 2012’’ 

2 and inserting ‘‘October 1, 2015’’. 

3 (e) EXTENSION OF TRANSFERS OF CERTAIN

4 TAXES.— 

5 (1) IN GENERAL.—Section 9503 of the Internal 

6 Revenue Code of 1986 is amended— 

7 (A) in subsection (b)— 

8 (i) by striking ‘‘April 1, 2012’’ each 

9 place it appears in paragraphs (1) and (2) 

10 and inserting ‘‘October 1, 2015’’; 

11 (ii) by striking ‘‘APRIL 1, 2012’’ in the 

12 heading of paragraph (2) and inserting 

13 ‘‘OCTOBER 1, 2015’’; 

14 (iii) by striking ‘‘March 31, 2012’’ in 

15 paragraph (2) and inserting ‘‘September 

16 30, 2015’’; and 

17 (iv) by striking ‘‘January 1, 2013’’ in 

18 paragraph (2) and inserting ‘‘July 1, 

19 2016’’; and 

20 (B) in subsection (c)(2), by striking ‘‘Jan21 uary 1, 2013’’ and inserting ‘‘July 1, 2016’’. 

22 (2) MOTORBOAT AND SMALL-ENGINE FUEL TAX

23 TRANSFERS.— 

24 (A) IN GENERAL.—Paragraphs (3)(A)(i) 

25 and (4)(A) of section 9503(c) of such Code are 


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1 each amended by striking ‘‘April 1, 2012’’ and 

2 inserting ‘‘October 1, 2015’’. 

3 (B) CONFORMING AMENDMENTS TO LAND

4 AND WATER CONSERVATION FUND.—Section 

5 201(b) of the Land and Water Conservation 

6 Fund Act of 1965 (16 U.S.C. 460l–11(b)) is 

7 amended— 

8 (i) by striking ‘‘April 1, 2013’’ each 

9 place it appears and inserting ‘‘October 1, 

10 2016’’; and 

11 (ii) by striking ‘‘April 1, 2012’’ and 

12 inserting ‘‘October 1, 2015’’. 

13 (f) EFFECTIVE DATE.— 

14 (1) IN GENERAL.—Except as provided in para15 graph (2), the amendments made by this section 

16 shall take effect on April 1, 2012. 

17 (2) SUBSECTION (b)(2).—The amendment 

18 made by subsection (b)(2) shall apply to periods be19 ginning after September 30, 2012. 


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1 TITLE II—OTHER PROVISIONS 

2 SEC. 201. TEMPORARY INCREASE IN SMALL ISSUER EXCEP3 TION TO TAX-EXEMPT INTEREST EXPENSE 

4 ALLOCATION RULES FOR FINANCIAL INSTI5 TUTIONS. 

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

7 265(b)(3) of the Internal Revenue Code of 1986 is amend8 ed— 

9 (1) by striking ‘‘2009 or 2010’’ in clause (i) 

10 and inserting ‘‘2009, 2010, or 2012’’, 

11 (2) by striking ‘‘2009 or 2010’’ in clauses (ii) 

12 and (iii) and inserting ‘‘2009, 2010, or the period 

13 beginning after the date of the enactment of the 

14 Highway Investment, Job Creation, and Economic 

15 Growth Act of 2012 and before January 1, 2013’’, 

16 and 

17 (3) by striking ‘‘2009 AND 2010’’ in the heading 

18 and inserting ‘‘2009, 2010, AND 2012’’. 

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

20 this section shall apply to obligations issued after the date 

21 of the enactment of this Act. 


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1 SEC. 202. TEMPORARY MODIFICATION OF ALTERNATIVE 

2 MINIMUM TAX LIMITATIONS ON TAX- EXEMPT 

3 BONDS. 

4 (a) INTEREST ON PRIVATE ACTIVITY BONDS NOT

5 TREATED AS TAX PREFERENCE ITEMS.—Clause (vi) of 

6 section 57(a)(5)(C) of the Internal Revenue Code of 1986 

7 is amended— 

8 (1) in subclause (I) by inserting ‘‘, or after the 

9 date of enactment of the Highway Investment, Job 

10 Creation, and Economic Growth Act of 2012 and be11 fore January 1, 2013’’ after ‘‘January 1, 2011’’; 

12 (2) in subclause (III) by inserting ‘‘before Jan13 uary 1, 2011’’ after ‘‘which is issued’’; and 

14 (3) by striking ‘‘AND 2010’’ in the heading and 

15 inserting ‘‘, 2010, AND PORTIONS OF 2012’’. 

16 (b) NO ADJUSTMENT TO ADJUSTED CURRENT

17 EARNINGS.—Clause (iv) of section 56(g)(4)(B) of the In18 ternal Revenue Code of 1986 is amended— 

19 (1) in subclause (I) by inserting ‘‘, or after the 

20 date of enactment of the Highway Investment, Job 

21 Creation, and Economic Growth Act of 2012 and be22 fore January 1, 2013’’ after ‘‘January 1, 2011’’; 

23 (2) in subclause (III) by inserting ‘‘before Jan24 uary 1, 2011’’ after ‘‘which is issued’’; and 

25 (3) by striking ‘‘AND 2010’’ in the heading and 

26 inserting ‘‘, 2010, AND PORTIONS OF 2012’’. 


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

2 this section shall apply to obligations issued after the date 

3 of enactment of this Act. 

4 SEC. 203. ISSUANCE OF TRIP BONDS BY STATE INFRA5 STRUCTURE BANKS. 

6 Section 610(d) of title 23, United States Code, is 

7 amended— 

8 (1) by redesignating paragraphs (4), (5), and 

9 (6) as paragraphs (5), (6), and (7), respectively, 

10 (2) by inserting after paragraph (3) the fol11 lowing new paragraph: 

12 ‘‘(4) TRIP BOND ACCOUNT.— 

13 ‘‘(A) IN GENERAL.—A State, through a 

14 State infrastructure bank, may issue TRIP 

15 bonds and deposit proceeds from such issuance 

16 into the TRIP bond account of the bank. 

17 ‘‘(B) TRIP BOND.—For purposes of this 

18 section, the term ‘TRIP bond’ means any bond 

19 issued as part of an issue if— 

20 ‘‘(i) 100 percent of the available 

21 project proceeds of such issue are to be 

22 used for expenditures incurred after the 

23 date of the enactment of this paragraph 

24 for 1 or more qualified projects pursuant 

25 to an allocation of such proceeds to such 


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1 project or projects by a State infrastruc2 ture bank, 

3 ‘‘(ii) the bond is issued by a State in4 frastructure bank and is in registered form 

5 (within the meaning of section 149(a) of 

6 the Internal Revenue Code of 1986), 

7 ‘‘(iii) the State infrastructure bank 

8 designates such bond for purposes of this 

9 section, and 

10 ‘‘(iv) the term of each bond which is 

11 part of such issue does not exceed 30 

12 years. 

13 ‘‘(C) QUALIFIED PROJECT.—For purposes 

14 of this subparagraph, the term ‘qualified 

15 project’ means the capital improvements to any 

16 transportation infrastructure project of any 

17 governmental unit or other person, including 

18 roads, bridges, rail and transit systems, ports, 

19 and inland waterways proposed and approved 

20 by a State infrastructure bank, but does not in21 clude costs of operations or maintenance with 

22 respect to such project.’’, 

23 (3) by adding at the end of paragraph (5), as 

24 redesignated by paragraph (1), the following new 

25 subparagraph: 


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1 ‘‘(D) TRIP BOND ACCOUNT..—Funds de2 posited into the TRIP bond account shall con3 stitute for purposes of this section a capitaliza4 tion grant for the TRIP bond account of the 

5 bank.’’, and 

6 (4) by adding at the end the following new 

7 paragraph: 

8 ‘‘(8) SPECIAL RULES FOR TRIP BOND ACCOUNT

9 FUNDS.— 

10 ‘‘(A) IN GENERAL.—The State shall de11 velop a transparent competitive process for the 

12 award of funds deposited into the TRIP bond 

13 account that considers the impact of qualified 

14 projects on the economy, the environment, state 

15 of good repair, and equity. 

16 ‘‘(B) APPLICABILITY OF FEDERAL LAW.— 

17 The requirements of any Federal law, including 

18 this title and titles 40 and 49, which would oth19 erwise apply to projects to which the United 

20 States is a party or to funds made available 

21 under such law and projects assisted with those 

22 funds shall apply to— 

23 ‘‘(i) funds made available under the 

24 TRIP bond account for similar qualified 

25 projects, and 


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1 ‘‘(ii) similar qualified projects assisted 

2 through the use of such funds.’’. 

3 SEC. 204. EXTENSION OF PARITY FOR EXCLUSION FROM IN4 COME FOR EMPLOYER-PROVIDED MASS 

5 TRANSIT AND PARKING BENEFITS. 

6 (a) IN GENERAL.—Paragraph (2) of section 132(f) 

7 of the Internal Revenue Code of 1986 is amended by strik8 ing ‘‘January 1, 2012’’ and inserting ‘‘January 1, 2013’’. 

9 (b) EFFECTIVE DATE.—The amendment made by 

10 this section shall apply to months after December 31, 

11 2011. 

12 SEC. 205. EXEMPT-FACILITY BONDS FOR SEWAGE AND 

13 WATER SUPPLY FACILITIES. 

14 (a) BONDS FOR WATER AND SEWAGE FACILITIES

15 TEMPORARILY EXEMPT FROM VOLUME CAP ON PRIVATE

16 ACTIVITY BONDS.—Subsection (g) of section 146 of the 

17 Internal Revenue Code of 1986 is amended— 

18 (1) by striking ‘‘and’’ at the end of paragraph 

19 (3), 

20 (2) by striking the period at the end of para21 graph (4) and inserting ‘‘, and’’, and 

22 (3) by inserting after paragraph (4) the fol23 lowing new paragraph: 


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1 ‘‘(5) any exempt facility bonds issued before 

2 January 1, 2018, as part of an issue described in 

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

4 (b) CONFORMING CHANGE.—Paragraphs (2) and 

5 (3)(B) of section 146(k) of the Internal Revenue Code of 

6 1986 are both amended by striking ‘‘paragraph (4), (5), 

7 (6), or (10) of section 142(a)’’ and inserting ‘‘paragraph 

8 (4) or (5) of section 142(a) with respect to bonds issued 

9 after December 31, 2017, or paragraph (6) or (10) of sec10 tion 142(a)’’. 

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

12 this section shall apply to obligations issued after the date 

13 of the enactment of this Act. 

14 TITLE III—REVENUE 

15 PROVISIONS 

16 SEC. 301. TRANSFER FROM LEAKING UNDERGROUND STOR17 AGE TANK TRUST FUND TO HIGHWAY TRUST 

18 FUND. 

19 (a) IN GENERAL.—Subsection (c) of section 9508 of 

20 the Internal Revenue Code of 1986 is amended— 

21 (1) by striking ‘‘Amounts’’ and inserting: 

22 ‘‘(1) IN GENERAL.—Except as provided in para23 graph (2), amounts’’, and 

24 (2) by adding at the end the following new 

25 paragraph: 


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1 ‘‘(2) TRANSFER TO HIGHWAY TRUST FUND.— 

2 Out of amounts in the Leaking Underground Stor3 age Tank Trust Fund there is hereby appropriated 

4 $3,000,000,000 to be transferred under section 

5 9503(f)(3) to the Highway Trust Fund.’’. 

6 (b) TRANSFER TO HIGHWAY TRUST FUND.— 

7 (1) IN GENERAL.—Subsection (f) of section 

8 9503 of the Internal Revenue Code of 1986 is 

9 amended by inserting after paragraph (2) the fol10 lowing new paragraph: 

11 ‘‘(3) INCREASE IN FUND BALANCE.—There is 

12 hereby transferred to the Highway Trust Fund 

13 amounts appropriated from the Leaking Under14 ground Storage Tank Trust Fund under section 

15 9508(c)(2).’’. 

16 (2) CONFORMING AMENDMENTS.—Paragraph 

17 (4) of section 9503(f) of such Code is amended— 

18 (A) by inserting ‘‘or transferred’’ after 

19 ‘‘appropriated’’, and 

20 (B) by striking ‘‘APPROPRIATED’’ in the 

21 heading thereof. 


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1 SEC. 302. PORTION OF LEAKING UNDERGROUND STORAGE 

2 TANK TRUST FUND FINANCING RATE TRANS3 FERRED TO HIGHWAY TRUST FUND. 

4 (a) IN GENERAL.—Subsection (b) of section 9503 of 

5 the Internal Revenue Code of 1986 is amended by insert6 ing after paragraph (2) the following new paragraph: 

7 ‘‘(3) PORTION OF LEAKING UNDERGROUND

8 STORAGE TANK TRUST FUND FINANCING RATE.— 

9 There are hereby appropriated to the Highway Trust 

10 Fund amounts equivalent to one-third of the taxes 

11 received in the Treasury under— 

12 ‘‘(A) section 4041(d) (relating to addi13 tional taxes on motor fuels), 

14 ‘‘(B) section 4081 (relating to tax on gaso15 line, diesel fuel, and kerosene) to the extent at16 tributable to the Leaking Underground Storage 

17 Tank Trust Fund financing rate under such 

18 section, and 

19 ‘‘(C) section 4042 (relating to tax on fuel 

20 used in commercial transportation on inland 

21 waterways) to the extent attributable to the 

22 Leaking Underground Storage Tank Trust 

23 Fund financing rate under such section. 

24 For purposes of this paragraph, there shall not be 

25 taken into account the taxes imposed by sections 


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1 4041 and 4081 on diesel fuel sold for use or used 

2 as fuel in a diesel-powered boat.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) Paragraphs (1), (2), and (3) of section 

5 9508(b) of the Internal Revenue Code of 1986 are 

6 each amended by inserting ‘‘two-thirds of the’’ be7 fore ‘‘taxes’’. 

8 (2) Paragraph (4) of section 9503(b) of such 

9 Code is amended by striking subparagraphs (A) and 

10 (B) and by redesignating subparagraphs (C) and 

11 (D) as subparagraphs (A) and (B), respectively. 

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

13 this section shall apply to taxes received after the date 

14 of the enactment of this Act. 

15 SEC. 303. ELIMINATION OF UNINTENDED APPLICATION OF 

16 CELLULOSIC BIOFUEL PRODUCER CREDIT. 

17 (a) CLAIMS FOR CELLULOSIC BIOFUEL PRODUCER

18 CREDIT.—The amendments made by section 1408(a) of 

19 the Health Care and Education Reconciliation Act of 2010 

20 and section 2121(a) of the Small Business Jobs Act of 

21 2010 shall be applied to claims for credits under section 

22 40(a) of the Internal Revenue Code of 1986 with respect 

23 to fuels sold or used before January 1, 2010, filed on or 

24 after February 3, 2012. 


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1 (b) TREATMENT OF UNUSED GENERAL BUSINESS

2 CREDITS.—No claim for credit under section 38(a)(1) of 

3 the Internal Revenue Code of 1986 which is attributable 

4 to a credit under section 40(a) of such Code for any fuel 

5 described in section 40(b)(6)(E)(iii) of such Code may be 

6 filed on or after February 3, 2012. 

7 (c) TRANSFER OF RESULTING REVENUE TO HIGH8 WAY TRUST FUND.—Subsection (b) of section 9503 of the 

9 Internal Revenue Code of 1986 is amended by adding at 

10 the end the following new paragraph: 

11 ‘‘(7) TRANSFER OF RESULTING REVENUE.— 

12 Out of money in the Treasury not otherwise appro13 priated, there are hereby appropriated amounts 

14 equivalent to the increase in revenues received in the 

15 Treasury resulting from the provisions of, and 

16 amendment made by, subsections (a) and (b) of sec17 tion 303 of the Highway Investment, Job Creation, 

18 and Economic Growth Act of 2012.’’. 

19 SEC. 304. TRANSFER OF GAS GUZZLER TAXES TO HIGHWAY 

20 TRUST FUND. 

21 (a) IN GENERAL.—Paragraph (1) of section 9503(b) 

22 of the Internal Revenue Code of 1986 is amended by re23 designating subparagraphs (C), (D), and (E) as subpara24 graphs (D), (E), and (F), respectively, and by inserting 

25 after subparagraph (B) the following new subparagraph: 


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1 ‘‘(B) section 4064 (relating to gas guzzler 

2 tax),’’. 

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

4 this section shall apply to taxes received after the date 

5 of the enactment of this Act. 

6 SEC. 305. REVOCATION OR DENIAL OF PASSPORT IN CASE 

7 OF CERTAIN UNPAID TAXES. 

8 (a) IN GENERAL.—Subchapter D of chapter 75 of the 

9 Internal Revenue Code of 1986 is amended by adding at 

10 the end the following new section: 

11 ‘‘SEC. 7345. REVOCATION OR DENIAL OF PASSPORT IN CASE 

12 OF CERTAIN TAX DELINQUENCIES. 

13 ‘‘(a) IN GENERAL.—If the Secretary receives certifi14 cation by the Commissioner of Internal Revenue that any 

15 individual has a seriously delinquent tax debt in an 

16 amount in excess of $50,000, the Secretary shall transmit 

17 such certification to the Secretary of State for action with 

18 respect to denial, revocation, or limitation of a passport 

19 pursuant to section 4 of the Act entitled ‘An Act to regu20 late the issue and validity of passports, and for other pur21 poses’, approved July 3, 1926 (22 U.S.C. 211a et seq.), 

22 commonly known as the ‘Passport Act of 1926’. 

23 ‘‘(b) SERIOUSLY DELINQUENT TAX DEBT.—For pur24 poses of this section, the term ‘seriously delinquent tax 

25 debt’ means an outstanding debt under this title for which 


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1 a notice of lien has been filed in public records pursuant 

2 to section 6323 or a notice of levy has been filed pursuant 

3 to section 6331, except that such term does not include— 

4 ‘‘(1) a debt that is being paid in a timely man5 ner pursuant to an agreement under section 6159 or 

6 7122, and 

7 ‘‘(2) a debt with respect to which collection is 

8 suspended because a collection due process hearing 

9 under section 6330, or relief under subsection (b), 

10 (c), or (f) of section 6015, is requested or pending. 

11 ‘‘(c) ADJUSTMENT FOR INFLATION.—In the case of 

12 a calendar year beginning after 2012, the dollar amount 

13 in subsection (a) shall be increased by an amount equal 

14 to— 

15 ‘‘(1) such dollar amount, multiplied by 

16 ‘‘(2) the cost-of-living adjustment determined 

17 under section 1(f)(3) for the calendar year, deter18 mined by substituting ‘calendar year 2011’ for ‘cal19 endar year 1992’ in subparagraph (B) thereof. 

20 If any amount as adjusted under the preceding sentence 

21 is not a multiple of $1,000, such amount shall be rounded 

22 to the next highest multiple of $1,000.’’. 

23 (b) CLERICAL AMENDMENT.—The table of sections 

24 for subchapter D of chapter 75 of the Internal Revenue 


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1 Code of 1986 is amended by adding at the end the fol2 lowing new item: 

‘‘Sec. 7345. Revocation or denial of passport in case of certain tax delinquencies.’’. 

3 (c) AUTHORITY FOR INFORMATION SHARING.— 

4 (1) IN GENERAL.—Subsection (l) of section 

5 6103 of the Internal Revenue Code of 1986 is 

6 amended by adding at the end the following new 

7 paragraph: 

8 ‘‘(23) DISCLOSURE OF RETURN INFORMATION

9 TO DEPARTMENT OF STATE FOR PURPOSES OF PASS10 PORT REVOCATION UNDER SECTION 7345.— 

11 ‘‘(A) IN GENERAL.—The Secretary shall, 

12 upon receiving a certification described in sec13 tion 7345, disclose to the Secretary of State re14 turn information with respect to a taxpayer who 

15 has a seriously delinquent tax debt described in 

16 such section. Such return information shall be 

17 limited to— 

18 ‘‘(i) the taxpayer identity information 

19 with respect to such taxpayer, and 

20 ‘‘(ii) the amount of such seriously de21 linquent tax debt. 

22 ‘‘(B) RESTRICTION ON DISCLOSURE.—Re23 turn information disclosed under subparagraph 

24 (A) may be used by officers and employees of 


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1 the Department of State for the purposes of, 

2 and to the extent necessary in, carrying out the 

3 requirements of section 4 of the Act entitled 

4 ‘An Act to regulate the issue and validity of 

5 passports, and for other purposes’, approved 

6 July 3, 1926 (22 U.S.C. 211a et seq.), com7 monly known as the ‘Passport Act of 1926’.’’. 

8 (2) CONFORMING AMENDMENT.—Paragraph (4) 

9 of section 6103(p) of such Code is amended by strik10 ing ‘‘or (22)’’ each place it appears in subparagraph 

11 (F)(ii) and in the matter preceding subparagraph 

12 (A) and inserting ‘‘(22), or (23)’’. 

13 (d) REVOCATION AUTHORIZATION.—The Act entitled 

14 ‘‘An Act to regulate the issue and validity of passports, 

15 and for other purposes’’, approved July 3, 1926 (22 

16 U.S.C. 211a et seq.), commonly known as the ‘‘Passport 

17 Act of 1926’’, is amended by adding at the end the fol18 lowing: 

19 ‘‘SEC. 4. AUTHORITY TO DENY OR REVOKE PASSPORT. 

20 ‘‘(a) INELIGIBILITY.— 

21 ‘‘(1) ISSUANCE.—Except as provided under 

22 subsection (b), upon receiving a certification de23 scribed in section 7345 of the Internal Revenue 

24 Code of 1986 from the Secretary of the Treasury, 

25 the Secretary of State may not issue a passport or 


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1 passport card to any individual who has a seriously 

2 delinquent tax debt described in such section. 

3 ‘‘(2) REVOCATION.—The Secretary of State 

4 shall revoke a passport or passport card previously 

5 issued to any individual described in subparagraph 

6 (A). 

7 ‘‘(b) EXCEPTIONS.— 

8 ‘‘(1) EMERGENCY AND HUMANITARIAN SITUA9 TIONS.—Notwithstanding subsection (a), the Sec10 retary of State may issue a passport or passport 

11 card, in emergency circumstances or for humani12 tarian reasons, to an individual described in sub13 section (a)(1). 

14 ‘‘(2) LIMITATION FOR RETURN TO UNITED

15 STATES.—Notwithstanding subsection (a)(2), the 

16 Secretary of State, before revocation, may— 

17 ‘‘(A) limit a previously issued passport or 

18 passport card only for return travel to the 

19 United States; or 

20 ‘‘(B) issue a limited passport or passport 

21 card that only permits return travel to the 

22 United States.’’. 

23 (e) EFFECTIVE DATE.—The amendments made by 

24 this section shall take effect on January 1, 2013. 


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1 SEC. 306. 100 PERCENT CONTINUOUS LEVY ON PAYMENTS 

2 TO MEDICARE PROVIDERS AND SUPPLIERS. 

3 (a) IN GENERAL.—Paragraph (3) of section 6331(h) 

4 of the Internal Revenue Code of 1986 is amended by strik5 ing the period at the end and inserting ‘‘, or to a Medicare 

6 provider or supplier under title XVIII of the Social Secu7 rity Act.’’. 

8 (b) EFFECTIVE DATE.—The amendment made by 

9 this section shall apply to payments made after the date 

10 of the enactment of this Act. 

11 SEC. 307. TRANSFER OF AMOUNTS ATTRIBUTABLE TO CER12 TAIN DUTIES ON IMPORTED VEHICLES INTO 

13 THE HIGHWAY TRUST FUND. 

14 Section 9503(b) of the Internal Revenue Code of 

15 1986, as amended by this Act, is amended by adding at 

16 the end the following new paragraph: 

17 ‘‘(8) CERTAIN DUTIES ON IMPORTED VEHI18 CLES.—There are hereby appropriated to the High19 way Trust Fund amounts equivalent to the amounts 

20 received in the Treasury that are attributable to du21 ties collected on or after October 1, 2011, and before 

22 October 1, 2016, on articles classified under sub23 heading 8703.22.00 or 8703.24.00 of the Har24 monized Tariff Schedule of the United States.’’. 


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1 SEC. 308. TREATMENT OF SECURITIES OF A CONTROLLED 

2 CORPORATION EXCHANGED FOR ASSETS IN 

3 CERTAIN REORGANIZATIONS. 

4 (a) IN GENERAL.—Section 361 of the Internal Rev5 enue Code of 1986 is amended by adding at the end the 

6 following new subsection: 

7 ‘‘(d) SPECIAL RULES FOR TRANSACTIONS INVOLVING

8 SECTION 355 DISTRIBUTIONS.—In the case of a reorga9 nization described in section 368(a)(1)(D) with respect to 

10 which stock or securities of the corporation to which the 

11 assets are transferred are distributed in a transaction 

12 which qualifies under section 355— 

13 ‘‘(1) this section shall be applied by substituting 

14 ‘stock other than nonqualified preferred stock (as 

15 defined in section 351(g)(2))’ for ‘stock or securities’ 

16 in subsections (a) and (b)(1), and 

17 ‘‘(2) the first sentence of subsection (b)(3) shall 

18 apply only to the extent that the sum of the money 

19 and the fair market value of the other property 

20 transferred to such creditors does not exceed the ad21 justed bases of such assets transferred (reduced by 

22 the amount of the liabilities assumed (within the 

23 meaning of section 357(c))).’’. 

24 (b) CONFORMING AMENDMENT.—Paragraph (3) of 

25 section 361(b) is amended by striking the last sentence. 

26 (c) EFFECTIVE DATE.— 


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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendments made by this section 

3 shall apply to exchanges after the date of the enact4 ment of this Act. 

5 (2) TRANSITION RULE.—The amendments 

6 made by this section shall not apply to any exchange 

7 pursuant to a transaction which is— 

8 (A) made pursuant to a written agreement 

9 which was binding on February 6, 2012, and at 

10 all times thereafter; 

11 (B) described in a ruling request submitted 

12 to the Internal Revenue Service on or before 

13 February 6, 2012; or 

14 (C) described on or before February 6, 

15 2012, in a public announcement or in a filing 

16 with the Securities and Exchange Commission. 

17 SEC. 309. INTERNAL REVENUE SERVICE LEVIES AND 

18 THRIFT SAVINGS PLAN ACCOUNTS. 

19 Section 8437(e)(3) of title 5, United States Code, is 

20 amended by inserting ‘‘, the enforcement of a Federal tax 

21 levy as provided in section 6331 of the Internal Revenue 

22 Code of 1986,’’ after ‘‘(42 U.S.C. 659)’’. 


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1 SEC. 310. MODIFICATIONS OF REQUIRED DISTRIBUTION 

2 RULES FOR PENSION PLANS. 

3 (a) IN GENERAL.—Section 401(a)(9)(B) of the Inter4 nal Revenue Code of 1986 is amended to read as follows: 

5 ‘‘(B) REQUIRED DISTRIBUTIONS WHERE

6 EMPLOYEE DIES BEFORE ENTIRE INTEREST IS

7 DISTRIBUTED.— 

8 ‘‘(i) 5-YEAR GENERAL RULE.—A trust 

9 shall not constitute a qualified trust under 

10 this section unless the plan provides that, 

11 if an employee dies before the distribution 

12 of the employee’s interest (whether or not 

13 such distribution has begun in accordance 

14 with subparagraph (A)), the entire interest 

15 of the employee will be distributed within 

16 5 years after the death of such employee. 

17 ‘‘(ii) EXCEPTION FOR ELIGIBLE DES18 IGNATED BENEFICIARIES.—If— 

19 ‘‘(I) any portion of the employ20 ee’s interest is payable to (or for the 

21 benefit of) an eligible designated bene22 ficiary, 

23 ‘‘(II) such portion will be distrib24 uted (in accordance with regulations) 

25 over the life of such eligible des26 ignated beneficiary (or over a period 


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1 not extending beyond the life expect2 ancy of such beneficiary), and 

3 ‘‘(III) such distributions begin 

4 not later than 1 year after the date of 

5 the employee’s death or such later 

6 date as the Secretary may by regula7 tions prescribe, 

8 then, for purposes of clause (i) and except 

9 as provided in clause (iv) or subparagraph 

10 (E)(iii), the portion referred to in sub11 clause (I) shall be treated as distributed on 

12 the date on which such distributions begin. 

13 ‘‘(iii) SPECIAL RULE FOR SURVIVING

14 SPOUSE OF EMPLOYEE.—If the eligible 

15 designated beneficiary referred to in clause 

16 (ii)(I) is the surviving spouse of the em17 ployee— 

18 ‘‘(I) the date on which the dis19 tributions are required to begin under 

20 clause (ii)(III) shall not be earlier 

21 than the date on which the employee 

would have attained age 70 1 22 ⁄2, and 

23 ‘‘(II) if the surviving spouse dies 

24 before the distributions to such spouse 

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1 plied as if the surviving spouse were 

2 the employee. 

3 ‘‘(iv) RULES UPON DEATH OF ELIGI4 BLE DESIGNATED BENEFICIARY.—If an el5 igible designated beneficiary dies before the 

6 portion of an employee’s interest described 

7 in clause (ii) is entirely distributed, clause 

8 (ii) shall not apply to any beneficiary of 

9 such eligible designated beneficiary and the 

10 remainder of such portion shall be distrib11 uted within 5 years after the death of such 

12 beneficiary.’’. 

13 (b) DEFINITION OF ELIGIBLE DESIGNATED BENE14 FICIARY.—Section 401(a)(9)(E) of such Code is amended 

15 to read as follows: 

16 ‘‘(E) DEFINITIONS AND RULES RELATING

17 TO DESIGNATED BENEFICIARY.—For purposes 

18 of this paragraph— 

19 ‘‘(i) DESIGNATED BENEFICIARY.—The 

20 term ‘designated beneficiary’ means any 

21 individual designated as a beneficiary by 

22 the employee. 

23 ‘‘(ii) ELIGIBLE DESIGNATED BENE24 FICIARY.—The term ‘eligible designated 

25 beneficiary’ means, with respect to any emVerDate Mar 15 2010 23:55 Feb 27, 2012 Jkt 099200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\S2132.PCS S2132

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1 ployee, any designated beneficiary who, as 

2 of the date of death of the employee, is— 

3 ‘‘(I) the surviving spouse of the 

4 employee, 

5 ‘‘(II) subject to clause (iii), a 

6 child of the employee who has not 

7 reached majority (within the meaning 

8 of subparagraph (F)), 

9 ‘‘(III) disabled (within the mean10 ing of section 72(m)(7)), 

11 ‘‘(IV) a chronically ill individual 

12 (within the meaning of section 

13 7702B(c)(2), except that the require14 ments of subparagraph (A)(i) thereof 

15 shall only be treated as met if there is 

16 a certification that, as of such date, 

17 the period of inability described in 

18 such subparagraph with respect to the 

19 individual is an indefinite one that is 

20 reasonably expected to be lengthy in 

21 nature), or 

22 ‘‘(V) an individual not described 

23 in any of the preceding subparagraphs 

24 who is not more than 10 years young25 er than the employee. 


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1 ‘‘(iii) SPECIAL RULE FOR CHIL2 DREN.—Subject to subparagraph (F), an 

3 individual described in clause (ii)(II) shall 

4 cease to be an eligible designated bene5 ficiary as of the date the individual reaches 

6 majority and the requirement of subpara7 graph (B)(i) shall not be treated as met 

8 with respect to any remaining portion of 

9 an employee’s interest payable to the indi10 vidual unless such portion is distributed 

11 within 5 years after such date.’’. 

12 (c) REQUIRED BEGINNING DATE.—Section 

13 401(a)(9)(C) of such Code is amended by adding at the 

14 end the following new clause: 

15 ‘‘(v) EMPLOYEES BECOMING 5-PERCENT OWNERS AFTER AGE 701 16 ⁄2.—If an 

17 employee becomes a 5-percent owner (as 

18 defined in section 416) with respect to a 

19 plan year ending in a calendar year after 

20 the calendar year in which the employee 

attains age 701⁄2 , 21 then clause (i)(II) shall 

22 be applied by substituting the calendar 

23 year in which the employee became such 

24 an owner for the calendar year in which 

25 the employee retires.’’. 


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1 (d) EFFECTIVE DATES.— 

2 (1) IN GENERAL.—Except as provided in this 

3 subsection, the amendments made by this section 

4 shall apply to distributions with respect to employees 

5 who die after December 31, 2012. 

6 (2) REQUIRED BEGINNING DATE.— 

7 (A) IN GENERAL.—The amendment made 

8 by subsection (c) shall apply to employees be9 coming a 5-percent owner with respect to plan 

10 years ending in calendar years beginning before, 

11 on, or after the date of the enactment of this 

12 Act. 

13 (B) SPECIAL RULE.—If— 

14 (i) an employee became a 5-percent 

15 owner with respect to a plan year ending 

16 in a calendar year which began before Jan17 uary 1, 2012, and 

18 (ii) the employee has not retired be19 fore calendar year 2013, 

20 such employee shall be treated as having be21 come a 5-percent owner with respect to a plan 

22 year ending in 2012 for purposes of applying 

23 section 401(a)(9)(C)(v) of the Internal Revenue 

24 Code of 1986 (as added by the amendment 

25 made by subsection (c)). 


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1 (3) EXCEPTION FOR CERTAIN BENE2 FICIARIES.—If a designated beneficiary of an em3 ployee who dies before January 1, 2013, dies after 

4 December 31, 2012— 

5 (A) the amendments made by this section 

6 shall apply to any beneficiary of such des7 ignated beneficiary, and 

8 (B) the designated beneficiary shall be 

9 treated as an eligible designated beneficiary for 

10 purposes of applying section 401(a)(9)(B)(iv) of 

11 such Code (as in effect after the amendments 

12 made by this section). 

13 (4) EXCEPTION FOR CERTAIN EXISTING ANNU14 ITY CONTRACTS.— 

15 (A) IN GENERAL.—The amendments made 

16 by this section shall not apply to a qualified an17 nuity which is a binding annuity contract in ef18 fect on the date of the enactment of this Act 

19 and at all times thereafter. 

20 (B) QUALIFIED ANNUITY CONTRACT.—For 

21 purposes of this paragraph, the term ‘‘qualified 

22 annuity’’ means, with respect to an employee, 

23 an annuity— 


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1 (i) which is a commercial annuity (as 

2 defined in section 3405(e)(6) of such 

3 Code) or payable by a defined benefit plan, 

4 (ii) under which the annuity payments 

5 are substantially equal periodic payments 

6 (not less frequently than annually) over the 

7 lives of such employee and a designated 

8 beneficiary (or over a period not extending 

9 beyond the life expectancy of such em10 ployee or the life expectancy of such em11 ployee and a designated beneficiary) in ac12 cordance with the regulations described in 

13 section 401(a)(9)(A)(ii) of such Code (as 

14 in effect before such amendments) and 

15 which meets the other requirements of this 

16 section 401(a)(9) of such Code (as so in 

17 effect) with respect to such payments, and 

18 (iii) with respect to which— 

19 (I) annuity payments to the em20 ployee have begun before January 1, 

21 2013, and the employee has made an 

22 irrevocable election before such date 

23 as to the method and amount of the 

24 annuity payments to the employee or 

25 any designated beneficiaries, or 


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1 (II) if subclause (I) does not 

2 apply, the employee has made an ir3 revocable election before the date of 

4 the enactment of this Act as to the 

5 method and amount of the annuity 

6 payments to the employee or any des7 ignated beneficiaries. 

8 SEC. 311. DEPRECIATION AND AMORTIZATION RULES FOR 

9 HIGHWAY AND RELATED PROPERTY SUBJECT 

10 TO LONG-TERM LEASES. 

11 (a) ACCELERATED COST RECOVERY.— 

12 (1) IN GENERAL.—Section 168(g)(1) of the In13 ternal Revenue Code of 1986 is amended by striking 

14 ‘‘and’’ at the end of subparagraph (D), by redesig15 nating subparagraph (E) as subparagraph (F), and 

16 by inserting after subparagraph (D) the following 

17 new subparagraph: 

18 ‘‘(E) any applicable leased highway prop19 erty,’’. 

20 (2) RECOVERY PERIOD.—The table contained in 

21 subparagraph (C) of section 168(g)(2) of such Code 

22 is amended by redesignating clause (iv) as clause (v) 

23 and by inserting after clause (iii) the following new 

24 clause: 

‘‘(iv) Applicable leased highway property ........... 45 years.’’. 


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1 (3) APPLICABLE LEASED HIGHWAY PROPERTY

2 DEFINED.— 

3 (A) IN GENERAL.—Section 168(g) of such 

4 Code is amended by redesignating paragraph 

5 (7) as paragraph (8) and by inserting after 

6 paragraph (6) the following new paragraph: 

7 ‘‘(7) APPLICABLE LEASED HIGHWAY PROP8 ERTY.—For purposes of paragraph (1)(E)— 

9 ‘‘(A) IN GENERAL.—The term ‘applicable 

10 leased highway property’ means property to 

11 which this section otherwise applies which— 

12 ‘‘(i) is subject to an applicable lease, 

13 and 

14 ‘‘(ii) is placed in service before the 

15 date of such lease. 

16 ‘‘(B) APPLICABLE LEASE.—The term ‘ap17 plicable lease’ means a lease or other arrange18 ment— 

19 ‘‘(i) which is between the taxpayer 

20 and a State or political subdivision thereof, 

21 or any agency or instrumentality of either, 

22 and 

23 ‘‘(ii) under which the taxpayer— 

24 ‘‘(I) leases a highway and associ25 ated improvements, 


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1 ‘‘(II) receives a right-of-way on 

2 the public lands underlying such high3 way and improvements, and 

4 ‘‘(III) receives a grant of a fran5 chise or other intangible right permit6 ting the taxpayer to receive funds re7 lating to the operation of such high8 way.’’. 

9 (B) CONFORMING AMENDMENT.—Subpara10 graph (F) of section 168(g)(1) (as redesignated 

11 by subsection (a)(1)) is amended by striking 

12 ‘‘paragraph (7)’’ and inserting ‘‘paragraph 

13 (8)’’. 

14 (b) AMORTIZATION OF INTANGIBLES.—Section 

15 197(f) of the Internal Revenue Code of 1986 is amended 

16 by adding at the end the following new paragraph: 

17 ‘‘(11) INTANGIBLES RELATING TO APPLICABLE

18 LEASED HIGHWAY PROPERTY.—In the case of any 

19 amortizable section 197 intangible property which is 

20 acquired in connection with an applicable lease (as 

21 defined in section 168(g)(7)(B)), the amortization 

22 period under this section shall not be less than the 

23 term of the applicable lease. For purposes of the 

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1 tion 168(i)(3)(A) shall apply in determining the 

2 term of the applicable lease.’’. 

3 (c) NO PRIVATE ACTIVITY BOND FINANCING OF AP4 PLICABLE LEASED HIGHWAY PROPERTY.—Section 147(e) 

5 of the Internal Revenue Code of 1986 is amended by in6 serting ‘‘, or to finance any applicable leased highway 

7 property (as defined in section 168(g)(7)(A))’’ after 

8 ‘‘premises’’. 

9 (d) EFFECTIVE DATES.— 

10 (1) IN GENERAL.—Except as provided in para11 graph (2), the amendments made by this section 

12 shall apply to leases entered into after the date of 

13 the enactment of this Act. 

14 (2) NO PRIVATE ACTIVITY BOND FINANCING.— 

15 The amendment made by subsection (c) shall apply 

16 to bonds issued after the date of the enactment of 

17 this Act. 

18 SEC. 312. EXTENSION FOR TRANSFERS OF EXCESS PENSION 

19 ASSETS TO RETIREE HEALTH ACCOUNTS. 

20 (a) IN GENERAL.—Paragraph (5) of section 420(b) 

21 of the Internal Revenue Code of 1986 is amended by strik22 ing ‘‘December 31, 2013’’ and inserting ‘‘December 31, 

23 2021’’. 

24 (b) CONFORMING ERISA AMENDMENTS.— 


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1 (1) Sections 101(e)(3), 403(c)(1), and 

2 408(b)(13) of the Employee Retirement Income Se3 curity Act of 1974 are each amended by striking 

4 ‘‘Pension Protection Act of 2006’’ and inserting 

5 ‘‘Highway Investment, Job Creation, and Economic 

6 Growth Act of 2012’’. 

7 (2) Section 408(b)(13) of such Act (29 U.S.C. 

8 1108(b)(13)) is amended by striking ‘‘January 1, 

9 2014’’ and inserting ‘‘January 1, 2022’’. 

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

11 this Act shall take effect on the date of the enactment 

12 of this Act. 

13 SEC. 313. TRANSFER OF EXCESS PENSION ASSETS TO RE14 TIREE GROUP TERM LIFE INSURANCE AC15 COUNTS. 

16 (a) IN GENERAL.—Subsection (a) of section 420 of 

17 the Internal Revenue Code of 1986 is amended by insert18 ing ‘‘, or an applicable life insurance account,’’ after 

19 ‘‘health benefits account’’. 

20 (b) APPLICABLE LIFE INSURANCE ACCOUNT DE21 FINED.— 

22 (1) IN GENERAL.—Subsection (e) of section 

23 420 of the Internal Revenue Code of 1986 is amend24 ed by redesignating paragraphs (4) and (5) as paraVerDate Mar 15 2010 23:55 Feb 27, 2012 Jkt 099200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\S2132.PCS S2132

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1 graphs (5) and (6), respectively, and by inserting 

2 after paragraph (3) the following new paragraph: 

3 ‘‘(4) APPLICABLE LIFE INSURANCE AC4 COUNT.—The term ‘applicable life insurance ac5 count’ means a separate account established and 

6 maintained for amounts transferred under this sec7 tion for qualified current retiree liabilities based on 

8 premiums for applicable life insurance benefits.’’. 

9 (2) APPLICABLE LIFE INSURANCE BENEFITS

10 DEFINED.—Paragraph (1) of section 420(e) of such 

11 Code is amended by redesignating subparagraph (D) 

12 as subparagraph (E) and by inserting after subpara13 graph (C) the following new subparagraph: 

14 ‘‘(D) APPLICABLE LIFE INSURANCE BENE15 FITS.—The term ‘applicable life insurance bene16 fits’ means group-term life insurance coverage 

17 provided to retired employees who, immediately 

18 before the qualified transfer, are entitled to re19 ceive such coverage by reason of retirement and 

20 who are entitled to pension benefits under the 

21 plan, but only to the extent that such coverage 

22 is provided under a policy for retired employees 

23 and the cost of such coverage is excludable from 

24 the retired employee’s gross income under sec25 tion 79.’’. 


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1 (3) COLLECTIVELY BARGAINED LIFE INSUR2 ANCE BENEFITS DEFINED.— 

3 (A) IN GENERAL.—Paragraph (6) of sec4 tion 420(f) of such Code is amended by redesig5 nating subparagraph (D) as subparagraph (E) 

6 and by inserting after subparagraph (C) the fol7 lowing new subparagraph: 

8 ‘‘(D) COLLECTIVELY BARGAINED LIFE IN9 SURANCE BENEFITS.—The term ‘collectively 

10 bargained life insurance benefits’ means, with 

11 respect to any collectively bargained transfer— 

12 ‘‘(i) applicable life insurance benefits 

13 which are provided to retired employees 

14 who, immediately before the transfer, are 

15 entitled to receive such benefits by reason 

16 of retirement, and 

17 ‘‘(ii) if specified by the provisions of 

18 the collective bargaining agreement gov19 erning the transfer, applicable life insur20 ance benefits which will be provided at re21 tirement to employees who are not retired 

22 employees at the time of the transfer.’’. 

23 (B) CONFORMING AMENDMENTS.— 

24 (i) Clause (i) of section 420(e)(1)(C) 

25 of such Code is amended by striking ‘‘upon 


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1 retirement’’ and inserting ‘‘by reason of re2 tirement’’. 

3 (ii) Subparagraph (C) of section 

4 420(f)(6) of such Code is amended— 

5 (I) by striking ‘‘which are pro6 vided to’’ in the matter preceding 

7 clause (i), 

8 (II) by inserting ‘‘which are pro9 vided to’’ before ‘‘retired employees’’ 

10 in clause (i), 

11 (III) by striking ‘‘upon retire12 ment’’ in clause (i) and inserting ‘‘by 

13 reason of retirement’’, and 

14 (IV) by striking ‘‘active employ15 ees who, following their retirement,’’ 

16 and inserting ‘‘which will be provided 

17 at retirement to employees who are 

18 not retired employees at the time of 

19 the transfer and who’’. 

20 (c) MAINTENANCE OF EFFORT.— 

21 (1) IN GENERAL.—Subparagraph (A) of section 

22 420(c)(3) of the Internal Revenue Code of 1986 is 

23 amended by inserting ‘‘, and each group-term life in24 surance plan under which applicable life insurance 


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1 benefits are provided,’’ after ‘‘health benefits are 

2 provided’’. 

3 (2) CONFORMING AMENDMENTS.— 

4 (A) Subparagraph (B) of section 420(c)(3) 

5 of such Code is amended— 

6 (i) by redesignating subclauses (I) and 

7 (II) of clause (i) as subclauses (II) and 

8 (III) of such clause, respectively, and by 

9 inserting before subclause (II) of such 

10 clause, as so redesignated, the following 

11 new subclause: 

12 ‘‘(I) separately with respect to 

13 applicable health benefits and applica14 ble life insurance benefits,’’, and 

15 (ii) by striking ‘‘for applicable health 

16 benefits’’ and all that follows in clause (ii) 

17 and inserting ‘‘was provided during such 

18 taxable year for the benefits with respect 

19 to which the determination under clause (i) 

20 is made.’’. 

21 (B) Subparagraph (C) of section 420(c)(3) 

22 of such Code is amended— 

23 (i) by inserting ‘‘for applicable health 

24 benefits’’ after ‘‘applied separately’’, and 


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1 (ii) by inserting ‘‘, and separately for 

2 applicable life insurance benefits with re3 spect to individuals age 65 or older at any 

4 time during the taxable year and with re5 spect to individuals under age 65 during 

6 the taxable year’’ before the period. 

7 (C) Subparagraph (E) of section 420(c)(3) 

8 of such Code is amended— 

9 (i) in clause (i), by inserting ‘‘or re10 tiree life insurance coverage, as the case 

11 may be,’’ after ‘‘retiree health coverage’’, 

12 and 

13 (ii) in clause (ii), by inserting ‘‘FOR

14 RETIREE HEALTH COVERAGE’’ after ‘‘COST

15 REDUCTIONS’’ in the heading thereof, and 

16 (iii) in clause (ii)(II), by inserting 

17 ‘‘with respect to applicable health benefits’’ 

18 after ‘‘liabilities of the employer’’. 

19 (D) Paragraph (2) of section 420(f) of 

20 such Code is amended by striking ‘‘collectively 

21 bargained retiree health liabilities’’ each place it 

22 occurs and inserting ‘‘collectively bargained re23 tiree liabilities’’. 

24 (E) Clause (i) of section 420(f)(2)(D) of 

25 such Code is amended— 


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1 (i) by inserting ‘‘, and each group2 term life insurance plan or arrangement 

3 under which applicable life insurance bene4 fits are provided,’’ in subclause (I) after 

5 ‘‘applicable health benefits are provided’’, 

6 (ii) by inserting ‘‘or applicable life in7 surance benefits, as the case may be,’’ in 

8 subclause (I) after ‘‘provides applicable 

9 health benefits’’, 

10 (iii) by striking ‘‘group health’’ in 

11 subclause (II), and 

12 (iv) by inserting ‘‘or collectively bar13 gained life insurance benefits’’ in subclause 

14 (II) after ‘‘collectively bargained health 

15 benefits’’. 

16 (F) Clause (ii) of section 420(f)(2)(D) of 

17 such Code is amended— 

18 (i) by inserting ‘‘with respect to appli19 cable health benefits or applicable life in20 surance benefits’’ after ‘‘requirements of 

21 subsection (c)(3)’’, and 

22 (ii) by adding at the end the fol23 lowing: ‘‘Such election may be made sepa24 rately with respect to applicable health 

25 benefits and applicable life insurance beneVerDate Mar 15 2010 23:55 Feb 27, 2012 Jkt 099200 PO 00000 Frm 00046 Fmt 6652 Sfmt 6201 E:\BILLS\S2132.PCS S2132

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1 fits. In the case of an election with respect 

2 to applicable life insurance benefits, the 

3 first sentence of this clause shall be ap4 plied as if subsection (c)(3) as in effect be5 fore the amendments made by such Act 

6 applied to such benefits.’’ 

7 (G) Clause (iii) of section 420(f)(2)(D) of 

8 such Code is amended— 

9 (i) by striking ‘‘retiree’’ each place it 

10 occurs, and 

11 (ii) by inserting ‘‘, collectively bar12 gained life insurance benefits, or both, as 

13 the case may be,’’ after ‘‘health benefits’’ 

14 each place it occurs. 

15 (d) COORDINATION WITH SECTION 79.—Section 79 

16 of the Internal Revenue Code of 1986 is amended by add17 ing at the end the following new subsection: 

18 ‘‘(f) EXCEPTION FOR LIFE INSURANCE PURCHASED

19 IN CONNECTION WITH QUALIFIED TRANSFER OF EXCESS

20 PENSION ASSETS.—Subsection (b)(3) and section 

21 72(m)(3) shall not apply in the case of any cost paid 

22 (whether directly or indirectly) with assets held in an ap23 plicable life insurance account (as defined in section 

24 420(e)(4)) under a defined benefit plan.’’. 

25 (e) CONFORMING AMENDMENTS.— 


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1 (1) Section 420 of the Internal Revenue Code 

2 of 1986 is amended by striking ‘‘qualified current 

3 retiree health liabilities’’ each place it appears and 

4 inserting ‘‘qualified current retiree liabilities’’. 

5 (2) Section 420 of such Code is amended by in6 serting ‘‘, or an applicable life insurance account,’’ 

7 after ‘‘a health benefits account’’ each place it ap8 pears in subsection (b)(1)(A), subparagraphs (A), 

9 (B)(i), and (C) of subsection (c)(1), subsection 

10 (d)(1)(A), and subsection (f)(2)(E)(ii). 

11 (3) Section 420(b) of such Code is amended— 

12 (A) by adding the following at the end of 

13 paragraph (2)(A): ‘‘If there is a transfer from 

14 a defined benefit plan to both a health benefits 

15 account and an applicable life insurance ac16 count during any taxable year, such transfers 

17 shall be treated as 1 transfer for purposes of 

18 this paragraph.’’, and 

19 (B) by inserting ‘‘to an account’’ after 

20 ‘‘may be transferred’’ in paragraph (3). 

21 (4) The heading for section 420(c)(1)(B) of 

22 such Code is amended by inserting ‘‘OR LIFE INSUR23 ANCE’’ after ‘‘HEALTH BENEFITS’’. 

24 (5) Paragraph (1) of section 420(e) of such 

25 Code is amended— 


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1 (A) by inserting ‘‘and applicable life insur2 ance benefits’’ in subparagraph (A) after ‘‘ap3 plicable health benefits’’, and 

4 (B) by striking ‘‘HEALTH’’ in the heading 

5 thereof. 

6 (6) Subparagraph (B) of section 420(e)(1) of 

7 such Code is amended— 

8 (A) in the matter preceding clause (i), by 

9 inserting ‘‘(determined separately for applicable 

10 health benefits and applicable life insurance 

11 benefits)’’ after ‘‘shall be reduced by the 

12 amount’’, 

13 (B) in clause (i), by inserting ‘‘or applica14 ble life insurance accounts’’ after ‘‘health ben15 efit accounts’’, and 

16 (C) in clause (i), by striking ‘‘qualified cur17 rent retiree health liability’’ and inserting 

18 ‘‘qualified current retiree liability’’. 

19 (7) The heading for subsection (f) of section 

20 420 of such Code is amended by striking ‘‘HEALTH’’ 

21 each place it occurs. 

22 (8) Subclause (II) of section 420(f)(2)(B)(ii) of 

23 such Code is amended by inserting ‘‘or applicable 

24 life insurance account, as the case may be,’’ after 

25 ‘‘health benefits account’’. 


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1 (9) Subclause (III) of section 420(f)(2)(E)(i) of 

2 such Code is amended— 

3 (A) by inserting ‘‘defined benefit’’ before 

4 ‘‘plan maintained by an employer’’, and 

5 (B) by inserting ‘‘health’’ before ‘‘benefit 

6 plans maintained by the employer’’. 

7 (10) Paragraphs (4) and (6) of section 420(f) 

8 of such Code are each amended by striking ‘‘collec9 tively bargained retiree health liabilities’’ each place 

10 it occurs and inserting ‘‘collectively bargained retiree 

11 liabilities’’. 

12 (11) Subparagraph (A) of section 420(f)(6) of 

13 such Code is amended— 

14 (A) in clauses (i) and (ii), by inserting ‘‘, 

15 in the case of a transfer to a health benefits ac16 count,’’ before ‘‘his covered spouse and depend17 ents’’, and 

18 (B) in clause (ii), by striking ‘‘health plan’’ 

19 and inserting ‘‘plan’’. 

20 (12) Subparagraph (B) of section 420(f)(6) of 

21 such Code is amended— 

22 (A) in clause (i), by inserting ‘‘, and collec23 tively bargained life insurance benefits,’’ after 

24 ‘‘collectively bargained health benefits’’, 

25 (B) in clause (ii)— 


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1 (i) by adding at the end the following: 

2 ‘‘The preceding sentence shall be applied 

3 separately for collectively bargained health 

4 benefits and collectively bargained life in5 surance benefits.’’, and 

6 (ii) by inserting ‘‘, applicable life in7 surance accounts,’’ after ‘‘health benefit 

8 accounts’’, and 

9 (C) by striking ‘‘HEALTH’’ in the heading 

10 thereof. 

11 (13) Subparagraph (E) of section 420(f)(6) of 

12 such Code, as redesignated by subsection (b), is 

13 amended— 

14 (A) by striking ‘‘bargained health’’ and in15 serting ‘‘bargained’’, 

16 (B) by inserting ‘‘, or a group-term life in17 surance plan or arrangement for retired em18 ployees,’’ after ‘‘dependents’’ , and 

19 (C) by striking ‘‘HEALTH’’ in the heading 

20 thereof. 

21 (14) Section 101(e) of the Employee Retire22 ment Income Security Act of 1974 (29 U.S.C. 

23 1021(e)) is amended— 

24 (A) in paragraphs (1) and (2), by inserting 

25 ‘‘or applicable life insurance account’’ after 


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1 ‘‘health benefits account’’ each place it appears, 

2 and 

3 (B) in paragraph (1), by inserting ‘‘or ap4 plicable life insurance benefit liabilities’’ after 

5 ‘‘health benefits liabilities’’. 

6 (f) TECHNICAL CORRECTION.—Clause (iii) of section 

7 420(f)(6)(B) is amended by striking ‘‘416(I)(1)’’ and in8 serting ‘‘416(i)(1)’’. 

9 (g) REPEAL OF DEADWOOD.— 

10 (1) Subparagraph (A) of section 420(b)(1) of 

11 the Internal Revenue Code of 1986 is amended by 

12 striking ‘‘in a taxable year beginning after December 

13 31, 1990’’. 

14 (2) Subsection (b) of section 420 of such Code 

15 is amended by striking paragraph (4) and by redes16 ignating paragraph (5), as amended by this Act, as 

17 paragraph (4). 

18 (3) Paragraph (2) of section 420(b) of such 

19 Code, as amended by this section, is amended— 

20 (A) by striking subparagraph (B), and 

21 (B) by striking ‘‘PER YEAR.—’’ and all 

22 that follows through ‘‘No more than’’ and in23 serting ‘‘PER YEAR.—No more than’’. 

24 (4) Paragraph (2) of section 420(c) of such 

25 Code is amended— 


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1 (A) by striking subparagraph (B), 

2 (B) by moving subparagraph (A) two ems 

3 to the left, and 

4 (C) by striking ‘‘BEFORE TRANSFER.—’’ 

5 and all that follows through ‘‘The requirements 

6 of this paragraph’’ and inserting the following: 

7 ‘‘BEFORE TRANSFER.—The requirements of this 

8 paragraph’’. 

9 (5) Paragraph (2) of section 420(d) of such 

10 Code is amended by striking ‘‘after December 31, 

11 1990’’. 

12 (h) EFFECTIVE DATE.— 

13 (1) IN GENERAL.—The amendments made by 

14 this section shall apply to transfers made after the 

15 date of the enactment of this Act. 

16 (2) CONFORMING AMENDMENTS RELATING TO

17 PENSION PROTECTION ACT.—The amendments made 

18 by subsections (b)(3)(B) and (f) shall take effect as 

19 if included in the amendments made by section 

20 841(a) of the Pension Protection Act of 2006. 


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Calendar No. 327 

112TH CONGRESS 

2D SESSION S. 2132 

[Report No. 112–152] 

A BILL 

To amend the Internal Revenue Code of 1986 to 

for highway programs, and for other purposes. and trust fund expenditures, to provide revenues provide for the extension of highway-related taxes 

FEBRUARY 27, 2012 

Read twice and placed on the calendar 


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